a semiparametric approach to short term oil price forecasting abstract in this paper it is shown how the garch properties of oil price changes can be employed to forecast the oil price distribution over short term horizons the forecasting methodology is semiparametric and it is based on the bootstrap approach the results of an out of sample forecasting exercise carried out using the brent oil price series suggest that the forecasting approach can be used to obtain a performance measure for the forward price in addition to compute interval forecasts for the oil price

an empirical exploration of the world oil price under the target zone model abstract this paper investigates the behavior of the world oil price based on the first generation target zone model using anecdotal data during the period of 1988 1999 we found that opec has tried to maintain a weak target zone regime for the oil price our econometric tests suggest that the movement of the oil price is not only manipulated by actual and substantial interventions by opec but also tempered by market participants expectations of interventions as a consequence the non linear model based on the target zone theory has very good forecasting ability when the oil price approaches the upper or lower limit of the band

calculating and using second order accurate solutions of discrete time dynamic equilibrium models we describe an algorithm for calculating second order approximations to the solutions to nonlinear stochastic rational expectations models the paper also explains methods for using such an approximate solution to generate forecasts simulated time paths for the model and evaluations of expected welfare differences across different versions of a model the paper gives conditions for local validity of the approximation that allow for disturbance distributions with unbounded support and allow for non stationarity of the solution process

sustainable consumption within a sustainable economy beyond green growth and green economies abstract in 1992 one unambiguous result of the unced conference was the need for changing consumption and production patterns with affluent countries taking the lead 20 years later at the 2012 uncsd little is left over and instead the green economy has been the theme pursued by the oecd the eu and other countries so the question needs to be answered if this is finally an attempt to put into practice what was promised 20 years ago or another diversion from what needs to be accomplished sustainable development is still a convincing concept if the original definition is taken avoiding the confusion caused by partisan interests reinterpreting the concept focussing on human needs fulfilment and respecting environmental limits it can still guide strong sustainable consumption green economy green growth on the other hand is a new terminology for what is known since 40 years as ecological modernisation it is indeed overdue but with its focus on efficiency and innovation it cannot guarantee to fulfil the brundtland sustainability criteria a factor analysis based on the i p a t formula demonstrates how optimistic the assumptions regarding future technologies must be to support the green growth concept consequently the authors pledge for a pragmatic risk avoiding approach by slimming the physical size of the economy this requires strong sustainable consumption including production as resource consumption which in turn requires a change of the societies institutional settings formal and informal mechanisms and orientations finally some elements of a strategy towards this end are pointed out with special emphasis on the role of non governmental organisations ngos through networking and advocacy they can both stimulate bottom up action and mobilise the pressure necessary for the institutional changes which are needed to mainstream strong sustainable consumption

thailand green gdp assessment based on environmentally extended input output model abstract green gdp is an indicator of economic growth with the environmental impact on that growth factored into the traditional gdp this study aims to develop a green gdp model for thailand using the eio lca method green gdp is calculated by subtracting environmental costs from the traditional gdp environmental cost can be further divided into three components based on the system of environmental economic accounting seea which include depletion cost degradation cost and defensive cost life cycle assessment is a tool for evaluating the environmental impact which in this study focuses on ghg emissions the total direct ghg emissions for thailand are calculated for 1990 2020 based on the 2006 ipcc guidelines and thailand public statistical data for each economic sector it was found that the amount of ghg emissions are 242 459 million tonnes co2eq yr which come from 10 economic sectors comprised of agriculture mining manufacturing petroleum refinery power generation gas separation construction commercial residential and transportation more than 80 of the total direct emissions come from four sectors manufacturing 28 power generation 26 transportation 16 and agriculture 15 the portion of total ghg emissions direct and indirect emissions contributions is different from direct ghg emissions because the proportion of emissions from upstream processes in each sector is different the portion of total ghg emissions of manufacturing agriculture transportation and residential are 60 22 13 and 5 respectively the total thailand green gdp is consolidated from the results of each sector s green gdp the difference between thailand s gdp and green gdp is about 2 due to the degradation cost of ghg emissions with variability in the ratio of gdp to green gdp across different sectors the forecast of green gdp by sector for 2015 2020 can be used as business as usual bau scenarios to support policy making as well as the nama and indc action plan for thailand

