Hard and soft health technology of the future

Hard technology is far ahead of its health application. At this time it is already technically feasible to equip an individual with a totally artificial heart which works better than a transplant and is not rejected, a system to make blind people “see”, a system to allow deaf people to “hear”, and an artificial kidney for home use. But they are not available to any human being for love or money. Other, even more spectacular technologies are just around the corner; but they are not being developed. The problem is not new. Semmelweis' 1847 discovery which reduced maternal childbed mortality by over 90% was not accepted by the medical profession until almost 40 years later. But the problem has to be solved in the interest of suffering humanity. The solution will be aided by an understanding of the causes:(1) Health economics are irrational (cancer cure versus cancer preventive);(2) Health issues are more emotional than all others (public debates are won by making an issue into a health issue: first railroads, SST, nuclear fuel, DDT, etc);(3) A larger number of people have to be convinced of the value and safety of a health innovation before it can be a success;(4) All innovation entails risk—physicians are trained to be wary of taking risks that are new and strange.The solution of the problem thus does not depend only on hard technology, but on soft technology:(a) Disseminate factual information on health matters;(b) Encourage public discussion of the evidence, the alternatives, the risks and benefits;(c) Create an incentive structure (economic or otherwise) which reflects the true contribution to the advancement of human health.     

Ex Post Welfare under Alternative Health Care Systems

The implications of a societal aversion to inequality for the optimal structure of the health care system are studied. The agents are assumed to be ex ante identical, but to differ ex post in the state of their health. Inequality aversion is introduced by postulating a strictly concave ex post social welfare function. It is shown that the optimal public health care system allocates health care differently than would private health insurance; specifically, people who are relatively unhealthy with and without treatment receive more health care, and people who are relatively healthy with and without treatment receive less health care. The aggregate quantity of health care under the optimal public health care system can be either greater or smaller than under private health care insurance. If the public health care system is optimally designed, allowing agents to purchase supplementary private health care insurance cannot raise social welfare and is likely to decrease it.     

Social insurance for the elderly

We study the effects of retirement benefits provided by social insurance programs on consumption, portfolio choice, and retirement in a continuous-time theoretical model. We show that people tend to retire earlier with an increase in retirement social insurance benefits (SIBs), consistent with empirical evidence. We show also that people tend to increase savings before retirement in anticipation of increased retirement benefits, a counter-intuitive result. The response of risky investment with an increase in the SIBs is ambiguous, depending on parameter values. The overall social welfare will increase with an increase in SIBs if the balanced budget constraint is satisfied. We also investigate the effects of changes in the two streams of the SIBs (paid in perishable goods and cash) and the proportion of workers in entire population on social welfare.     

Extreme value statistics and recurrence intervals of NYMEX energy futures volatility

Energy markets and the associated energy futures markets play a crucial role in global economies. It is of great theoretical and practical significance to gain a deeper understanding of extreme value statistics of the volatility of energy futures traded on the New York Mercantile Exchange (NYMEX). We investigate the statistical properties of the recurrence intervals of daily volatility time series of four NYMEX energy futures, which are defined as the waiting times τ between consecutive volatilities exceeding a given threshold q. We find that the recurrence intervals are distributed as a stretched exponential $P_q\left(\tau \right)\sim e^{{\left(\mathit{a\tau }\right)}^{-\gamma }}$, where the exponent γ decreases with increasing q, and there is no scaling behavior in the distributions for different thresholds q after the recurrence intervals are scaled with the mean recurrence interval $\overline{\tau }$. These findings are significant under the Kolmogorov–Smirnov test and the Cramér–von Mises test. We show that the empirical estimations are in nice agreement with the numerical integration results for the occurrence probability W_q(Δt|t) of a next event above the threshold q within a (short) time interval after an elapsed time t from the last event above q. We also investigate the memory effects of the recurrence intervals. It is found that the conditional distributions of large and small recurrence intervals differ from each other and the conditional mean of the recurrence intervals scale as a power law of the preceding interval $\overline{\tau }\left({\tau }_0\right)/\overline{\tau }\sim {\left({\tau }_0/\overline{\tau }\right)}^{\beta }$, indicating that the recurrence intervals have short-term correlations. Detrended fluctuation analysis and detrending moving average analysis further uncover that the recurrence intervals possess long-term correlations. We confirm that the “clustering” of the volatility recurrence intervals is caused by the long-term correlations well known to be present in the volatility. Our findings shed new lights on the behavior of large volatilities and have potential implications in risk management of energy futures.     

