Household survey data for research on well-being and behavior in Central Asia

This paper summarizes the micro-level survey evidence from Central Asia generated and analyzed in the period 1991–2012. We provide an exhaustive overview over all accessible individual and household-level surveys undertaken in Kazakhstan, Kyrgyzstan, Tajikistan, Turkmenistan and Uzbekistan – and of all academic papers published using these datasets. We argue that Central Asia is a fascinating region for the study of comparative economics given its dual experience of transition and development. However, the region is also understudied, in part due to lack of data, and especially due to a lack of panel data. We identify knowledge gaps derived from this lack of longitudinal surveys and suggest worthwhile areas for future research. Finally, we also present a new and novel individual-level panel dataset called “Life in Kyrgyzstan”.     

Willingness to pay for other species' well-being

Benefit-cost analysis of environmental policies typically focuses on benefits to human health and well-being. For other species, economists have attempted to measure human WTP for changes in the numbers of individuals for different types of wildlife, and to preserve biodiversity. When it comes to humans' WTP for improvements in the quality-of-life for other species, however, the evidence is limited. Morbidity and quality-of-life considerations may be particularly important to the task of valuing non-fatal harm to wildlife in the wake of an environmental disaster. We argue that the other species morbidity-reduction component of WTP should be calculated net of any “outrage” component associated with the cause of the harm. This net WTP is likely to be correlated with the premium that people are willing to pay for chicken products from birds for which the quality-of-life has been enhanced by improved animal welfare measures. This paper uses a conjoint choice stated preference survey to reveal the nature of systematic heterogeneity in preferences for “humanely raised” versus “conventionally raised” chicken. We also use latent class analysis to distinguish between two classes of people—those who are willing to pay a premium for humanely raised chicken, and those who are not.     

Saving rates and portfolio choice with subsistence consumption

We analytically show that a common across rich/poor individuals Stone-Geary utility function with subsistence consumption in the context of a simple two-asset portfolio-choice model is capable of qualitatively and quantitatively explaining: (i) the higher saving rates of the rich, (ii) the higher fraction of personal wealth held in risky assets by the rich, and (iii) the higher volatility of consumption of the wealthier. On the contrary, time-variant “keeping-up-with-the-Joneses” weighted average consumption which plays the role of moving benchmark subsistence consumption gives the same portfolio composition and saving rates across the rich and the poor, failing to reconcile the model with what micro data say.     

Medicaid managed care: effects on children's Medicaid coverage and utilization

We use data from the National Health Interview Surveys (NHIS) to measure the effects of the growth of Medicaid managed care on children. We examine both the probability that individual children were Medicaid-covered and their utilization of care. We find that managed care penetration has significant effects on the composition of the Medicaid caseload: Young children are less likely to be covered, while poor school-age children are more likely to be covered. When we examine coverage by race, we find that black children are less likely to be covered where Medicaid managed care organizations (MMCOs) are more prevalent. These lower Medicaid enrollment rates are linked to increases in the numbers of young children who go without any doctor visits in a year. These results suggest that it is important to examine the potential effects of changes in Medicaid on selection into the Medicaid program, rather than focusing exclusively on the effects of managed care on those who are enrolled. In addition, among those enrolled in Medicaid, higher managed care penetration is associated with an increase in the number of black children with chronic conditions who go without doctor visits, but with decreases in the number of Hispanic children and poor teens who go without care.     

Does the trust game measure trust?

Could altruism explain observed choices in the standard trust game? With dominant altruism, trustors would give more to poor trustees. However, we find trustors to give no more to poor than to rich trustees, confirming trust as the dominant motivation for “trust like” choices.     

Utility Representation of an Incomplete Preference Relation

We consider the problem of representing a (possibly) incomplete preference relation by means of a vector-valued utility function. Continuous and semicontinuous representation results are reported in the case of preference relations that are, in a sense, not “too incomplete.” These results generalize some of the classical utility representation theorems of the theory of individual choice and paves the way towards developing a consumer theory that realistically allows individuals to exhibit some “indecisiveness” on occasion. Journal of Economic Literature Classification Number: D11.     