fostering change to sustainable consumption and production an evidence based view this note from the field is an edited version of a policy brief summarizing the key findings from the first half of the sustainable consumption research exchange network score for the policy programs in the field of sustainable consumption and production scp we recommend a framework for action to change to scp that mentions the key domains to include food mobility and energy use housing the last two clearly related to urban development it should use a systemic perspective on the scp challenge and differentiate between developed fast developing and base of the pyramid economies score focuses mainly on developed economies and here we propose to differentiate between 1 measures that fit with mainstream beliefs and paradigms here governments could make operational agreements on implementation of instruments like green public procurement stimulating ecodesign etc 2 problems where a rough agreement on goals exists but where change is radical or means are uncertain and hence planning difficult here governments could foster visioning experimentation and support e g international collaboration in leapfrogging programs 3 problems that outright clash with the mainstream beliefs and paradigms here governments could foster informed deliberation on the more fundamental issues related to markets governance and growth 2007 elsevier ltd all rights reserved

price changes in the euro area and the united states some facts from individual consumer price data prices of goods and services do not adjust immediately in response to changing demand and supply conditions this paper characterizes the average frequency and size of price changes in the euro area and its member countries investigates the determinants of the probability of price changes and compares the evidence for the euro area with available u s results the facts documented in this paper are based on evidence from individual price data recorded at the store level in all euro area countries except ireland and greece that is in datasets covering austria belgium finland france germany italy luxembourg the netherlands portugal and spain which together account for around 97 percent of euro area gdp the data used are the monthly price records underlying the computation of national consumer price indices and harmonized consumer price indices these data cover a large number of products selected on the basis of extensive household budget surveys

target zones and exchange rate dynamics this paper develops a simple model of exchange rate behavior under a target zone regime it shows that the expectation that monetary policy will be adjusted to limit exchange rate variation affects exchange rate behavior even when the exchange rate lies inside the zone and is thus not being defended actively somewhat surprisingly the analysis of target zones turns out to have a strong formal similarity to problems in option pricing and investment under uncertainty

target zones and exchange rates an empirical investigation this paper develops an empirical model of exchange rates in a target zone the distribution of exchange rate changes is conditioned on a latent jump variable where the probability and size of a jump vary over time as a function of financial and macroeconomic variables when there is no jump the target zone is credible and exchange rate changes are constrained to remain within the target zone band the paper revisits the empirical evidence from the european monetary system regarding the conditional distribution of exchange rate changes the credibility of the system and the size of the foreign exchange risk premia in contrast to some previous findings we conclude that the french franc deutschmark rate exhibits considerable nonlinearities realignments are somewhat predictable and the credibility of the system did not increase substantially after 1987 moreover our model implies that the foreign exchange risk premium becomes large during speculative crises

physical market determinants of the price of crude oil and the market premium abstract we analyze the determinants of the real price of crude oil by means of an equilibrium correction model over the last two decades where we focus on the aspects of the physical market that impact on the clearing price we find that two cointegrating relations affect the changes in prices one refers to opec s behavior attempting to control prices using its market power and quotas the other to the coverage rate of oecd expected future demand using inventory behaviors we derive a forecasting equation for the change in oil prices which we use to assess the speculative elements of the price increases of the period 2000 05 we show that worries alien to the physical markets were the causes of the increase in oil prices and we quantify their overall impact

on environmental kuznets curves arising from stock externalities abstract we develop a stock externality model in an optimal growth framework and examine the relationship between economic growth and the environment we find that as incomes rise over the growth path both the marginal benefits of pollution control and the marginal costs of pollution control rise if at a given income level the marginal benefits rise more than the marginal costs the emissions income relationship has a negative slope at that income level and vice versa we are thus able to generate examples of emissions income relationships of varying shapes by varying pollution specific parameters which determine marginal costs and benefits such as the convexity of the cost function the rate of decay of the stock of pollution and the share of consumption in the composite good an inverted u shape relationship an environmental kuznets curve requires only minimal assumptions a convex cost function and that environmental quality is a normal good imply an inverted u shape relationship for an open set of parameters we also examine how environment income relationship varies according to what measure is used for the environment emissions stock of pollution or emissions control

the extreme value in crude oil and us dollar markets abstract this study constructs a flexible range based volatility model by considering extreme value information to explore the volatility and dependence structures between the oil price and the us dollar exchange rate an asset allocation strategy is implemented to evaluate the economic value and confirm the efficiency of this model the empirical results indicate that the use of extreme value information can not only enhance the explanatory power of volatility structures but also sort out the asymmetric volatility effect in the oil market besides investors can obtain extra benefits of between 72 and 713 annualized basis points by incorporating extreme value information into their asset allocation strategies less risk averse investors can generate higher benefits the empirical results have potentially important implications for asset allocation and risk management

