do better schools matter parental valuation of elementary education the evaluation of numerous school reforms requires an understanding of the value of better schools given the difficulty of calculating the relationship between school quality and student outcomes i turn to another method and use house prices to infer the value parents place on school quality i look within school districts at houses located on attendance district boundaries houses then differ only by the elementary school the child attends i thereby effectively remove the variation in neighborhoods taxes and school spending i find that parents are willing to pay 2 5 percent more for a 5 percent increase in test scores this finding is robust to a number of sensitivity checks

the economic consequences of hugo chavez a synthetic control analysis abstract we use the synthetic control method to perform a case study of the impact of hugo chavez on the venezuelan economy we compare outcomes under chavez s leadership and polices against a counterfactual of business as usual in similar countries we find that relative to our control per capita income fell dramatically while poverty health and inequality outcomes all improved during the chavez administration these outcomes also improved in each of the corresponding control cases and thus we cannot attribute the improvements to chavismo we conclude that the overall economic consequences of the chavez administration were bleak

retail pricing and clearance sales sellers of new products are faced with having to guess demand conditions to set price appropriately but sellers are able to adjustprice over time and to learn from past mistakes additionally it is not necessary that all goods be sold with certainty it is sometimes better to set a high price and to risk no sale this process is modeledto explain retail pricing behavior and the time distribution of transactions prices start high and fall as a function of time on theshelf the initial price and rate of decline can be predicted and depends on thinness of the market the proportion of customers who are window shoppers and other observable characteristics copyright 1986 by american economic association

driving to opportunity local rents wages commuting costs and sub metropolitan quality of life we examine variation in local rents wage levels commuting costs household characteristics and amenities within metropolitan areas for 2071 areas covering the united states by density and central city status we demonstrate the sensibility of estimating wage levels by workplace not residence and recover decentralized rent gradients that fall with commuting costs we construct and map a willingness to pay index which indicates the quality of life typical households receive from local amenities when households are similar mobile and informed this index varies considerably within metros and is typically high in areas that are dense suburban sunny mild safe entertaining and have elevated school funding

interval estimates of non market resource values from referendum contingent valuation surveys contingent valuation methods cvm have attracted considerable attention in recent years as researchers have begun to resort to survey methods to elicit individual values for non market goods such as environmental resources or public goods cummings brookshire and schulze 1986 and mitchell and carson 1989 offer comprehensive assessments of these methods cvm survey questions come in a variety of forms one format which has proven to be popular is called the discrete choice or take it or leave it referendum or closedended question originally implemented in the literature by bishop and heberlein 1979 since respondents find it very difficult to identify precisely their true point value of access to some resource or public good open ended valuation questions can be unreliable or can discourage response in contrast most people are familiar with being confronted by a posted price for a good and with deciding whether or not they would buy at that price this is the strategy behind discrete choice cvm questions a different hypothetical price is offered to each respondent and by their yes no response to the question of whether they would be willing to pay this price the researcher gains information about their true underlying point value one persistent difficulty with the econometric techniques that are currently used most widely to analyze referendum contingent valuation data is the absence of confidence intervals for the ultimate value estimates early empirical applications approximate mean valuations using a truncated mean based on a logit model with the upper limit being the highest bid value in the sample unfortunately the variance of this estimated mean cannot easily be recovered from the numerical integration procedure commonly used to calculate the

the effect of protest votes on the estimates of wtp for use values of recreational sites contingent valuation studies are often characterized by a considerable number of protest responses which may cause selectivity bias on the final estimates for wtp sample selection models can detect and if necessary correct selectivity bias in economic applications where the relevant dependent variable is continuous sample selection models are generally estimated using heckman s 2 step method rather than the fiml estimator either method has its own drawback computational complexity for the fiml method susceptibility to collinearity problems for the 2 step method using data on valuation of forest resources for recreational use we analyse the performance of the two estimators in this application given the presence of some collinearity the fiml is preferred to the 2 step method a procedure is outlined to deal with selectivity problems in similar settings