The contracting value of tainted reports in cost reduction settings

While cost accounting is a well-developed discipline with a rich institutional past, it is criticized for being manipulable. This criticism is due, in part, to the existence of multiple, yet equally accepted cost allocation procedures or cost estimation techniques. Employing a principal-agent model, cost accounting is modeled as a menu of alternative methods which, conditional on agent effort, produce noisy, unbiased and independently distributed (i.e., equally defensible) measures from which a single realization is selected ex post as the report used to contract with the agent. Assuming that the report does not indicate which method produced it, the report modeled is “tainted” in that the lowest (most favorable to the agent) outcome is reported, where the “amount” of tainting corresponds to the menu's size. The paper identifies bright-line conditions where the principal's expected net payoff is independent of the amount of tainting, demonstrating that tainting does not necessarily affect the report's incentive value.     

Superstition and “lucky” apartments: Evidence from transaction-level data

Using a sample of apartment transactions during 2004–2006 in Chengdu, China, we investigate the impact of superstitions in the Chinese real estate market. Numerology forms an important component of Chinese superstitious lore, with the numbers 8 and 6 signifying good luck, and the number 4 bad luck. We find that secondhand apartments located on floors ending with “8” fetch, on average, a 235 RMB higher price (per square meter) than on other floors. For newly constructed apartments, this price premium disappears due to uniform pricing of new housing units, but apartments on floors ending in an “8” are sold, on average, 6.9 days faster than on other floors. Buyers who have a phone number containing more “8”’s are more likely to purchase apartments in a floor ending with “8”; this suggests that at least part of the price premium for “lucky” apartments arises from the buyers’ superstitious beliefs.     

Ecological sustainability in policy assessments: A wide-angle view and a close watch

We give a perspective from two practitioners on some of the challenges of addressing sustainability concerns in environmental policy assessments. We focus on the ecological dimension of sustainability, which is closely related to the concept of “ecosystem resilience.” First, we discuss several recent benefit-cost analyses conducted by EPA that illustrate many of the practical difficulties analysts have faced when attempting to assess the ecological benefits of proposed regulations. Next, we discuss the importance of increased coordination of policy assessments among offices and agencies that traditionally operate more or less independently. We conclude by using a stylized model to illustrate how using an “adaptive management” approach to designing and evaluating policies can help to avoid some of the limitations of standard policy assessments highlighted in this special section of Ecological Economics and elsewhere.     

An econometric analysis of cognitive impairment and healthcare utilization in the ageing population

The ageing population is a major concern for policy makers, with the ever-increasing strains placed on health budgets. One overlooked area of research is the impact that cognitive impairment (an early marker of potential dementia onset) has on the healthcare utilization of an ageing population. Based on the theoretical micro-economic foundations of healthcare demand, we study the relationship between cognitive functioning and impairment, measured by word recall and changes thereof, and healthcare utilization among over 50s in nine European countries. The contribution of this article is to produce estimates for cognitive functioning and impairment, as opposed to full dementia, in the context of healthcare utilization.

We apply regression models to healthcare utilization data from Waves 1, 2 and 4 of the Survey of Health, Ageing and Retirement in Europe and find that recalling one additional word is associated with a reduction in visits to a medical doctor of 0.32, per year (p<0.01). Even after controlling for self-assessed health, this association is strong at just over 0.1 visits – this is the additional impact, over and above the average number of visits for similar individuals without cognitive impairment.     

