Modernization,inter-caste marriage,and dowry: An analytical perspective

As economic growth and development occurs in India, it has been thought that dowry would decline as an institution. However, the practice of dowry has rapidly spread to regions in India where previously it was not extensively practiced and dowry inflation may be occurring. In this paper, a simple analytical model of dowry, based upon caste determined status differentials, is developed. The model assumes that some inter-caste marriage occurs. The implications of the model are that gross dowry inflation is fueled by economic growth, but net dowry remains unchanged. More importantly, unequal growth stimulates an expansion of the practice of dowry to lower castes.     

Politically Determined Income Inequality and the Provision of Public Goods

Political processes may bring about Pareto improvements by increasing income inequality in a society that produces a public good by voluntary contributions. Proportional taxation funds a “governing agent.” The most endowed agent is the Condorcet winner for governing agent. When the tax rate can also be chosen by a vote, the ideal point of the agent with median initial endowment is the Condorcet winner under Cobb–Douglas utility. If Pareto improvements are possible, this ideal point corresponds to Pareto improvement. Pareto improvement may also be possible, even when a Leviathan set taxes, if there is deadweight loss from taxation. Pareto improvements are indeed always possible in “large” societies. On the other hand, no improvements may be possible if the initial distribution of wealth is very unequal in a “small” society, and Condorcet winners may not exist for other utility functions.     

The role of takeovers in increasing efficiency

This paper extends the limited number of studies that examine whether the threat of takeovers serves as an efficiency-enforcement mechanism. A nonparametric programming approach is utilized to construct a measure of overall efficiency that is decomposed into technical and allocative components. Utilizing three inputs and five outputs, measures of efficiency are constructed for a sample of 578 banks from states that permit acquisitions and states that do not. The results indicate that, on average, banks that are subject to takeovers tend to be more efficient Furthermore, the lack of threat of takeovers appears to induce inefficiencies that are technical in nature. The evidence lends support to the hypothesis that the threat of takeovers improves efficiency in firms.     

The limitations of decentralized world redistribution: An optimal taxation approach

A centralized scheme of world redistribution that maximizes a border-neutral social welfare function, subject to the disincentive effects it would create, generates a drastic reduction in world consumption inequality, dropping the Gini coefficient from 0.69 to 0.25. In contrast, an optimal decentralized (i.e., with no cross-country transfers) redistribution has a miniscule effect on world income inequality. Thus, the traditional public finance concern about the excess burden of redistribution cannot explain why there is so little world redistribution.Actual foreign aid is vastly lower than the transfers under the simulated world income tax, suggesting that voluntary world transfers - subject to a free-rider problem - produces an outcome that is consistent with rich countries such as the United States either placing a much lower value on the welfare of foreigners, or else expecting that a very significant fraction of cross-border transfers is wasted. The product of the welfare weight and one minus the share of transfers that are wasted constitutes the implicit weight that the United States assigns to foreigners. We calculate that value to be as low as 1/2000 of the value put on the welfare of an American, suggesting that U.S. policy is consistent with social preferences that place essentially no value on the welfare of the citizens of the poorest countries, or that implicitly assumes that essentially all transfers are wasted.     

EFFECTIVE PERSUASION

Do elementary statistics or equilibrium theory deliver any insight regarding how we should argue in debates? We provide an answer in a model in which each discussant wants to convince the audience that a specific state holds. If the discussants' payoffs in the audience's posterior are concave above and convex below the prior and exhibit loss aversion, then the leading discussant should give precedence to the weaker argument, and the follower should respond to a weak argument weakly and to a strong argument strongly. Such characterizations are also obtained for the case of choosing between independent and correlated arguments.