the well being of the elderly and wage arrears in russia about one third of households with elderly were not paid their wages during the mid 1990s in russia applying matching estimations to a nationally representative survey the study shows that wage arrears had detrimental effects on the well being of the elderly in these families salaries in households with wage arrears dropped by almost two thirds income fell by more than one third and poverty doubled behavioral responses were only partly effective the net revenue loss amounted to five sixths of the wage shock for men and nine tenths of the wage shock for women the elderly cut back on food expenses by reducing food purchases and adjusting their diet towards cheaper calories economising on expenses equal to around one quarter of the wage reduction caloric and protein intakes dropped although less than income and the nutritional content of food consumption with regard to vitamins and minerals deteriorated wage arrears worsened male health more than female health even though the decline in income was comparable functional limitations rose by 8 for men and 3 for women and self rated health declined by 2 5 for men and 0 5 for women old age men with arrears were almost twice as likely to die before the next survey round and functional limitations of surviving men rose by more than 10 by contrast there was no impact on the next round s health status of old age women a rich data set is used to discount alternative explanations including feedback from health to income other economic factors health service access health behavior and environmental conditions jel i12 i30 j14 j30

fat tails exponents extreme uncertainty simulating catastrophe in dice abstract the problem of low probability catastrophic risk is increasingly central to discussion of climate science and policy but the integrated assessment models iams of climate economics rarely incorporate this possibility what modifications are needed to analyze catastrophic economic risks in an iam we explore this question using dice a well known iam we examine the implications of a fat tailed probability distribution for the climate sensitivity parameter a focus of recent work by martin weitzman and the shape of the damage function one of the issues raised by the stern review forecasts of disastrous economic outcomes in dice can result from the interaction of these two innovations but not from either one alone

drawn into violence evidence on what makes a criminal from the vietnam draft lotteries draft lottery number assignment during the vietnam era provides a natural experiment to examine the effects of military service on crime using exact dates of birth for inmates in state and federal prisons in 1979 1986 and 1991 we find that draft eligibility increases incarceration for violent crimes but decreases incarceration for nonviolent crimes among whites this is particularly evident in 1979 where two sample instrumental variable estimates indicate that military service increases the probability of incarceration for a violent crime by 0 34 percentage points and decreases the probability of incarceration for a nonviolent crime by 0 30 percentage points we conduct two falsification tests one that applies each of the three binding lotteries to unaffected cohorts and another that considers the effects of lotteries that were not used to draft servicemen jel k42 h56

consumption effects of genetic modification what if consumers are right this paper develops a model of differentiated consumers to examine the consumption effects of genetic modification gm under alternative labelling regimes and segregation enforcement scenarios analytical results show that if consumers perceive gm products as being different than their traditional counterparts gm affects consumer welfare and thus consumption decisions when the existence of market imperfections in one or more stages of the supply chain prevents the transmission of cost savings associated with the new technology to consumers gm results in welfare losses for consumers the analysis shows that the relative welfare ranking of the no labelling and mandatory labelling regimes depends on i the level of consumer aversion to gm products ii the size of marketing and segregation costs under mandatory labelling iii the share of the gm product in total production and iv the extent to which gm products are incorrectly labelled as non gm products

adaptation to climate change a review through a development economics lens abstract this paper looks at adaptation to climate change from the point of view of poor households since the development literature has firmly established the role of weather risk as a source of income volatility for the poor and climate change is expected to increase this risk we review the range of risk coping mechanisms available to poorer households with a focus on possible barriers to adaptation we ask both how government interventions affect the set of options available for adaptation and risk coping and also what these adaptive responses imply for the prospects of sustainable development support for adaptation can involve efforts to make existing locations livelihoods and forms of production more resilient to climate risk in situ adaptation or reductions in vulnerability through the geographical and sectoral mobility of the poor transformational adaptation our review shows how successful adaptation will need to strike a balance between the two forms of adaptation avoiding locking in unsustainable practices in locations that are already marginal from an economic perspective and taking account of broader socio economic trends already taking place in many developing countries such as population growth and urbanisation we also highlight important considerations for policy makers which to date have been relatively neglected in the literature in particular related to the dynamic interaction between adaptation and sustainable development

inserting gm products into the food chain the market and welfare effects of different labeling and regulatory regimes the purpose of this article is to examine the system wide effects of the introduction of genetically modified gm products with and without labeling and to compare these two regimes to a third regime where gm products are not present either because they have not yet been developed or because they have been banned for each regime the decisions and welfare of consumers producers and life science companies are examined the article explicitly incorporates the consumer response to the introduction of gm technology and considers different market structures of the life science sector

witchcraft weather and economic growth in renaissance europe between the thirteenth and nineteenth centuries as many as one million individuals in europe were executed for the crime of witchcraft the majority of the trials and executions took place during the sixteenth and seventeenth centuries during this period the speed and volume of executions were astonishing in one german town as many as 400 people were killed in a single day midelfort 1972 the trials were ubiquitous conducted by both ecclesiastical and secular courts by both catholics and protestants the victims were primarily women primarily poor and disproportionately widows the persecutions took place throughout europe starting and ending earlier in southwest europe than in the northern and eastern areas and spread even across the atlantic ocean to salem massachusetts although witchcraft trials in europe and america largely ended by the late eighteenth century witchcraft accusations and killings still take place in many countries today particularly in the developing world for example witchcraft is often blamed for aids deaths in sub saharan africa ashforth 2001 and miguel 2003 shows that negative economic shocks are associated with increases in witch killing in modern tanzania belief in the witch and fear of her is enduring while much work has been done on the motivations behind the european trials the large scale causes remain unknown the existing work has primarily been concerned with the factors that played into trials on a small scale why a certain individual was targeted or why a certain type of individual was targeted in a given area this work has indicated that there was a diverse set of issues that played into trials on an individual level more broadly however there are few causal explanations for why witchcraft trials happened at all and on such a large scale in so many

