Who is saving privately for retirement and how much? New evidence for Germany

Due to demographic change, the replacement rates of the German statutory pension scheme will decrease over the next decades. Voluntary savings for retirement will therefore increase in relevance as a method of maintaining one’s standard of living during retirement. This article examines the savings behavior for retirement on an individual level in Germany at the extensive as well as the intensive margin. First, the decision to save in general is analyzed, showing that the main determinants for saving are personal income and disposable household income. Furthermore, it is shown that migrants and individuals living in the Eastern part of Germany turn out to be less likely to have additional private savings. Second, the chosen gross saving rates are analyzed using a Tobit model, a log-normal hurdle model and a Type II Tobit model. The results suggest that the decision to save in general, as well as the saving rate, are independent of each other, leading to a loss of information if only a standard Tobit model is used. For example, higher personal income increases the probability to save for retirement, but decreases the resulting saving rate. Modeling both decisions separately thus, leads to a better understanding of the determinants of saving for old-age.     

Greenhouse gas abatement: How much? and Who pays?

Two basic questions that arise in international policy debates over greenhouse gas emission reduction are: (1) How much to control? and (2) Who pays? In this paper, we investigate the interdependence between these two issues. We characterize general conditions under which the Pareto-optimal environmental control will depend on the distribution of the cost burden among nations and provide a sufficient condition under which a Pareto optimum can be implemented by a market mechanism with tradable emission permits. However, numerical results suggest that the interdependence may be weak in a hypothetical negotiation between the OECD and the ROW (the rest of the world). The approach can be applied to more realistic cases with multiple regions.     

Regime security and taxation in autocracies: Who is taxed and how?

We study taxation by autocratic rulers. Using a detailed dataset on government finances in 105 autocracies from 1950 to 2004, we find that despotic autocrats, who are defined as personally concentrating all decision-making power and as not relying on elites for regime support, tend, with a middle class absent, to use lower personal income taxes in face of a threat of rebellion from the population-at-large and to use higher land and property taxes to financially repress elites. When the threat to the regime is from elites, taxation is the converse, with the tax burden on elites is relaxed. Our empirical results show how autocratic rulers choose forms of taxation with awareness of elites and the population-at-large as groups that can threaten regime security.     

Continuous-time mean–variance portfolio selection with only risky assets

We investigate in this paper a continuous-time mean–variance portfolio selection problem in a general market setting with multiple assets that all can be risky. Using the Lagrange duality method and the dynamic programming approach, we derive explicit closed-form expressions for the efficient investment strategy and the mean–variance efficient frontier. We provided a necessary and sufficient condition under which the global minimum variance is zero and there exists a risk-free wealth process. Our results reveal that, even if there is no risk-free asset in the market, there can still exist a risk-free wealth process, the global minimum variance can be zero, and the efficient frontier can be a straight line in the mean–standard derivation plane. In addition, we further prove the validity of the two-fund separation theorem.     

Corruption and re-election: how much can politicians steal before getting punished?

Can corruption be used to improve re-election chances of politicians in office? What is the optimal level of corruption for doing so? In this paper I use suspicious patterns of public procurement allocations in local government as a proxy measurement of corruption, based on combining quantitative and qualitative evidence on corrupt practices in local government. I then tie suspicious procurements to re-election probabilities of mayors in Croatian cities and municipalities from 2009 to 2017, and find that due to a rent-extracting relationship formed between firms and political elites, local politicians can engage in potential corruption and still win elections. There is an optimal level of suspicious procurements for which politicians maximize their re-election chances. When a mayor surpasses the cut-off level of around 20% of suspiciously allocated funds from public procurement his or her probability of re-election starts to decline, while he or she loses office for at least one half of all procurements allocated suspiciously. In order to address potential endogeneity issues I apply a fuzzy regression discontinuity design based on population thresholds that determine the size of the local council, where the intensity of the treatment (potential corruption) increases with increasing council size. The results overall confirm the hypothesized nonlinear relationship between corruption and re-election.     

Nursing overtime: why, how much, and under what working conditions?

To provide the best care to patients, the physical wellness of nursing staff is essential. Current evidence indicates long work hours can lead to adverse nurse and patient outcomes. To provide quality and safe patient care, both staff nurses and nurse managers need to recognize the adverse effects of overtime, whether it is mandatory or voluntary. Results of this study showed overtime was not used more when there was an increase in nursing shortages. Further, overtime was not used to control shortages; rather, understaffing was an underlying condition of the nursing practice, at least in the study sample. Thus, efforts must be made not only to prevent nurses from working long hours, but also to resolve the problem of understaffing in order to retain qualified nurses in hospitals.     

Human population dynamics revisited with the logistic model: how much can be modeled and predicted?

