baseline value specification and sensitivity analysis in multiattribute project portfolio selection abstract a key issue in applying multi attribute project portfolio models is specifying the baseline value a parameter which defines how valuable not implementing a project is relative to the range of possible project values in this paper we present novel baseline value specification techniques which admit incomplete preference statements and unlike existing techniques make it possible to model problems where the decision maker would prefer to implement a project with the least preferred performance level in each attribute furthermore we develop computational methods for identifying the optimal portfolios and the value to cost based project rankings for all baseline values we also show how these results can be used to i analyze how sensitive project and portfolio decision recommendations are to variations in the baseline value and ii provide project decision recommendations in a situation where only incomplete information about the baseline value is available

specific experience household structure and intergenerational transfers farm family land and labor arrangements in developing countries data from indian rural household survey was used to test th hypothesis that the coexistence in traditional rural societies of extended intergenerational families infrequent land sales and high reliance on family members as farm laborers is the result of the economic advantages which accrue from the knowledge gained by farming a particular ploy of land over a long period of time the land specific experience of elderly members of a intergenerational household who farmed the land as a child and then as an adult are expecially critical in adverse weather years most previous investigators attributed the existence of multigenerational households the use of family members rather than hired laboreds and the infrequency of land sales to deficiencies in the market i e labor market imperfections and an absence of capital insurance and asset markets in the present investigations these same characteristics are viewed as having an economic advantages a model for estimating the contribution of the experience of the elderly household members to agricultural profits was developed and applied to data from a 3 year panel study of 2900 indian rural farm households the data was collected between 1968 71 by the national council of applied economic research the survey collected information on farm profits farm inputs demographic characteristics and the effects of weather conditions on profits a major limitation of the study was a lack of information on the duration of land ownership age of household members was substituted as a proxy for duration of ownership findings were consistent withe the hypothesis in poor agricultural years gross returns for households which contained an elderly household member were greater than the gross returns for comparable households which did not contain an elderly member the economic advantages of specific knowledge embodied in the experienced elderly farmer were comparable to the economic advantages which accrued to households whose members were more educated the hypothesis cannot fully explain the existence of intergenerational families since there is a relatively large proportion of such families among nonfarm families in many countries including india findings suggest that intergenerational families may provide for more occupational diversity and thereby reduce income risks the specific experience hypothesis has policy implications if technological changes are introduced the value of specific experience may be lost and the frequency of intergenerational households may decline the hypothesis may also explain why farmers are reluctant to agree to land redistribution and consolidation schemes this reluctance may disappear after sufficient technological change has occurred

international portfolio choice and political instability risk a multi objective approach abstract the benefits derived from international portfolio diversification into foreign nations including the less developed countries are well documented yet this practice is discouraged due to market imperfections such as political instability in practice nations may be differentiated further by many aspects such as border controls or political and social trends which constrain private transactions and financial decisions this paper attempts to examine 1 whether the home asset bias in a portfolio holding is associated with higher political instability risk and 2 to what extent international diversification among stocks in the presence of such risk outperforms domestic stock portfolios using alternative instability risk proxies in the context of a discrete time version of mean variance framework we corroborate the impact of this type of risk on international portfolio investment decisions

portfolio optimization with stochastic dominance constraints abstract we consider the problem of constructing a portfolio of finitely many assets whose return rates are described by a discrete joint distribution we propose a new portfolio optimization model involving stochastic dominance constraints on the portfolio return rate we develop optimality and duality theory for these models we construct equivalent optimization models with utility functions numerical illustration is provided

child fostering in africa when labor and schooling motives may coexist abstract the paper proposes a theoretical framework for understanding purposive child fostering in africa whereby a non orphaned child is sent to live temporarily with relatives in the model adults decide whether to foster in or out a child in conjunction with other household choices e g own time allocation between market and non market activities children s amount of work and schooling by allowing for positive externalities from fostering and thus asymmetric motives for fostering in labor and out human capital the proposed framework predicts that school age children are sent to better off households and that some families may foster in and out simultaneously the model identifies the conditions under which all actors involved children included may benefit from fostering arrangements but also points to situations where fostering may become an opportunity to marginalize a subset of children the paper aims to provide a sound theoretical foundation that sheds light on why there exists mixed empirical evidence on the effects of fostering on children s well being and cautions against demonizing non parent residence as unequivocally detrimental to children

ex ante and ex post labor supply response to risk in a low income area abstract this paper tests for ex ante and ex post labor supply responses to weather risk for rural indian farm households the analysis uses panel data on 2115 households spanning 13 states in rural india merged with a 22 year series of district level rainfall data ex ante households facing riskier distributions of rainfall are more likely to participate in the labor market ex post unexpectedly bad weather and low rainfall increase labor force participation