resilience in the dynamics of economy environment systems the ecological concept of resilience has begun to inform analysis of change in economy environment systems the linkages between resilience and the stability of dynamical systems are discussed along with its role in understanding of the evolution of such systems particular linkages discussed include those between resilience biodiversity and the sustainability of alternative states recent developments in modelling the resilience of joint economy environment systems suggest the advantages of analysing change in the system as a markov process the transition probabilities between states offering a natural measure of the resilience of the system in such states it is argued that this emergent property of the collaboration between ecology and economics has far reaching implications for the way we think about model and manage the environmental sustainability of economic development

optimal intensity targets for greenhouse gas emissions trading under uncertainty uncertainty is an obstacle for commitments under cap and trade schemes for emission permits we assess how well intensity targets where each country s permit allocation is indexed to its future realized gdp can cope with uncertainties in international greenhouse emissions trading we present some empirical foundations for intensity targets and derive a simple rule for the optimal degree of indexation to gdp using an 18 region simulation model of a cooperative global cap and trade treaty in 2020 under multiple uncertainties and endogenous commitments we show that optimal intensity targets could reduce the cost of uncertainty and achieve significant increases in global abatement the optimal degree of indexation to gdp would vary greatly between countries including super indexation in some advanced countries and partial indexation for most developing countries standard intensity targets with one to one indexation would also improve the overall outcome but to a lesser degree and not in all individual cases although target indexation is no magic wand for a future global climate treaty gains from reduced cost uncertainty and the potential for more stringent environmental commitments could justify the increased complexity and other potential downsides of intensity targets

anticipated and unanticipated effects of crude oil prices and gasoline inventory changes on gasoline prices abstract this paper examines the effect of anticipated and unanticipated changes in oil prices and gasoline inventory on us gasoline prices we estimate empirical responses to anticipated and unanticipated changes in oil prices and gasoline inventory and show that gasoline price adjustments are faster and stronger for anticipated changes in oil prices and inventory levels than for unanticipated changes furthermore this difference is statistically significant we use these findings to evaluate the cost of adjustment hypothesis suggested by borenstein and shephard 2002 we also find that there is an asymmetry in the effect of gasoline inventory on gasoline and oil prices this finding complements a well known result that positive and negative changes in oil prices have asymmetric effect on gasoline prices

environmental policy and macroeconomic dynamics in a new keynesian model this paper studies the dynamic behavior of an economy under different environmental policy regimes in a new keynesian model with nominal and real uncertainty we find the following results i an emissions cap policy is likely to dampen macroeconomic fluctuations ii staggered price adjustment alters significantly the performance of the environmental policy regime put in place iii the optimal environmental policy response to shocks is strongly influenced by the degree to which prices adjust and by the monetary policy reaction

an interpretation of recent research on exchange rate target zones how do exchange rate bands work compared to completely fixed rates between realignments or more precisely what are the dynamics of exchange rates interest rates and central bank interventions within exchange rate bands does the difference between bands and completely fixed exchange rates matter and if so which of the two arrangements is best or more precisely what are the tradeoffs that determine the optimal bandwidth this article will present an interpretation of some selected recent theoretical and empirical research on exchange rate target zones with emphasis on main ideas and results and without technical detail

energy transitions and national development indicators a global review of nuclear energy production abstract energy use plays a vital role for human well being however human well being can also be affected by socio economic and environmental impacts associated with the use of different primary energy sources nuclear energy production is perceived as one means of satisfying national energy demand while contributing to a potentially sustainable energy transition the objective of this study is to further understand socio economic environmental and technological factors that characterize countries that choose nuclear energy production hence this exploratory study reviews the socio economic contexts of nuclear energy producing countries in comparison to countries without nuclear energy use the study is based on world development indicators published by world bank for 213 countries between 1960 and 2013 and follows two analytical steps first based on a comparison of countries average development indicator values over time we descriptively explore which socio economic environmental and technological factors characterize the spectrum of countries following different nuclear energy strategies no nuclear production phase out planning to produce produce nuclear energy second we statistically analyze nuclear energy producing countries exploring if there was significant change in socio economic environmental and technological characteristics after the start of nuclear energy production characteristics of our four country groups revealed nuclear countries incl phase out used more energy per capita and showed higher levels of carbon emissions as well as household consumption compared to countries planning to use nuclear energy and countries without nuclear energy use adoption of nuclear energy does not appear to reduce fossil fuel use or enable energy independence hence our study did not provide evidence that nuclear energy production can be seen as technological answer to global challenges like climate change or unequal energy distribution it is therefore unclear if and how nuclear energy contributes to global human well being as part of sustainable development

