The Effect of Risk Context on the Value of a Statistical Life: a Bayesian Meta-model

This paper presents the first value of statistical life (VSL) meta-analysis that empirically estimates correction factors for ‘out of context’ benefits transfer (BT) purposes. In the field of mortality risk reductions elicited willingness to pay values in one risk context, say road safety, are frequently applied in other risk contexts like air pollution. However, differences in risk perception and the population at risk across contexts are likely to result in diverging VSL estimates. In a meta-analysis of 26 international stated preference studies, a Bayesian model is estimated regressing contingent values for mortality risk reductions, originating from three different risk contexts, on the characteristics of the risk reduction itself and additional variables characterizing the underlying studies. A willingness to pay (WTP) premium for mortality risk reductions in the air pollution and general mortality risk context relative to improving road safety is observed. Evaluated at the mean, road safety VSL estimates should be multiplied by a factor 1.8 before being applicable in the air pollution context. Moreover, in an illustrative BT exercise we find limited overlap in the set of context specific predictive VSL distributions. Consequently, ‘out of context’ BT results in a substantial over- or underestimation of the VSL.     

HOW IMPORTANT ARE ENDOGENOUS PEER EFFECTS IN GROUP LENDING? ESTIMATING A STATIC GAME OF INCOMPLETE INFORMATION

We quantify the importance of endogenous peer effects in group lending programs by estimating a static game of incomplete information. Endogenous peer effects describe how one's behavior is affected by the behavior of her peers. Using a rich dataset from a group lending program in India, our empirical analysis presents a robust finding of large peer effects. The preferred model suggests that the probability of a member making a full repayment would be 12 percentage points higher if all the fellow members were to make full repayment compared with a scenario in which none of the other members repay in full. We find that peer effects would be overestimated without controlling for unobserved group heterogeneity and that inconsistencies exist in the estimated effects of other variables without modeling peer effects and unobserved heterogeneity. Copyright © 2012 John Wiley & Sons, Ltd.     

Umgang mit Aggressionen

Herausforderndes Verhalten bei Demenz - Wenn Aggression, erh?hter Bewegungsdrang, starke Orientierungsprobleme, Selbst- und Fremdgef?hrdung oder andere „herausfordernde“ Verhaltensweisen auftreten, wird die Pflege und Begleitung von Demenzkranken als Belastung erlebt. Doch Pflegende stehen dem Problem nicht hilflos gegenüber. Eine interdisziplin?re Expertengruppe gibt mit ihren Empfehlungen ein Handlungsgerüst.     

Allocative efficiency of rural water supply – a globally flexible SGM cost frontier

This contribution investigates the efficiency of water suppliers in rural areas of East and West Germany. A non-radial measure of input specific allocative inefficiency is used to reduce the distributional dependency with respect to the inefficiency parameters. It is based on the demand system of a flexible cost function for the variable inputs labour, energy and chemicals modelled by applying a modified symmetric generalized McFadden functional form. Concavity restrictions, as required by economic theory, are imposed. The analysis reveals that efforts towards increasing suppliers’ allocative efficiency should focus on the relatively inefficient usage of the input chemicals. The input specific allocative model specification was found to be superior to the overall allocative specification.

Is more competition conducive to the macroeconomic performance in the euro area?

One of the main goals of the European Union, laid down, inter alia, in the Lisbon Strategy and in the “Europe 2020” Strategy, is to raise employment. One important means of supporting the creation of new jobs is to increase competition. In this paper, it is shown that on average the mark-up, i.e. the deviation of prices from marginal cost in the euro area still exceeds the levels observed in the UK and in the US. After completion of the Single Market Programme in 1993, the mark-up has declined in the euro area and even more in the UK. Nevertheless, there is a strong cross-country variation between Member States, with a particularly high mark-up ratio found for Italy. Panel estimations show that total factor productivity growth, labour productivity growth and the labour market performance in the euro area could be improved by reducing the mark-up. This could be achieved by a proper institutional design. More competition could indeed improve the macroeconomic performance.     

Optimal macroeconomic policies in a financial and economic crisis: a case study for Slovenia

In this paper, we study different and, in particular, “optimal” reactions of fiscal (and to some extent monetary) policies to the financial and economic crisis of 2007–2009 in Slovenia, a small open economy that is part of the Economic and Monetary Union (EMU). Using an econometric model of the Slovenian economy, we simulate the effects of the global crisis under the assumption of no-policy reactions, i.e. assuming that macroeconomic policies are conducted without attempting to deal with the effects of the crisis. Next, we study the possibilities of fiscal policy reducing or even annihilating the effects of the crisis. We also investigate the optimal reaction of fiscal policies based on the assumption that Slovenian policy-makers behave as though they were optimizing an objective function. We show that optimal policies call for only a very modestly active countercyclical role of fiscal policies. There are strong trade-offs between countercyclical fiscal policies and the requirements of fiscal solvency.     

How effective is European merger control?

This paper applies an intuitive approach based on stock market data to a unique dataset of large concentrations during the period 1990–2002 to assess the effectiveness of European merger control. The basic idea is to relate announcement and decision abnormal returns. Under a set of four maintained assumptions, merger control might be interpreted to be effective if rents accruing due to the increased market power observed around the merger announcement are reversed by the antitrust decision, i.e. if there is a negative relation between announcement and decision abnormal returns. To clearly identify the events' competitive effects, we explicitly control for the market expectation about the outcome of the merger control procedure and run several robustness checks to assess the role of our maintained assumptions. We find that only outright prohibitions completely reverse the rents measured around a merger's announcement. On average, remedies seem to be only partially capable of reverting announcement abnormal returns. Yet they seem to be more effective when applied during the first rather than the second investigation phase and in subsamples where our assumptions are more likely to hold. Moreover, the European Commission appears to learn over time.