asset pricing implications of pareto optimality with private information we compare the empirical performance of a standard incomplete markets asset pricing model with that of a novel model with constrained pareto optimal allocations we represent the models stochastic discount factors in terms of the cross sectional distribution of consumption and use these representations to evaluate the models empirical implications the first model is inconsistent with the equity premium in the united states united kingdom and italy the second model is consistent with the equity premium and the risk free rate in all three countries if the coefficient of relative risk aversion is roughly 5 and the quarterly discount factor is less than 0 5

evaluating asset pricing models with limited commitment using household consumption data we evaluate the asset pricing implications of a class of models in which risk sharing is imperfect because of limited enforcement of intertemporal contracts lustig 2004 has shown that in such a model the asset pricing kernel can be written as a simple function of the aggregate consumption growth rate and the growth rate of consumption of the set of households that do not face binding enforcement constraints these unconstrained households have lower consumption growth rates than all other households in the economy we use household data on consumption growth from the u s consumer expenditure survey to identify unconstrained households to estimate the pricing kernel implied by these models and evaluate their performance in pricing aggregate risk we find that for high values of the relative risk aversion coecient the limited enforcement

technology adoption impact and extension in developing countries agriculture a review of the recent literature given the stagnant agricultural productivity and persistent food insecurity in low income countries notably in sub saharan africa ssa there has been continued interest in the adoption of new technology and its impact on productivity in these regions interestingly there are signs of green revolution in maize and rice in ssa reflected in sharply increasing yield trends in advanced regions to increase crop yields and sustain yield gains recent case studies of technology adoption unanimously recommend the adoption of integrated farm management systems particularly in ssa on the other hand since the 2010s there have been increasing numbers of studies on social network or farmer to farmer technology extension these studies explore more efficient extension systems than traditional public sector extension approaches this article reviews both recent case studies of technology adoption and its productivity impacts as well as studies on agricultural extension to identify common findings shortcomings and major remaining issues

agricultural household models extensions applications and policy this book presents the basic model of an agricultural household that underlies most of the case studies undertaken so far the model assumes that households are price takers and is therefore recursive the decisions modeled include those affecting production and the demand for inputs and those affecting consumption and the supply of labor comparative results on selected elasticities are presented for a number of economies the empirical significance of the approach is demonstrated in a comparison of models that treat production and consumption decisions separately and those in which the decisionmaking process is recursive the book summarizes the implications of agricultural pricing policy for the welfare of farm households marketed surplus the demand for nonagricultural goods and services the rural labor market budget revenues and foreign exchange earnings in addition it is shown that the basic model can be extended in order to explore the effects of government policy on crop composition nutritional status health saving and investment and to provide a more comprehensive analysis of the effects on budget revenues and foreign exchange earnings methodological topics primarily the data requirements of the basic model and its extensions along with aggregation market interaction uncertainty and market imperfections are discussed the most important methodological issues the question of the recursive property of these models is also discussed

decomposing learning by doing in new plants the paper examines learning by doing in the context of a production function in which the other arguments are labor human capital physical capital and vintage as a proxy for embodied technical c

cyclical dynamics in idiosyncratic labor market risk is individual labor income more risky in recessions this is a difficult question to answer because existing panel data sets are so short to address this problem we develop a generalized method of moments estimator that conditions on the macroeconomic history that each member of the panel has experienced variation in the cross sectional variance between households with differing macroeconomic histories allows us to incorporate business cycle information dating back to 1930 even though our data do not begin until 1968 we implement this estimator using household level labor earnings data from the panel study of income dynamics we estimate that idiosyncratic risk is i highly persistent with an annual autocorrelation coefficient of 0 95 and ii strongly countercyclical with a conditional standard deviation that increases by 75 percent from 0 12 to 0 21 as the macroeconomy moves from peak to trough

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

idiosyncratic risk and the equity premium evidence from the consumer expenditure survey abstract this paper investigates whether uninsured idiosyncratic risk accounts for the equity premium following mankiw j financial econ 17 1986 211 the paper develops an equilibrium factor model in which risk premia depend on the covariance between an asset s return and certain moments of the cross sectional distribution for consumption growth cross sectional consumption factors are constructed using data from the consumer expenditure survey but they do not appear to be promising candidates for explaining the equity premium the cross sectional factors are weakly correlated with stock returns and generate equity premia of 2 percent or less for preference specifications with low degrees of risk aversion

