insecure alliances risk inequality and support for the welfare state popular support for the welfare state varies greatly across nations and policy domains we argue that these variations vital to understanding the politics of the welfare state reflect in part the degree to which economic disadvantage low income and economic insecurity high risk are correlated when the disadvantaged and insecure are mostly one and the same the base of popular support for the welfare state is narrow when the disadvantaged and insecure represent two distinct groups popular support is broader and opinion less polarized we test these predictions both across nations within a single policy area unemployment insurance and across policy domains within a single polity the united states using a new survey results are consistent with our predictions and are robust to myriad controls and specifications when disadvantage and insecurity are more correlated the welfare state is more contested hy do citizens support the welfare state the answer remains as elusive as the question is fundamental we know that patterns of public support vary greatly across nations and domains of social policy we also know that these differences are associated with variations in levels of spending and program generosity brooks and manza 2006a 2006b 2007 kang and powell 2010 svallfors 1997 2004 yet there has only been limited effort to explain why patternsofpublicsupportvary thatis whyaggregatepublic support polarization of opinion and the breadth of opposition to the welfare state differ across societies and social policy areas in this article we develop such a proposition distinguish it from other leading claims and show that it finds strong confirmation not only in cross national analysis but also when examining popular support for different social policies within the united states the proposition is that the structure of support for the welfare state varies with the joint distribution of economic disadvantage low income and economic in

social comparisons and contributions to online communities a field experiment on movielens we design a field experiment to explore the use of social comparison to increase contributions to an online community we find that after receiving behavioral information about the median user s total number of movie ratings users below the median demonstrate a 530 percent increase in the number of monthly movie ratings while those above the median decrease their ratings by 62 percent when given outcome information about the average user s net benefit score above average users mainly engage in activities that help others our findings suggest that effective personalized social information can increase the level of public goods provision

the self reinforcing dynamics of economic insecurity and obesity this article models the dynamic effects of economic insecurity on body weight using australian panel data we infer an individual s level of economic insecurity as a function of exposure to various financial risks and employ regression equations to explore its effect upon current period body mass index bmi scores estimates reveal that a sustained standard deviation increase in economic insecurity raises an individual s bmi at a rate of approximately 0 35 units per year quantile regressions are then used to estimate the sensitivity of body weight to insecurity at different percentiles of the distribution and we find that persons who are overweight and obese are much more seriously affected this implies that shocks that make individuals more financially vulnerable can generate harmful self sustaining cycles of risk and weight gain we also model the dynamics of insecurity and show that it is a persistent phenomenon for persons with high levels of exposure and lower incomes this finding indicates that persons of lower socio economic status are more likely to encounter vicious cycles of increasing insecurity and obesity which partially explains why weight related health problems are unusually highly concentrated amongst these individuals

macroeconomic implications of conspicuous consumption a sombartian dynamic model this chapter presents a dynamic general equilibrium model in which consumers have status preference i investigate the manner in which capital accumulation is impeded by conspicuous consumption a la corneo and jeanne j public econ 66 55 71 1997a following the literature social norms are given as either bandwagon type or snob type i then show that when the economy is characterized by a bandwagon type social norm capital accumulation exhibits interesting patterns those patterns include for example an oscillating convergence path the rise of the economy feeds its decay through conspicuous consumption and that decay suppresses conspicuous consumption and engenders prosperity as predicted by sombart liebe luxus und kapitalismus reprinted 1967 deutscher taschenbuch verlag munchen 1912

double sided auction mechanism design in electricity based on maximizing social welfare an efficient electricity double sided auction mechanism should control market power and enhance the social welfare of the electricity market based on this goal the paper designs a new double sided auction mechanism in the new mechanism the social welfare contribution of each participant plays a pivotal role because this contribution is the critical factor in market clearing payment settling and transaction matching rules in particular each winner of the auction can gain transfer payments according to his contribution to social welfare in the electricity market and this gives the mechanism the ability to control the market power of some participants at the same time this mechanism ensures that the market organizer balances his budget we then conduct a theoretical and empirical analysis based on the spanish electricity market both of the results show that compared to the uniform pricing mechanism the new mechanism can reduce market power of participants and enhance the social welfare of the electricity market

optimal income tax in the presence of status effects abstract the existence of distortions from individuals competing to attain social status by using consumption signals justifies some measure of income tax as a counter acting distortion the question posed here is whether it also constitutes a reason for a more progressive income tax schedule the answer is found to be broadly negative if progressiveness is interpreted as a more convex tax schedule unless the rich are more concerned with status seeking than the poor on the other hand status seeking makes the optimal tax schedule steeper so that redistribution is increased essentially the analysis of status seeking based on a signaling approach confirms and strengthens the existing view of an optimal tax schedule and can be incorporated into the diamond american economic review 88 1998 83 95 approach