remittances and household wealth after conflict a case study on urban burundi few studies have researched the use of remittances in conflict affected contexts this study analyzes unique data from burundi testing three hypotheses relative deprivation investment and insurance derived from new economics of labor migration studies employing propensity score matching results show that remittances are common among wealthier households rejecting the relative deprivation hypothesis remittances have strong effects on non productive assets such as living conditions and food security and weak effects on productive assets such as asset ownership poorer households invest mostly in non productive assets suggesting that remittances are insurance for the poor whereas wealthier households seem largely unaffected by remittances

the economics of poverty traps and persistent poverty an asset based approach abstract longitudinal data on household living standards open the way to a deeper analysis of the nature and extent of poverty while a number of studies have exploited this type of data to distinguish transitory from more chronic forms of income or expenditure poverty this paper develops an asset based approach to poverty analysis that makes it possible to distinguish deep rooted persistent structural poverty from poverty that passes naturally with time due to systemic growth processes drawing on the economic theory of poverty traps and bifurcated accumulation strategies this paper briefly discusses some feasible estimation strategies for empirically identifying poverty traps and long term persistent structural poverty as well as relevant extensions of the popular foster greer thorbecke class of poverty measures the paper closes with reflections on how asset based poverty can be used to underwrite the design of persistent poverty reduction strategies

vulnerability of victims of civil conflicts empirical evidence for the displaced population in colombia summary internal conflicts and the forced displacement often caused by such conflicts impose a heavy burden on the civilian population and greatly damage a community s overall welfare the present study employs a household level survey administered to 2 322 colombian displaced households to estimate changes in household welfare after displacement and to assess aggregate consumption levels in destination sites we also assess whether households are able to smooth consumption and we analyze the strategies they are compelled to adopt in order to cope our results indicate that victims of civil conflict face difficulties in generating income are unable to rely on usual risk sharing mechanisms and are forced to draw upon costly coping strategies in order to smooth consumption the vulnerability of displaced households and the possibility of falling into poverty traps highlight the need to design and implement specific policies for victims of internal conflict in order to cope with the displacement shock

parental human capital investment and old age transfers from children is it a loan contract or reciprocity for indonesian families abstract this paper proposes two alternative models of intergenerational transfers linking parental investment in human capital of children to old age support the first model formulates these transfers as a pure loan contract and the second model as self enforcing reciprocity both models predict neutrality of intergenerational redistribution of resources within the family also known as the difference in income transfer derivatives property two models however provide different reasons for the failure of this property and yield different policy implications for parental human capital investment and provision of old age support specification tests on the indonesian family life survey data reject the pure loan model in favor of the reciprocity model the estimated difference in income transfer derivatives for this data is found to be significantly higher than the difference estimated by altonji hayashi and kotlikoff altonji et al 1992 altonji j g hayashi f and kotlikoff l j 1992 is the extended family altruistically linked direct tests using micro data the american economic review vol 82 5 1177 98 for the u s psid data

precautionary behavior migrant networks and household consumption decisions an empirical analysis using household panel data from rural china abstract we develop a test of precautionary behavior in the consumption decisions of rural agricultural households among surveyed households facing a median level of consumption risk 10 of savings can be attributed to a precautionary motive and this increases to 15 for households with consumption per capita below the poverty line we next use distant lags of local rainfall shocks uncorrelated with current consumption growth to identify the size of migrant networks outside the village and then present evidence that both poor and nonpoor households engage in less precautionary saving as the size of the village migrant network increases

who gets the job referral evidence from a social networks experiment we use recruitment into a laboratory experiment in kolkata india to analyze how job networks select individuals for employment opportunities we present evidence that individuals face a tradeoff between choosing the most qualified individual for the job and the individual who is ideal from the perspective of their social network the experiment allows randomly selected subjects to refer members of their social networks to subsequent rounds of the experiment and varies the incentive schemes offered to these participants we find that when faced with performance pay individuals are more likely to refer co workers and less likely to refer family members high ability participants who are offered performance pay recruit referrals who perform significantly better on a cognitive ability task and also prove to be more reliable as evidenced by their choices in the trust game and performance on an effort task

the crowding out effect of formal insurance on informal risk sharing an experimental study abstract this paper investigates the crowding out effect of formal insurance on informal risk sharing arrangements via theory and laboratory experiment our model and simulation predict that the crowding out of private transfers is often more than one for one and will reduce the total risk coverage furthermore the existence of a moderate degree of altruism exaggerates the crowding out effect especially when there is an ex ante income inequality these predictions are mostly supported by the laboratory experiment except that the crowding out effect is not more than one for one and hence the total risk coverage is not significantly reduced by formal insurance

a portfolio model for siting offshore wind farms with economic and environmental objectives abstract siting offshore wind farms is a complex problem due to the wake interactions between wind farms we develop a profit maximizing portfolio model based on underlying network models to track the wake effects through a series of wind farms our portfolio model optimizes the siting of wind farms considering multiple wind directions and wind speeds and performs better than simple decision heuristics excluding sites from the portfolio has nonlinear impacts on the profitability of the portfolio of sites in that areas excluded from consideration have greater impacts on profit if they are grouped together or aligned parallel to the prevailing wind direction the model can be readily adapted to include additional cost factors