welfare estimation using aggregate and individual observation models a comparison using monte carlo techniques due to the weak behavioral foundations of aggregate demand models zonal travel cost models have been largely abandoned in favor of models based on individual observations however sample selection difficulties in individual observation models often require the use of distribution sensitive limited dependent variables estimators in this paper i use monte carlo simulations to investigate whether the bias from aggregation is worse than possible bias from these narrowly specified estimators somewhat surprisingly the results indicate that zonal models often outperform the individual observation models especially when using an aggregate model that incorporates intrazonal variance of the explanatory variables

hybrid seed and the economic well being of smallholder maize farmers in zambia abstractthe development and diffusion of hybrid maize in zambia since the 1970s is a major achievement in african agriculture but other than profitability studies analyses of how this process has affected the economic well being of smallholder farmers have been few we test the relationship of hybrid seed use with six indicators of economic well being after using the control function instrumental variables approach to test for the endogeneity of hybrid seed use we estimate correlated random effects cre fractional response cre tobit and fixed effects models with a panel of nationally representative data collected in 2002 3 and 2006 7 findings suggest that use of maize hybrids is associated with higher values of household income assets farm and processing equipment and livestock and less deprivation compared to other farmers in nearby villages

testing heterogeneous agent models an alternative aggregation approach abstract starting from the cross sectional aggregation of marginal utilities rather than intertemporal marginal rates of substitution this paper develops a new heterogeneous agent pricing kernel a closed form version of the new kernel depends on changes in the cross sectional variance of log consumption rather than the variance of changes in log consumption as in constantinides and duffie 1996 asset pricing with heterogeneous consumers journal of political economy 104 219 237 we implement the new kernel on household consumption data from the consumer expenditure survey cex at monthly and quarterly horizons the new kernel reconciles the premium on u s equities with the consumption of asset holders for reasonable values of relative risk aversion the new kernel also fares better than kernels based on the aggregation of intertemporal marginal rates of substitution in explaining the cross sectional variation of risk premia on stocks and bonds portfolios mimicking changes in the cross sectional variance of log consumption for asset holders command significant negative sharpe ratios

learning by doing and learning from others human capital and technical change in agriculture household level panel data from a nationally representative sample of rural indian households describing the adoption and profitability of high yielding seed varieties hyvs associated with the green revolution are used to test the implications of a model incorporating learning by doing and learning spillovers the estimates indicate that i imperfect knowledge about the management of the new seeds was a significant barrier to adoption ii this barrier diminished as farmer experience with the new technologies increased iii own experience and neighbors experience with hyvs significantly increased hyv profitability and iv farmers do not fully incorporate the village returns to learning in making adoption decisions

temptation and self control some evidence and applications this paper studies the empirical relevance of temptation and self control using household level data from the consumer expenditure survey we construct an infinite horizon consumption savings model that allows but does not require temptation and self control in preferences in the presence of temptation a wealth consumption ratio in addition to consumption growth becomes a determinant of the asset pricing kernel and the importance of this additional pricing factor depends on the strength of temptation to identify the presence of temptation we exploit an implication of the theory that a more tempted individual should be more likely to hold commitment assets such as individual retirement account ira or 401 k accounts our estimation provides empirical support for temptation preferences based on our estimates we explore some quantitative implications of this class of preferences for capital accumulation in a neoclassical growth model and the welfare cost of the business cycle

relative wage movements and the distribution of consumption we analyze how relative wage movements among birth cohorts and education groups affected the distribution of household consumption and economic welfare our empirical work draws on the best available cross sectional data sets to construct synthetic panel data on u s consumption labor supply and wages during the 1980s we find that low frequency movements in the cohort education structure of pretax hourly wages among men drove large changes in the distribution of household consumption the results constitute a spectacular failure of between group consumption insurance a failure not explained by existing theories of informationally constrained optimal consumption behavior a welfare analysis indicates that the cost of between group consumption variability is larger than the cost of aggregate consumption variability by two orders of magnitude

prices as factors approximate aggregation with incomplete markets abstract recent developments in intertemporal asset pricing theory focus on two sets of fundamental determinants of asset returns models with complete markets emphasize aggregate variables such as per capita consumption such models have not performed well empirically models with incomplete markets emphasize disaggregate variables such as the distribution of wealth these models have shown empirical promise but their lack of parsimony has led many to question their usefulness indeed most empirical applications as well as the best practice in the financial industry ignore much of what theory has to say altogether practitioners favor factor models and in particular models in which asset returns serve as factors that explain other asset returns this paper attempts to rationalize these very different approaches we show that in an incomplete markets economy an economy in which the true pricing kernel is high dimensional and difficult to measure a low dimensional pricing kernel that depends on returns as in the capm or the apt can accurately price assets in this sense theory based on fundamentals admits an approximate aggregation that is consistent with practical application theory and practice therefore may not be as disparate as they might seem

