Pension principles in the Swedish pension system

This article analyses the role of pension principles of funding and benefit provision for the development of the Swedish pension system. Focusing on four major public pension reforms in the twentieth century, it discusses why certain pension principles were used and under what circumstances they were more or less likely to change. The analysis shows that change was implemented to a large extent as a response to the previous pension system failing to fulfil its intended purpose in terms of financial stability, work incentives and redistribution.     

Innovation and performance – evidence at micro level

This empirical study aims to shed light on the link between innovation and economic performance at micro level. Based on a comprehensive survey among dairy and crop farms in the Netherlands we estimate a structural multi-stage model to deliver evidence on the effect of engagement and investment in innovation on the production of product, process and organizational or marketing innovations as well as on the effect of such innovations on farm level productivity. The results suggest various market and farm behaviour related factors to stimulate an increase in innovation engagement and production. Furthermore, the study reveals that indeed a greater innovation investment per unit (innovation input) leads to a higher probability of producing at least one successful product, process and/or organizational or marketing innovation (innovation output). The production of process and organizational or marketing related innovation leads to significant productivity gains. Various recommendations towards a more effective and efficient innovation policy are finally given.     

Automatic‐renewal contracts with heterogeneous consumer inertia

Automatic contract renewals are a common feature in consumer markets. Since these contracts renew automatically unless a consumer actively cancels, firms can use them to exploit consumer inertia. As a source of inertia I study limited attention and investigate how firms use contract renewal to sell to consumers with different degrees of inattention. In monopolistic markets, adverse selection of more‐attentive consumers limits the exploitation of naively inattentive consumers. When signing a contract, naively inattentive consumers overestimate their future probability to make an active cancellation decision. To exploit this mistake, the monopolist wants to target these consumers with large prices after contracts renew. These back‐loaded contracts, however, adversely attract more‐attentive consumers who cancel more often when choosing these exploitative contracts. To mitigate adverse selection, monopolists focus less on exploiting naively inattentive consumers. Adverse selection induces fewer consumer mistakes and can increase efficiency. I show that competition mitigates adverse selection, which induces firms to focus more on exploitation with more back‐loaded pricing. I discuss implications for recently implemented policies on automatic‐renewal contracts.     

The Success of the Nordic Countries as a Blueprint for Small Open Economies

To retain their leading position, the Nordics must invest in developing more sophisticated products than competing economies like Turkey. This applies to all complex economies, but constitutes a greater challenge to the Nordic countries with their comparatively small populations.     

Science and proven experience: a Swedish variety of evidence-based medicine and a way to better risk analysis?

A key question for evidence-based medicine (EBM) is how best to model the way in which EBM should ‘[integrate] individual clinical expertise and the best external evidence’. We argue that the formulations and models available in the literature today are modest variations on a common theme and face very similar problems when it comes to risk analysis, which is here understood as a decision procedure comprising a factual assessment of risk, the risk assessment, and the decision what to do based on this assessment, the risk management. Both the early and updated models of evidence-based clinical decisions presented in the writings of Haynes, Devereaux and Guyatt assume that EBM consists of, among other things, evidence from clinical research together with information about patients’ values and clinical expertise. On this A-view, EBM describes all that goes on in a specific justifiable medical decision. There is, however, an alternative interpretation of EBM, the B-view, in which EBM describes just one component of the decision situation (a component usually based on evidence from clinical research) and in which, together with other types of evidence, EBM leads to a justifiable clincial decision but does not describe the decision itself. This B-view is inspired by a 100-years older version of EBM, a Swedish standard requiring medical decision-making, professional risk-taking and practice to be in accordance with ‘science and proven experience’ (VBE). In the paper, we outline how the Swedish concept leads to an improved understanding of the way in which scientific evidence and clinical experience can and cannot be integrated in light of EBM. How scientific evidence and clinical experience is integrated influences both the way we do risk assessment and risk management. In addition, the paper sketches the as yet unexplored historical background to VBE and EBM.     

Attributional complexity of monoculturals and biculturals: Implications for cross-cultural competence

Cross-cultural Competence (CC) of managers in globally dispersed MNE affiliates is one of the most effective means to overcome the liability of foreignness. Although managers high in biculturalism may have more resources than monoculturals to acquire (and deploy) CC in mitigating liability of foreignness, this has not been adequately examined. We contribute by examining the influence of two new antecedents of CC –biculturalism and Attributional Complexity. In four studies, we find that these antecedents are related to CC, effectiveness outcomes, and show incremental value over established personality traits in predicting them. We discuss contributions, limitations, future directions, and managerial implications.     

Correlates and Consequences of the 1918 Influenza in South Africa

We study the demographic and economic correlates of the 1918 influenza or “Spanish flu” that killed an estimated 6% of South Africa's population. While the pandemic has received some attention in South African historiography and from social scientists in other contexts, little is known about its long-term impact on the country. Bringing together data from a range of new sources, including population and agricultural censuses, household surveys, and the voters’ rolls, we provide analyses that show, first, the factors that (do and do not) predict flu mortality across South Africa's magisterial districts, and, second, suggest some important consequences of the flu. Our results reveal a large but short-lived demographic shock, and detectable, if small scale, long-term economic consequences.     

ROBUST PORTFOLIOS AND WEAK INCENTIVES IN LONG‐RUN INVESTMENTS

When the planning horizon is long, and the safe asset grows indefinitely, isoelastic portfolios are nearly optimal for investors who are close to isoelastic for high wealth, and not too risk averse for low wealth. We prove this result in a general arbitrage‐free, frictionless, semimartingale model. As a consequence, optimal portfolios are robust to the perturbations in preferences induced by common option compensation schemes, and such incentives are weaker when their horizon is longer. Robust option incentives are possible, but require several, arbitrarily large exercise prices, and are not always convex.     

Public health insurance,individual health,and entry into self-employment

We investigate the impact of a differential treatment of paid employees versus self-employed workers in a public health insurance system on the entry rate into self-employment. Health insurance systems that distinguish between the two sectors of employment create incentives or disincentives to start a business for different individuals. We estimate a discrete time hazard rate model of entry into self-employment based on representative household panel data for Germany, which include individual health information. The results indicate that an increase in the health insurance cost differential between self-employed workers and paid employees by €10 per month decreases the probability of entry into self-employment by 1.7% of the annual entry rate. This shows that entrepreneurship lock, which an emerging literature describes for the system of employer-provided health insurance in the USA, can also occur in a public health insurance system. Therefore, entrepreneurial activity should be taken into account when discussing potential health-care reforms.