‘HAVE YOU FELT ANGRY LATELY?’: A NOTE ON UNFAIR WAGE PERCEPTIONS AND THE NEGATIVE EMOTION OF ANGER

The author analyses the nexus between unfair wage perceptions of workers and the frequency of the negative emotion of anger. For this purpose, German household panel data for the years 2007, 2009, 2011 and 2013 are used. Angry feelings in the last four weeks have occurred significantly more frequently for workers who perceive their wage as unfair, whereas the own absolute hourly wage is not significantly correlated with the frequency of having felt angry. The results further indicate that workers have felt more often angry if working hours are larger; but the economic significance seems rather small compared to unfair wage perceptions.     

Do unfair perceived own pay and top managers’ pay erode satisfaction with democracy?

Many people are relatively unsatisfied with the democratic system as it currently exists. In this empirical research note, the authors present evidence that German workers, who perceive their own pay or top managers’ pay as unfair, are on average significantly less happy with the democracy in Germany. Thus, fairness perceptions in the labour market and of income inequality seem to have spillover effects on the overall satisfaction with the democratic system.     

The Importance of Tax Adjustments When Evaluating Wage Expectations*

Using elicited expectations of future gross salaries, we evaluate characteristics causing German students to make larger or smaller estimation errors. While students seem to underestimate actual salaries by 18 percent, we show that these errors are highly attributable to misconceptions of the progressive income tax. Developing a suitable adjustment procedure, we correct students’ estimates and find that errors decline by 12 percentage points. Conducting regression analyses, we reveal strong connections with students’ age, gender, work experience, secondary school track, and knowledge about student loans. These results change notably if not controlling for students’ misconceptions of the tax system.     

Frank Romeike und Matthias Müller-Reichart: Risikomanagement in Versicherungsunternehmen. Grundlagen, Methoden, Checklisten und Implementierung

Ohne Zusammenfassung     

The relationship between capital and liquidity prudential instruments

Journal of Regulatory Economics - Basel III introduced unweighted capital standard and new regulatory liquidity standards to complement the revised risk-weighted capital requirements. This change...     

Solvency II: stability problems with the SCR aggregation formula

One of the central issues in the Solvency II process will be an appropriate calculation of the Solvency Capital Requirement (SCR). This is the economic capital that an insurance company must hold in order to guarantee a one-year ruin probability of at most 0.5%. In the so-called standard formula, the overall SCR is calculated from individual SCRs in a particular way that imitates the calculation of the standard deviation for a sum of normally distributed risks (SCR aggregation formula). However, in order to cope with skewness in the individual risk distributions, this formula must be calibrated accordingly in order to maintain the prescribed level of confidence. In this paper, we want to show that the methods proposed and discussed thus far still show stability problems within the general setup.     

Ein Reservierungsverfahren für die Rechtsschutzversicherung nach Art der Lebensversicherung

In this paper we introduce a new approach to the calculation of claims reserves (known and IBNR cases) which is particularly adapted to the business model of legal expense insurance. An essential aspect here is the split into two model components: case numbers and average claim costs. In contrast to other reserving methods for case numbers and claims cash flows which are frequently used in practice without checking the validity for application we introduce a model in which the time until case settlement is described by a lifetime distribution according to the principles of life insurance. The split of model components also allows for a simple implementation of cost inflation effects which is required by German law. Finally, the approach proposed here can readily be transferred to the calculation of IBNR reserves.     

A profit-to-provisioning approach to setting the countercyclical capital buffer

In this paper, we propose a new profit-to-provisioning approach that can be used in the macroprudential decision-making process. We construct new Banking Prudence Indicators (BPI) that largely capture the risk of cyclicality of profit and loan loss provisions and should monitor the forward-looking ability of the expected credit loss approach under International Financial Reporting Standard 9. We evaluate the performance of our newly proposed BPIs using two econometric exercises. Overall, they exhibit good statistical properties, are relevant to the countercyclical capital buffer decision-making process, and might contribute to a more precise assessment of both systemic risk accumulation and risk materialization.