modeling technology adoption in developing countries an analysis of technology adoption decisions by poor farmers is provided some possible empirical models for studying technology adoption are reviewed the issue of theoretical consistency is dealt with in terms of the costs of such consistency measured in data needs and model complexity and the benefits measured in terms of understanding the micro economic foundations of adoption

what floats your boat preference revelation from lotteries over complex goods abstract we examine a type of lottery used to distribute some publicly held resource access rights the lottery provides participants with the opportunity to choose among a set of simple gambles over multi attribute goods participant choices result in an endogenous distribution of success rates over gambles that reflects tradeoffs between the relative desirability of the available goods and the probability of winning when lottery winnings are multi attribute goods lottery outcomes provide sufficient information to estimate hedonic prices marginal utility and marginal rates of substitution among attributes we develop a model for characterizing preferences from this information set we apply our model to idaho s four rivers whitewater recreation lottery which allows applicants to apply for one permit among a large set of alternative river day combinations that provide varying river and weather characteristics this lottery structure shows promise as a foundation for economic experiments for preference revelation

learning asymmetries in real business cycles when a boom ends the downturn is generally sharp and short when growth resumes the boom is more gradual our explanation rests on learning about productivity when agents believe productivity is high they work invest and produce more more production generates higher precision information when the boom ends precise estimates of the slowdown prompt decisive reactions investment and labor fall sharply when growth resumes low production yields noisy estimates of recovery noise impedes learning slows recovery and makes booms more gradual than downturns a calibrated model generates growth rate asymmetry similar to macroeconomic aggregates fluctuations in agents forecast precision match observed countercyclical errors of forecasters

is consumption growth consistent with intertemporal optimization evidence from the consumer expenditure survey in this paper we show that some of the predictions of models of consumer intertemporal optimization are in line with the patterns of nondurable expenditure observed in u s household level data we propose a flexible specification of preferences that allows multiple commodities and yields empirically tractable equations we estimate preference parameters using the only u s micro data set with complete consumption information we show that previous rejections can be explained by the simplifying assumptions made in previous studies we also show that results obtained using good consumption or aggregate data can be misleading

soil quality and fertilizer use rates among smallholder farmers in western kenya studies of fertilizer use in sub saharan africa have been dominated by analyses of economic and market factors having to do with infrastructure institutions and incentives that prevent or foster increased fertilizer demand largely ignoring how soil fertility status conditions farmer demand for fertilizer we apply a switching regression model to data from 260 farm households in western kenya in order to allow for the possibility of discontinuities in fertilizer demand based on a soil carbon content scc threshold we find that the usual factors reflecting liquidity and quasi fixed inputs are important on high scc plots but not on those with poorer soils external inputs become less effective on soils with low scc hence the discernible shift in behaviors across soil quality regimes for many farmers improved fertilizer market conditions alone may be insufficient to stimulate increased fertilizer use without complementary improvements in the biophysical conditions that affect conditional factor demand

the nested collective lottery that maximizes welfare under consumption interdependence we develop a generalized lottery mechanism in this article that allows people to choose to succeed separately while retaining both merits fairness and options to succeed jointly of the collective lottery developed by chen et al 2010 we use the rationing of hunting permits in the us and canada as examples to show the applicability of this generalized lottery mechanism

