The evolution of consumption and its welfare effects

In this paper the evolution of consumption is explained on the basis of a theory that connects preferences over actions to the motivational forces driving actions. More specifically, the hypotheses about what motivates consumption activities draw on insights from biology, behavioral science, and psychology. With secularly rising income, the growing consumption opportunities and the expanding consumption alter the underlying motivational forces and induce a change of preferences. As a consequence, the structure of consumption expenditures is systematically transformed. In the light of this explanation, the paper analyzes the effects of the growth and transformation of consumption on individual welfare. As turns out, the motivations driving the growth of consumption do not necessarily imply that this growth indeed results in welfare increases, particularly when the ability to spend on consumption is already high. Moreover, when preferences change, the measurement of the welfare effects of the growth and transformation of consumption depends on the arbitrary choice of a reference point. This implies an ambiguity that raises further queries about the normative foundations of the ubiquitous calls for continued consumption growth.     

Subjective welfare,isolation, and relative consumption

The recent literature has shown that subjective welfare depends on relative income. Much of the existing evidence comes from developed economies. What remains unclear is whether this is a universal human trait or an artifact of a prosperous, market-oriented lifestyle. Using data from Nepal, a mountainous country where many households still live in relative isolation, we test whether poorer and more isolated households care less about relative consumption. We find that they do not. We investigate possible reasons for this. We reject that it is due to parental concerns regarding the marriage prospects of their children. But we find evidence in support of the reference point hypothesis put forth by psychologists: household heads having migrated out of their birth district still judge the adequacy of their consumption in comparison with households in their district of origin.     

Intertemporal consumption with directly measured welfare functions and subjective expectations

Euler equation estimation of intertemporal consumption models requires many, often unverifiable assumptions. These include assumptions on expectations and preferences. We aim at reducing some of these requirements by using direct subjective information on respondents’ preferences and expectations. The results suggest that individually measured welfare functions and expectations have predictive power for the variation in consumption across households. Furthermore, estimates of the intertemporal elasticity of substitution based on the estimated welfare functions are plausible and of a similar order of magnitude as other estimates found in the literature. The model favored by the data only requires cross-section data for estimation.     

“国军”福利品供应站顾客消费特性及营销策略之研究

本研究首先经由文献探讨,界定“国军”福利品供应站在业态别中的角色,应类似于超级市场的综合商品零售商的角色。而後透过问卷设计调查,SWOT分析及深度访谈等方式,提出福利品供应站在经营及营销策略上除了强调商品售价低廉外,也应着重于强调保证商品质量的宣传力度,并以更具弹性的手法来引进或汰换商品,并且尽可能提供更多的商品选择性,而後利用邻近小区或都会区的营区来增加责场地点或以租赁场地方式采用小规模小区型售场的方式大量展店,并以更多元的方式促销,建立完整顾客数据库,提高宣传效率及全面开放信用卡消费等积极性方式作为推动策略。     

High growth and low consumption in East Asia: How to improve welfare while avoiding financial failures

This paper analyzes certain policies that are typical of a number of rapidly growing East Asian countries in which a fixed exchange rate, combined with a surplus labor market, has made domestic assets relatively inexpensive, generating high rates of FDI as well as domestic capital formation. This “investment hunger” can lead to unanticipated declines in the returns to investment, and resulting financial insolvencies. Private consumption remains low and there are concerns that high savings rates cannot be sustained.We construct a dynamic general equilibrium model and apply it to a stylized Asian economy, loosely based upon China. We calibrate a benchmark equilibrium, and carry out various counterfactual simulations to analyze alternative policies, in particular tax cuts and exchange rate revaluations, as instruments in increasing private consumption while avoiding bank failures.     

Income and consumption smoothing and welfare gains across Pacific Island Countries: The role of remittances and foreign aid

We examine the potential welfare gains and channels of income smoothing for Pacific Island Countries (PICs) and find that, under full risk sharing overall welfare gains across all PICs (particularly, Kiribati, Palau, and Papua New Guinea) are at desirable levels. However, for Australia, the potential welfare gain from risk sharing is almost similar to the gain it obtains if Australia attains full risk sharing with the rest of the OECD countries or with New Zealand alone. We also break down output using the framework of Sørensen and Yosha (1998) to quantify the extent and channels of risk sharing across PICs. For PICs, income-smoothing channels (net factor income and current transfers) play a significant role in buffering the output shock compared to the performance of those channels on smoothing the output shock for OECD countries. Domestic savings also smooth a fair portion of shocks to output, but the extent is much lower compared to that of OECD countries. Further, we analyze the effect of remittances and foreign aid on income smoothing for the PICs excluding Australia and New Zealand. Income smoothing via remittances is highly volatile and significant in recent years, while foreign aid seems to be a stronger and more stable channel for smoothing domestic output shocks for PICs.     

Demography and welfare economics

The focusing on demographic issues as an important part of welfare-economic assessment shifts the evaluative space in the direction of public discussion and social concern. A commoditycentred view of individual success and social welfare is often used in economics. But the linkage between our economic wealth and our ability to live as we would like has strong limits. This is partly because of interpersonal variations between individuals, but also because of variations in public and social arrangements (for example, for public health care, education and social security). The use of demographic perspectives can enrich economic analysis in several ways. In particular a demographically oriented system of evaluation can not only focus on variables that we all value, but it also gives us the freedom to decide what weights would be most appropriate for the exercise in which we might be engaged. The problem of valuation in welfare economics is ultimately a social-choice issue, requiring the use of explicit judgments on which the society can achieve some consensus through political processes.Lecture presented to the annual meeting of the Austrian Economic Association in Vienna, 24 May 1994. The author is grateful for support from the National Science Foundation for the research on which this paper draws.     