How helpful are social networks in finding a job along the economic cycle? Evidence from immigrants in France

Around 50% of individuals obtain or hear about jobs through social networks. This hiring trend may become problematic when the labor market is tight and people need less social contacts to find a job. Using a one-period static model where network members may receive job offers directly from the firm or indirectly through employed members in the network we show that the share of new hires finding a job through social connections (ie network matching rate) decreases with the job finding rate. Using French data for the period 2003–2012, we test this prediction with immigrants, a population subgroup for whom networks play a major role in occupational decisions. We propose two network matching rate indicators, one based on direct recommendations and another one internalizing the positive externality on the employment probability induced by peers. We find a decreasing relationship between the network matching rate and the job finding rate. Social connections are less helpful for finding jobs during economic expansions.     

Social motives in intergroup conflict: Group identity and perceived target of threat

We experimentally test the social motives behind individual participation in intergroup conflict by manipulating the perceived target of threat—groups or individuals—and the symmetry of conflict. We find that behavior in conflict depends on whether one is harmed by actions perpetrated by the out-group, but not on one׳s own influence on the outcome of the out-group. The perceived target of threat dramatically alters decisions to participate in conflict. When people perceive their group to be under threat, they are mobilized to do what is good for the group and contribute to the conflict. On the other hand, if people perceive to be personally under threat, they are driven to do what is good for themselves and withhold their contribution. The first phenomenon is attributed to group identity, possibly combined with a concern for social welfare. The second phenomenon is attributed to a novel victim effect. Another social motive—reciprocity—is ruled out by the data.     

Beyond Homo economicus: evidence from experimental economics

Environmental policies are generally based on a model of the human actor taken from neoclassical economic theory. This paper reports on laboratory experiments suggesting weaknesses in this model and describes alternative models correcting these weaknesses. One finding is that economic actors tend to be hyperbolic as opposed to exponential discounters who discount the immediate future at a higher rate than the more distant future. Another finding is that economic actors are not self-regarding, but rather in many circumstances are strong reciprocators who come to strategic interactions with a propensity to cooperate, respond to cooperative behavior by maintaining or increasing cooperation, and respond to free-riders by retaliating against the ‘offenders’, even at a personal cost, and even when there is no reasonable expectation that future personal gains will flow from such retaliation. We discuss some implications for policy analysis.     

The level of R&D spending in the variety-based endogenous growth model

We show that equilibrium endogenous growth may be excessive in the variety-based endogenous growth modelà la5 . This result is obtained by relaxing the assumption on the constant elasticity of the demand function for intermediate goods.     

Health,Social Insurance and Income

Health, a form of human capital, can be defined by longevity and physical wellbeing. Social policy decisions require an understanding of the factors that contribute to the creation of health inequalities. To learn more about socioeconomic variables and health capital, this paper examines the relationship between three key variables: health, social insurance, and income, for the Swedish population. Using a randomized research survey design, data from 3,600 participants of a larger Swedish study, conducted in 2005, was analyzed. A linear model of Three Stage Least Squares was chosen to correct for simultaneous bias in the Health, Social Insurance, and Income (HSI) Model. Findings confirm the importance of socioeconomic, behavioral and environmental factors in explaining health inequalities. The results clearly show men, educated people, nonsmokers, individuals that exercise and youngsters possess higher health status than other people. The dependency on social insurance is mainly caused by poor health; a higher degree of social insurance dependency was offset by income increases due to age and higher professional level.      

Reciprocity and economics in historical perspective

There is now compelling evidence to suggest that people respond in kind to helpful or hostile behaviour, so much so that some have been led to suggest that the subject of economic behaviour is not so much homo economicus as homo reciprocans. This recent interest in the phenomenon of reciprocity is part of a wider (and very welcome) rethinking of the basic attributes of the economic actor. On the basis of this recent work, economic theorising has moved some distance from the traditional modern-economic approach—an approach that simply assumes a strategically rational, egotistical actor and develops elaborate theorems therefrom—and towards a richer, more complex conceptualisation of the economic actor and her acts. On revisiting a remarkably similar debate that took place some 250 years earlier, however, we wonder whether this re-conceptualisation has yet moved far enough.