underpricing in public lotteries a critique of user pay and all pay tariffs i introduction a body of literature spanning from medical ethics to public economics has amassed regarding the nonmarket rationing of public resources a dominant focus has surrounded the merits and shortcomings of alternative rationing mechanisms as gauged by their effectiveness distributive justness and allocative efficiency these instruments include administrative criteria such as need merit or seniority based rules queues or waiting lines whereby access to the rationed good or service is determined by arrival times and lotteries whereby chance dictates the distribution of the good while nonmarket rationing in any case may lead to the misallocation of resources compared to rationing solely by price e g glaeser and luttmer 2003 empirical observation reveals that public agencies commonly distribute underpriced goods and services to individual consumers and firms the current study takes nonmarket rationing as given and investigates the properties of alternative lottery mechanisms the use of lot teries dates to biblical times boyce 1994 elster 1992 with modern examples including the military draft fienberg 1971 medical services cookson and dolan 2000 recreational privileges on public lands and waterways scrogin 2005 residential housing following hurricane katrina the white house office of the press secretary 2005 and public school admission and voucher programs berry cullen jacob and levitt 2006 from a design perspective lotteries are intriguing because they can take a variety of forms with each possessing unique incentive and revenue generating properties however given the purported inefficiencies of lottery rationing it is natural to question how they have sustained in allocative situations entailing public resources two explanations have emerged in the literature the first historic explanation is attributed to the fairness of the classic lottery mechanism in which the probability of being drawn is uniform and endogenous to the number of participants because entrants are equally likely to be drawn the mechanism is perceived as being nondiscriminatory empirical evidence presented in kemp and bolle 1999 supports this hypothesis in the rationing of some types of goods and services to individual consumers the fairness of lottery rationing is also consistent with the distributive objective of specific egalitarianism put forth by tobin 1970 and discussed later by elster 1992 whereby specific goods and services are allocated such that a greater degree of equality is attained relative to that of a competitive market while egalitarianism and efficiency would appear to be at odds che and gale 2007 demonstrated that lotteries can be more efficient than markets when individuals face binding wealth constraints in a similar vein wijkander 1988 demonstrated that social welfare can be increased by lottery rationing under certain conditions a second more objective explanation for the sustained use of lotteries is that public agencies may be legally constrained by price controls particularly when rationing to individuals and households taylor tsui and zhu 2003 acting as a self sustaining regulated monopolist the agency is confronted with selecting a rationing mechanism and a pricing policy that are both politically feasible and financially viable compared to need merit and seniority based allocation rules lotteries and queues are administratively simple and low cost to implement alternatively lotteries eschew the waiting time and coordination costs confronted by potential entrants under queuing however the initial distribution under lottery rationing may prove allocatively inefficient collectively the literature suggests that agency objectives may deviate from revenue maximization in distributing some types of scarce public resources with lotteries proving to be superior in some settings to alternative nonmarket rationing mechanisms

disability earnings income and consumption using longitudinal data for the period 1968 2005 for a sample of male household heads we determine the prevalence of disability during the working years and examine how the extent of disability affects a range of outcomes including earnings income and consumption we have seven main findings first disability rates are high we divide the disabled along two dimensions based on the persistence and severity of their work limiting condition we estimate that a person reaching age 56 has a 53 percent chance of having been disabled at least once during his working years and a 19 percent chance that he has begun a chronic and severe disability second the economic consequences of disability are frequently profound ten years after disability onset a person with a chronic and severe disability on average experiences a 68 percent decline in earnings a 32 percent decline in after tax income a 22 percent decline in food and housing consumption and a 21 percent decline in food consumption third the various economic consequences differ sharply across disability groups the outcome declines for those with a chronic and severe disability are often more than twice as large as those for the average disabled fourth our findings show the partial and incomplete roles that individual savings family support and social insurance play in reducing the consumption drop that follows disability only about half of this most disabled group reports receiving social security disability insurance or supplemental security income fifth we find a noticeable fall in earnings and income prior to the onset of a reported disability consumption also falls somewhat suggesting that future disability is partially but incompletely predictable in the short run sixth time use and detailed consumption data further indicate that disability is associated with a decline in well being seventh the quantities we have estimated combined with elasticities from the literature allow us to examine the optimality of current compensation for the disabled we find that the current compensation for our most disabled group appears to be lower than is optimal

on testing for full insurance using consumer expenditure survey data in a recent issue of this journal mace 1991 presented empirical evidence in support of the hypothesis that u s households engage in full risk sharing the data used were taken from the u s consumer expenditure survey cex for the years 1980 84 full insurance implies that household level consumption should be perfectly correlated with aggregate consumption but uncorrelated with householdlevel changes in income mace s surprising result was that at least for one functional specification household level income changes whether measured directly by changes in reported income or proxied by employment change dummies seemed to have no statistically significant effect on consumption this comment demonstrates that this result was due to measurement error in key variables

the role of heterogeneity in asset pricing the effect of a clustering approach in this article we use a novel clustering approach to study the role of heterogeneity in asset pricing we present evidence that the equity premium is consistent with a stochastic discount factor sdf calculated as the average of the household clusters intertemporal marginal rates of substitution in the 1984 2002 period the result is driven by the skewness of the cluster based cross sectional distribution of consumption growth but cannot be explained by the cross sectional variance and mean alone we find that nine clusters are sufficient to explain the equity premium with relative risk aversion coefficient equal to six the result is robust to various averaging schemes of cluster based consumption growth used to construct the sdf lastly the analysis reveals that standard approximation schemes of the sdf using individual household data produce unreliable results implying a negative sdf