application of mechanism design to electric power markets republished as competition is introduced across the electric power industry around the world market design for the industry is urgently needed to shape its future structure and performance when generator companies compete with one another in a deregulated market they may not be willing to share the information needed to perform an economic dispatch of the generation using game theory this paper designs a new mechanism that achieves efficiency economic dispatch in spite of this information problem in this mechanism when each company acts in the best of its own interest the outcome is efficient the paper demonstrates the merits of the mechanism by simulations including the ieee 14 bus case this paper contained an incorrect graphic when it originally appeared in the ieee transactions on power systems vol 16 no 1 p 1 8 2001 it is republished here with the correct graphic

the social contingency of wants abstract economic models typically assume that individual wants are determined by forces exogenous to the economic system social psychology and consumer research in contrast support the view that the perceived benefits of goods and services are strongly affected by endogenously determined social norms we present a selective overview of the literature on the relationship between consumption and well being exploring the ways in which informal arguments from social science might be linked to formal models of economic behavior we find that the fixed preferences hypothesis leads to the systematic undervaluation of environmental services and the underprovisioning of environmental goods

inducing truthful revelation of generator reliability abstract liberalised electricity markets often include a capacity remuneration mechanism to allow generation firms recover their fixed costs various de rating factors and or penalties have been incorporated into such mechanisms in order to reward the unit based on the contribution they make to system security which in turn depends on the unit s reliability however this reliability is known to the firm but not to the regulator we adopt a mechanism design approach for capacity payments based on a declaration by the firm of their reliability the mechanism scales payments and penalties according to this declared reliability such that the firm s profit maximising strategy is to truthfully reveal its reliability a stochastic mixed complementarity problem mcp is used to model the interactions between the firms and we apply this methodology to a test system using irish electricity market data truth telling is induced increasing the efficiency of capacity payments while eliminating the requirement for the regulator to allocate resources to discovering reliability

measuring economic insecurity we provide a systematic treatment of the notion of economic insecurity assuming that an individual s sentiment of insecurity depends on the current wealth level and its variations experienced in the past we think of wealth as a comprehensive variable encompassing anything that may help in coping with adverse occurrences the current wealth level could also be interpreted as incorporating the individual s evaluation of future prospects variations in wealth experienced in the recent past are given higher weight than experiences that occurred in the more distant past two classes of measures are characterized with sets of plausible and intuitive axioms

direct minimum uplift model for pricing pool based auction with network constraints auctions with non convexities as considered in this paper use a multi period optimal power flow opf model based on generators offers to calculate efficient schedules the standard locational marginal prices lmps may not support these schedules and uplifts are needed to help the generators break even this paper presents a direct minimum uplift dmu pricing model which is formulated as a mixed integer linear programming problem with uplift minimization objective new dmu prices are major variables constrained with decomposition formula based on shift factors similar to the actual practice of developing lmps the remaining constraints reflect the generators profits and uplifts modeled as functions of the dmu prices the main feature of the dmu model is individual rationality attained in pool based auction under prices properly reflecting network constraints complemented with minimum uplifts the model is validated on several cases including the ieee 24 node system

is it vulnerability or economic insecurity that matters for health this paper contrasts the mental and physical health impacts of vulnerability and economic insecurity an individual is vulnerable if they are at risk of future absolute material deprivation while they are insecure if they are threatened by losses in relative status using data from the first eleven waves of the australian hilda panel we generate four alternative measures of real or perceived downside economic risk and employ panel data models to estimate their impacts on sf 36 mental and physical health indices we test our hypotheses using a series of polynomial interactions which allow the effect sizes to vary non linearly with income baseline estimates show that economic risks have consistently negative consequences for both mental and physical health with the former effect being around three times the size of the latter however our main finding is that increasing incomes do little to mitigate the sensitivity of health to these risks this suggests it is mostly the prospect of loss rather than deprivation that impacts upon wellbeing the finding is important as it helps distinguish between competing models i e beveridge vs bismarck for social insurance

the impact of income shocks on health evidence from cohort data we study the eect of permanent income innovations on health for a prime aged population using information on more than half a million individuals sampled over a twenty five year period in three dierent cross sectional surveys we aggregate data by date of birth cohort to construct a synthetic cohort dataset with details of income expenditure socio demographic factors health outcomes and selected risk factors we then exploit structural and arguably exogenous changes in cohort incomes over the eighties and nineties to uncover causal eects of permanent income shocks on health we find that such income innovations have little eects on health but do aect health behaviour and mortality