storm damage and risk preferences panel evidence from germany individuals risk preferences may change after experiencing external socio economic or natural shocks theoretical predictions and empirical studies suggest that risk taking may increase or decrease after experiencing shocks so far the empirical evidence is sparse especially when it comes to developed countries we contribute to this literature by investigating whether experiencing financial and health related damage caused by storms affects risk preferences of individuals in germany using unique panel data we find that household heads were more risk seeking after they experienced storm damage we do not find evidence of exposure to storm per se regardless of damage experience which suggests that household heads have to suffer damage for their risk preferences to be affected these results are robust across a battery of alternative model specifications and alternative storm damage measures magnitude of financial damage we rule out other potential explanations such as health related and economic shocks the self reported storm damage data is broadly confirmed by regional storm damage data provided by the insurance industry while we cannot identify the channels through which experiencing storm damage affects risk preferences from our data we suggest and discuss some potential channels the results may have important policy implications as risk preferences affect for instance individuals savings and investment behaviour adoption of self protection and self insurance strategies and technology adoption

assortative matching and risk sharing abstract this paper explores the sorting patterns in a two sided matching market where agents facing different risks match to share them when preference belongs to the class of harmonic absolute risk aversion hara the risk premium is perfectly transferable within each partnership thus a stable match minimizes the social cost of risk in the systematic risk model where agents are ranked by their holdings of a common risky asset the convexity of the joint risk premium in joint risk size leads to negative assortative matching nam in the idiosyncratic risk model where agents are ranked by their independent riskiness in the sense of second order stochastic dominance ssd nam arises when preference exhibits decreasing absolute risk aversion dara in the sense of ross and riskier background risk leads to more risk averse behavior however nam may fail to arise when riskier background risk leads to more risk tolerant behavior

periodic high risk as a cause of fertility decline in a changing rural environment survival strategies in the 1980 1983 south indian drought in the attempt to explain persistent high fertility in much of the third world attention has been drawn both to current returns from child labor and to the mitigation or avoidance of future risks the latter can be subdivided into meeting emergencies while the parental generation is still of working age and providing for old age or even safeguarding the transmission of family property on parental death the problems of old age have recently received most attention and they may well be of paramount importance in many societies yet in a research program that we have conducted in rural south india since 1979 the reasons given for demographic behavior have more frequently emphasized the need to plan strategies to meet periodic crisis than to ensure old age support 2 nevertheless one should not underemphasize the latter merely because the problem is predictable and the solutions understood in the study area for the great majority of the aged the support system still worked well 3 in contrast in our investigations of marriage fertility control and education we repeatedly discovered that a fundamental consideration with regard to parental decisions in these areas was to strengthen the ability of the family to withstand periodic crises 4 by far the most important type of crisis in this dry drought prone area was recurrent famines resulting

on the economics of nonmarket transfers the role of altruism abstract we examine altruistically motivated consumption transfers in an effort to account for nonmarket transfers we find that altruistic linkages lead to autonomous negotiation free transfers and that such transfers positively respond to stronger altruism we also find that given fairly natural assumptions concerning the altruism parameters mutual altruism does not necessarily result in group social harmony even though its rise narrows the conflict range in spite of enhanced transfers prompted by such a rise both parties may end up worse off these results help explain why in some social environments a shift toward market oriented transfers and exchanges may be quicker than in others as the disadvantages decline in utility associated with intragroup altruistic linkages outweigh the advantages

bayesian estimation of the global minimum variance portfolio in this paper we consider the estimation of the weights of optimal portfolios from the bayesian point of view under the assumption that the conditional distribution of the logarithmic returns is normal using the standard priors for the mean vector and the covariance matrix we derive the posterior distributions for the weights of the global minimum variance portfolio moreover we reparameterize the model to allow informative andnon informative priors directly for the weights of the global minimum variance portfolio the posterior distributions of the portfolio weights are derived in explicit form for almost all models the models are compared by using the coverage probabilities of credible intervals in an empirical study we analyze the posterior densities of the weights of an international portfolio

finance dominated capitalism and re distribution of income a kaleckian perspective in this article a major channel through which financialisation or finance dominated capitalism affects macroeconomic performance is examined the distribution channel empirical data for the following dimensions of re distribution in the period of finance dominated capitalism since the early 1980s is provided for 15 advanced capitalist economies functional distribution personal household distribution and the share and the composition of top incomes based on the kaleckian approach to the determination of income shares the effects of financialisation on functional income distribution are studied in more detail some stylised facts of financialisation are integrated into the kaleckian approach and by means of reviewing empirical and econometric literature it is found that financialisation and neoliberalism have contributed to the falling labour income share since the early 1980s through three main kaleckian channels 1 a shift in the sectoral composition of the economy 2 an increase in management salaries and rising profit claims of the rentiers and thus in overheads and 3 weakened trade union bargaining power