asset pricing puzzles and incomplete markets the representative agent theory of asset pricing is modified to incorporate heterogeneous agents and incomplete markets the model features two types of agents who differ up to a nontradable idiosyncratic component in their endowment processes numerical solutions indicate that individuals are able to diversify a substantial portion of their idiosyncratic income risk through riskless borrowing and lending alone restrictions on the variability of intertemporal marginal rates of substitution hansen and jagannathan 1991 are used to argue that incomplete markets as modeled here cannot account for the properties of asset returns that are anomalous from the perspective of representative agent theory a large literature in financial economics has investigated the extent to which variants of the lucas 1978 general equilibrium theory of asset pricing can account for the joint behavior of aggregate u s consumption and asset returns by and large this literature has concluded that a theory based upon frictionless arrow debreu markets and or a representative agent makes strongly counterfactual predictions regarding even the simple unconditional properties of this relationship mehra and prescott 1985 for instance show that the theory drastically underpredicts the average excess rate of return on u s stocks the so called equity premium puzzle weil 1989 points out as did mehra and prescott that the magnitude of the average risk free rate is far below that predicted by the theory this has been dubbed the risk free rate puzzle numerous authors including grossman melino and shiller 1987 and backus gregory and zin 1989 show that the theory cannot account for term premia inherent in the yield curve hodrick 1987 surveys a large literature which documents the theory s shortcomings in accounting for excess expected returns in foreign exchange markets the notion that the representative agent model cannot account for excess returns across a wide array of asset markets can be made more precise by using tools developed by hansen and jagannathan 1991 and shiller 1982

synergies between different types of agricultural technologies in the kenyan small farm sector abstractsustainable intensification of agriculture will have to build on various innovations but synergies between different types of technologies are not yet sufficiently understood we use repre

the sensitivity of consumption to transitory income estimates from panel data on households we investigate the stochastic relation between income and consumption specifically consumption of food within a panel of about 2 000 households our major findings are 1 consumption responds much more strongly to permanent than to transitory movements of income 2 the response to transitory income is nonetheless clearly positive 3 a simple test independent of our model of consumption rejects a central implication of the pure life cycle permanent income hypothesis the observed covariation of income and consumption is compatible with pure life cycle permanent income behavior on the part of80 percent of families and simple proportionality of consumption and income among the remaining 20 percent as a general matter our findings support the view that families respond differently to different sources of income variations in particular temporary income tax policies have smaller effects on consumption than do other more permanent changes in income of the same magnitude this abstract was borrowed from another version of this item

comparing welfare estimates of environmental quality changes from recreation demand models abstract this paper presents a procedure for examining the reliability of welfare estimates resulting from the estimation of multiple site recreation demand models a simulation approach is suggested where a utility function is combined with observations on individual and site characteristics to generate simulated data sets welfare measures associated with an improvement in site quality are calculated recreation demand models are estimated using the simulated data sets estimated welfare measures resulting from the recreation demand models are then compared to the true welfare measures calculated from the simulated data the procedure is demonstrated using two commonly employed recreation demand models

estimation of limited dependent variable models with dummy endogenous regressors applied economists have long struggled with the question of how to accommodate binary endogenous regressors in models with binary and nonnegative outcomes i argue here that much of the difculty with limited dependent variables comes from a focus on structural parameters such as index coefcients instead of causal effects once the object of estimation is taken to be the causal effect of treatment several simple strategies are available these include conventional two stage least squares multiplicative models for conditional means linear approximation of nonlinear causal models models for distribution effects and quantile regression with an endogenous binary regressor the estimation strategies discussed in the article are illustrated by using multiple births to estimate the effect of childbearing on employment status and hours of work

full insurance in the presence of aggregate uncertainty this paper tests implications of full consumption insurance the object is to determine how much mileage can be obtained from a model with complete markets with such features as private information or liquidity constraints omitted the implication exploited is that individual consumption responds to aggregate risk but not to idiosyncratic risk the test involves regressing the change in household consumption onto the change in aggregate consumption and other right hand side variables such as the change in household income and change in employment status all variables other than the change in aggregate consumption are predicted to be insignificant in explaining the change in household consumption with observations on consumption and income for 10 695 households from the consumer expenditure survey the results are mixed the results for one specification exponential utility are mostly consistent with full consumption insurance the results for the other specification power utility are not