why do oil prices jump or fall this paper discusses theories that can explain the zig zags of oil prices in general and in particular the recent jump more precisely the following explanations are discussed homo oeconomicus pure profit maximization if demand is dynamic and convex price reaction function price increases and respectively declines depend on capacity utilization cartelization contingent on output or revenues of which the latter can lead to backward bending supply segments and multiple equilibria statistical descriptions mean reversion homo politicus i e arguments for price hikes that are rational public choice despite the long run economic loss finally two approaches are presented that emphasize demand uncertainty one extending the above mentioned dynamic demand framework and the other considers a dynamic game of non competitive suppliers with lumpy investments summing up a demand shock seems to be the most suitable explanation of today s high prices indeed a shock given that international energy agency iea and department of energy doe were promising just a couple of years ago that we are going to have lots of oil at low prices while others and in particular politics have surprisingly little or no explanatory power

sustainability reporting among mining corporations a constructive critique of the gri approach abstract the environmental crisis is giving rise to growing public demand for socially responsible and ecologically viable mining practices large mining corporations are responding by advancing the idea of a sustainable mining industry these responses are accompanied by concerted efforts to advertise a company s relative progress in this direction through the publication of sustainability reports based on the global reporting initiative gri framework many scholars contest the effectiveness of that framework arguing that gri based reports can mislead decision makers who are concerned with sustainability or even camouflage unsustainable practices particularly at the site level few scholars however have scratched below the surface of criticism in order to consider how to improve the effectiveness of that framework this article takes a closer look at this problem by answering the following question what needs to be changed in mining corporations gri based frameworks for the purpose of promoting more meaningful and reliable sustainability performance information this article followed a qualitative methodological approach based on literature reviews and 41 semi structured interviews the analysis was guided by an evaluation of the extent to which the predominant gri based approach to sustainability reporting meets a number of principles of sustainability assessment and reporting known as the bellagiostamp principles this paper outlines a number of specific changes that should be promoted in mining corporations frameworks if their reports are to provide meaningful and accurate information about sustainability progress such changes include a more systematic consideration of site level performance scenario building and legacy effects overall this article corroborates the view that meaningful and reliable standardized disclosures of contributions to sustainability are unlikely to emerge any time soon the geographical dispersion of mining facilities imposes substantial difficulties to the contextualization of sustainability evaluations

a geopolitical theory of oil price behaviour an econometric evaluation previous work on crude oil price modelling has generally focused on two theoretical approaches either the optimal control analysis of pricing of a depletable resource or organization of the petroleum exporting countries opec as a partial monopolist setting oil prices to maximize net present value neither has been wholly satisfactory we consider a different perspective a cooperative framework in which political and military factors interacted with economic considerations for oil exporters and importers to define a target price zone tpz we analyse several issues in this context monthly versus annual average prices beginning and ending dates for tpzs degree of stability in several price series west texas intermediate wti brent etc free on board fob and landed prices real or nominal prices opec behaviour and effect of the euro exchange rate on dollar denominated oil prices we conclude that a tpz system was in operation from 1986 through 2003 the tpz worked imperfectly but with a sub

sustainable energy planning leapfrogging the energy poverty gap in africa abstract the present paper introduces the results of a spatial economic analysis that identifies the least cost rural electrification options that can bring the persistent energy poverty to an end in sub saharan africa the rationale behind the analysis is that the applicable energy technologies have gone through fundamental changes and these have profound effects on the competitiveness of the various options the least cost distributed generation options are calculated for each geographical location for mini hydro off grid pv and diesel generators options and it is compared to the electricity grid extension the methodology presented in this manuscript organises the scarcely available energy related local and regional geo information into comprehensible maps the set of tools presented and the results based on those analyses can support decision and policy makers to plan for the least cost rural electrification options while also adapting to the most effective way to reduce energy poverty this can help in the national rural electrification plans by delineating which communities cannot be reached by existing grid without excessive extension costs and gives the alternative distributed generation option

