consistency of risk preference measures an artefactual field experiment from rural china a variety of measures have been developed to elicit individual risk preferences how these measures perform in the field in particular in developing countries with non student subjects is still a

remittances and inequality in this paper the authors propose a framework and develop techniques for analyzing the impact of migrant remittances on the distribution of rural income by size and subsequently its impact on rural welfare household data are used to assign numerical coefficients to the impact of net remittances from both internal and international migrants on income inequality in 2 mexican villages the impact of migrant remittances on the distribution of rural income by size depends critically on the degree to which migration opportunities become diffused through the village population on the returns to human capital embodied in remittances and on the distribution of potentially remittance enhancing skills and education across village households our empirical findings demonstrate that in a village where many households contain internal migrants but few have experience migrating to the u s remittances from mexico to us migrants have an unequalizing impact on village incomes while remittances from internal migrants have a favorable effect on the village income distribution by contrast in a village with a long historyh of sending migrants to the us and hence a more ready access to us labor markets us to mexico remittances have an equalizing impact on incomes remittances from internal migrants in this village however embody a large human capital component and are highly correlated with household income hence internal migrant remittances account for a comparatively large share of inequalities in the 2nd village the overall effect of remittances on income inequality is favorable in both villages migration type migration stage and interaction terms all appear to play a role in this context the effects of small changes in remittances upon income inequality and rural welfare in the 2 villages are explored and some implications for migration and rural development policy are considered authors modified

inheritance and wealth inequality the case of the punjab abstract this study follows a wealth function approach to quantify the role of inheritance in wealth inequality in the region of punjab india using household data from the national sample survey 25th round the specification of the wealth function is fairly general it is used to test the hump shaped pattern of wealth age relationship and also to decompose the reported wealth holding of each sample household into inherited and accumulated components it is found that inheritance accounts for 53 38 and 24 13 percent of wealth inequality in the rural and urban sectors respectively some policy implications of our results are stated

violence and risk preference experimental evidence from afghanistan we investigate the relationship between violence and economic risk preferences in afghanistan combining i a two part experimental procedure identifying risk preferences violations of expected utility and specific preferences for certainty ii controlled recollection of fear based on established methods from psychology and iii administrative violence data from precisely geocoded military records we document a specific preference for certainty in violation of expected utility the preference for certainty which we term a certainty premium is exacerbated by the combination of violent exposure and controlled fearful recollections the results have implications for risk taking and are potentially actionable for policymakers and marketers

the fourfold pattern of risk attitudes in choice and pricing tasks we examine the robustness of the fourfold pattern of risk attitudes under two elicitation procedures we find that individuals are on average risk seeking over low probability gains and high probability losses and risk averse over high probability gains and low probability losses when we elicit prices for the gambles however a choice based elicitation procedure where participants choose between a gamble and its expected value yields individual decisions that are indistinguishable from random choice sensitivity to elicitation procedure holds between and within participants and remains when participants are allowed to review and change decisions the price elicitation procedure is more complex this finding may be further evidence that an increase in cognitive load exacerbates behavioural anomalies

consumer expenditures and inequality an analysis based on decomposition inequality in u s consumption expenditures is examined using the lerman and yitzhaki covariance method for decomposing the gini coefficient by factors from the decomposition nonparametric estimates of elasticities with respect to total expenditures are derived using data from the 1987 u s consumer expenditure interview survey the overall gini based on total annual consumption expenditures is 0 33 consistent with parametric expenditure elasticities the gini expenditure elasticities for household operations apparel and services and entertainment are relatively high an implication of this result is that taxing such goods and services will increase the progressivity or reduce the regressivity of the tax system copyright 1993 by mit press

computer mediated transactions every now and then a set of technologies becomes available that sets off a period of combinatorial innovation think of standardized mechanical parts in the 1800s the gasoline engine in the early 1900s electronics in the 1920s integrated circuits in the 1970s and the internet in the last decade or so the component parts of these technologies can be combined and recombined by innovators to create new devices and applications since these innovators are working in parallel with similar components it is common to see simultaneous invention there are many well known examples such as the electric light the airplane the automobile and the telephone many scholars have described such periods of innovation using terms such as recombinant growth general purpose technologies cumulative synthesis and clusters of innovation the internet and the web are wonderful examples of combinatorial innovation in the last 15 years we have seen a huge proliferation of web applications all built from a basic set of component technologies the internet itself was a rather unlikely innovation i like to describe it as a lab experiment that got loose since the internet arose from the research community rather than the private sector it had no obvious business model other public computer networks such as aol compuserve and minitel generally used a subscription models but were centrally controlled and offered little scope for innovation at the user level the internet won out over these alternatives precisely because it offered a flexible set of component technologies which encouraged combinatorial innovation

who is behavioral cognitive ability and anomalous preferences in this paper we ask whether variation in preference anomalies is related to variation in cognitive ability evidence from a new laboratory study of chilean high school students with similar schooling backgrounds shows that small stakes risk aversion and short run discounting are less common among those with higher standardized test scores the relationship with test scores survives controls for parental education and wealth we find some evidence that elementary school gpa is predictive of preferences measured at the end of high school two laboratory interventions provide suggestive evidence of a possible causal impact of cognitive resources on expressed preferences jel j24 d14 c91