the effect of unionism on fringe benefits this study analyzes the impact of unionism on fringes paid to production workers using data on individual establishments it compares fringe expenditures in establishments having the same level of compensation per hour and finds that unionism raises the share of compensation allotted to fringes particularly to pensions vacation pay and life accident and health insurance in addition since unionism also raises the straight time wage rate itself a prime determinant of expenditures on fringes unionism has a very sizeable impact on total fringe expenditures as well as on the fringe share of compensation the union fringe effect exceeds in percentage terms the union wage effect and is sufficiently large to suggest that standard union wage studies understate the union effect on total compensation the study also compares the fringe expenditures of production and non production workers within the same establishment controlling for within establishment pay policies the findings suggest that the pres

diagram for a small planet the production and ecosystem possibilities curve abstract with the development of the gpi there is now an ecological alternative to gdp for measuring a country s economic performance but we still lack an ecological alternative to the ppc for illustrating a country s economic problem the diagram suggested here illustrates a country s production and ecosystem possibilities including climate stability flood control carbon sequestration aquifer recharge scenery recreation biological diversity and so on burning a rainforest to clear the land shifts a country s ppc outward giving the visual impression of an unmitigated improvement but such development causes a movement along the country s pepc as ecosystem services are transformed into gdp the slope of the pepc is the marginal rate of transformation which equals the ratio of the land s marginal marketable product to its marginal ecosystem product changes in technology create substitution and income effects that help explain the enclosure movement and the environmental kuznets curve much as employment of the human resource can be restrained to allow more leisure development of the natural resource can be restrained to preserve more ecosystem services commercial lobbying interests and rivalries for positional goods create distortions that move a country along its pepc to a materialistic misallocation with too little conservation an idealistic misallocation is also possible with too much preservation of the natural environment small is beautiful up to a point and that is evident in this diagram jacob viner s viner j 1937 studies in the theory of international trade harper and brothers new york analytical objections to the ppc are revived

dynamic asset allocation with relative wealth concerns in incomplete markets abstract in dynamic portfolio choice problems stochastic state variables such as stochastic volatility lead to adjustments of the optimal stock demand referred to as hedge terms or merton breeden terms by deriving an explicit solution in a two agent framework with a stochastic opportunity set we show that relative wealth concerns give rise to new hedge terms beyond the ordinary ones this is because the agents hedge against both exogenous changes in the state variable and endogenous decisions of the other agent depending on the parametrization of the model these new terms can significantly change the investors hedging demands we also show that both heterogeneity in risk aversion or relative wealth concerns can have similar effects on the heterogeneity in portfolio decisions formally we study a non cooperative non zero sum stochastic differential game for which we prove a verification theorem in a setting with an unspanned state variable

relative consumption and tax evasion abstract relative consumption effects or status concerns that feature jealousy in the sense of dupor and liu 2003 boost consumption expenditure if consumption is financed by labour income such status considerations increase labour supply and hence the tax base a higher taxable income in turn can make tax evasion more attractive we show for various specifications of preferences that the tax base effect generally dominates consequently relative consumption effects tend to reduce tax evasion this is true irrespective of whether tax parameters are exogenous guarantee a balanced budget or are set optimally

the social and private micro level consequences of homeownership abstract this paper reviews the literature that describes the micro level economic and social consequences of homeownership we adopt an interdisciplinary approach and include studies from economics sociology geography political science psychology and other disciplines our focus is on the set of consequences of homeownership in developed countries our list of potential outcomes of homeownership includes the impact on household wealth and portfolio choice mobility labor force participation urban structure and segregation home maintenance political and social activities health demographics self esteem and child outcomes there is substantial evidence that homeownership has important effects on some household behaviors and outcomes however we find that much of the past 30 year s literature on consequences of homeowning is deficient from a theoretical or econometric perspective we suggest solutions and identify research gaps present in the literature

purchase allocation and demand bidding in electric power markets the purchase allocation problem is one of the most important problems faced by an electric energy service provider under new market environments the optimal purchase allocation problem for dual electric power markets and demand bid generation are discussed in this paper the price volatility is explicitly considered in purchase allocation problems and the sequential nature is modeled by conditional stochastic characteristics an analytical solution for the optimal allocation is derived with given demand and statistical characteristics of the market prices the method for generating demand bids for purchaser based on market allocation and price forecasting is then developed the numerical simulations for market allocation and bid generation are demonstrated based on the actual data of the u s california power market