estimating and forecasting the real prices of crude oil a data rich model using a dynamic model averaging dma approach given that oil price fluctuations have been of great interest for macroeconomics in the recent years due to its important implications for future inflation economic growth and policy making the aim of this paper is to estimate and forecast west texas intermediate wti crude oil prices using a large monthly dataset that covers the period from march 1983 to december 2011 to achieve this aim forecasting with factor models offers a usual approach that utilizes large datasets however a forecasting model which simply includes all factors in state space equation and does not allow for time varying may be not suitable with a highly volatile market such as oil market to overcome these limitations an approach that accounts both for parameter and model uncertainty is employed in particular this study uses the dynamic model averaging dma approach suggested by koop and korobilis 2012 the key element of the dma approach is that it allows both for model and parameter to vary at each point of time by doing so the dma is robust to structural breaks empirical findings show that dma approach outperforms any other alternative model used in the forecasting exercise results also show that there is model but not parameter variation in this oil price forecasting exercise finally the findings suggest that the dma approach provides a better proxy of expected spot prices than future prices

sticky prices in the euro area a summary of new micro evidence this paper summarises the vast evidence on micro price setting recently obtained for euro area countries we consider studies with micro data on consumer and producer prices as well as survey information the main findings are 1 prices in the euro area are sticky and stickier than in the us 2 downward price rigidity is only slightly more marked than upward price rigidity 3 heterogeneity and asymmetries are observed in price setting and 4 the relevance of theories that explain price stickiness such as implicit or explicit contracts marginal costs and coordination failure is confirmed whereas menu costs pricing thresholds and costly information explanations are judged much less relevant by firms jel c25 d40 e31

oil price mean reversion and zone readjustments observing opec s short term price output ceiling behavior during the late 1980s and 1990s one can conclude that it attempts to stabilize the market price within a range of its announced target price by controlling the output ceiling if the price moves within four to five dollars below the target price it usually reduces the output ceiling and assigns new quotas to its member countries to keep the price close to the target price in reality opec established a band for the market price positioned round the target price by basically choosing suitable upper and lower limits for the output or at least in soft markets it places tolerance zone below the target price in order to restrict the discrepancy between the market price and the target price the lower limit is particularly needed because it sets a price floor and ensures that the market price stays above the significantly lower marginal cost of oil production if the limits of these zones are backed by a perfectly credible intervention policy they can generate an expectations process that should turn the market prices around even before any intervention takes place while opec in some sense observes the target zones for its prices thosemore zones are neither well defined nor vigorously defended it can not always or may not be willing to maintain the price within the limits of the desired zone by cutting the output ceiling it must sometimes readjust the target price and output ceiling and thus create a new target zone to reflect the market s new fundamentals this is particularly true now because opec is losing market share to the other oil producers and is contemplating to shift the current band actual readjustments in the target price can be so large as in 1980 and 1985 that the newmarket price must jump as well they can occur when both the market price is near the limits of the band as well as when it is inside the band but still further away from those limits less

clustering in crude oil prices and the target pricing zone hypothesis abstract this paper studies the target pricing zone tpz hypothesis for crude oil by examining price clustering in the dollar digit it is hypothesized that price clustering occurs within an established tpz if opec is able to defend the upper and lower bounds through output changes the results show that prices strongly cluster around the dollar digit value of 9 within the tpz sub periods but not outside the sub periods furthermore the degree of clustering declines when production capacity utilization is high and when production significantly exceeds quotas consistent with opec s inability to defend the zone nine centered clustering also results in lower contemporaneous and next day volatility these results support the target pricing zone hypothesis of crude oil

the incentive to cheat an empirical analysis of opec relatively little is known about the payoffs to various kinds of strategies facing opec cartel members we propose an empirically tractable procedure to calculate the payoffs to relevant opec strategies fresh insights into the problem of the quota system and deterring cheating are presented stressing the importance of the nonrenewability of the oil stock the short run rigidity of demand short term capacity constraints the presence of a backstop technology and the different discount rates the cartel members are facing we conclude that punishment is a dominant strategy for the saudis and that the finite resource base in the oil industry substantially attenuates the incentive to cheat also the biased market quota system in favor of small producers weakens but does not eliminate their incentive to cheat in addition we compute the price paths and payoffs corresponding to competitive cournot and joint profit maximization solutions and contrast them with the actual historical patterns of opec beha