motivations to remit evidence from botswana in this article a theory of motivations to send remittances is described and tested with data from botswana altruism is one of the motivations tested and found to be an insufficient explanation for remittances among migrants in botswana a refinement of the model stipulates a modified altruism or enlightened self interest in this model the relationship between the migrant and family is tempered by an implicit understanding of mutual benefit the household strategy may be to encourage some members to migrate as a means of spreading risk and sharing gains the household strategy is similar to an insurance policy where migration is to places where market potential is high the risks incurred might be high the example is given of migration during a drought in botswana migrant remittances were greater in households with more cattle or households with more to lose drought alone was not statistically related to remittances increases in remittances were related to increased levels of education it is suggested that repayment was the motive for parents investment in migrants education migrants gains are identified as the potential for an inheritance the security of channeling investments through a trusted family member and security in having a home to return to it is pointed out that the altruism and family remittances from urban migration were strategies that bridged the simple dynamic of either urban development or rural development impacting on family welfare it is suggested that household models of economy adopt some measure to express the relationship of household wealth to remittances from urban migrants

financialisation and capital accumulation in the non financial corporate sector a theoretical and empirical investigation on the us economy 1973 2003 recent research has explored the growing financialization process in the u s and other advanced economies the term is a catch all phrase used to denote important changes in the structure of non financial corporations balance sheets including the growth of income from financial subsidiaries and investment as well as growth in the transfer of earnings to financial markets in the forms of interest payments dividend payments and stock buybacks this paper seeks to empirically explore the relationship between financialization in the u s economy and real investment at the firm level using data from a sample of non financial corporations from 1973 to 2003 i find a negative relationship between real investment and financialization first increased financial investment and increased financial profit opportunities may have crowded out real investment by changing the incentives of firm managers and directing funds away from real investment second increased payments to the financial markets may have impeded real investment by decreasing available internal funds shortening the planning horizons of the firm management and increasing uncertainty these two channels can help explain the negative relationship i find between investment and financialization

adjusting the labor supply to mitigate violent shocks evidence from rural colombia this paper studies the use of labor markets to mitigate the impact of violent shocks on households in rural areas in colombia it examines changes in the labor supply from on farm to off farm labor as a means of coping with the violent shock and the ensuing redistribution of time within households it identifies the heterogeneous response by gender because the incidence of violent shocks is not exogenous the analysis uses instrumental variables that capture several dimensions of the cost of exercising terror as a response to the violent shocks households decrease the time spent on on farm work and increase their supply of labor to off farm activities non agricultural ones men carry the bulk of the adjustment in the use of time inasmuch as they supply the most hours to off farm non agricultural work and formal labor markets labor markets do not fully absorb the additional labor supply women in particular are unable to find jobs in formal labor markets and men have increased time dedicated to leisure and household chores additional off farm supply does not fully cover the decrease in consumption the results suggest that in rural colombia labor markets are a limited alternative for coping with violent shocks thus policies in conflict affected countries should go beyond short term relief and aim at preventing labor markets from collapsing and at supporting the recovery of agricultural production

extended families and child well being studies of household behavior have established the distribution of resources among household members predicts spending and savings patterns however there is a paucity of evidence on the relationship between the well being of individual family members and the distribution of resources within an extended family including non co resident family members given the central role the family plays in many models of economic behavior this is an important gap in the literature using rich longitudinal survey data from the indonesia family life survey ifls evidence is presented on the relationship between three measures of health and education related human capital of children and the distribution of resources among extended family members ifls is ideally suited for this research since the survey collects detailed information about income and wealth from both coresident and non co resident family members the empirical model is founded on a natural extension of the collective model of household decision making chiappori 1988 1992 to the extended family the model is particularly appealing in this context because it places few restrictions on preferences of individual family members and does not specify a specific bargaining mechanism that underlies negotiations the collective model yields empirical tests of whether the behavior of family members is pareto efficient a special case of the model allows all family members to be completely altruistic which is observationally equivalent to a unitary model of family behavior that special case is rejected by the data however the restrictions of the efficient model are not rejected indicating that non co resident family members are able to co ordinate allocation decisions with respect to child human capital investments in such a way as to make no family member better off without another member being worse off

no toilet no bride intrahousehold bargaining in male skewed marriage markets in india abstract haryana state in india is characterized by widespread discrimination against women including a severe population level sex imbalance in this context an innovative social marketing campaign which targeted pro sanitation messages to households active in local marriage markets was implemented with the goal of increasing toilet ownership this paper estimates the impact of this program known colloquially as no toilet no bride on household level latrine ownership private sanitation coverage in haryana increased by 21 specifically among households with boys active on the marriage market this effect is larger and concentrated in marriage markets where women are relatively scarce and absent when women are relatively abundant which together suggest the program operated by successfully linking sanitation outcomes with marriage market competition induced by local scarcities of women due to male biased sex ratios

