loss aversion and price volatility as determinants of attitude towards and preference for variable price in the swedish electricity market the results of a survey of a random sample of 488 swedish residents showed that a positive attitude towards and preference for a variable price agreement with the incumbent electricity supplier was negatively affected by loss aversion and a positive attitude also negatively affected by beliefs about price volatility although correlated with attitude and preference age education and current choice of a variable price agreement had no independent effects income and current electricity costs had no effects

population growth and savings in ldcs a survey article both population growth and savings have traditionally taken a certain place of pride among models of growth and development the purpose of this paper is to examine the literature concerning the hypothesis that the savings rate itself is a function of the population growth rate and this effect exacerbates the negative effect of population on economic growth the evidence is examined from three perspectives i macroeconomic effects of variations in the age structure of the population ii choice theoretic models of family decision making particularly the joint determination of fertility decisions and savings decisions and iii market level interactions of variables which determine individual decisions the paper concludes that both population growth and savings rates are inextricably tied up in the process of economic development there are many ways in which the two variables may interact but no generalizations can be safely made across countries

population pressures saving and investment in the third world some puzzles for over 25 years economists and population specialists have generally embraced the plausible notion that rapid rates of population growth exert a quantitatively significant adverse impact on the pace of economic growth through the effects of age dependency capital shallowing and investment diversion however empirical research has not sustained these hypotheses individually or collectively one general factor appears to account for this variance between theory and facts the tendency to develop analyses with simplifying assumptions that are not then subjected to adequate empirical tests at its most fundamental level economics is about making choices in the face of scarcity in the literature relating population growth savings and investment and modeling of choices has been amazingly narrow indeed almost a economic at the household level population pressures are usually modeled by engineering like fixed coefficient formulae in contrast trade offs between quantities or qualities of consumption are seldom admitted parents work force behavior is usually taken to be uninfluenced by family size and children are typically assumed to contribute nothing productively similarly at the government level population pressures are modeled to show population sensitive expenditures taking priority and crowding out more productive spending in reality governments respond with more flexibility than the models suggest and some of the population sensitive expenditures may be growth enhancing more elaborate analyses reveal 2nd order effects economizing on scarce resources and an expansion in supply

retail competition in electricity markets abstract the introduction of competition into retail electricity supply gave rise to great expectations however to date its performance has proven less than stellar owing primarily to the theoretical concepts underpinning this reform which draw heavily on the austrian school neither consumers decision processes nor this sector s technical paradigm were adequately accounted for leading to an uncorrect estimation of the expected impact of opening to competition short and medium term prospects for the evolution of retail markets must be reconsidered from the perspective of greater stability not a generalization of competition but rather a persistent segmentation between active and inactive clients not a large and rapid diffusion of radical innovations in commercialisation with the potential for undermining the incumbents positions

the impact of wind power generation on the electricity price in germany abstract this paper investigates the relationship between intermittent wind power generation and electricity price behaviour in germany using a garch model i evaluate the effect of wind electricity generation on the level and the volatility of the electricity price in an integrated approach the results show that variable wind power reduces the price level but increases its volatility this paper s results also indicate that regulatory change has stabilised the wholesale price the electricity price volatility has decreased in germany after a modification of the marketing mechanism of renewable electricity this gives confidence that further adjustments to regulation and policy may foster a better integration of renewables into the power system

household risk management and optimal mortgage choice the portfolio of the typical american household is quite unlike the diversie ed portfolio of liquid assets discussed in e nance textbooks the major asset in the portfolio is a house a relatively illiquid asset with an uncertain capital value the value of the house generally exceeds the net worth of the household which e nances its homeownership through a mortgage contract to create a leveraged position in residential real estate other e nancial assets and liabilities are typically far less important than the house and its associated mortgage contract the importance of housing in household wealth is illustrated in figure i this e gure plots the fraction of household assets in housing and in equities against the wealth percentile of the household poor households appear at the left of the e gure and wealthy households at the right data come from the 1989 and 1998 survey of consumer finances the e gure shows that middle class american families from roughly the fortieth to the eightieth percentile of the wealth distribution have more than half their assets in the form of housing even after the expansion of equity ownership during the 1990s equities are of negligible importance for these households 1