What drives international financial flows? Politics,institutions and other determinants

This paper uses a large panel of financial flow data from banks to assess how institutions affect international lending. First, employing a time varying composite institutional quality index in a fixed-effects framework, the paper shows that institutional improvements are followed by significant increases in international finance. Second, cross-sectional models also show a strong effect of initial levels of institutional quality on future bank lending. Third, instrumental variable estimates further show that the historically predetermined component of institutional development is also a significant correlate of international bank inflows. The results thus suggest that institutional underdeveloped can explain a significant part of Lucas [Lucas, Robert E. 1990. “Why Doesn't Capital Flow from Rich to Poor Countries?” American Economic Review (Papers and Proceedings), 80 (2): 92–96. 1990] paradox of why doesn't capital flow from rich to poor countries. The analysis also does a first-step towards understanding which institutional features affect international banking.     

Differentiating ambiguity and ambiguity attitude

The objective of this paper is to show how ambiguity, and a decision maker (DM)'s response to it, can be modelled formally in the context of a general decision model. We introduce a relation derived from the DM's preferences, called “unambiguous preference”, and show that it can be represented by a set of probabilities. We provide such set with a simple differential characterization, and argue that it is a behavioral representation of the “ambiguity” that the DM may perceive. Given such revealed ambiguity, we provide a representation of ambiguity attitudes. We also characterize axiomatically a special case of our decision model, the “α-maxmin” expected utility model.     

Transfer fee regulations in European football

We analyze the impact of three different transfer fee systems on payoffs, contract lengths, training and effort incentives in European football. The different regimes, being used until 1995 (“pre-Bosman”), currently in use (“Bosman”), and recently approved (“Monti”) differ with respect to the transfer fee an initial club is entitled to depending on whether a player has a valid contract or not. We show that the different systems differ only with respect to the contract length if the contract which maximizes the expected joint surplus of the initial club and the player is feasible under each system. Otherwise, regime P is strictly dominated by regime B in terms of expected social welfare. Regime M leads to higher effort but lower incentives to invest in training compared to system B.     

Product cycles among three regions with differential R&D abilities

I extend the North–South product cycle model of Grossman and Helpman [Grossman, G. and Helpman, E. (1991b), “Endogenous Product Cycles,” Economic Journal, 101, 1214–1229.] to a three-region model where the region Middle undertakes both innovating and imitating activities in a trading equilibrium. In contrast to Grossman and Helpman [Grossman, G. and Helpman, E. (1991b), “Endogenous Product Cycles,” Economic Journal, 101, 1214–1229.], I find that an expansion in the North's labor force or a rise in the productivity of the North's labor in the research sector incurs no effect on the rate of the South's imitation. Moreover, the long-run relative wage of a region can vary inversely with the size of that region.     

Classifying exchange rate regimes: Deeds vs. words

Most of the empirical literature on exchange rate regimes uses the IMF de jure classification based on the regime announced by the governments, despite the recognized inconsistencies between reported and actual policies in many cases. To address this problem, we construct a de facto classification based on data on exchange rates and international reserves from all IMF-reporting countries over the period 1974-2000, which we believe provides a meaningful alternative for future empirical work on the topic. The classification sheds new light on several stylized facts previously reported in the literature. In particular, we find that the de facto pegs have remained stable throughout the last decade, although an increasing number of them shy away from an explicit commitment to a fixed regime (“hidden pegs”). We confirm the hollowing out hypothesis but show that it does not apply to countries with limited access to capital markets. We also find that pure floats are associated with only relatively minor nominal exchange rate volatility and that the recent increase in the number of de jure floats goes hand in hand with an increase in the number of de facto dirty floats (“fear of floating”).     

The Nash-threats folk theorem with communication and approximate common knowledge in two player games

We show that the use of communications to coordinate equilibria generates a Nash-threats folk theorem in two-player games with “almost public” information. The results generalize to the n-person case. However, the two-person case is more difficult because it is not possible to sustain equilibria by comparing the reports of different players, and using these “third parties” to effectively enforce contracts.     