income smoothing and consumption smoothing one way that risk averse households protect consumption levels is to borrow and use insurance mechanisms another way common in low income economies is to diversify economic activities and make conservative production and employment choices households thus tend toward limiting exposure only to shocks that can be handled with available credit and insurance typically both types of mechanisms are studied independently but much more can be learned by studying them together first we obtain a more complete picture of risks costs and insurance possibilities second it opens the way to considering biases in standard tests of credit and insurance

weather risk wages in kind and the off farm labor supply of agricultural households in a developing country this article investigates the effects of weather risk on the off farm labor supply of agricultural households in a developing country distinguishing different types of off farm labor markets a multivariate two limit tobit model is applied to data from india the regression results show that the share of the off farm labor supply increases with weather risk the increase is much larger in the case of nonagricultural work than in the case of agricultural wage work and the increase is much larger in the case of agricultural wages paid in kind than in the cash wage case suggesting farmers considerations of food security copyright 2007 oxford university press

identity economics meets financialisation gender race and occupational stratification in the us labour market throughout his career geoff harcourt has constantly and consistently highlighted the role of social norms and collective decisions in his study of modern economies in doing so he has put a great deal of emphasis on the distribution of income between different social groups especially so when concerned with the labour market this article attempts to celebrate this particular aspect of his numerous contributions to economics by highlighting the role of social norms in influencing earnings across occupations and demographic groups in the usa social norms generate hierarchy economic and non economic inequalities amongst ascriptively distinguished groups drawing on the stratification and identity economics literatures this article proposes a novel theoretical and empirical framework for analysing the effects of financialisation on the earnings dynamics of gender and race groups a framework that is consistent with discrimination as a source of racial and gender inequality the empirical methodology used in the form of long run cointegrating relationships of groups earnings across occupations assesses whether a pattern of social norms on wage distribution emerges over time the results of this study show that over the past 30 years social norms have exacerbated the stratification of the us labour market

preference programming for robust portfolio modeling and project selection in decision analysis difficulties of obtaining complete information about model parameters make it advisable to seek robust solutions that perform reasonably well across the full range of feasible parameter values in this paper we develop the robust portfolio modeling rpm methodology which extends preference programming methods into portfolio problems where a subset of project proposals are funded in view of multiple evaluation criteria we also develop an algorithm for computing all non dominated portfolios subject to incomplete information about criterion weights and project specific performance levels based on these portfolios we propose a project level index to convey i which projects are robust choices in the sense that they would be recommended even if further information were to be obtained and ii how continued activities in preference elicitation should be focused the rpm methodology is illustrated with an application using real data on road pavement projects

scenario based portfolio selection of investment projects with incomplete probability and utility information abstract in the selection of investment projects it is important to account for exogenous uncertainties such as macroeconomic developments which may impact the performance of projects these uncertainties can be addressed by examining how the projects perform across several scenarios but it may be difficult to assign well founded probabilities to such scenarios or to characterize the decision makers risk preferences through a uniquely defined utility function motivated by these considerations we develop a portfolio selection framework which i uses set inclusion to capture incomplete information about scenario probabilities and utility functions ii identifies all the non dominated project portfolios in view of this information and iii offers decision support for rejection and selection of projects the proposed framework enables interactive decision support processes where the implications of additional probability and utility information or further risk constraints are shown in terms of corresponding decision recommendations

consumption smoothing migration and marriage evidence from rural india a significant proportion of migration in low income countries particularly in rural areas is composed of moves by women for the purpose of marriage we seek to explain these mobility patterns by examining marital arrangements among indian households in particular we hypothesize that the marriage of daughters to locationally distant dispersed yet kinship related households is a manifestation of implicit interhousehold contractual arrangements aimed at mitigating income risks and facilitating consumption smoothing in an environment characterized by information costs and spatially covariant risks analysis of longitudinal south indian village data lends support to the hypothesis marriage cum migration contributes significantly to a reduction in the variability of household food consumption farm households afflicted with more variable profits tend to engage in longer distance marriage cum migration the hypothesized and observed marriage cum migration patterns are in dissonance with standard models of marriage or migration that are concerned primarily with search costs and static income gains

consumption insurance an evaluation of risk bearing systems in low income economies the hypothesis of full risk sharing can be taken to data from low income countries and evaluate formal and informal financial systems in many contexts idiosyncratic risks are high so credit insurance arrangements could be beneficial statistical tests reveal that households in southern india take advantage of these possibilities villages in cote d ivoire and countries in thailand do not do as well the paper includes an empirical description of the devices used to smooth consumption and a theoretical discussion of private information and incentives on ideal operating systems the full information and mechanism design frameworks provide benchmarks for policy analysis

do private transfers displace the benefits of public transfers evidence from south africa abstract this paper investigates whether government transfer programs displace or crowd out private support focusing on a large increase in state old age pensions in south africa using data spanning the period of the expansion we find that each rand of public pension income to the elderly leads to a 0 25 0 30 rand reduction in private transfers from children living away from home however despite the large increase in income there were no significant changes in migration labor supply or household composition we also show that evaluations of the distributional effects of the pension are overstated when crowding out is ignored