"We revive the logistic model, which was tested and found wanting in early-20th-century studies of aggregate human populations, and apply it instead to life expectancy (death) and fertility (birth)....For death...the logistic portrays the situation crisply. Human life expectancy is reaching the culmination of a two-hundred year-process that forestalls death until about 80 for men and the mid 80s for women. No breakthroughs in longevity are in sight unless genetic engineering comes to help. For birth, the logistic covers quantitatively its actual morphology. However, because we have not been able to model this essential parameter in a predictive way over long periods, we cannot say whether the future of human population is runaway growth or slow implosion...From a niche point of view, resources are the limits to numbers, and access to resources depends on technologies. The logistic makes clear that for homo faber, the limits to numbers keep shifting. These moving edges may most confound forecasting the long-run size of humanity."     

Whom do you distrust and how much does it cost? An experiment on the measurement of trust

We advance the measurement of trust in economics in two ways. First, we highlight the importance of clearly identifying the target of trust, particularly for obtaining concordance between attitudinal and behavioral measures of trust. Second, we introduce a novel behavioral measure of (dis)trust, based on individuals? willingness to pay to avoid being vulnerable to the target of trust. We conduct an experiment in which we vary the target of trust among passersby at several locations around a city, measuring both behavioral distrust and trust attitudes towards these varying targets. We find that subjects discriminate based on perceived characteristics of different targets in determining whether to trust, in a manner consistent with trust elicited using attitudinal measures and with actual trustworthiness. Risk aversion and altruism do not correlate highly with our measure of distrust.     

Social security and economic performance in Portugal: after all that has been said and done how much has actually changed?

This paper provides an empirical estimate of the macroeconomic effects of the Portuguese pay-as-you-go social security system based on data for the period 1970?C2007 and on VAR estimates using GDP, the unit cost of labor, the unemployment rate, the savings rate and social security spending. The major findings are twofold. First, growing social security spending has had detrimental effects on all of the private sector variables under consideration suggesting the existence of sizable inefficiencies. Second, these inefficiencies persist despite the successive reforms that took place over the last two decades. These results highlight the need for structural reforms of the pay-as-you-go system thereby addressing the sources of these inefficiencies, regardless of whether or not the system is financially sustainable. Furthermore, any reforms designed to address sustainability concerns cannot ignore these inefficiencies or risk making them even worse and thereby hindering the quest for sustainability itself.     

Beauty contested: how much of Keynes' remains in behavioural economics' beauty contests?

Abstract

In one of the most famous passages of the economic literature, John Maynard Keynes likens the stock market to a beauty contest (BC), in which the winners are those who anticipate the average opinion. In behavioural economics there have recently been attempts at investigating the BC experimentally. We argue that there exist important differences between Keynes' and behavioural economics' BCs. We identify several types of BCs and propose a taxonomy. We also suggest that, in spite of these differences, Keynes' theory of decision under uncertainty is central to understanding the actual behaviour observed in experimental BCs.     

The assumption of equal marginal utility of income: how much does it matter?

In most applied cost–benefit analyses, individual willingness to pay (WTP) is aggregated without using explicit welfare weights. This can be justified by postulating a utilitarian social welfare function along with the assumption of equal marginal utility of income for all individuals. However, since marginal utility is a cardinal concept, there is no generally accepted way to verify the plausibility of this latter assumption, nor its empirical importance. In this paper, we use data from seven contingent valuation studies to illustrate that if one instead assumes equal marginal utility of the public good for all individuals, aggregate monetary benefit estimates change dramatically.     

Who is Deprived? Who Feels Deprived? Labor Deprivation,Youth, and Gender in Morocco

The paper provides a method to better understand how objective conditions of deprivation are translated into subjective feelings of deprivation using a strand of the recent literature on relative deprivation, and applies this method to labor deprivation in Morocco. We postulate that gender norms are associated with identity and the reference group that people compare themselves with. We find that the reference group plays a pivotal role in understanding how feelings of labor deprivation are generated and this can explain the apparent mismatch between objective conditions of deprivation and subjective feelings of deprivation related to joblessness among young men and women. It can also potentially help governments design public policies that address objective conditions of deprivation, such as unemployment, with a better understanding of subjective implications.     

Who wins and who loses from state subsidies?

China is perceived to rely on subsidizing firms in targeted industries to improve their performance and stay competitive. We implement an approach that allows for the joint estimation of direct and indirect effects of subsidies on subsidized and non-subsidized firms. We find that firms that receive subsidies experience a boost in productivity. However, our approach highlights the importance of indirect effects, which are generally neglected in the literature. We find that, in general but not always, non-subsidized firms experience reductions in their productivity growth if they operate in a cluster where other firms are subsidized. These negative externalities depend on the share of firms that receive subsidies in the cluster. Aggregating direct and indirect effects into a (weighted) total effect shows that this negative indirect effect tends to dominate. We interpret our results in light of a simple heterogenous firm model, which highlights that subsidization in a competitive environment of firms may potentially harm non-subsidized firms.