Choice and individual welfare

We propose an abstract method of systematically assigning a “rational” ranking to non-rationalizable choice data. Our main idea is that any method of ascribing welfare to an individual as a function of choice is subjective, and depends on the economist undertaking the analysis. We provide a simple example of the type of exercise we propose. Namely, we define an individual welfare functional as a mapping from stochastic choice functions into weak orders. A stochastic choice function (or choice distribution) gives the empirical frequency of choices for any possible opportunity set (framing factors may also be incorporated into the model). We require that for any two alternatives x and y, if our individual welfare functional recommends x over y given two distinct choice distributions, then it also recommends x over y for any mixture of the two choice distributions. Together with some mild technical requirements, such an individual welfare functional must weight every opportunity set and assign a utility to each alternative x which is the sum across all opportunity sets of the weighted probability of x being chosen from the set. It therefore requires us to have a “prior view” about how important or representative a choice of x at a given situation is.     

Nonlinear prices and welfare

The paper constructs a general equilibrium model of education which is distinguished by a ‘job ladder’ or sticky wages, combined with the assumption that educated labor is preferred over uneducated labor, i.e. per a ‘fairness-in-hiring’ rule, when there is excess demand for jobs at given wages. This theory of education, considered to be relevant to liberal arts education in underdeveloped countries, is contrasted with the human capital doctrine and the Arrow-Spence screening theories. The analysis is mainly focused on examining the social inefficiency properties of the educational process captured in the model constructed.     

Immigration and welfare magnets

"This paper investigates if the location choices made by immigrants when they arrive in the United States are influenced by the interstate dispersion in welfare benefits. Income-maximizing behavior implies that foreign-born welfare recipients unlike their native-born counterparts, may be clustered in the states that offer the highest benefits. The empirical analysis indicates that immigrant welfare recipients are indeed more heavily clustered in high-benefit states than the immigrants who do not receive welfare, or than natives. As a result, the welfare participation rate of immigrants is much more sensitive to changes in welfare benefits than that of natives."     

Simultaneous entry and welfare

I examine the welfare properties of free entry under conditions of simultaneous entry. Specifically, I consider the second-best problem of influencing the number of entrants while taking as given firm behavior upon entry. I consider two alternative models of simultaneous entry: grab-the-dollar entry and war-of-attrition entry. I show that, if entry costs are low, then the results from previous models of sequential entry are fairly robust to the possibility of simultaneous entry. If however entry costs are high, then the welfare effects of free entry depend delicately on the nature of the entry game being played.     

村集体经济再认识与集体经济再造--来自浙江省126个集体经济薄弱村的调查

新形势下农村集体经济日益成为基层公共服务的重要支撑与村庄管理有效运行的保障。通过对浙江省126个经济薄弱村调研结果发现,集体经济的发展受到农户收入水平、农村区域地理环境、村庄规模以及村庄内部党员结构、宗族结构等众多因素的影响。基于关键要素的分析进一步发现,集体经济发展不仅是资源要素禀赋问题,也是合作治理视角下交易成本与社会成本的管理问题。发展集体经济日益从一个生产性问题变成管理性的农村资源规划与利用的难题。因此,集体经济发展的关键在于合作治理成本的有效化解。重新认识集体经济发展的依赖与功能是未来集体经济再造的关键,也是村庄有效治理的前提。     

Capital controls and welfare

This paper computes welfare levels under different degree of capital controls and compares them with the welfare level under perfect capital mobility by using the methodology of Schmitt-Grohé and Uribe (2007). We show that perfect capital mobility is not always optimal and that capital controls may enhance an economy’s welfare level. There exists an optimal degree of capital-account restriction that achieves a higher level of welfare than that under perfect capital mobility, if the economy has costly financial intermediaries. The results of our analysis imply that as the domestic financial intermediaries are less efficient, the government should impose stricter capital controls in the form of a tax on foreign borrowing.     

Democracy and dynamic welfare optima

We show that there exists a rule of deciding on random election dates, such that the solution of a welfare optimum computed on an infinite horizon, coincides with short-run economic policies chosen by a democratically elected government.     

Trade taxes and economic welfare

For a small country with no domestic distortions, trade taxes are generally viewed as welfare-reducing. This note shows that, in certain cases, a temporary trade tax may raise welfare in the present although it must lower welfare over the entire planning horizon.     

Military reserves and social welfare

We consider the contribution of reserves to the efficient mobilization of military manpower. Our analysis suggests that offering recruits an option to serve as reservists enhances social welfare if there is a sufficiently strong relationship between recruit performance in the military and their expected civilian income.     

Misperceptions,rigidity and welfare

In this paper we derive precise measures of the welfare costs of errors in the expectations in a simple two-period model of a small open economy. Over-optimistic expectations about future productivity lead to a misallocation of investment and consumption and, if future wages are rigid, to a fall in employment. The welfare costs of misallocations can, in close analogy with other distortions, be expressed as areas of familiar triangles. The costs of unemployment are, however, likely to be relatively more important when expectation errors are small.