optimal strategies for selecting project portfolios using uncertain value estimates abstract practically all organizations seek to create value by selecting and executing portfolios of actions that consume resources typically the resulting value is uncertain and thus organizations must take decisions based on ex ante estimates about what this future value will be in this paper we show that the bayesian modeling of uncertainties in this selection problem serves to i increase the expected future value of the selected portfolio ii raise the expected number of selected actions that belong to the optimal portfolio ex post and iii eliminate the expected gap between the realized ex post portfolio value and the estimated ex ante portfolio value we also propose a new project performance measure defined as the probability that a given action belongs to the optimal portfolio finally we provide analytic results to determine which actions should be re evaluated to obtain more accurate value estimates before portfolio selection in particular we show that the optimal targeting of such re evaluations can yield a much higher portfolio value in return for the total resources that are spent on the execution of actions and the acquisition of value estimates

risk sharing across communities this paper studies cross community risk sharing there is now a large body of theoretical and empirical work on informal insurance where people mitigate risk by sharing income a consistent empirical finding is that risk sharing is not complete within villages often the observed sets of individuals 2 one reason researchers suspect is that risk sharing does not take place at the village level but between individuals and families 3 we build a theoretical model where risksharing takes place between pairs of agents there are idiosyncratic shocks to individual income and community level shocks we consider how the opportunity for cross community links affects the shape and efficiency of risk sharing arrangements we find that when links across villages form there can be less risk sharing within a village welfare is higher for those directly or indirectly connected across villages but lower for those with no path connecting them to the other village overall welfare can be higher thus empirical findings that insurance within a village is not complete is not necessarily evidence of an inefficient pattern of risk sharing relations rather the finding is consistent with risk sharing patterns that involve cross community relations and such patterns may yield higher aggregate welfare despite incomplete insurance within a village this paper makes two contributions first it demonstrates the importance of a network analysis by examining pairwise incentives to form relations and the resulting pattern we can see new risk sharing outcomes second with this network model we show how informal risk sharing across communities has both aggregate and distributional effects to study network outcomes we posit a simple two stage model first we provide a benchmark model for risk sharing for a given network then working backwards we consider incentives to form risk sharing links 4 to illustrate consider a rural population and ask how people might link

determinants and effects of income diversification amongst farm households in burkina faso using four years of household data from three agroecological zones in burkina faso sahelian sudanian and guinean the article examines the determinants and effects of household income diversification harvest shortfalls and terms of trade are found to drive diversification but land constraints do not income diversification is associated with higher incomes and food consumption and more stable income and consumption over years

on the costs of food price fluctuations in low income countries abstract conventional welfare measures of the costs of food price fluctuations in low income countries are extended to allow for both economic growth and food security effects the analysis reveals that growth and food security effects may dominate more conventional welfare costs of food price fluctuations although estimating the empirical magnitude of the effects is hampered by the lack of consensus on the extent to which food price fluctuations actually reduce economic growth and food security even if the welfare costs of food price fluctuations are high there are many challenges to the design and successful implementation of price stabilization schemes

stochastic dominance and expected utility survey and analysis while stochastic dominance has been employed in various forms as early as 1932 it has only been since 1969 1970 that the notion has been developed and extensively employed in the area of economics finance agriculture statistics marketing and operations research in this survey the first second and third order stochastic dominance rules are discussed with an emphasis on the development in the area since the 1980s

contingent portfolio programming for the management of risky projects methods for selecting a research and development r d project portfolio have attracted considerable interest among practitioners and academics this notwithstanding the industrial uptake of these methods has remained limited partly because of the difficulties of capturing relevant concerns in r d portfolio management motivated by these difficulties we develop contingent portfolio programming cpp which extends earlier approaches in that it i uses states of nature to capture exogenous uncertainties ii models resources through dynamic state variables and iii provides guidance for the selection of an optimal project portfolio that is compatible with the decision maker s risk attitude although cpp is presented here in the context of r d project portfolios it is applicable to a variety of investment problems where the dynamics and interactions of investment opportunities must be accounted for

war and local collective action in sierra leone abstract we study the brutal 1991 2002 sierra leone civil war using nationally representative household data on conflict experiences postwar economic outcomes local politics and collective action individuals whose households directly experienced more intense war violence are robustly more likely to attend community meetings more likely to join local political and community groups and more likely to vote tests using prewar controls and alternative samples suggest that selection into victimization is unlikely to be driving the results more speculatively the findings could help partially explain the rapid postwar political and economic recoveries observed in sierra leone and after several other recent african civil wars