the impact of patient cost sharing on low income populations evidence from massachusetts greater patient cost sharing could help reduce the fiscal pressures associated with insurance expansion by reducing the scope for moral hazard but it is possible that low income recipients are unable to cut back on utilization wisely and that as a result higher cost sharing will lead to worse health and higher downstream costs through increased use of inpatient and outpatient care we use exogenous variation in the copayments faced by low income enrollees in the massachusetts commonwealth care program to study these effects we estimate separate price elasticities of demand by type of service overall we find price elasticities of about 0 16 for this low income population similar to elasticities calculated for higher income populations in other settings these elasticities are somewhat smaller for the chronically sick especially for those with asthma diabetes and high cholesterol these lower elasticities are attributable to lower responsiveness to prices across all categories of service and to some statistically insignificant increases in inpatient care

pension reform in china preparing for the future china is revamping its enterprise based old age security system and introducing a pension programme financed by the employer employee and the government through a combination of pooled funds and individual accounts the new system is expanding coverage to the urban workforce outside the state sector and protecting benefits against inflation the decentralised nature of the pension pools however limits increases in efficiency and portability of pension benefits sustainability of the revised system will require attention to fund management regulations and preparation for rapid population ageing by expanding coverage to rural wage earners and reducing benefits

the impact of income components on the distribution of family incomes attempts have recently been made to assign inequality contributions to various components of income this paper discusses the issues involved in such assignments and highlights the problems that follow from having a number of possible decomposition rules u s data on the distribution of family incomes are used to examine the relative influence of these income components and to evaluate empirically the performance of different decomposition rules a wide range of inequality contributions can be obtained even when restricted to only naturally derived decomposition rules some of the results are plainly absurd and serve to warn against the indiscriminate use of decomposition formulae without first investigating their properties

a matrix approach to the gini index decomposition by subgroup and by income source the literature offers two main ways of decomposing the gini index decomposition by population subgroup and by income source this article proposes merging the two decomposition dimensions by suggesting a matrix formula for the gini index which permits the simultaneous decomposition by subgroup and by income source using this multi decomposition one can investigate the role of the interaction between the subgroup and the source components in determining the overall inequality we apply the methodology to sample data on italian household incomes collected in 2008

addiction and cue triggered decision processes we propose a model of addiction based on three premises 1 use among addicts is frequently a mistake 2 experience sensitizes an individual to environmental cues that trigger mistaken usage 3 addicts understand and manage their susceptibilities we argue that these premises find support in evidence from psychology neuroscience and clinical practice the model is tractable and generates a plausible mapping between behavior and the characteristics of the user substance and environment it accounts for a number of important patterns associated with addiction gives rise to a clear welfare standard and has novel implications for policy

a dual self model of impulse control we propose that a simple dual self model gives a unified explanation for several empirical regularities including the apparent time inconsistency that has motivated models of quasi hyperbolic discounting and rabin s paradox of risk aversion in the large and small the model also implies that self control costs imply excess delay as in the o donoghue and rabin models of quasi hyperbolic utility and it explains experimental evidence that increased cognitive load makes temptations harder to resist the base version of our model is consistent with the gul pesendorfer axioms but we argue that these axioms must be relaxed to account for the effect of cognitive load

patient cost sharing in low income populations economie theory suggests that a natural tool to control medical costs is increased consumer cost sharing for medical care while such cost sharing reduces full insurance wherein patients are indifferent between falling sick or remaining healthy a greater reliance on coinsurance and copayments can in theory stem patient and provider incentives to engage

health insurance and the demand for medical care evidence from a randomized experiment we estimate how cost sharing the portion of the bill the patient pays affects the demand for medical services the data come from a randomized experiment a catastrophic insurance plan reduces expenditures 31 percent relative to zero out of pocket price the price elasticity is approximately 0 2 we reject the hypothesis that less favorable coverage of outpatient services increases total expenditure for example by deterring preventive care or inducing hospitalization

income sources effects on inequality abstract based on certain desirable properties a subset of entropy decomposition rules is proposed to assign inequality contributions to different components of income in addition a method of assessing the impact on inequality of marginal changes in income components originally applied to gini index by lerman and yitzhaki the review of economics and statistics 67 1985 151 is extended to other measures of inequality an empirical exercise based on australian income distribution data illustrates the usefulness of the proposed analytical framework

variation in risk seeking behaviour following large losses a natural experiment this study explores people s risk taking behaviour after having suffered large real world losses following a natural disaster using the margins of the 2011 australian floods brisbane as a natural experimental setting we find that homeowners who were victims of the floods and face large losses in property values are 50 more likely to opt for a risky gamble a scratch card giving a small chance of a large gain 500 000 than for a sure amount of comparable value 10 this finding is consistent with prospect theory predictions regarding the adoption of a risk seeking attitude after a loss