default correlation at the sovereign level evidence from some latin american markets using the eruption of argentina debt crisis in 2001 as a natural experiment we investigated the correlated default at the sovereign level for some latin american countries daily closing market quotes for sovereign credit default swaps cds of argentina brazil mexico and venezuela were obtained from credittrade database using copula approach we observed increased dependences among sovereign cds markets during the crisis period their dependence structures were found to be asymmetric moreover the degree of credit contagion was related to the creditworthiness of the country this study also discussed the implications of these findings for policymakers

gradual incorporation of information pharmaceutical stocks and the evolution of president clinton s health care reform abstract we examine the effect of the evolution of president clinton s health care reform proposal over january 1992 october 1993 on pharmaceutical stock prices we identify a 52 3 percent decline in market adjusted prices which we then associate with health care reform applying a new technique isotonic regression we find most of the decline occurred gradually much of the decline occurred as the clinton plan adopted strategies to contain health care costs including managed competition and implicit regulation indirect evidence suggests that the wealth lost by pharmaceutical companies may have been largely an anticipated transfer our results are relevant to understanding the likely effects of the clinton plan and more recent proposals many other policy changes are marked by gradual public revelation of information which may not be completely observable by a researcher our approach may uncover information about the anticipated effects of policies unavailable from a traditional event study

terrorism and attitudes towards minorities the effect of the theo van gogh murder on house prices in amsterdam abstract does fundamentalist islamic terrorism have an effect on the general attitudes towards muslim minorities we use the murder of theo van gogh as an event study to address this question specifically we use the hedonic market model and test for an effect on listed house prices in neighborhoods where more than 25 of the people belong to an ethnic minority from a muslim country type i relative to the other neighborhoods house prices in type i neighborhoods decreased in 10 months by about 3 with a widening gap over time our results are robust to several adjustments including using synthetic control groups finally we find evidence that segregation increased people belonging to the muslim minority were more likely to buy and less likely to sell a house in a type i neighborhood after the murder than before

a measure of segregation based on social interactions we develop an index of segregation based on two premises 1 a measure of segregation should disaggregate to the level of individuals and 2 an individual is more segregated the more segregated are the agents with whom she interacts we present an index that satisfies 1 and 2 and that is based on agents social interactions the extent to which blacks interact with blacks whites with whites etc we use the index to measure school and residential segregation using detailed data on friendship networks we calculate levels of within school racial segregation in a sample of u s schools we also calculate residential segregation across major u s cities using block level data from the 2000 u s census

conflicts between principals and agents evidence from residential brokerage abstract when a homeowner uses an agent to sell his property he may have less information than his agent and be disadvantaged in price setting and negotiating this study examines whether the percentage commission structure in real estate brokerage creates agency problems we investigate whether agents are able to use their information advantage to either sell their own property faster or for a higher price than their clients properties the empirical results confirm our theoretical predictions of agency problems as we find that agent owned houses sell no faster than client owned houses but they do sell at a price premium of approximately 4 5

do non strategic sanctions obey the law of demand the demand for punishment in the voluntary contribution mechanism abstract the prospect of receiving a monetary sanction for free riding has been shown to increase contributions to public goods we ask whether the impulse to punish is unresponsive to the cost to the punisher or whether like other preferences it interacts with prices to generate a conventional demand curve in a series of experiments we randomly vary the cost of reducing the earnings of other group members following voluntary contribution decisions in our design new groups are formed after each interaction and no subject faces any other more than once so there is no strategic reason to punish we nonetheless find significant levels of punishment and we learn that both price and the extent to which the recipient s contribution is below the group mean are significant determinants of the quantity of punishment demanded moreover punishment is mainly directed at free riders even when it costs nothing to the punisher