migration risk and liquidity constraints in el salvador abstract this article utilizes panel data from el salvador to investigate the use of transnational migration as an ex post risk management strategy i show that adverse agricultural conditions in el salvador increase both migration to the united states and remittances sent back to el salvador i show that in the absence of any agricultural shocks the probability that a household sent members to the united states would have decreased on average by 24 26 i also show that the 2001 earthquakes reduced net migration to the united states a one standard deviation increase in earthquake damage reduced the average probability of northward migration by 37 11 the evidence suggests that the effects of the earthquakes had more to do with households retaining labor at home to cope with the effects of the disaster than with the earthquakes disrupting migration financing

credit constraints job mobility and entrepreneurship evidence from a property reform in china this paper provides new evidence on the impact of private property rights on entrepreneurship i explore this issue in the context of a housing reform in urban china that allowed state employees renting state owned housing the opportunity to buy their homes at subsidized prices using the reform as an exogenous change in the capital constraints and mobility costs that inuence individuals entry

using weather variability to estimate the response of savings to transitory income in thailand this paper measures the extent to which farmers are able to use savings and dissavings to smooth consumption in response to unexpected shocks to income time series information on regional rainfall is used to construct estimates of transitory income due to rainfall shocks the relationship between these measures of transitory income and savings indicates that farm households save a significantly higher fraction of transitory income than nontransitory income jel d91 016 the incomes of farm households in developing countries are notorious for being both low and uncertain policies that increase the incomes of farmers may well be different

smoothing consumption by smoothing income hours of work responses to idiosyncratic agricultural shocks in rural india while research has demonstrated that farm households in developing economies are able to protect consumption from idiosyncratic crop shocks little evidence shows how this is achieved this paper examines the extent to which labor markets allow households to shift labor from farm to off farm employment and the extent to which such a shift explains the observed lack of correlation between consumption and idiosyncratic crop shocks the empirical analysis uses a novel measure of the idiosyncratic crop income shock which utilizes information on start of season cropping choices to more accurately estimate household expectations of weather

selecting a portfolio of solar energy projects using multiattribute preference theory this article reports a procedure developed to assist the u s department of energy in selecting a portfolio of solar energy applications experiments the procedure has also been used in other government procurements and appears to be applicable in a variety of project funding processes the technical quality of each proposed applications experiment was summarized through the use of multiple evaluation measures or attributes these were combined into a single index of the overall technical quality of an experiment through the use of a multiattribute utility function recently derived results in measurable value theory were applied to derive an index of the overall technical quality of a portfolio of experiments budgetary and programmatic issues were handled through the use of constraints this approach allowed the portfolio selection problem to be formulated as an integer linear program details of the application are presented including a discussion of the data requirements and assessment procedure used the portfolio selection procedure was successfully applied and variations of it have been successfully used in four other solar energy procurements

displacement due to violence in colombia a household level analysis abstract civil wars and ethnic conflicts have resulted in an estimated number of approximately 35 million refugees and internally displaced persons worldwide understanding the determinants of forced migration is an important prerequisite for the definition of appropriate policies of prevention assistance and relocation we develop a conceptual framework for the empirical analysis of displacement decisions at the household level while similarities to conventional migration theories exist there are also important differences implied by the presence of violent conflict for example risk aversion and lack of information may hamper conventional migration but enhance displacement factors such as landholdings and social capital at the place of origin may not only reduce displacement in the conventional sense of raising opportunity costs but may also spur displacement indirectly by increasing the household s likelihood of becoming the victim of direct threats for the case of colombia we conduct an econom

risk financial markets and human capital in a developing country this paper explores the link between financial market incompleteness and human capital accumulation we examine how child school attendance responds to seasonal fluctuations in the income of agrarian households using panel data from rural india to pinpoint market imperfections we study responses to aggregate and idiosyncratic as well as to anticipated and unanticipated income shocks our main finding is that seasonal fluctuations in school attendance are a form of self insurance but one which does not result in a substantial loss of human capital on average

female migration for marriage implications from the land reform in rural tanzania summary using the longitudinal household panel data drawn from rural tanzania 1991 2004 this study investigates impacts of the land reform on women s marriage motivated relocation during the period under study several villages that initially banned a widow s land inheritance abolished this discrimination taking a differences in differences approach this study finds that the probability of males marrying in a village increased by altering its customary land inheritance rule in favor of widows in the light of the traditional system favoring exogamous and patrilocal marriage this finding indicates that females relocate at marriage in response to the favorable land tenure system at the destination

multistage decision making fuzzy methodology for optimal investments based on experts evaluations abstract a new methodology of making a decision on an optimal investment in several projects is proposed the methodology is based on experts evaluations and consists of three stages in the first stage kaufmann s expertons method is used to reduce a possibly large number of applicants for credit using the combined expert data the credit risk level is determined for each project only the projects with low risks are selected in the second stage the model of refined decisions is constructed using the new modification of the previously proposed possibilistic discrimination analysis method sirbiladze khutsisvili dvalishvili 2010 this stage is based on expert knowledge and experience the projects selected in the first stage are compared in order to identify high quality ones among them the possibility levels of experts preferences are calculated and the projects are ranked finally the third stage deals with the bicriteria discrete optimization problem whose solution makes it possible to arrange the most advantageous investment in several projects simultaneously the decision on funding the selected projects is made and an optimal distribution of the allocated investment amount among them is provided the efficiency of the proposed methodology is illustrated by an example