lottery dependent utility in this paper we propose a model for decision making under risk that is capable of predicting empirically observed preference patterns that have been found to be incompatible with the expected utility model the model departs from the classical expected utility model by allowing utilities to depend on the lottery the dependence of utilities on the lottery being evaluated is achieved by restricting the utility measure to a convenient parametric family of functions the idea then is to use each lottery to determine a specific parameter value thus characterizing the utility function for each particular lottery the expected value of this lottery dependent utility function provides the overall measure of preference the model retains the properties of transitivity stochastic dominance and continuity it also permits types of analyses such as exploitation of basic attitudes toward risk through risk aversion properties that have been found useful in decision theory the primary use of our model is in descr

decreasing risk aversion and mean variance analysis on formule un ensemble de postulats d aversion pour le risque absolu decroissant et on montre que seules les fonctionnelles d utilite moyenne variance peuvent les satisfaire

on the statistical foundations of non linear utility theory the case of status quo dependent preferences abstract an account of non expected utility is given which resumes concepts of analysis from statistical decision theory and combines them with standard principles of preference theory such as weak order continuity and stochastic dominance a three parameter family of probability dependent utility functions is specified which is governed by the decision maker s aspiration level distribution of present wealth or status quo and discount parameter for future risks the approach offers a simple resolution of the allais paradox and explains basic patterns of probability dependent risk attitudes arising in theoretical and applied decision analysis

simple solutions to the initial conditions problem in dynamic nonlinear panel data models with unobserved heterogeneity i study a simple widely applicable approach to handling the initial conditions problem in dynamic nonlinear unobserved effects models rather than attempting to obtain the joint distribution of all outcomes of the endogenous variables i propose finding the distribution conditional on the initial value and the observed history of strictly exogenous explanatory variables the approach is flexible and results in simple estimation strategies for at least three leading dynamic nonlinear models probit tobit and poisson regression i treat the general problem of estimating average partial effects and show that simple estimators exist for important special cases copyright 2005 john wiley sons ltd

the interest elasticity of savings in developing countries the existing evidence abstract this paper presents a critical analysis of some of the most recent empirical work on the interest elasticity of savings in developing economies supported by a set of empirical results the paper argues that a the real interest elasticity of savings is not easily detected using the existing empirical models which generally yield insignificant interest rate parameters in the seventies b the existing models suffer from serious defects that make if very difficult to interpret the estimated parameters

price sensitivity of residential energy consumption in norway abstract the main aim of this paper is to test the stability of the results of a model which focus on the relationship between the choice of heating equipment and the residential energy consumption the results for the income and energy price variables are of special interest stability in the time dimension is tested by applying the model on micro data for each of the years 1993 1995 the parameter estimates are stable within a 95 confidence interval however the estimated impact of the energy price variable on energy consumption was considerably weaker in 1994 than in 1993 and 1995 the results for two different income groups in the pooled data set are also subject to stability testing the energy price sensitivity in residential energy consumption is found to be higher for high income households than for low income households

risk pricing in a non expected utility framework abstract risk prices are calculated as the certainty equivalents of risky assets using a recently developed non expected utility non eu approach to quantitative risk assessment the present formalism for the pricing of risk is computationally simple realistic in the sense of behavioural economics and straightforward to apply in operational research and risk and decision analyses

comparative statics and non expected utility preferences abstract researchers have shown that many though not all of the basic results of expected utility analysis can be more or less directly generalized to non expected utility preferences this paper describes the essential difference between results which can be extended in this manner and those which cannot and shows that an important family of comparative statics theorems falls into the former class

