The Gravity of Intermediate Goods

Review of Industrial Organization - One of the puzzles of the gravity literature is the persistent effect of distance on trade flows, despite the dramatic fall in trade costs during the last few...     

Varieties of paternalism and the heterogeneity of utility structures

A principal source of interest in behavioral economics has been its advertised contributions to policies aimed at ‘nudging’ people away from allegedly natural but self-defeating behavior toward patterns of response thought more likely to improve their welfare. This has occasioned controversies among economists and philosophers around the normative limits of paternalism, especially by technical policy advisors. One recent suggestion has been that ‘boosting,’ in which interventions aim to enhance people’s general cognitive skills and representational repertoires instead of manipulating their choice environments behind their backs, avoids the main normative challenges. A limitation in most of this literature is that it has focused on relatively sweeping policy recommendations and consequently on strong polar alternatives of general paternalism and strict laissez faire. We review a real instance, drawn from a consulting project we conducted for an investment bank, of a proposed intervention that is more typical of the kind that economists are more often actually called upon to offer. In this example, the sophistication of current tools for preference attribution, combined with philosophical externalism about the semantics of preferences that makes it less plausible to attribute their literal self-conscious representation to people as propositional attitude content becomes more tightly refined, blocks applicability of the distinction between nudging and boosting. This seems to call for irreducible, context-specific ethical judgment in assessing the appropriateness of the forms of paternalism that economists must actually wrestle with in going about their everyday business.     

Costs and potential funding of expanded public pension coverage in Asia

Public pension burdens in most emerging Asian economies are still relatively small. However, there are a number of reasons to believe that they will increase markedly in the coming years. First, many Asian economies will face rapidly ageing populations, which will raise pension and other old‐age‐related spending dramatically. Second, as economies develop, political pressures to expand the coverage of public pensions and raise pension benefits will likely increase. The first objective of this paper is to identify the potential fiscal burden of public pensions in 23 emerging Asian economies, based on econometric models and forecasts of GDP and demographic trends. Using two different methodologies yields estimated increases in the average share of public pension expenditures in GDP of 1.0 percentage point and 3.6 percentage points by 2030 compared with current levels. We believe the latter estimate is more realistic. The second objective is to recommend policies to provide adequate funding for public pension needs, including enhancing the efficiency of social insurance programs, improving the balance of revenues and expenditures, implementing more explicit fiscal rules and frameworks, and establishing stronger fiscal surveillance at the national and regional levels.     

Measuring Employment Security in Europe Using Surveys of Employers

Using results from surveys in which employers were questioned about their freedom to shed staff, we develop a measure of employment security in Europe. We seek to identify which institutional factors are correlated with the responses of employers and find that they appear to reflect the strength of legal restrictions and trade unions and the prevalence of atypical employment. Our results are used to compile an index of employment security that has both a temporal and a cross‐country dimension.     

On the E-optimality of truncated block designs

Sufficient conditions are found for designs, derived from completely symmetric designs by deleting binary blocks, to be E-optimal. Sufficient conditions are also found for E-optimality of designs obtained from other E-optimal designs by deleting all blocks forming a balanced incomplete block design on a subset of the treatments. The results include many binary and non-binary designs for which E-optimality was previously unknown.     

Elicitation using multiple price list formats

We examine the properties of a popular method for eliciting choices and values from experimental subjects, the multiple price list format. The main advantage of this format is that it is relatively transparent to subjects and provides simple incentives for truthful revelation. The main disadvantages are that it only elicits interval responses, and could be susceptible to framing effects. We consider extensions to address and evaluate these concerns. We conclude that although there are framing effects, they can be controlled for with a design that allows for them. We also find that the elicitation of risk attitudes is sensitive to procedures, subject pools, and the format of the multiple price list table, but that the qualitative findings that participants are generally risk averse is robust. The elicitation of discount rates appear less sensitive to details of the experimental design. Electronic Supplementary Material Supplementary material is available in the online version of this article at . JEL Classification C9, D81, D91 An erratum to this article is available at .     

SERVCON: development and validation of a multidimensional service convenience scale

As customers have demanded greater convenience in service exchanges, researchers have responded by incorporating the convenience construct into their conceptual models and empirical studies, but a comprehensive, formally validated measure of convenience remains lacking. This study conceptualizes service convenience as a second-order, five-dimensional construct that reflects consumers’ perceived time and effort in purchasing or using a service. Service convenience dimensions are salient at different stages of the purchase decision process. Given this conceptualization, the study presents the development and validation of the SERVCON scale, a comprehensive instrument for measuring service convenience. The five dimensions are independent within a nomological network that illustrates distinct antecedent and consequent effects, and the results reinforce the multidimensional representation, offering insight into the distinctive relationships between each service convenience dimension and its antecedents, such as competitive intensity, and consequences, such as repurchase behavior. The findings help researchers and managers understand a fully conceptualized convenience construct and facilitate the measurement of convenience in future empirical studies.