lottery rationed public access under alternative tariff arrangements changes in quality quantity and expected utility abstract a recent phenomenon is the emergence of quotas restricting individual access to public resources as regulators commonly ration access opportunities by lottery this paper extends the traditional open access destination choice framework for non market demand and welfare analysis conceptual results for one and two part tariff lotteries indicate that individuals may sustain welfare losses from improvements in quality or increases in the quota if aggregate demand is sufficiently responsive relative to individual utility nested random expected utility models reums are estimated with a panel dataset of individual choices of lottery rationed harvest rights for wild game empirical results indicate that the types and timing of tariff payments affect participation choices over rationed and open access alternatives and the benefits derived from changes in the quality and quantity of the lottery rationed access opportunities

why has house price dispersion gone up we calibrate a dynamic general equilibrium island model to investigate the 30 year increase in the level of house prices and their dispersion across u s metropolitan areas the model is based on two main assumptions households o w in and out metropolitan areas in response to local productivity shocks and the housing supply cannot adjust instantly because of technological and regulatory constraints the calibration reveals that the observed tightening of housing supply regulation cannot quantitatively account for the rise in the level and dispersion of house prices in equilibrium workers o w out of tightly regulated towards less regulated metropolitan areas undoing most of the price impact of local supply restrictions in contrast the observed increase in wage dispersion across metropolitan areas does create the observed increase in the level and dispersion of house prices workers o w towards exceptionally productive metropolitan areas and drive house prices up the calibration also suggests that the welfare eects of housing supply regulation are large when wages become more dispersed

household choices in equilibrium this paper is an empirical investigation of equilibrium restrictions on household consumption and male labor supply it exploits a simple factor structure rationalized by two assumptions that household allocations are pareto optimal and that the labor market is competitive the paper estimates household preferences and tests how well this parsimonious factor structure represents panel data on married couples and time series data on asset returns most of the estimates are roughly comparable to those found in previous work no evidence against the simple factor representation is found and the intertemporal capital asset pricing model is not rejected copyright 1990 by the econometric society

agricultural technology adoption and household welfare measurement and evidence abstract previous studies on the adoption and impacts of improved crop varieties have relied on self reported adoption status of the surveyed households however in the presence of weak variety maintenance and poorly functioning seed certification system measurement errors in self reported adoption status can be considerable this paper investigates how such measurement errors can lead to biased welfare estimates using dna fingerprinting based varietal identification as a benchmark we find that misclassification in self reported adoption status is considerable with significant false negative and positive response rates we empirically show that such measurement errors lead to welfare estimates that are biased towards zero and substantially understate the poverty reduction effects of adoption while the empirical evidence suggests attenuation bias our theoretical exposition and simulations demonstrate that upward bias and sign reversal effects are also possible the results point to the need for improved monitoring of the diffusion process of improved varieties through innovative adoption data collection approaches to generate robust evidence for prioritizing and justifying investments in agricultural research and extension

why do so few hold stocks the authors investigate why 75 percent of u s households do not hold stocks despite the equity premium and predictions of expected utility models the question is relevant for privatization asset pricing and tax progressivity issues they show that risk aversion per se heterogeneity of beliefs habit persistence time nonseparability and quantity constraints on borrowing do not account for the phenomenon a wedge between borrowing and lending rates and minimum investment requirements are plausible but empirically weak factors more promising explanations are inertia and departures from expected utility maximization there is also qualified support for nondiversifiable income risk as a contributing factor copyright 1995 by royal economic society

a simple test of consumption insurance are consumers effectively insured against idiosyncratic shocks to income or wealth either by formal institutions such as charities private insurance and government programs or by informal mechanisms such as gifts and loans from relatives friends and neighbors under full insurance consumption growth should be cross sectionally independent of idiosyncratic variables that are exogenous to consumers this proposition is tested by cross sectional regressions of consumption growth on a variety of exogenous variables full insurance is rejected for long illness and involuntary job loss but not for spells of unemployment loss of work due to strike and an involuntary move

