Richard H. Thaler — Wirtschaftsnobelpreisträger 2017

Richard H. Thaler was awarded this year’s Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel “for his contributions to behavioural economics”. He studied systematic departures of human behaviour from the standard “homo oeconomicus” assumption. His famous work on boundedly rational behaviour considers both cognitive limitations and limited self-control. The cognitive limitations he studied are in particular the endowment effect, i.e. the observation that individuals assign a higher value to an object if they possess it, and mental accounting, a collection of theories regarding how individuals think about money. Furthermore, he provided path-breaking evidence on the nature of social preferences, which laid the groundwork for the development of several widely used economic theories incorporating altruism, fairness and reciprocity.     

Do professional forecasters behave as if they believed in the New Keynesian Phillips Curve for the euro area?

This paper finds that participants in the European Central Bank’s Survey of Professional Forecasters have submitted forecasts that are consistent with a (mostly forward-looking) empirical version of the New Keynesian Phillips Curve for the euro area. The estimation technique takes advantage of the panel nature of the Survey of Professional Forecasters’ dataset to exploit both its time series and cross-section dimensions, and to control for unobservable individual heterogeneity across forecasters. The estimation results suggest that euro-area inflation forecasts have reacted less to unemployment forecasts after the start of the financial crisis but another cost measure (energy inflation) remains significant. This finding is consistent with a flatter Phillips Curve in the euro area after 2007. However, the reasons suggested by the International Monetary Fund for this finding, namely a better anchoring of inflation expectations and increases in structural unemployment do not seem to find support in the survey data. Instead, the expectations for compensation per employee submitted by professional forecasters are consistent with the existence of downward real-wage rigidities in euro-area labour markets.     

Impacts of Jumps and Stochastic Interest Rates on the Fair Costs of Guaranteed Minimum Death Benefit Contracts

The authors offer a new perspective to the field of guaranteed minimum death benefit contracts, especially for simple return premium and rising floor guarantees. A particular feature of these contracts is a guaranteed capital upon the insured's death. A complete methodology based on the generalized Fourier transform is proposed to investigate the impacts of jumps and stochastic interest rates. This paper thus extends Milevsky and Posner (2001). If jumps alone are considered, similar results are obtained, but, when stochastic interest rates are introduced, the fair costs of the guarantee feature are found to be substantially higher in this more general economy.     

Measuring the Impact of Socio-Economic Factors on School Efficiency in Australia

This paper examines the productive efficiency of government schools in New South Wales (NSW) in Australia. The study uses a technical inefficiency effects model applied to a unique three-year panel dataset containing 1235 primary and 371 secondary schools in NSW. A stochastic frontier production function and an inefficiency effects function that control for school socioeconomic and environmental factors are estimated. The dataset contains information on various school inputs, school expenditures by major functional area, parental socioeconomic characteristics, student characteristics, and standardized test scores. We examine the degree to which school and non-school educational inputs influence student achievement scores and find that, overall, primary schools are 88.6% and secondary schools 96.4% efficient. The index describing community socio-educational advantage has the most significant influence on students’ achievement scores.     

Export survival and the dynamics of experience

This paper focuses on developing countries’ pioneer exports to the OECD and obtains several important results on export dynamics, linking export experience and export survival. Using product level data at the SITC 5-digit level for 114 developing countries over the 1962–2009 period, we show that prior export experience obtained in non-OECD markets significantly increases survival of pioneer exports toward the OECD. The experience does not need to last long, as gaining experience for more than two years does not confer any additional benefit. The effect of experience depreciates rapidly with time: a break in export experience prior to entering the OECD reduces the advantage on survival. Finally, the role of prior export experience is particularly relevant for survival in the first two years upon entry into the OECD. The geographic dynamic of export experience reveals that experience is acquired in neighboring, easy to access markets before reaching more distant, richer partners and ultimately serving the OECD with a higher probability of survival.     

Fighting Capital Flight in Africa: Evidence from Bundling and Unbundling Governance

This study investigates the effect of governance on capital flight by bundling and unbundling governance. The empirical evidence is based on 37 African countries for the period 1996–2010 and the Generalised Method of Moments. Governance is bundled by principal component analysis, namely: (i) political governance from political stability and ‘voice and accountability’; (ii) economic governance from government effectiveness and regulation quality and (iii) institutional governance from corruption-control and the rule of law. The following findings are established. (i) Political stability and ‘voice and accountability’ reduce capital flight while the collective effect of political governance is not significant. (ii) Economic governance increases capital flight whereas the individual effects of regulation quality and government effectiveness are not significant. (iii) Corruption-control and institutional governance negatively affect capital flight whereas the impact of the rule of law is not significant. (iv) Taken together, Corruption-control is the most effective governance weapon in the fight against capital flight. (v) Priority in the Washington Consensus is more effective at fighting capital flight compared to the Beijing Model. Policy implications are discussed.     

HOW ENDAs EXTEND THE WORKWEEK: LEGAL PROTECTION AND THE LABOR SUPPLY OF BEHAVIORALLY GAY MEN

Employment Nondiscrimination Acts (ENDAs) have received much political attention in the recent past. Despite the political attention, very little research has investigated the impact of ENDAs. I analyze the impact of ENDAs on labor supplies, which is under‐researched in the policy analysis literature. My work is the first to investigate the labor supply patterns of behaviorally gay men using data that are representative of the entire behaviorally gay population. I show that ENDAs motivate behaviorally gay men to work roughly 15–20 h more per week and increase the probability that behaviorally gay men will supply any labor by approximately 7%. These results suggest that ENDAs increase the labor supply of behaviorally gay workers by increasing workplace tolerance of homosexuality. (JEL J2, J7, J1)