consumption smoothing and the welfare consequences of social insurance in developing economies studies of risk in developing economies have focused on consumption fluctuations as a measure of the value of insurance a common view in the literature is that the welfare costs of risk and benefits of social insurance are small if income shocks do not cause large consumption fluctuations we present a simple model showing that this conclusion is incorrect if the consumption path is smooth because individuals are highly risk averse hence social safety nets could be valuable in low income economies even when consumption is not very sensitive to shocks

witchcraft beliefs as a cultural legacy of the atlantic slave trade evidence from two continents abstract this paper argues that the historical slave trade contributed to the propagation of persistent witchcraft beliefs on both sides of the atlantic ocean and establishes two key empirical patterns first it shows that in sub saharan africa representatives of ethnic groups which were more heavily exposed to the atlantic slave trade in the past are more likely to believe in witchcraft today thus establishing a link between historical trauma and contemporary culture second exploring the role of the slave trade in cultural transmission across continents this paper finds that afro descendants in modern latin america are substantially more likely to believe in witchcraft relative to other ancestral groups moreover accounting for ancestry and other relevant factors people residing in regions historically more reliant on african slave labor are also more likely to be witchcraft believers these findings support ethnographic narratives on the connection between slave trade slavery and the entrenchment of witchcraft beliefs and shed light on the nature of these beliefs and related practices as a cultural framework for interpreting misfortune and a mechanism of enslavement in local communities

using artefactual field experiments to learn about the incentives for sustainable forest use in developing economies one vexing problem facing mankind is how to promote sustainable use of common property resources within developed and developing countries alike misuse of fresh water pastures and forests is commonplace while developed countries have in many cases designed principles and laws to promote sustainable resource use developing countries often lack the institutional know how and means to enforce property rights this has led researchers to look for alternative means to address common property resource problems we study behavior and attitudes towards for

income shocks and gender gaps in education evidence from uganda abstract this paper uses exogenous variation in rainfall across districts in uganda to estimate the causal effects of household income shocks on children s enrollment and academic performance conditional on gender i find negative deviations in rainfall from the long term mean to have negative and highly significant effects on female enrollment in primary schools and the effect grows stronger for older girls i find no effect of rainfall variation on the enrollment of boys and young girls moreover i find that when schooling is free of charge and both marginal boys and girls are enrolled a negative income shock has an adverse effect on the test scores of female students while boys are not affected the results imply that households respond to income shocks by varying the amount of schooling and resources provided to girls while boys are to a large extent sheltered a finding consistent with a model where parents values of child labor differ across sexes

land tenure price shocks and insurgency evidence from peru and colombia abstract the paper examines how property arrangements a key determinant of rural income influence armed conflict in the presence of commodity price shocks using detailed data on district level land tenure crop produce and conflict intensity in peru and colombia estimates show that exogenous negative price shocks increase the intensity of conflict in districts with a greater presence of individual ownership relative to other types of land tenure the finding is consistent with small landowners in the export sector experiencing a sharper downturn in labor market outcomes thus reducing the opportunity cost of participating in insurgent groups

taxes lawyers and the decline of witch trials in france abstracthow is rule of law established we address this question by exploring the effect of increases in fiscal capacity on the establishment of well enforced formal legal standards in a preindustrial economy between 1550 and 1700 there were over 2 000 witch trials in france prosecuting a witch required local judges to significantly deviate from formal rules of evidence hence we exploit the significant variation across time and space in witch trials and fiscal capacity across french regions between 1550 and 1700 to show that increases in fiscal capacity were associated with increased adherence to the formal rule of law as fiscal capacity increased local judges increasingly upheld de jure rules and the frequency of witch trials declined

estimating the demand for a new technology bt cotton and insecticide policies this article examines the potential demand for bt cotton in the southeast from information gathered in the first year of commercialization we combine revealed preference rp data on adoption of bt cotton varieties with stated preference sp data on willingness to adopt to estimate demand using a double bounded maximum likelihood procedure using estimated demand equations we simulate the costs of reducing conventional insecticide applications through subsidization of bt cotton results indicate that reducing cotton insecticide applications by 40 in the southeast would require a 21 acre subsidy with total annual program costs between 53 million and 60 million

innovation and trade with endogenous market failure the case of genetically modified products a partial equilibrium two country model is developed to analyze implications from the introduction of genetically modified gm products in the model innovators hold proprietary rights farmers are competitive adopters some consumers deem gm food to be inferior in quality to traditional food and the mere introduction of gm crops affects the costs of non gm food because of costly identity preservation among the results derived it is shown that although gm innovations have the potential to improve efficiency some groups can be made worse off indeed it is even possible that the costs induced by gm innovations outweigh the efficiency gains

combining contingent valuation and travel cost data for the valuation of non market goods the travel cost method tcm has long been used to infer the economic value of nonmarket resources and public goods more recently contingent valuation cvm survey methods have gained popularity for eliciting these values here cvm survey responses are combined with tcm data on actual market behavior to estimate jointly both the parameters of the underlying utility function and its corresponding ordinary demand function this is a prototypical empirical example of a new modeling strategy variants of which should prove useful in many applications especially where reliance on a single valuation method is undesirable

policy evaluation with combined actual and contingent response data the city of marietta georgia experimentally switched from flat fee financing to volume based pricing for its trash services in january 1994 both before and during the experiment detailed data on individuals observed responses to the actual introduction and contingent behavioral responses to a hypothetical introduction of volume based pricing were collected this study applies these data and investigates the methodology of collecting contingent behavior data and their use in policy analysis in particular this study empirically evaluates the effect of experience with the policy on responses to contingent behavior questions and tests for potential bias in the contingent behavior data