allocation of goods by lottery i introduction many goods such as hunting permits oil drilling leases cellular telephone licenses and rights to fishing berths as well as some buds such as the military draft jury duty and who is to be thrown overboard on a sinking life raft are or have been allocated by lotteries in neo classical welfare economics the random distribution of property rights does not affect allocative efficiency as long as transferability is allowed and the transactions costs are non prohibitive lottery allocations however are generally not transferable thus lottery allocations are inefficient since the goods are not ultimately allocated to the users who value them the most a number of authors such as aubert 1959 fienberg 1971 eckhoff 1989 and elster 1989 36 122 have argued that lotteries are chosen as the allocative instrument because it represents a fair or just means of allocating the goods rawls 1971 374 and eckhoff 1989 have noted that where it is impractical to divide the goods equally among those who desire them a lottery serves to satisfy both the requirement that the process be fair and that the allocation problem be resolved relatively costlessly elster 1989 113 however notes that lotteries are not the only fair allocation mechanism for example he points out that in jewish ethics the problem of allocating an indivisible good such as life saving resources is resolved by denying it to everyone even economists would probably prefer a lottery to this resolution the fairness hypothesis has a rich history in the old testament lotteries are deemed a fair way of allocating goods such as the inheritance of land numbers 33 54 lotteries are also used to allocate bads in perhaps the most famous biblical example of use of lots jonah was chosen by lot to be sacrificed to appease god who had brought a storm that threatened to wreck the ship the story goes that the lot selected jonah because he was shirking his duties elsewhere and should not have even been on the vessel jonah 1 6 1 notice that fair here is taken to mean just given this theological foundation it is not surprising that the lottery has seen frequent use in legal history as well one of the most interesting cases occurred in swedish and finnish trials in the 17th and 18th centuries in cases where a man was murdered by a mob lotteries were used to allocate punishment since the law required an eye for an eye no more and no less eckhoff says that if it was impossible to ascertain which of them had dealt the mortal blow the courts determined that one of the responsible parties be sentenced to death and that the person be selected by lottery 1989 19 a similar use of lotteries occurs in military history to deal with cases of mass desertion in roman armies every tenth man was executed decimated and the remainder pardoned in more modern times the lottery has been used in u s law 2 first of course is the use of a lottery to decide who shall sit on a jury a connection between fairness and lotteries however has also appeared in the common law in an 1842 case u s v holmes which has been discussed by fienberg 1971 eckhoff 1989 and elster 1989 a ship sank in a heavy storm and the lone surviving life raft was in grave danger of sinking the crew threw overboard fourteen male passengers in an effort to save the rest when back in port after being rescued a crewman named holmes the only crew member who had not disappeared upon arrival to port was brought to trial for the deaths of the passengers the court ruled that the non essential members of the crew should have been thrown overboard before any passengers and if that was not sufficient then passengers should have been selected by lot which is the fairest mode elster 1989 65 the fact that a human life presumably a large cost was at stake ex post did not affect the decision 3 the environmental economics literature contains a number of references to the social preferences for and benefits of lottery allocations

on optimal congestion abstract a number of classic papers conclude that if a congestible facility is the property of a profit maximizing entrepreneur he will impose a charge for use that induces the socially optimal level of use and congestion all these papers happen to deal with a special case in which that conclusion holds but it is not true in general in general the socially optimal level of use of a congestible facility is the level at which the marginal cost of providing the service is equal to the sum of the decreases in the users willingnesses to pay for a unit of service when the level of congestion is optimal and need not coincide with the level resulting from a profit maximizing charge this sum is derived from the integral under a fictitious demand curve constructed by imagining that the level of congestion is the same and optimal at all levels of the use charge

risk preferences over simple and compound public lotteries abstract lottery choice experiments with monetary payoffs have a long tradition for eliciting risk preferences this note demonstrates how risk preferences over multi attribute public lotteries may be estimated consistent with experimental findings results from simple and compound lottery choice models indicate significant differences in the degree of risk aversion between male and female applicants

rationed access and welfare case of public resource lotteries pressures on public lands and waterways are resulting increasingly in the rationing of public access by lottery upon accounting for the uncertainties of random rationing discrete choice models lend themselves to analyzing participation in public resource lotteries and estimating welfare changes key to valuing lotteryrationed rights is accounting for changes in access probabilities that result from policy changes the empirical application models the discrete choices of more than 18 000 participants in a new mexico lottery system for elk harvest rights welfare estimates are obtained from simulated policy changes that affect individually and jointly the access probability and indirect utility

welfare impacts of improved chickpea adoption a pathway for rural development in ethiopia we analyse the impact of improved chickpea adoption on welfare in ethiopia using three rounds of panel data first we estimate the determinants of improved chickpea adoption using a double hurdle model we apply a control function approach with correlated random effects to control for possible endogeneity resulting from access to improved seed and technology transfer activities to instrument for these variables we develop novel distance weighted measures of a household s neighbours access to improved seed and technology transfer activities second we estimate the impact of area under improved chickpea cultivation on household income and poverty we apply a fixed effects instrumental variables approach where we use the predicted area under cultivation from the double hurdle model as an instrument for observed area under cultivation we find that improved chickpea adoption significantly increases household income while also reducing household poverty finally we disaggregate results by landholding to explore whether the impact of adoption has heterogeneous effects adoption favoured all but the largest landholders for who the new technology did not have a significant impact on income overall increasing access to improved chickpea appears a promising pathway for rural development in ethiopia s chickpea growing regions

