Trust, trustworthiness, and risk in rural Paraguay

This dissertation looks at the relationship between trust, trustworthiness, and risk aversion in a rural Paraguayan setting. The first chapter of this dissertation looks at theft between farmers. Rural areas of developing countries often lack effective legal enforcement. However, villagers who know each other well and interact repeatedly may use implicit contracts to minimize crime. I construct a dynamic limited-commitment model in which a thief cannot credibly commit to forego stealing from his fellow villagers but may be induced to limit his stealing by the promise of future gifts from his potential victim. Using a unique survey from rural Paraguay which combines traditional data on production with information on theft, gifts, and trust, as well as with experiments measuring trust and trustworthiness, I test whether the data is consistent with predictions from the dynamic model. The results provide evidence that, in contrast with predictions from a one-period model with an anonymous thief, farmers do implicitly contract with one another to limit theft. Farmers who have more close family members in their village give fewer gifts, and farmers with plots which are more difficult to steal from give fewer gifts, experience less theft, and trust more. Gift-giving increases when trust is lower and the threat of theft is greater, turning the social capital literature on its head. The second chapter of this dissertation looks at a different linkage between trust, trustworthiness, and risk. Trusting behavior in general and play in the traditional trust experiment specifically depend both on trust beliefs and on levels of risk aversion. I ran two experiments with a diverse set of subjects in fifteen villages of rural Paraguay, the traditional trust experiment and a new experiment measuring only risk aversion. I find that risk attitudes are highly predictive of play in the trust game. In addition, omitting risk aversion as a regressor in trust regressions significantly changes the coefficients of important explanatory variables such as gender and wealth. The chair of this dissertation committee was Ethan Ligon and the other committee members were George Akerlof and Elisabeth Sadoulet.     

Occupational Careers and Longitudinal Data: Tools and Perspectives of Research

Over the last years, the start of an increasing number of longitudinal researches and the development of suitable techniques of analysis have made possible the study of an increasing number of questions about social mobility and individual careers. Yet there is not just one way to face the study of careers. For the richness of the information they contain, longitudinal data offer the possibility to carry out different types of analysis according to the different questions of research. In this article four different approaches to the study of work-life careers will be introduced. The objective is twofold. On one hand, the study intends to offer a brief introduction to the most recent and sophisticated techniques that can be used for the analysis of careers. On the other hand, the article aims to point out the theoretical contribution that each technique can give to the debate on social mobility. The main potentialities and limits of the techniques will be stressed too.The techniques introduced in this article represent a fruitful approach for the study of work-life histories and occupational careers. Nevertheless they can be used for the analysis of all kinds of social careers.     

Disease management primer: managing dollars by managing disease

The costliest participants to treat are those with chronic and serious, acute conditions that are often preventable. Developing programs aimed at patients with chronic conditions could be the key to getting control of health care costs. Disease management programs seek to alleviate some of this expense by better managing chronic illnesses and improving the overall health care of employees.     

Unemployment insurance and the business cycle*

An equilibrium model is developed to study the interaction of the business cycle, unemployment insurance (UI), and the labor market for young men in Canada. The model combines optimal job offer, layoff, and recall decisions within a numerically solved and restricted Bayesian–Nash equilibrium. We consider the long‐run implications of changes made to unemployment insurance in Canada during the 1990s. The changes lead to equilibrium increases in average rates of unemployment, layoffs, and recalls. Eliminating UI lowers the equilibrium unemployment rate and average observed earnings. UI policy affects the timing of cycles of endogenous outcomes relative to the productivity cycle.     

Politics and institutions: European parliamentary technology assessment

This paper analyses, from an institutionalist perspective, the emergence, nature and ways in which parliamentary scientific and technological advice activities are carried out in different European countries. A diffusion process from the United Sates could be identified in the early times, but some local preconditions are also important for the adoption of these practices in Europe, as well as the existence of some political entrepreneurs willing to advance the initiatives within their respective political systems. We argue that the connection of technology assessment (TA) with the political process can only be understood if the former is regarded not only as an input in the decision-making process but also as a legitimising mechanism.Different models of arrangements of parliamentary TA (PTA) are identified, depending on the degree of inclusiveness of different actors in the TA process. The adaptation, consolidation and differential impact of these organizations are mediated by two factors: the capacity of PTA organizations to gain support, both inside and outside the Legislature, and their capacity to access decision makers in an environment of competition with other organizations that also produce TA. Models of PTA have both types of these capacities in differing degrees. It is argued that differences in the potential impact of TA activities in the different countries are to be analysed in the context of the rules of the political game and the types of incentives that TA organizations face. The degree of autonomy/dependence and exclusivity/nonexclusivity of the assessment for the parliaments are essential for understanding the diversity of impacts.     

Slow boom, sudden crash

Many asset markets exhibit slow booms and sudden crashes. This pattern is explained by an endogenous flow of information. In the model, agents undertake more economic activity in good times than in bad. Economic activity generates public information about the state of the economy. If the economic state changes when times are good and information is abundant, asset prices adjust quickly and a sudden crash occurs. When times are bad, scarce information and high uncertainty slow agents’ reactions as the economy improves; a gradual boom ensues. Data from U.S. and emerging credit markets support the theory.     

Long memory and mean reversion in real exchange rates in Latin America

This article examines the long-run Purchasing Power Parity (PPP) hypothesis for 12 Latin American Real Effective Exchange Rates (REERs) using fractional integration techniques. The empirical results, applying parametric approaches, provide evidence of mean reversion in the REERs in the cases of Nicaragua, Belize, Costa Rica, Guyana and Paraguay and lack of it for the remaining seven countries. Employing semiparametric methods, the evidence of mean reversion covers the following countries: Belize, the Dominican Republic, Ecuador and Mexico. Thus, only for Belize and Guyana do we obtain consistent evidence of mean reversion in the real exchange rates. At the other extreme, lack of mean reversion, and thus, lack of PPP, is obtained with both methods in Bolivia, Brazil, Colombia and Venezuela. For the remaining six countries, the results are ambiguous. The results for the PPP theory in Belize and Guyana may show the importance of promoting policies based on exchange rate flexibility and economic liberalization to reach a long-run stability scenario that leads to greater international competitiveness and lower external vulnerability.     

A Nonparametric Revealed Preference Approach to Measuring the Value of Environmental Quality

We develop an approach to valuing non-market goods using nonparametric revealed preference analysis. We show how nonparametric methods can also be used to bound the welfare effects of changes in the provision of a non-market good. Our main context is one in which the non-market good affects the marginal utility of consuming a related market good. This can also be framed as a shift in the taste for, or quality of, the market good. A systematic approach for incorporating quality/taste variation into a revealed preference framework for heterogeneous consumers is developed. This enables the recovery of the minimal variation in quality required to rationalise observed choices of related market goods. The variation in quality appears as a adjustment to the price for related market goods which then allows a revealed preference approach to bounding compensation measures of welfare effects to be applied.