population dependency rates and savings rates stability of estimates challenging the notion that increasing dependency rates lower the national savings rate in developing countries this study explored the stability of dependency effects over time while holding constant the sample of countries in an attempt to examine the link between the two rates specifically researchers estimated savings rate equations for 1975 1980 and 1985 and looked at regionally differential effects of dependency ratios on the national savings rate these equations were estimated separately for each year for developing countries in africa latin america and asia the model structure proved generally unstable for the years between 1975 and 1980 and for countries in africa and latin america between 1975 and 1985 the savings model structure was significantly different across each region for each of the 3 years examined as population variables on savings rates varied among developing countries depending on their geographical location results concurred with findings from earlier research suggesting the impact country composition included in the estimation has upon study results broadly speaking however dependency rate effects did not significantly change over time no strong evidence was produced to support generalizations that increasing dependency rates lower the national savings rate data sources and savings equations and variables are discussed in the report

dependency rates and savings rates reply arthur goldberger s comment is a tempest in a teacup this is readily verified from the data presented in table 1 this table reproduces from my original paper the coefficients for paired equations estimated with three different samples in which in s n and ln si y were the dependent variables as the data of table 1 indicate in 7 of the 12 cases the coefficients are identical through the second decimal place furthermore all the discrepancies are quantitatively very small in 9 cases the paired parameter estimates are within 1 percent of each other in the remaining cases the differences are of the magnitude of 0825 0012 and 0011 these are well within the margins of accuracy within which anyone views data generated from the national income accounts of the less developed countries in light of these considerations it is difficult to understand the tone of goldberger s comment the reason for the slight discrepancies is straightforward my observations for s n and s y were computed separately from data supplied by the statistical office of the agency for international development with the rounding introduced by the series for n and y it is not surprising that the series for s n is not identically equal to the series which would be obtained by forming s n from the product of y n and s y similar slight discrepancies have also been reported in other econometric work in which equations for s n and s y have been estimated with separately computed data series in any case nowhere in my paper did i even refer to the precise numerical parameter estimates obtained in my equations the main conclusions of the paper were that the dependency variables were quantitatively an important determinant of international savings rates and further that introduction of these variables greatly reduced the importance of percapita income on which some previous discussions had focused neither of these conclusions is affected by goldberger s comment

two moment decision models and expected utility maximization two moment decision models are consistent with expected utility maximization only if the choice set or the agent s preferences are restricted this paper identifies a restriction which is sufficient to ensure this consistency and confirms that it holds in many economic models the implications for economic analysis are then derived two different approaches to representing an agent s preferences over strategies yielding random payoffs are in wide use under the mean standard deviation ms approach the agent is assumed to rank the alternatives according to the value of some function defined over the first two moments of the random payoff while the expected utility eu criterion assumes that the expected value of some utility function defined over payoffs is used instead the fact that there are these two competing approaches has generated a considerable literature some authors are concerned with the advantages and disadvantages of each while others deal with conditions under which the potentially different approaches would yield the same results or at least approximately so space does not

the effect of price on electricity contract choice i explore how households switch between fixed price and variable price electricity contracts in response to variations in price and temperature conditional on previous contract choice using panel

the interrelated dynamics of unemployment and low wage employment this paper examines the extent of state dependence in unemployment and the role played in this by intervening low wage employment a range of dynamic random and fixed effects estimators are compared low wage employment is found to have almost as large an adverse effect as unemployment on future prospects and the difference in their effects is found to be insignificant evidence is presented that low wage jobs act as the main conduit for repeat unemployment and considerably increases its probability obtaining a higher wage job reduces the increased risk of repeat unemployment to insignificance