who pays the costs of non gmo segregation and identity preservation our aim is to explore who pays the costs and who reaps the benefits of maintaining a dual market system of genetically modified organisms gmos and non gmos we analyze the welfare effects of the introduction of consumer hatred given gmo technology and the introduction of gmo technology given hatred making alternative assumptions of competitive and then monopolistic supply we recognize that identity preservation ip of non gmos creates costs for ip and non ip producers we model these costs as depending on the sizes of the two supply channels copyright 2003 oxford university press

a new assessment model of social cost of carbon and its situation analysis in china abstract the social cost of carbon scc represents monetary value of the damage caused by carbon dioxide emissions in climate change it is an important standard for the formulation of climate policy the uncertainty of carbon social cost is closely related to climate sensitivity damage parameters discount rate and so on previous studies have mainly focused on the consequences of climate change and the effect of social cost of carbon and welfare under different policies its research on the social cost of carbon has not included the evolution coefficient of carbon emissions and it has rarely introduced the climate disaster damage function into the process of solving the social cost of carbon this paper provides a simplified formula for the social cost of carbon the model has a nonlinear processing of the carbon circulation system which increases the nonlinear structure of co2 emission potential in addition the model modifies the climate damage function which adds additional losses from climate catastrophes this paper analyzes the combined effects of several key sensitivity parameters resulting in a fat tail distribution of social cost of carbon ultimately it is found that the mean scc of 2015 is 44 93 tco2 and the median scc is 15 9054 tco2 considering the possibility of extreme results and the impact of disaster risk loss on uncertain structure the joint effects of damage parameters climate sensitive parameters and discount rates make the social cost of carbon as much as 2 8 times the median and fat tail effect is obvious this brings uncertainty to the current emission reduction policies and abatement costs making it more difficult to assess cost effectiveness at last the paper evaluates the social cost of carbon under the base situation and low discount rate in china

organic production and ethical trade definition practice and links abstract in recent years there has been a growing debate about ethical aspects of production and trade this has evolved from concerns about fair trade safe working conditions for producers and employees and sustainable and environmentally safe natural resource management the principles of organic agriculture are wide ranging and include concerns for safe food production for the environment for animal welfare and for issues of social justice a working definition of ethical trading and an assessment of the links between organic production and ethical trading were obtained from 34 organisations in the uk involved in ethical or fair trading or organic agriculture interviewees were from major supermarkets independent and multiple retailers alternative trading organisations importers wholesalers accreditation bodies non governmental development agencies and lobby groups a definition of ethical trading based on the interviewees responses is developed and discussed the paper examines current practice in ethical and organic trading and assesses the role of the ethical trading initiative and major supermarkets current and potential links between organic production and ethical trade are explored constraints to linking the two concepts more fully both conceptual and practical are evaluated there is potential for organic production to be ethical using the holistic definition given here by the addition of social criteria to the standards of the organic regulatory authorities ethical trading is now becoming mainstream trading and internationally traded organic produce will therefore have to comply with the current view of what is ethical

how to decide when experts disagree uncertainty based choice rules in environmental policy environmental economists have traditionally addressed the issue of choice under uncertainty by applying the expected utility hypothesis when policymakers face a panel of experts with widely divergent beliefs the problem may more accurately be described as a case of choice under pure uncertainty arrow and hurwicz 1972 demonstrate that rational choice criteria under pure uncertainty will focus on the extremes of the state space not the midpoint as is typically assumed using nordhaus s dice model uncertainty based choices about global warming policies are evaluated linkages to the safe minimum standard and the precautionary principle are also discussed

when rebels attack quantifying the impacts of capturing territory from the government in yemen households were adversely affected by the mostly nonviolent capture of yemen s capital in 2014 although socioeconomically advantaged households were initially better able to cope with the shock th

women empowerment and economic development women empowerment and economic development are closely related in one direction development alone can play a major role in driving down inequality between men and women in the other direction empowering women may benefit development does this imply that pushing just one of these two levers would set a virtuous circle in motion this paper reviews the literature on both sides of the empowerment development nexus and argues that the interrelationships are probably too weak to be self sustaining and that continuous policy commitment to equality for its own sake may be needed to bring about equality between men and women

middleman minorities and ethnic violence anti jewish pogroms in the russian empire using detailed panel data from the pale of settlement area between 1800 and 1927 we document that anti jewish pogroms mob violence against the jewish minority broke out when economic shocks coincided with political turmoil when this happened pogroms primarily occurred in places where jews dominated middleman occupations i e moneylending and grain trading this evidence is inconsistent with the scapegoating hypothesis according to which jews were blamed for all misfortunes of the majority instead the evidence is consistent with the politico economic mechanism in which jewish middlemen served as providers of insurance against economic shocks to peasants and urban grain buyers in a relationship based on repeated interactions when economic shocks occurred in times of political stability rolling over or forgiving debts was an equilibrium outcome because both sides valued their future relationship in contrast during political turmoil debtors could not commit to paying in the future and consequently moneylenders and grain traders had to demand immediate re payment this led to ethnic violence in which the break in the relationship between the majority and jewish middlemen was the igniting factor

reflections on the stern review 2 a growing international opportunity to move strongly on climate change this paper highlights the basic economic principles behind the policy recommendations in the stern review and takes forward the analysis and proposals of the review it is written in the light of developments since the review was published reflecting on interaction with policy makers and analysts around the world and other commentators on the review its authors argue that across the world progress of understanding and developing the necessary policy response to climate change has been especially rapid in the last few months building on these developments and the review team s initial analysis they outline a policy programme going forward for international collective action to tackle climate change