wages rents and the quality of life this study focuses on the role of wages and rents in allocating workers to locations with various quantities of amenities the theory demonstrates that if the amenity is also productive then the sign of the wage gradient is unclear while the rent gradient is positive the theory is extended to include the housing market and nontraded goods these extensions require little modification of the conclusion the empirical work on wages shows that the regional wage differences can be explained largely by these local attributes with the use of site price data implicit prices are estimated and quality of life rankings for the cities are computed

parametric and semiparametric estimation of sample selection models an empirical application to the female labour force in portugal this paper applies both parametric and semiparametric methods to the estimation of wage and participation equations for married women in portugal the semiparametric estimators considered are the two stage estimators proposed by newey 1991 and andrews and schafgans 1998 the selection equation results are compared using the specification tests proposed by horowitz 1993 horowitz and hardle 1994 and the wage equation results are compared using a hausman test significant differences between the two approaches indicate the inappropriateness of the standard parametric methods to the estimation of the model and for the purpose of policy simulations the greater departure seems to occur in the range of the low values of the index corresponding to a specific group of women copyright 2001 john wiley sons ltd

the planting real option in cash rent valuation after entering into a farmland cash rent contract in the fall a tenant farmer has flexibility over the spring crop choice and the input application level failure to account for these options will bias estimates of what farmers should pay to rent land applying monte carlo simulation methods this study investigates the option values for these choices a multivariate gaussian copula mgc is employed to account for dependence among yields and prices results show that the average cash rent valuation for the real option approach is 33 6 higher than that for the conventional net present value npv method in which the input intensity option is 0 9 crop planting sequence is shown to impact the real option value

emotion venting and punishment in public good experiments experimental studies have shown that sanctions effectively deter free riding within groups however the over use of costly punishment may actually harm overall welfare a main reason for over punishment is that free riders generate negative emotions that likely favor excessive punishments in this paper we ask whether the venting of one s emotions in different ways can reduce the level of excessive punishment in a standard vcm with punishment environment while preserving the norm enforcement properties of punishment we find that venting emotions reduces excessive punishment and under certain conditions the net effect is an increase in final payoffs i e welfare to the group

limited dependent variables in willingness to pay studies applications in health care the appropriate technique for econometric analysis of wtp willingness to pay data is an issue which has not been addressed in many studies of wtp for health and health care this paper argues that whether an open ended question or a payment scale approach is adopted the way in which wtp is recorded means that limited dependent variable models are more appropriate than standard regression analysis data from an open ended question on wtp for maternity care contain a large proportion of zeros and the evidence suggests that a two part specification performs better than ols or a standard tobit model if the payment scale method is adopted our argument suggests that grouped data regression is an appropriate econometric technique in practice with data from a study in northern norway the results from ols and grouped data regression are broadly similar

the impact of the london bombings on the well being of adolescent muslims we exploit the timing of the london bombings coinciding with a large scale national survey of adolescents to identify the impact of extremist islamic terror attacks on the well being of adolescent muslims our analysis reveals interesting gender differences we find evidence of a decline in the happiness of muslim teenage girls after the bombings which is also accompanied by a rise in expectations of facing discrimination in the labour market these findings are robust to several falsification tests on the other hand we fail to uncover compelling evidence of any impact of the bombings on muslim teenage boys

estimating bargaining power in the market for existing homes although bargaining is common in markets for heterogeneous goods it has largely been ignored in the hedonic literature in a break from that tradition we establish sufficient conditions that permit one to identify the effect of buyer and seller bargaining on hedonic models our model is estimated using a previously overlooked feature of the american housing survey that permits us to observe characteristics of both buyers and sellers results suggest that household wealth gender and other demographic traits influence bargaining power in addition variation in bargaining power arising from the presence of school age children accounts for anomalous seasonal patterns reported in various widely cited indices of quality adjusted house prices