comment on the interpretation and misinterpretation of inequality decompositions by income sources summary this paper discusses interpretations of different inequality decomposition rules when inequality is decomposed by income sources it argues that authors of a recent article based their conclusions on misinterpreted decomposition results it also argues that marginal effects derived as elasticities of inequality with respect to uniform increases in income from each source are easily interpreted and can be compared across different decomposition rules

does self control depletion affect risk attitudes abstract a core prediction of recent dual self models is that risk attitudes depend on self control while these models have received a lot of attention empirical evidence regarding their predictions is lacking we derive hypotheses from three prominent models for choices between risky monetary payoffs under regular and reduced self control we test the hypotheses in a lab experiment using a well established ego depletion task to reduce self control and measuring risk attitudes via finely graduated choice lists manipulation checks document the effectiveness of the depletion task we find no systematic evidence in favor of the theoretical predictions in particular depletion does not increase risk aversion

developments in non expected utility theory the hunt for a descriptive theory of choice under risk this article reviews recent developments in the economic theory of individual decision making under risk since the 1950s it has been known that individual choices violate the standard model of expected utility in predictable ways considerable research effort has now been devoted to the project of developing a superior descriptive model following an overview of non expected utility theories which distinguishes between conventional and non conventional approaches the paper seeks to assess these alternative models in terms of empirical success using laboratory and field data and theoretical usefulness the closing sections reflect on some new directions emerging in this literature

the brain as a hierarchical organization based on recent neuroscience evidence we model the brain as a dual system organization subject to three conflicts asymmetric information temporal hori zon and incentive salience under the first and second conflicts we show that the uninformed system imposes a positive link between consumption and labor at every period furthermore decreasing impatience endogenously emerges as a consequence of these two conflicts under the first and third conflicts it becomes optimal to set a consumption cap finally we discuss the behavioral implications of these rules for choice bracketing and expense tracking and for consumption over the life cycle jel dil d74 d82 d87 d91

misery loves company social regret and social interaction effects in choices under risk and uncertainty abstract extensive field evidence shows individuals decisions in settings involving uncertainty depend on their peers decisions one hypothesized cause of peer group effects is social interaction effects an individual s utility from an action is enhanced by others taking the same action we employ a series of controlled laboratory experiments to study the causes of peer effects in choice under uncertainty we find strong peer group effects in the laboratory our design allows us to rule out social learning social norms group affiliation and complementarities as possible causes for the observed peer group effects leaving social interaction effects as the likely cause we use a combination of theory and empirical analysis to show that preferences including social regret are more consistent with the data than preferences including a taste for conformity we observe spillover effects as observing another s choice of one risky gamble makes all risky gambles more likely to be chosen

choice under uncertainty problems solved and unsolved ffifteen years ago the theory of choice under uncertainty could be considered one of the success stories of economic analysis it rested on solid axiomatic foundations it had seen important breakthroughs in the analytics of risk risk aversion and their applications to economic issues and it stood ready to provide the theoretical underpinnings for the newly emerging information revolution in economics 1 today choice under uncertainty is a field in flux the standard theory is being challenged on several grounds from both within and outside economics the nature of these challenges and of our profession s responses to them is the topic of this paper

measuring beliefs and rewards a neuroeconomic approach the neurotransmitter dopamine is central to the emerging discipline of neuroeconomics it is hypothesized to encode the difference between expected and realized rewards and thereby to mediate belief formation and choice we develop the first formal test of this theory of dopaminergic function based on a recent axiomatization by caplin and dean 2008a these tests are satisfied by neural activity in the nucleus accumbens an area rich in dopamine receptors we find evidence for separate positive and negative reward prediction error signals suggesting that behavioral asymmetries in response to losses and gains may parallel asymmetries in nucleus accumbens activity

the effect of medicaid premiums on enrollment a regression discontinuity approach abstract this paper estimates the effect that premiums in medicaid have on the length of enrollment of program beneficiaries whether and how low income families will participate in the exchanges and in states medicaid programs depends crucially on the structure and amounts of the premiums they will face i take advantage of discontinuities in the structure of wisconsin s medicaid program to identify the effects of premiums on enrollment for low income families i use a 3 year administrative panel of enrollment data to estimate these effects i find an increase in the premium from 0 to 10 dollars per month results in 1 4 fewer months enrolled and reduces the probability of remaining enrolled for a full year by 12 percentage points but other discrete changes in premium amounts do not affect enrollment or have a much smaller effect i find no evidence of program enrollees intentionally decreasing labor supply in order to avoid the premiums

examining risk preferences under high monetary incentives experimental evidence from the people s republic of china several experimental sessions were conducted to elicit certainty equivalents for a sequence of lotteries involving real monetary outcomes the opportunity to conduct sessions in the people s republic of china afforded the ability to offer very large monetary incentives relative to subjects living costs in the highest payoff condition subjects earned three times their normal monthly revenue in the course of a two hour experiment results indicate a statistically significant impact of the level of monetary incentives on revealed risk preferences however even under extreme monetary incentives subjects demanded amounts well in excess of expected value for low probability gain prospects copyright 1992 by american economic association