resource scarcity and antisocial behavior abstract this paper examines whether exposure to persistent resource scarcity on the commons affects pastoralists readiness to engage in antisocial behavior towards their fellow commons users the region under study is divided into two areas according to exogenous variations in biomass production stemming from geological peculiarities we conducted a joy of destruction game with pastoralists from both areas and provide evidence for a positive relationship between antisocial behavior and long term exposure to scarcity antisocial behavior among villagers occurs twice as often in an area where resources are scarcer and competitive pressure is higher our results remain robust to the inclusion of various controls including beliefs socio demographics absolute and relative income and within group inequality if one interprets decreasing another participant s payoff below one s own as a tendency towards conflict behavior our results suggest a higher risk of conflict among resource users in areas of greater scarcity

agricultural disaster payments in the southeastern us do weather and climate variability matter governments around the world are forced to react to disasters caused by weather the agricultural sector is particularly susceptible to weather extremes and adverse climate conditions in the us agricultural disaster payments account for a significant part of total agricultural subsidies the payments and their distribution are more important in the areas most affected by disastrous weather events usually coinciding with areas of pronounced impact of the el nino southern oscillation enso in this article the impact of weather and climate as well as some economic variables on disaster payments is analysed using county level data from four states in the southeastern united states the results suggest that weather and climate variables explain most of the crop disaster payments at the county level while socioeconomic variables do not suggesting that advancements in weather and climate forecasts could be helpful in planning for disaster compensation

targets of violence evidence from india s naxalite conflict this paper considers how shocks to rural incomes intensify violence in india s naxalite insurgency using variation in annual rainfall in a panel of district level fatal incidents between 2005 and 2011 i find that deficient rainfall generally spurs targeted violence against civilians but the number of maoist attacks against security forces only increases in mining districts this finding consistent with the idea that the relationship between income shocks and conflict depends on the type of targets and the revenue sources of the rebels in particular the fighting capacity of rebel groups against government forces could benefit more from negative rural income shocks if the group s resources are sufficiently independent from the agricultural economy as is the case in mining areas

club goods and group identity evidence from islamic resurgence during the indonesian financial crisis this paper tests a model in which group identity in the form of religious intensity functions as ex post insurance i exploit relative price shocks induced by the indonesian financial crisis to demonstrate a causal relationship between economic distress and religious intensity koran study and islamic school attendance that is weaker for other forms of group identity consistent with ex post insurance credit availability reduces the effect of economic distress on religious intensity religious intensity alleviates credit constraints and religious institutions smooth consumption shocks across households and within households particularly for those who were less religious before the crisis

weather shocks agriculture and crime evidence from india we use detailed crime agriculture and weather data from india during the years 1971 2000 to conduct a systematic analysis of the relationship between weather shocks and multiple categories of crime we find that drought and heat exert a strong impact on virtually all types of crimes that the impact on property crimes is larger than for violent crimes and that this relationship has been relatively stable over three decades of economic development we then use seasonal and geographical disaggregations of weather and agricultural cultivation to examine the prevailing hypothesis that agricultural income shocks drive the weather crime relationship in developing countries the patterns we find are consistent with this hypothesis in the case of rainfall shocks but suggest additional mechanisms may play an important role in driving the heat crime relationship consistent with evidence from industrialized countries

wage arrears and economic voting in russia this paper revisits the issue of economic voting in the context of the 1996 presidential election in russia the election was branded as a fundamental choice between capitalism and communism yet voters were also grappling with a large crisis of personal finances about one in two workers experienced nonpayments of wages at the time of the elections the analysis exploits a rich nationally representative household panel dataset to identify the impact of wage arrears on the second round election outcome wage arrears reduced the vote for the incumbent president yeltsin among workers from around 65 to 49 which amounts to a drop of 4 in the yeltsin vote in the second round support for yeltsin vote declined with the amount of wage arrears at the time of the vote and with wage arrears in 1995 wage arrears led more voters to believe the government to be noncaring and to favor income restrictions for the rich political attitudes of working men changed more than those of working women

augmenting travel cost models with contingent behavior data this paper proposes contingent behavior survey questions as a valuable supplement to observed data in travel cost models of non market demand for recreational resources a set of observed and contingent behavior results for each survey respondent allows the researcher to control for individual heterogeneity by taking advantage of panel data methods when exploring the nature of respondent demands the contingent scenarios also provide opportunities to a test for differences between observed and contingent preferences and or b assess likely demands under conditionsbeyond the domain of observed variation in costs or resource attributes most importantly contingent scenarios allow the researcher to imposeexogenously varying travel costs exogenous imposition of travel costs together with panel methods reduces the omitted variables bias that plagues observed data travel cost models of recreational demand using a convenience sample of data for illustrative purposes we show how to estimate the demand for recreational angling by combining observed and contingent behavior data we begin with simple naive pooled poisson models and progress to more theoretically appropriate fixed effects panel poisson specifications

income shocks and hiv in africa we examine how variation in local economic conditions has shaped the aids epidemic in africa using data from over 200 000 individuals across 19 countries we match biomarker data on individuals serostatus to information on local rainfall shocks a large source of income variation for rural households we estimate infection rates in hiv endemic rural areas increase by 11 for every recent drought an effect that is statistically and economically significant income shocks explain up to 20 of variation in hiv prevalence across african countries suggesting existing approaches to hiv prevention could be bolstered by helping households manage income risk better the relationship between income and health has long been of interest to economists and a lengthy literature documents strong linkages between economic conditions and many important health outcomes currie 2009 there has been much less progress however in understanding the economic foundations of the hiv aids epidemic one of the most important global health challenges such an understanding might yield particular dividends in sub saharan africa ssa where over a million people continue to become newly infected with the disease each year unaids 2010 in this article we explore the role of negative income shocks in shaping the