the political economy of hatred this paper develops a model of the interaction between the supply of hate creating stories from politicians and the willingness of voters to listen to hatred hatred is fostered with stories of an out group s crimes but the impact of these stories comes from repetition not truth hate creating stories are supplied by politicians when such actions help to discredit opponents whose policies benefit an out group egalitarians foment hatred against rich minorities opponents of redistribution build hatred against poor minorities hatred relies on people accepting rather than investigating hate creating stories hatred declines when there is private incentive to learn the truth increased economic interactions with a minority group may provide that incentive this framework is used to illuminate the evolution of anti black hatred in the united states south episodes of anti semitism in europe and the recent surge of anti americanism in the arab world

ethnic capital and intergenerational mobility this paper analyzes the extent to which ethnic skill differentials are transmitted across generations i assume that ethnicity acts as an externality in the human capital accumulation process the skills of the next generation depend on parental inputs and on the quality of the ethnic environment in which parents make their investments or ethnic capital the empirical evidence reveals that the skills of today s generation depend not only on the skills of their parents but also on the average skills of the ethnic group in the parent s generation

macroeconomic consequences of terror theory and the case of israel abstract this paper analyzes the effect of terror on the economy terror endangers life such that the value of the future relative to the present is reduced hence due to a rise in terror activity investment goes down and in the long run income and consumption go down as well governments can offset terror by putting tax revenues into the production of security facing a tide in terror a government that acts optimally increases the proportion of output spent on defense but does not fully offset the tide thus when terror peaks the long run equilibrium with an optimizing government is of lower output and welfare next we show that this theory of terror and the economy helps to understand changes in trend and business cycle of the israeli economy the estimates show that terror has a large impact on the aggregate economy continued terror at the level of the death toll by about the same size as due to car accidents is expected to decrease annual consumption per capita by about 5 in 2004 had israel not suffered from terror during the last 3 years we estimate that the output per capita would have been 10 higher than it is today

the london bombings and racial prejudice evidence from the housing and labor market this paper investigates the impact of the london bombings on attitudes toward ethnic minorities examining outcomes in housing and labor markets across london boroughs we use a difference in differences approach specifying treated boroughs as those with the highest concentration of asian residents our results indicate that house prices in treated boroughs fell by approximately 2 in the 2 years after the bombings relative to other boroughs with sales declining by almost 6 furthermore we present evidence of a rise in the unemployment rate in treated compared to control boroughs as well as a rise in racial segregation jel j15 j71 r21

semiparametric estimation of the intercept of a sample selection model this paper provides a consistent and asymptotically normal estimator for the intercept of a semiparametrically estimated sample selection model the estimator uses a decreasingly small fraction of all observations as the sample size goes to infinity as in heckman 1990 in the semiparametrics literature estimation of the intercept has typically been subsumed in the nonparametric sample selection bias correction term the estimation of the intercept however is important from an economic perspective for instance it permits one to determine the wage gap between unionized and nonunionized workers decompose the wage differential between different socioeconomic groups e g male female and black white and evaluate the net benefits of a social programme

social stigma and asset value recent attempts by economists to identify and quantify the effect of social stigma on asset value have often been stymied by confounding mechanisms i use the unique circumstances surrounding the 1999 columbine shooting to estimate the effect of social stigma on asset value using a difference in differences model with property fixed effects i find the immediate effect of stigma from the columbine shooting is 5 7 of a property s value after one year this implies a 13 million loss from property sales in the year 2000 alone the results are robust to numerous specifications and synthetic control placebo tests this suggests that social stigma plays a role in consumer preferences

multivariate mixed models for open ended contingent valuation data willingness to pay for conservation of monk seals although dichotomous choice dc contingent valuation cv has been recommended by the us noaa blue ribbon panel for large scale contingent valuation studies useful information can still be obtained from smaller open ended oe studies often undertaken as a precursor to a dc survey the cv study considered here was carried out in greece and looked at willingness to pay wtp for protecting the mediterranean monk seal monachus monachus in the aegean area this is the most endangered seal in the world and the application of the cv methodology was the first such application in greece the oe data consist of two responses first a binary response detailing whether or not respondents were in principle prepared to pay for the protection of this seal secondly those respondents who answered yes to the first question were then asked to state their maximum wtp for such protection a multivariate binomial log normal mixture model is used to develop a bid function including explanatory variables such as income sex age and education such a modelling approach provides an alternative to more commonplace tobit estimation however the model is extended to include further information which was collected on