conflict displacement and labor market outcomes in post war bosnia and herzegovina abstract the war in bosnia and herzegovina of the early nineties displaced 1 3 million people this study uses longitudinal data to document the effects of this displacement on labor market outcomes to account for endogeneity in displacement i exploit the fact that the level of violence affected the decision to leave and that pre war economic performance is orthogonal to local violence levels i find that displaced bosnians are less likely to be working relative to the people who stayed displaced men experience higher unemployment levels and displaced women are more likely to drop out of the labor force

returning home after civil war food security and nutrition among burundian households abstractthis paper investigates the food security and nutritional status of formerly displaced households hhs using the 2006 core welfare indicator survey for burundi we compare their food intake and their level of expenses with that of their non displaced neighbours we test whether it is the duration of displacement that matters for current food security and nutritional status or the time lapsed since returning home we use log linear as well as propensity score matching and an instrumental variable approach to control for self selection bias we find that the individuals and hhs who returned home just before the time of the survey are worse off compared to those who returned several years earlier on average the formerly displaced have 5 per cent lower food expenses and 6 per cent lower calorie intake moreover we find evidence in favour of duration of displacement as the main mechanisms through which displacement affects hh welfare results are robust after controlling for self selection bias de

civil war crop failure and child stunting in rwanda economic shocks at birth have lasting effects on children s health several years after the shock the authors calculate height for age z scores for children under age five using data from a rwandan nationally representative household survey conducted in 1992 they exploit district and time variation in crop failure and civil conflict to measure the impact of exogenous shocks that children experience at birth on their height several years later they find that boys and girls born after the shock in regions experiencing civil conflict are both negatively affected with height for age z scores 0 30 and 0 72 standard deviations lower respectively conversely only girls are negatively affected by crop failure with these girls exhibiting 0 41 standard deviation lower height for age z scores and the impact is worse for girls in poor households results are robust to using sibling difference estimators household level production and rainfall shocks as alternative measures of crop failure

collective agricultural production a solution for transition economies abstract the paper examines theoretical reasons and provides examples for productivity differences between agricultural service cooperatives and collectives service cooperatives can utilize economies of scale enhance competitiveness and provide technical information advantages that often outweighed problems of free riding low investment and excessive political intervention agricultural collectives while not adding substantial advantages are in addition associated with problems of supervision and effort supply tendencies to substitute casual workers or mechanization for regular members and low investment incentives while collective forms of organization in transition economies respond to high risk and market imperfections they do so inefficiently policies that create conditions for service cooperatives to compete may lead to large productivity gains

a two season agricultural household model of output and price uncertainty abstract this paper presents a two season model of a household s production consumption labor supply and storage decisions in an environment of output and price risk the analytical results in this study are markedly different from those of models prevalent in the mainstream of the agricultural household literature the empirical analysis that uses panel data from a village in india provides support for the theoretical results and underscores the seasonal dimension of the farmers choice problems the results also show that ignoring risk or risk averse preferences may introduce substantial downward bias in optimal response estimates

an exogeneity test for a simultaneous equation tobit model with an application to labor supply a test of weak exogeneity in the simultaneous equation tobit model is proposed and illustrated using a female labour supply model estimated using cross section data the test statistic can be simply output from any standard tobit maximum likelihood package and is asymptotically efficient the procedure provides consistent estimators for the simultaneous tobit model whose asymptotic covariance matrix is a simple extension of the usual tobit formula we also provide the lagrange multiplier test of weak exogeneity this abstract was borrowed from another version of this item

imperfect commitment altruism and the family evidence from transfer behavior in low income rural areas in this paper we examine empirically whether risk pooling is more advantageous among altruistic compared to selfish agents in a framework where individuals cannot make binding commitments in particular we incorporate altuism into a model of risk sharing under imperfect commitment and use simulation methods to establish tests of the roles of both altruism and commitment problems in determining the extent of insurance and the intertemporal movements in interhousehold transfers the tests are carried out using three panel data sets from two countries of rural south asia that provide detailed information on transfers and enable the measurement of income shocks the estimates provide strong support for the notion that imperfect commitment substantially constrains informal transfer arrangements whether kin based or not but also provide evidence that altruism plays an important role in ameliorating commitment constraints and thus in increasing the gains from income pooling

educational homogamy how much is opportunities individuals match on length and type of education we find that around half of the systematic sorting on education is explained by the tendency of individuals to marry someone who went to the same educational institution or to an institution near them this may be due to low search frictions or selection of people with the same preferences into the same institutions the residual half of the systematic sorting on education is a direct effect of partners education which is potentially explained by complementarities in household production in couples with same education