economic impacts of the california one variety cotton law the california one variety cotton law is an important example of technological regulation in this case intended to serve as a de facto quality control and to mitigate externalities in production that can arise from the mixing of cottonseed at the gin this paper describes and interprets the economic history of the law presents a theoretical model of its economic effects and provides quantitative estimates of the impacts on output prices and economic welfare following a partial deregulation under a 1978 amendment to the law the analysis shows that large social costs have arisen from concentrating control over the genetic base for california cotton production in the hands of a single government cotton breeder and restricting production to the use of a single selection of a single variety some of these costs have been eliminated by the partial deregulation in 1978 to permit private breeders to compete in the provision of genetic material but production is still restricted to the acala variety of cot

price analysis risk assessment and insurance for organic crops the agricultural risk protection act of 2000 recognized organic farming as a good farming practice making federal crop insurance coverage available for organiccrops and taking into account the idiosyncrasies of the organic production system inaddition to the production risks covered for conventional producers organic farmerswho sign up for coverage are compensated for production losses from damage due toinsects disease and or weeds however the incorporation of organic production intothe crop insurance rating structure has been limited organic producers are charged anarbitrary 5 premium surcharge over conventional crop insurance the actuarialfairness of this premium is at least questionable in addition in the case of crop failure organic farmers receive compensation based on the prices of conventionally producedcrops thus price premiums that organic producers are able to obtain in the market arenot compensated for under the current insurance policy structure the food conservation and energy act of 2008 which amends part of thefederal crop insurance act was written to investigate some of these claims requiringthe u s department of agriculture to examine the currently offered federal cropinsurance coverage for organic crops as described in the organic policy provisions of theact title xii such provisions established the need to review among other things theunderwriting risk and loss experience of organic crops determine whether significant consistent or systematic variations in loss history exist between organic and nonorganicproduction and modify the coverage for organic crops in accordance with the results here we present the major findings of three analyses we performed on keyelements of the insurance of organic crops prices yields and revenue in an effort tocontribute to the design of an organic crop insurance policy that covers organicproducers according to their idiosyncratic risks

what do we learn from the weather the new climate economy literature a rapidly growing body of research applies panel methods to examine how temperature precipitation and windstorms influence economic outcomes these studies focus on changes in weather realizations over time within a given spatial area and demonstrate impacts on agricultural output industrial output labor productivity energy demand health conflict and economic growth among other outcomes by harnessing exogenous variation over time within a given spatial unit these studies help credibly identify i the breadth of channels linking weather and the economy ii heterogeneous treatment effects across different types of locations and iii nonlinear effects of weather variables this paper reviews the new literature with two purposes first we summarize recent work providing a guide to its methodologies datasets and findings second we consider applications of the new literature including insights for the damage function within models that seek to assess the potential economic effects of future climate change jel c51 d72 o13 q51 q54

what is wrong with the west european economies tol and yohe point out that in their reply vol 8 no 1 to tol and yohe s review vol 7 no 4 the stern team demonstrates the fragility of the numerical findings of the cost benefit analysis in the stern review at the same time the stern team puts less weight on cost benefit analysis as a guide to policy making on climate change tol and yohe show that the stern review allows several mutually contradictory interpretations of the model that underlies the cost estimates and argue that each interpretation implies that stern s cost estimates have a severe downward bias

a review of the stern review on the economics of climate change the stern review calls for immediate decisive action to stabilize greenhouse gases because the benefits of strong early action on climate change outweighs the costs the economic analysis supporting this conclusion consists mostly of two basic strands the first strand is a formal aggregative model that relies for its conclusions primari ly upon imposing a very low discount rate concerning this discount rate aspect i am skeptical of the review s formal analysis but this essay points out that we are actual ly a lot less sure about what interest rate should be used for discounting climate change than is commonly acknowledged the review s second basic strand is a more intuitive argument that it might be very important to avoid possibly large uncertain ties that are difficult to quantify concerning this uncertainty aspect i argue that it might be recast into sound analytical reasoning that might justify some of the review s conclusions the basic issue here is that spending money to slow global warming should perhaps not be conceptualized primarily as being about consump tion smoothing as much as being about how much insurance to buy to offset the small change of a ruinous catastrophe that is difficult to compensate by ordinary savings

poverty and witch killing many observers have noted that poverty and violence go hand in hand there is a strong negative relationship between economic growth and crime across countries as well as across districts in india and a link between low income and the occurrence of civil war 1 yet existing studies are typically unable to resolve the key econometric identification issues of omitted variable bias and endogeneity to illustrate the unobserved quality of local government institutions may affect both income growth and crime rates and poverty could lead to violence if desperate people with nothing to lose commit more crimes but violence itself may in turn affect economic productivity this paper uses local rainfall variation to identify the impact of income shocks on murder in a rural tanzanian district 2 extreme rainfall resulting in drought or floods is exogenous and is associated with poor harvests and near famine conditions in the region and a large increase in the murder of witches there are twice as many witch murders in years of extreme rainfall as in other years the victims are nearly all elderly women typically killed by relatives these econometric results across 11 years in 67 villages provide novel evidence on the role of income shocks in causing violent crime and religious violence in particular and also provide insights into witchcraft an important social phenomenon in africa rarely studied by economists the view that economic conditions are a driving force behind witch murders is bolstered by the fact that most witch killing in tanzania takes place in poor rural areas largely dependent on rain fed agriculture and that most victims in our sample are from poor households however it is difficult to definitively disentangle this income shock theory from alternative socio cultural explanations the concentration of tanzanian witch murders in a region dominated by one particular ethnic group the sukuma and the especially high number of witch murders in villages where indigenous religious beliefs are strong both point to the important role of non economic factors economic theories and cultural theories are perhaps best viewed as complements the empirical findings demonstrate the power of economics to rationalize a phenomenon that has previously been understood almost solely through a socio cultural lens 3