heterogeneous preferences and the individual change to alternative electricity contracts abstract based on data from a large scale computer based survey among more than 3700 citizens in germany this paper empirically disentangles the determinants of the general change of electricity contracts and the specific change from any green or non green to current green electricity contracts within the last ten years our econometric analysis reveals a strong relevance of behavioral factors and individual values and norms for example patience which was measured by an incentivized experiment included in the survey has a significantly positive effect on both general switches to alternative electricity contracts and specific switches to green electricity contracts furthermore trust and less robust social preferences also measured by an incentivized experiment have additional significantly positive effects on the specific change to green electricity contracts our estimation results also imply an important role of political identification i e an ecological policy orientation is strongly significantly positively correlated with the change to green electricity contracts furthermore several household specific factors like relocation decisions as well as socio demographic and socio economic variables like household income are also relevant the empirical analysis thus provides new explanation patterns for the phenomenon that relatively few households regularly change their electricity contracts and specifically switch to green electricity contracts although they have high stated preferences for such changes our insights suggest several directions for policy and electricity suppliers to increase these switching rates for example the high importance of trust for the change to green electricity contracts suggests transparency initiatives of electricity suppliers to decrease concerns against renewable energies

children and savings in less developed countries abstract a commonly cited motive for childbearing in ldcs is the support in old age provided by one s children alternative means of retirement support become available as a country develops this paper presents a simple two period model in which financial institutions are allowed to substitute for children in the provision of this service the quality of financial institutions is given an operational definition and the hypothesis of the model are tested on a cross section sample of countries

choosing between fixed and adjustable rate mortgages note introduction in recent years mortgage borrowers have been given a wide variety of financing methods from which to choose e g guttentag 1983 barnett and mckenzie 1984 examples include assumptions adjustable rates shared appreciation growing equity and numerous others by far the dominant two have been the standard fixed rate and the adjustable rate mortgage beginning with regulation changes in 1979 adjustable rate mortgage lending at first was fairly restricted but with the major deregulation change in 1981 the types of adjustable rate mortgages have proliferated 2 now lenders have the flexibility to use numerous indexes including inflation and disposable income indexes make interest rate changes independent of payment changes and allow negative amortization the purpose of this paper is to examine the choice between fixed and adjustable rate mortgages 3 two views have dominated the theoretical literature one that emphasizes the irrelevance of borrower characteristics in the mortgage choice decision given the prices and terms of the contract and one that focuses on the potential impact of borrower characteristics assuming asymmetric information 4 this paper is the first to examine empirically the impact of pricing and borrower characteristics on the choice of mortgage contract

are the non monetary costs of energy efficiency investments large understanding low take up of a free energy efficiency program this paper finds striking evidence that individuals and households bypass opportunities to improve energy efficiency that require zero out of pocket expenditures and are widely believed to be privately beneficial we report results from a large scale randomized controlled trial that significantly reduced barriers to participation in the federal weatherization assistance program wap this program the largest residential energy efficiency program in the country aims to reduce the energy burden of low income americans by installing energy efficiency measures in their homes since the program s inception in 1976 more than 7 million households have received weatherization assistance related work fowlie greenstone and wolfram 2015 finds that participation in this program significantly reduces energy consumption and associated energy expenditures among participating households 1 these sizeable

limited attention and the residential energy efficiency gap abstract inattention may be an important contributor to the energy efficiency gap and may be particularly acute in residential buildings where many different features will determine a home s energy

consumers perceptions and misperceptions of energy costs this paper presents three initial stylized facts from the vehicle ownership and alternatives survey voas a nationally representative survey that elicits consumers beliefs about gasoline prices and the relative energy costs of autos with different fuel economy ratings first american consumers devote little attention to fuel costs when purchasing autos second consistent with a cognitive bias called mpg illusion consumers underestimate the fuel cost differences between low mpg vehicles and overestimate the differences between high mpg vehicles third americans mean and median expected future gas prices were above current prices and predictions of the futures market at the time of the survey although it is often argued that misperceived energy costs justify policies to encourage the sale of energy efficient durable goods these results show that misperceptions and expectations that differ from market information could either increase or decrease energy efficiency