The political economy of global carbon emissions reductions

The discussion about what reductions in greenhouse gas emissions are required and how the emissions rights might be distributed globally has fostered the belief that there is a fundamental conflict between the rich nations of the “North” and the poor but populous nations of the “South.” The argument is that grandfathering the rights will only reinforce existing global inequalities, while per capita distribution of the rights would lead to such huge transfers of wealth to the South as to be unacceptable to the North. However, a very simple general equilibrium model highlighting key elements of the global economy shows that this perception is incorrect under a plausible interpretation of the goal of the United Nations Framework Convention on Climate Change to “avoid dangerous anthropogenic interference with the climate system.” Instead of using an economic damage function to determine the optimal level of emissions reductions, the model's utility functions are calibrated to reflect scientific understanding of what would be required to stabilize the atmosphere at safe concentrations of greenhouse gases. Among policy options that would accomplish this, the United States has a preference for grandfathering the allocation of emissions rights over a per capita allocation, but this preference is not strong and could be offset by other geopolitical considerations.     

Pollution and life expectancy: How environmental policy can promote growth

This article investigates the influence of environmental policy (EP) on growth in an AK-type growth model, when finite lifetime is introduced and the link between pollution and life expectancy (through the detrimental impact of pollution on health) is taken into account.Using an overlapping generations model à la Blanchard [Blanchard, O. (1985). Debt, deficits and finite horizon. Journal of Political Economy, 93:223-247], we demonstrate that finite lifetime introduces a “generational turnover effect” which modifies the influence of the EP on growth. Thus, when lifetime is finite and independent from pollution, we show that the “generational turnover effect” limits the detrimental impact of the EP on growth, if agents smooth their consumption over time. When pollution negatively influences life expectancy through health, we demonstrate that the “generational turnover effect” is magnified and that the EP and growth have an inverted U-shaped relationship in the steady-state. In this case, we show that the environmental policy is more likely to promote growth (i.e. it stimulates growth for a wider range of environmental taxes) when the impact of pollution on health is important and/or public expenditures in health are low. Finally, using numerical simulations, we find that for the value of parameters that we have chosen, the EP will be more likely to promote growth when agents smooth consumption over time.     

The structure of strategy-proof social choice — Part I: General characterization and possibility results on median spaces

We define a general notion of single-peaked preferences based on abstract betweenness relations. Special cases are the classical example of single-peaked preferences on a line, the separable preferences on the hypercube, the “multi-dimensionally single-peaked” preferences on the product of lines, but also the unrestricted preference domain. Generalizing and unifying the existing literature, we show that a social choice function is strategy-proof on a sufficiently rich domain of generalized single-peaked preferences if and only if it takes the form of voting by issues (“voting by committees”) satisfying a simple condition called the “Intersection Property.”Based on the Intersection Property, we show that the class of preference domains associated with “median spaces” gives rise to the strongest possibility results; in particular, we show that the existence of strategy-proof social choice rules that are non-dictatorial and neutral requires an underlying median space. A space is a median space if, for every triple of elements, there is a fourth element that is between each pair of the triple; numerous examples are given (some well-known, some novel), and the structure of median spaces and the associated preference domains is analysed.     

Technology transfer in the IT industry: A Korean perspective

Recently Korean Government announced ambitious IT strategy to establish Korea as one of leaders in world IT market. To implement this strategy, technology transfer from research lab to market should be successfully performed. This study is to identify factors influencing technology transfer and to examine contribution of these factors on success of technology transfer in Korean IT industry. Survey results show that technology project leaders evaluated “Concreteness of Technology” as the most influential factor for technology transfer, followed by “Communication Channels,” “Collaboration among Participants,” “Management Support,” “Government Support,” and “Incentives for Transfer.” Out of 135 technology transfer projects, respondents rated 33 projects as sustaining (28.44%), 38 as promoting (28.15%), 26 as demonstrating (19.26%), 27 in incubating (20.00%), and the remaining 7 in imaging stage (8.15%). This statistics means that 28.15% of technology transfer projects did not reach production stage. Regression analysis identifies that “Communication Channels,” “Management Support,” “Concreteness of Technology” “Sense of Common Purpose,” and “Awareness of Technology Transfer” were statistically significant in explaining success of technology transfer.