inequality as a determinant of malnutrition and unemployment policy this paper explores the policy implications that are obtained once it is recognized that at low nutrition intakes a person s productivity is an increasing function of intake in the context of a fully general equilibrium model it is shown that if aggregate assets in an economy are neither large nor small certain patterns of lorenz improving asset redistributions or nutrition transfers increase aggregate output and reduce the volume of involuntary unemployment and the incidence of undernourishment copyright 1987 by royal economic society

faraway so close coupled climate and economic dynamics in an agent based integrated assessment model abstract in this work we develop an agent based model that offers an alternative to standard computable general equilibrium integrated assessment models iams the dystopian schumpeter meeting keynes dsk model is composed of heterogeneous firms belonging to capital good consumption good and energy sectors production and energy generation lead to greenhouse gas emissions which affect temperature dynamics climate damages are modelled at the individual level as stochastic shocks hitting workers labour productivity energy efficiency capital stock and inventories of firms in that aggregate damages emerge from the aggregation of losses suffered by heterogeneous interacting and boundedly rational agents the model is run focusing on a business as usual carbon intensive scenario consistent with a representative concentration pathway 8 5 we find that the dsk model is able to account for a wide ensemble of micro and macro empirical regularities concerning both economic and climate dynamics simulation experiments show a substantial lack of isomorphism between the effects of micro and macro level shocks as it is typical in complex system models in particular different types of shocks have heterogeneous impact on output growth unemployment rate and the likelihood of economic crises pointing to the importance of the different economic channel affected by the shock overall we report much larger climate damages than those projected by standard iams under comparable scenarios suggesting possible shifts in the growth dynamics from a self sustained pattern to stagnation and high volatility and the need of urgent policy interventions

evaluating familial support for the elderly the intrahousehold allocation of medical expenditures in rural pakistan introduction in this article i examine the determinants of medical expenditures on the elderly in rural pakistani households analyzing in particular the dependence of such expenditures on the economic contribution of the elderly to household income the results for older males are contrasted with those for younger males improved life expectancies in the south asian economies as in other developing economies have generated new policy interest in the economic status of the elderly there is however little empirical evidence on this topic while the scant research on the elderly in south asia undoubtedly reflects the fact that they represent one of the smallest demographic groups in these economies it also reflects the widespread belief that they are well provided for by the intergenerational households where the vast majority of them reside with their adult children however this assumption has been questioned by a number of scholars who find that medical expenditures on the elderly are closely correlated with the elderly s individual incomes and wealth household data from pakistan support such claims data on individual medical expenditures and days of illness are available from two household surveys a panel data set collected by the international food policy research institute ifpri and from the pakistan living standards measurement survey lsms both data sets reveal a strong correlation between the number of days of illness reported by adult males and age leading one to expect a similarly strong correlation between medical expenditures and age instead the ifpri data yield a correlation that is less than one would expect given the relationship between illness and age the lsms data set which provides information on many more

precision guided or blunt the effects of us economic sanctions on human rights this study analyzes the consequences of economic sanctions for the target country s human rights situation we offer a political economy explanation for different types of human rights infringements or improvements in reaction to economic shocks caused by sanctions based on that explanation we derive hypotheses linking sanctions to four types of human rights economic rights political and civil rights basic human rights and emancipatory rights we use endogenous treatment regression models to test those hypotheses by estimating the causal average treatment effect of us economic sanctions on each type of human rights within a uniform empirical framework unlike previous studies we find no support for adverse effects of sanctions on economic rights or basic human rights once the endogenous selection of sanctioned countries is modelled with respect to women s rights our findings even indicate a positive effect of sanctions that is associated with improvements in women s economic rights only our results for political rights and civil liberties suggest significant deterioration under economic sanctions we conclude that it is important to account for the potential endogeneity of economic sanctions and to distinguish different dimensions of human rights as the effects of economic sanctions along those dimensions may vary considerably

discounting uncertainty and revealed time preference recent studies suggest that direct preferences regarding investment gains and losses may significantly affect people s behavior in financial markets the present paper shows that this hypothesis has striking implications for the choice of discount rates in cost benefit analysis the paper explores a model in which the future benefits provided by a generic public good environmental quality should be discounted at a rate that is close to the market rate of return for risk free financial assets this holds true even when the public good has risk characteristics equivalent to those of risky forms of wealth such as corporate stocks

crime induced poverty traps abstract poverty makes thieves and thieves hamper economic growth we study these linkages in a model of modern sector job creation job creation has two effects higher labor demand tends to lower crime while higher output gives more to steal tending to increase crime at low levels of modernization the second effect dominates and as a consequence the model has decreasing returns to scale at higher levels of modernization there is increasing returns to scale due to declining crime the economy may end up in a poverty trap with high crime and low production or obtain full modernization with low crime rates the danger of ending up in a poverty trap has implications for economic policies we show for instance that a reform intended to improve efficiency may throw the economy into a vicious circle of increasing crime and stagnation if implemented too fast