emotional arousal as a source of bounded rationality abstract this paper proposes an alternative psychological explanation for bounded rationality according to herbert simon bounded rationality arises from human cognitive limitations following the suggestion of institutional economist john r commons i argue that extremes in emotional arousal also contribute to bounded rationality this idea is formalized and developed using the yerkes dodson law from psychology examples from the popular press and the academic literatures of law management and economics are presented to illustrate the impact of this type of bounded rationality on human behavior

identification of endogenous social effects the reflection problem this paper examines the reflection problem that arises when a researcher observing the distribution of behaviour in a population tries to infer whether the average behaviour in some group influences the behaviour of the individuals that comprise the group it is found that inference is not possible unless the researcher has prior information specifying the compisition of reference groups if this information is available the prospects for inference depend critically on the population relationship between the variables defining reference groups and those directly affecting outcomes inference is difficult to implossible if these variables are functionally dependent or are statistically independent the prospects are better if the variables defining reference groups and those directly affecting outcomes are moderately related in the population

applying the copula approach to sample selection modelling the limited availability of tractable multivariate distributions undermines the validity of the standard parametric approach to sample selection modelling copula distributions can be very useful in situations where the applied researcher has a prior on the distributional form of the margins since the modelling of the latter is separated from that of the dependence structure the present article first presents an application to female work data afterwards the approach is analysed in an application to contingent valuation data on recreational values of forests it is shown that the copula approach is especially beneficial in case of strong departures from the hypothesis of normality

nonparticipation or misspecification the impacts of nonparticipation on dichotomous choice contingent valuation dichotomous choice or referendum contingent valuation surveys have become the predominate choice for valuing goods and services otherwise not valued in a standard market nonmarket goods and services a number of researchers have recently recommended that dichotomous choice contingent valuation studies include a follow up question to all no responses to determine whether the no response is a result of unwillingness to pay or nonparticipation if the goal of the study is to investigate the impact of covariates on either mean willingness to pay or the probability of nonparticipation simple identification of indifferent individuals will not suffice a simulation study shows that existing econometric models designed to account for nonparticipation are extremely sensitive to misspecification bias accurate identification of the probability of nonparticipation is hampered by potential misspecification of the distribution of willingness to pay

is the new immigration really so bad this article reviews the recent evidence on us immigration focusing on two key questions 1 does immigration reduce the labour market opportunities of less skilled natives 2 have immigrants who arrived after the 1965 immigration reform act been successfully assimilated overall evidence that immigrants have harmed the opportunities of less educated natives is scant on the question of assimilation the success of the us born children of immigrants is a key yardstick by this metric post 1965 immigrants are doing reasonably well even children of the least educated immigrant origin groups have closed most of the education gap with the children of natives

protest responses in contingent valuation a significant number of respondents to contingent valuation surveys tend to either state a zero bid or refuse to state a bid at all for reasons associated with the process of valuation these protest responses are routinely removed from contingent valuation samples because it is assumed that they are not indicative of respondents true values the censoring of protest responses has led to the emergence of a definitional controversy one view is that the definition of protest responses and the rules for censoring them are dependent on whether the practitioner conceives of the contingent valuation survey as a market or as a referendum however what is not acknowledged is the possibility that protest responses and their meaning may vary according to the type of good being valued the elicitation format and the interaction between these elements and external factors this potential renders the development of unambiguous rules for censoring protest responses difficult moreover when willingness to pay is viewed as a behavioural intention it becomes important to determine what the responses actually mean this approach does not assume an interpretative position a priori against which the responses should be judged but seeks to inform an existing understanding which is inadequate