analysis of adoption and impacts of improved maize varieties in eastern zambia summary this paper analyzes the adoption and welfare impacts of improved maize varieties in eastern zambia using data obtained from a sample of over 800 farm households using both propensity score matching and endogenous switching regression models the paper shows that adoption of improved maize leads to significant gains in crop incomes consumption expenditure and food security results further show that improved maize varieties have significant poverty reducing impacts in eastern zambia the paper concludes with implications for policies to promote adoption and impacts of modern varieties in zambia

asset holding and consumption volatility we investigate the possibility that limited participation in asset markets and the stock market in particular might explain the lack of correspondence between the sample moments of the intertemporal marginal rate of substitution and asset returns in u k data we estimate ownership probabilities to separate likely shareholders from nonshareholders enabling us to control for changing composition effects as well as selection into the group we then construct estimates of the imrs for each of these different groups and consider their time series properties we find that the consumption growth of shareholders is more volatile than that of nonshareholders and more highly correlated with excess returns to shares in particular one cannot reject the predictions of the consumption capital asset pricing model for the group of households predicted to own both assets this is in contrast to the failure of the model when estimated on data for all households

the impacts of hybrid maize seed on the welfare of farming households in kenya this paper explores the impacts of hybrid maize adoption on the welfare of farming households in kenya we use a four year panel dataset to estimate the effects of hybrid seed use on four indicators of household welfare namely income assets inequality and poverty results show that use of hybrid seed not only contributes to higher annual income but also to raising the value of assets possibly reflecting longer term welfare effects further we find that use of hybrid seed reduces the depth of poverty and that the amount planted reduces inequality as expected impacts differ between major and minor maize growing areas of the country maize farmers who do not use hybrid seed are clearly disadvantaged this calls for continued public and private investments in the infrastructure and policy process that supports a competitive liberalized seed industry and improved access of smallholder farmers to well adapted affordable hybrids

demand for maize hybrids and hybrid change on smallholder farms in kenya kenya is a globally recognized maize success story as the overall percentage of maize farmers growing hybrids tops 80 and the seed industry matures the slow pace of hybrid replacement on farms and the continued dominance of the seed industry by kenya seed company may dampen productivity our econometric analysis identifies the factors that explain farmer demand for hybrid seed and the age of hybrids they grow considering hybrid seed ownership male headed households with more education more assets and more land plant more hybrid seed scale of seed demand per farm is differentiated by agroecology we find a strong farmer response to the seed to grain price ratio which we interpret as evidence of a commercial orientation even on household farms however despite the dramatic increase in the number of hybrids sold and the breadth of seed suppliers as seed markets liberalize an older hybrid still dominates national demand

optimal pricing of public lotteries and comparison of competing mechanisms this article establishes optimal pricing rules for rationing indivisible units of rival and otherwise nonexcludable goods by lottery or a hybrid of a lottery and outright sale by posted price given the distributional objective of maximizing expected consumer surplus the solutions to unconstrained and constrained versions of the pricing problem may be expressed in classic inverse elasticity form with the lottery price appearing as an entry fee user fee or a combination of the two numerical analysis of a rich class of private value distributions indicates that sizable gains in expected consumer surplus can be realized over competitive pricing and zero pricing

lottery or waiting line auction abstract this paper studies the efficiencies of the two most widely used non price allocation mechanisms lotteries and waiting line auctions as our analysis suggests in addition to the fairness of the mechanism the use of lotteries in lieu of waiting line auctions can be also justified from an efficiency point of view in particular we show that the less dispersed consumers time valuations are the more efficient is a lottery relative to a waiting line auction in addition we identify four conditions under which a lottery dominates a waiting line auction in expected social surplus preserving furthermore the numerical simulations we conduct indicate that over a predominantly wide range of circumstances a lottery is more socially efficient than a waiting line auction as an allocative mechanism in the absence of a conventional price system

market incompleteness and the equity premium puzzle evidence from state level data abstract this paper investigates the importance of market incompleteness by comparing the rates of risk aversion estimated from complete and incomplete markets environments for the incomplete markets case we use consumption data for the 50 us states we find that the rate of risk aversion under the incomplete markets setup is much lower furthermore including the second and third moments of the cross sectional distribution of consumption growth in the pricing kernel lowers the estimate of risk aversion these findings suggest that market incompleteness ought to be seen as an important component of solutions to the equity premium puzzle