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

discount schedules and grower incentives in grain marketing in this paper we develop a microeconomic optimization model of grain elevator cleaning and commingling decisions when the firm is faced with different discounting schedules using generalizations of jensen s inequality it is shown that a convex concave discount schedule encourages commingling cleaning however a separate market for cleanings may qualitatively alter the optimal arrangement of grain wheat elevator records are studied to discern whether alternative discount schedules provide elevators with opportunities to cover the costs of rearranging grain composition rearrangement activities appear to be marginally profitable for some dockage levels

what causes violent crime this study uses panel data of intentional homicide and robbery rates for a sample of developed and developing countries for the period 1970 1994 based on information from the united nations world crime surveys to analyze the determinants of national crime rates both across countries and over time a simple model of the incentives to commit crimes is proposed which explicitly considers possible causes of the persistence of crime over time criminal inertia a panel data based gmm methodology is used to estimate a dynamic model of national crime rates this estimator controls for unobserved country speci ce ects the joint endogeneity of some of the explanatory variables and the existence of some types of measurement errors a icting the crime data the results showthat increases in income inequality raise crime rates crime tends to be countercyclical and criminal inertia is signi cant 2002 elsevier science b v all rights reserved

segregation rent control and riots the economics of religious conflict in an indian city religious conflict is an important problem in many ethnically diverse countries horowitz 1985 a growing literature in economics suggests that conflict over resources is frequently at the root of such violence see for instance esteban and ray 2007 a number of recent empirical papers provide evidence that negative economic shocks to a community and the consequent struggle for control over resources can help explain the eruption of historic tensions into acts of violence miguel et al 2004 oster 2004 and miguel 2005 we explore this link further by studying the relationship between hindu muslim violence and living arrangements in particular residential segregation within cities in india that is conditional on city level demographics and the overall degree of ethnic tension what are the characteristics of specific locations within a city where communal violence tends to emerge and what can this tell us about why some neighborhoods erupt in this manner at certain points in time communal violence at the neighborhood level

persistent commodity shocks and transitory crime effects abstract this paper studies the dynamic response of crime to a positive income shock we estimate the short and medium run effects that an increase in copper price had on the local economy and on criminal activity in chile which is the world s leading copper producer after a decade of high prices mining municipalities did not exhibit lower crime rates compared to non mining municipalities to explain this counterintuitive result we investigated heterogeneous dynamic effects and observed that property crimes decreased only at the beginning of the boom as the dynamics of unskilled employment are consistent with the crime cycle we argue that crime evolves due to temporary labor market adjustments

how disasters affect local labor markets the effects of hurricanes in florida this study improves upon the difference in difference approach by examining exogenous shocks using a generalized difference in difference gdd technique that identifies economic effects of hurricanes based on the quarterly census of employment and wages data worker earnings in florida counties hit by a hurricane increase up to 4 percent whereas earnings in neighboring counties decrease over time workers experience faster earnings and slower employment growth than workers in unaffected counties hurricanes have a greater impact in coastal and panhandle counties and powerful hurricanes have greater economic effects than weaker ones further the gdd technique is applicable to analyze a wider range of exogenous shocks than hurricanes

do female officers improve law enforcement quality effects on crime reporting and domestic violence escalation we study the impact of the integration of women in us policing between the late 1970s and early 1990s on violent crime reporting and domestic violence escalation along these two key dimensions we find that female officers improved police quality using crime victimization data we find that as female representation increases among officers in an area violent crimes against women in that area and especially domestic violence are reported to the police at significantly higher rates there are no such effects for violent crimes against men or from increases in the female share among civilian police employees furthermore we find evidence that female officers help prevent the escalation of domestic violence increases in female officer representation are followed by significant declines in intimate partner homicide rates and in rates of repeated domestic abuse these effects are all consistent between fixed effects models with controls for economic and policy variables and models that focus exclusively on increases in female police employment driven by externally imposed affirmative action plans resulting from employment discrimination cases

market and welfare effects of second generation consumer oriented gm products we examine the economic effects of the introduction of consumer oriented genetically modified gm products into the food system by developing a model of heterogeneous consumers and producers that allows for vertical and horizontal differentiation between the products available to consumers the model facilitates the estimation of consumer and producer surpluses in the product utility and product net returns spaces results show that the introduction of consumer oriented gm products can change the relationship between gm and conventional and organic products from one of vertical to one of horizontal product differentiation and can enhance both economic welfare and the market acceptance and growth of agricultural biotechnology

ethics welfare and markets an economic analysis the present article examines society s welfare when goods with identical physical attributes can be produced using two alternative technologies one of them less ethically desirable but less expensive for at least some producers for the scenario where identification costs must be borne by producers and consumers of the high quality good the outcome under unregulated markets is identical to the optimal solution of a central planner constrained to neither ban the undesirable technology nor segregate the low quality good however under certain circumstances the unregulated market equilibrium may be improved upon by government intervention that shifts the burden of identification costs to the producers of the low quality good or which bans the production of the low quality good the optimal intervention needs to be determined case by case and depends on consumer preferences relative production costs and relative costs of identification and fraud prevention

accounting for the risk of extreme outcomes in an integrated assessment of climate change abstract the potential for climate catastrophes represented by fat tailed distributions on consequences has attracted much attention recently to date however most integrated assessment models have either been largely deterministic or deterministic with ex post sensitivity analysis the conclusions of such analyses are likely to differ from those employing models that accurately characterize society s joint preferences concerning time and risk especially when distributions are fat tailed using a dynamic stochastic general equilibrium model adapted from nordhaus s dice model we show that failing to accurately account for risk can lead to substantial underestimation of the net benefits of greenhouse gas abatement a robust finding of our analysis is that a lenient policy ramp emissions reduction strategy is preferable over a more aggressive strategy such as that advocated by the stern review only if the model does not account for uncertainty about the climate system the carbon cycle and economic damages and specifies a consumption discount rate that is counterfactually higher than the historical global weighted average cost of capital of 4 0 in the debate over uncertainty and time discounting our results imply that what matters most in climate change assessment is the inclusion and particular specification of uncertainty rather than the precise choice of discount rate