small menu costs and large business cycles a macroeconomic model of monopoly i introduction the conflict between modern neoclassical and traditional keynesian theories of the business cycle centers upon the pricing mechanism in neoclassical models prices are fully flexible they represent the continuous optimization of economic agents and the continuous intersection of supply and demand in keynesian models prices are often assumed to be sticky they do not necessarily equilibrate all markets at all times one of the reasons for the resurgence of the equilibrium approach to macroeconomics has been the absence of a theoretical underpinning for this keynesian price stickiness this note shows that sticky prices can be both privately efficient and socially inefficient the business cycle results from the suboptimal adjustment of prices in response to a demand shock to the extent that policy can stabilize aggregate demand it can mitigate the social loss due to this suboptimal adjustment in some keynesian models prices are simply exogenously fixed 2 in others agents must set their prices in advance of the transaction date the act of altering a posted price is certainly costly these costs include such items as printing new catalogs and informing salesmen of the new price yet these menu costs are small and therefore generally perceived as providing only a weak foundation for these fixed price models however this inference is flawed small menu costs can cause large welfare losses the claim that price adjustment costs are small does not rebut the claim that they are central to understanding economic fluctuations

war terror and the tourism market in israel a supply and demand model of the israeli hotel industry is developed distinguishing between its domestic and foreign sectors model simulations are employed to examine the impacts of war and terrorist incidents on tourist activity and hotel revenues foreign demand for israeli hotel stays is highly price elastic and income inelastic and moderately sensitive to terrorist events domestic demand is price inelastic income elastic and terror insensitive in the wake of terror attacks hotels supply or minimum prices to israeli tourists shift downward reducing local market prices and encouraging more local tourism however the magnitude of these shifts is minor and the local market thus provides little buffer for dropoffs in foreign tourism by permitting excess capacity in such fashion hotels respond rationally to the price inelasticity of local demand

estimating benefits for effective enforcement of speed reduction from dichotomous choice cv we present an empirical estimation of the distribution of wtp foreffective speed restriction via implementation of local trafficcalming schemes random samples are drawn from the populations ofhouseholds henceforth hhs of three centres intersected by maintrunk roads with varying through traffic conditions we estimatethe underlying wtp distributions from discrete choice responsesto site specific referendum contingent valuation studiesaccounting for zero bidders we then test the hypothesis ofdifferent distributions across villages the statistical analysisconsists first of a parametric specification and then of atotally non parametric one stated welfare changes for effectivespeed reduction are found to be sizeable and the parameters ofthe random utility models are plausibly related to differences inobjective speed measures across centres the results appear toencourage the use of the referencum cv method in the estimationof local public goods in this case study the proposed publicproject would seem to pass the kaldor hicks potentialcompensation test

modelling zero values and protest responses in contingent valuation surveys in contingent valuation surveys the category of zero bidders refers to individuals that are not willing to pay anything for the programme under analysis specific questions can help to identify true zero values coming from people that are indifferent to the programme separately from protest responses the latter are generally excluded from the analysis this paper introduces a mixture sample selection model that takes into account both zero values and protest responses in the estimates the model is applied to the valuation of a traffic calming scheme aimed at reducing risks for residents in three villages in the north east of england

discrimination in the rental housing market a field experiment on the internet this paper presents a field experiment on discrimination in the housing market using the internet as a research platform the procedure involved our creating three fictitious persons with distinct

rockets the housing market effects of a credible terrorist threat abstract this paper explores the economic costs of conflict using a unique experiment we analyze the effects of hezbollah s massive surprise rocket attack against northern israel during the 2006 second lebanon war and the continued threat posed by the organization s expanding rocket arsenal on the housing market the labor market and patterns of migration flows and sorting relying on hedonic and repeat sales approaches and using a difference in differences identification strategy for 2000 2012 we show that the attack led to a 6 7 decline in house prices and rents in the most severely hit localities relative to other localities in northern israel these effects persisted until 2012 suggesting that the public continued to view the rocket threat as credible in contrast we find practically no effect on labor market conditions migration flows and sorting