aging and the income value of housing wealth abstract the potential of reverse annuity mortgages to increase the current income of the elderly is analyzed we conclude that most low income elderly also have little housing equity in general a reverse annuity mortgage would substantially affect the income only of the single elderly who are very old whose life expectancy is short on the other hand if the transfer were in the form of a lump sum payment rather than an annuity the payment would increase the liquid wealth of most elderly families by a large fraction thus legislation that would facilitate the market for reverse mortgages could improve substantially the financial status of a small proportion of the elderly

housing related well being in older people the impact of environmental and financial influences with the ageing of populations in europe one can expect new pressures on the existing housing stock to accommodate those older individuals with mobility problems at the same time housing assets are expected to be called upon to guarantee financial security for older homeowners the accessibility and suitability of housing and the financial security that housing provides may exert an independent influence on well being to what extent either factor prevails in influencing well being has important policy implications this paper empirically examines the impact of investment and environmental housing influences on satisfaction with housing in a population of older people data are used from the european country which had the greatest number of homeowners at the time of the survey spain and where at the same time older people rely heavily on informal caregiving robust evidence is presented to suggest that satisfaction with housing in old age is indeed independently associated with environmental influ

conspicuous consumption snobbism and conformism abstract we develop a model in which consumers purchase a conspicuous good in order to signal high income and thereby achieve greater social status in equilibrium the signalling value of conspicuous consumption depends in an identifiable way on the number of consumers and consumer behaviour is characterized by either snobbism or conformism the market demand curve for the conspicuous good may exhibit a positive slope if consumers are conformist we derive some unconventional policy implications concerning the taxation of luxuries and the voluntary provision of public goods

testing the central prediction of housing tenure transition models abstract housing tenure choice is usually assumed to depend on relative tenure specific user costs controlling for the household s lifetime income these models assume perfect capital markets however there is substantial evidence that potential first time homebuyers face significant borrowing constraints this paper proposes a tenure choice model based on tenure transition theory principles that recognizes the existence of both exogenous and endogenous liquidity constraints it predicts that tenure choice depends centrally on a household s liquefiable wealth controlling for the asset price of housing this prediction is tested using household survey data from both the united states and canada

getting ahead of the joneses when equality increases conspicuous consumption among bottom tier consumers it is widely believed that increasing the equality of material possessions or income in a social group should lead people at the bottom of the distribution to consume less and save more however this prediction and its causal mechanism have never been studied experimentally five studies show that greater equality increases the satisfaction of those in the lowest tier of the distribution because it reduces the possession gap between what they have and what others have however greater equality also increases the position gains derived from status enhancing consumption since it allows low tier consumers to get ahead of the higher proportion of consumers clustered in the middle tiers as a result greater equality reduces consumption when consumers focus on the narrower possession gap but it increases consumption when they focus on the greater position gains i e when consumption is conspicuous social competition goals are primed and the environment is competitive

ageing in place exploring elderly people s housing preferences in spain the greater visibility of societal ageing and higher share of individuals with disabilities have created new challenges for housing and urban policies housing needs can influence individual choice of living environment and the willingness to undertake housing improvements this is especially relevant in southern european countries where the family is still the main provider of care for the elderly this study makes an empirical analysis of the underlying preferences for housing and perceptions of housing suitability in the event of dependency in old age drawing upon a new representative database of the spanish population it explores whether preferences are stable for different age groups and different levels of individual affluence calculated in terms of income and housing assets the study found preferences for ageing in place which became stronger as individuals grew older the effect of affluence or the wealth effect was considerable acting independently and exhibiting higher health needs

the shattered iron rice bowl intergenerational effects of chinese state owned enterprise reform reform of the chinese state owned enterprise soe sector in the late 1990s triggered massive layoffs 34 million employees and marked the end of the iron rice bowl guarantee of employment security for the remaining 67 million workers an expanding international literature has documented the adverse health impacts of economic insecurity on adults but has typically neglected children this paper uses the natural experiment of soe reform to explore the causal relationship between increased parental economic insecurity and children s bmi z score using province year level layoff rates and income loss from the layoffs we estimate a generalised difference in differences model with child fixed effects and year fixed effects for a medium build 10 year old boy a median treatment effect implies a gain of 1 8 kg and a 2 2 percentage point increase in the overweight rate due to the reform anxiety about potential losses causes weight gain for boys whose soe parents kept their jobs unconditional quantile regressions suggest that boys who are heavier are more likely to gain weight girls are not significantly affected intergenerational effects therefore increase the estimated public health costs of greater economic insecurity