genetically modified crops their market and welfare impacts a framework is developed for examining price and welfare effects of the introduction of genetically modified gm products in the short run non gm grain generally becomes another identity preserved product however more profound market effects are observed under some reasonable parameterizations when calibrated to reflect the u s corn market introducing gm technology increases aggregate welfare over a wide range of scenarios unless the corresponding production cost savings are small and consumers are seriously concerned about gm products the possibility that gm technology may reduce aggregate welfare is interesting because the model assumes rational agents and does not include regulatory constraints

swords or plowshares a theory of the security of claims to property this paper develops a general equilibrium model of the allocation of resources among appropriative and productive activities the model emphasizes the distinction between offensive weapons which are the instruments of predation and fortifications which provide defense against predation the analysis of this model shows how the equilibrium security of claims to property is determined the analysis focuses on the possibility of a nonaggressive equilibrium in which no resources are allocated to offensive weapons and claims to property are fully secure we also analyze the complex relation between economic welfare and the security of claims to property we find for example that a relatively poor agent could be better off in an equilibrium with less secure claims to property

universal pensions for developing countries summary the governments of new zealand mauritius namibia botswana bolivia nepal samoa brunei kosovo and mexico city provide a basic pension to the elderly with no test other than citizenship residence and age these universal non means tested pensions automatically protect an entire population in a way that contributory earnings related pensions never can the author examines the value of this scheme for low income countries and argues that an income test if desired is best done ex post through the tax system rather than ex ante even though there are few examples of ex post recovery systems operating in the world today

stochastic carbon sinks for combating carbon dioxide emissions in the eu abstract this paper carries out numerical calculations on the potential of carbon sinks in the eu emissions trading scheme ets and national commitments under conditions of stochastic carbon dioxide emissions from fossil fuels and carbon sequestration by forests chance constraint programming is used to analyze the role of stochastic carbon sinks for national and eu wide compliance costs the analytical results show that the inclusion of the carbon sink option can reduce costs for low enough marginal cost and risk discount but also that costless carbon sinks as by products from forestry are not part of a cost effective solution under a high reliability concern cost savings are reduced due to risk discounting under a reliability concern in particular when assigning chebyshev s inequality as compared with a normal probability distribution it is also shown that the supply of forest sinks on the market depends on the differences in marginal abatement cost between the trading and the non trading sectors and in risk discounting between achievements of the ets cap and the national commitment relatively low marginal abatement cost in the non trading sector and high risk discounting of national commitment achievements increase the supply of sinks in the market and hence reduces the equilibrium price the empirical application illustrates the importance of risk discounting for the magnitude of cost savings obtained from introducing forest carbon sinks in the eu ets and national commitments

economic and welfare impacts of commercializing a herbicide tolerant biotech wheat abstract a transgenic variety of spring wheat was proposed for deregulation in north america in 2002 more recently the developer shelved this plan in this paper a quantitative model is used to analyze the possible economic impact of commercializing a crop for which there may be sizable consumer resistance at issue is whether and under what conditions the economic benefits from biotech wheat could be outweighed by economic costs the analysis also addresses the distribution of costs and benefits among stakeholders producers consumers and us taxpayers specific attention is given to the impacts on consumers in non biotech and biotech market segments and those in the united states and foreign countries under base case assumptions the analysis suggests that commercialization of biotech wheat could lead to a small net loss of total economic welfare results depend critically on several model parameters the rate of biotech adoption unit cost savings for biotech producers the share of the non biotech market segment and extra costs associated with a dual marketing system for wheat

poverty and crime in 19th century germany we estimate the impact of poverty on crime in 19th century bavaria germany rainfall is used as an instrumental variable for grain rye prices to address econometric identification problems in the existing literature the rye price was a major determinant of living standards during this period the rye price has a positive effect on property crime a one standard deviation increased property crime by 8 ols estimates are twice as large as instrumental variable estimates highlighting the value of our empirical approach higher rye prices lead to significantly less violent crime though and we argue that higher beer prices caused by the higher rye prices are a likely explanation

market opportunities genetic endowments and intrafamily resource distribution child survival in rural india the authors examine how intrafamily resource allocations respond to changes in economic conditions and to genetic differences in children by estimating the determinants of variations in the sex specific survival differentials of rural indian children based on standard census and household survey data they explore in particular the hypothesis that such differences are related to the relative returns to survival with households selectively allocating resources to children in response to variation in sex differences in their expected earnings opportunities as adults data are from the 1961 census and a 1971 household survey excerpt

economic shocks and crime evidence from the crash of ponzi schemes abstract in november 2008 colombian authorities dismantled a network of ponzi schemes making hundreds of thousands of investors lose tens of millions of dollars throughout the country using original data on the geographical incidence of the ponzi schemes this paper estimates the impact of their breakdown on crime we find that the crash of ponzi schemes differentially exacerbated crime in affected districts confirming the intuition of the standard economic model of crime this effect is only present in places with relatively weak judicial and law enforcement institutions and with little access to consumption smoothing mechanisms such as microcredit in addition we show that with the exception of economically motivated felonies such as robbery violent crime is not affected by the negative shock

are remittances insurance evidence from rainfall shocks in the philippines several facts motivate this study first life in developing countries is prone to many kinds of risk such as crop and income loss due to natural disasters weather insect infestations and fire and civil conflict second international migration and remittance flows are substantial and growing between 1965 and 2000 individuals living outside their country of birth grew from 2 2 to 2 9 percent of the world population totaling 175 million people in 2000 the remittances that these migrants send to their countries of origin are an important but poorly understood type of international financial flow this article examines a mechanism for coping with shocks ex post on which previous micro level studies have not focused remittances from family members overseas at the international level it is commonly posited that remittance flows from overseas buffer economic shocks in migrants home countries but there have been relatively few empirical tests of this claim with micro level household data related research on the role of domestic migration in pooling risk within extended families includes lucas and stark 1985 rosenzweig and stark 1989 and paulson 2000