the concept of weak sustainability abstract this paper surveys the links between growth theory with exhaustible resources and the concept of weak sustainability it examines the underlying assumptions behind this concept and questions the usefulness of the weak sustainability index as an indicator of sustainable development

the system boundaries of sustainability abstract the energy systems of the western industrialized nations have passed through different stages of development and fundamental energy crises over the course of their history 14th 18th and the end of the 20th century these crises have contributed decisively to the transformation of the energy system and of european societies the various historical energy systems their system boundaries and the restrictions resulting from them have decisively influenced the opportunities for development in european societies based upon this knowledge the question arises as to what energy system boundaries a future sustainability strategy will have to deal with the different sustainability concepts strong and weak sustainability imply different system boundaries for an energy system aiming at sustainable development climate change the design of the future energy system and the finiteness of the fossil energy system are the restrictions for the future energy system hence the boundaries of the sustainability system are determined by four dimensions based on the finiteness of the fossil energy system the development of a post fossil energy system the problem of climate change and the chosen sustainability paradigm this sustainability approach could enable sustainable development opportunities for the present generation without affecting the welfare of future generations

the dynamic stability of opec s oil price mechanism abstract this paper examines opec s long lived mechanism which targets the oil price and adjusts the quality ceiling to meet the target the stability of this controversial mechanism is compared to that of two alternatives one requires quantity control without any price targeting and the other is a synthesis of quantity control and the opec mechanisms all three mechanisms passed the stability test and the two alternatives give rise to some interesting policy implications practically considerations which involve the availability of specific information make opec s mechanism the most appropriate in terms of achieved targeted revenues the paper also offers a convergence strategy that speeds up the achievement of targeted revenues under opec s current mechanism

opec and other commodity cartels a comparison abstract the economic literature provides specific characteristics for cartels although the theory of international cartels is not well developed in the literature and every cartel is unique some of these characteristics exist in each cartel this study investigates the existence of these characteristics in six known commodity cartels including opec in addition it compares the oil companies cartel the seven sisters to opec and summarizes the findings of opec econometric models developed in the literature in the last 25 years and concludes that the results do not support cartel or competitive models for opec although other cartels are more successful than opec many books and articles in economics use opec as a cartel example neither statistical tests nor theory support the popular use of opec as a cartel example indeed this article concludes that opec is composed of saudi arabia the dominant world producer plus several distinct sub groups and that separate models are required to explain the behavior of each assigning the power of some opec members to opec has caused confusion about its behavior recent opec success is attributed to political natural and technical capacity limitations in the oil fields that prevented countries from cheating on their quota in other words opec adherence to the quota except for saudi arabia is anything but voluntary

the impact of the asian crisis on the behavior of us and international petroleum prices the strong long run relationships among the petroleum spot and futures prices have weakened after the asian crisis as manifested in less co integration among these prices in the post crisis period the directional causal relationships have either changed the direction as in the case of wti crude or weakened somewhat as in the case of nymex gasoline and heating oil these changes should complicate the job of those who try to benefit from predicting the movements of petroleum prices after the asian crisis in the international gasoline spot markets movements in the nymex gasoline price are found to precede movements in the gulf coast and rotterdam gasoline prices in the pre crisis period and the movements of these prices and those of the singapore price in the post crisis period implying that the nymex price is the gasoline leader in both periods the monday friday day of the week effect is only significant for the nymex gasoline 1 month and 3 month futures prices and the gulf coast gasoline spot economic and political shocks related to the spot prices have greater impacts on all prices than shocks related to the futures prices regardless of the petroleum type and the time period

spite and development in a wide variety of settings spiteful preferences would constitute an obstacle to cooperation trade and thus economic development this paper shows that spiteful preferences the desire to reduce another s material payoff for the mere purpose of increasing one s relative payoff are surprisingly widespread in experiments conducted in one of the least developed regions in india uttar pradesh in a one shot trust game the authors find that a large majority of subjects punish cooperative behavior although such punishment clearly increases inequality and decreases the payoffs of both subjects in experiments to study coordination and to measure social preferences the findings reveal empirical patterns suggesting that the willingness to reduce another s material payoff either for the sake of achieving more equality or for the sake of being ahead is stronger among individuals belonging to high castes than among those belonging to low castes because extreme social hierarchies are typically accompanied by a culture that stresses status seeking it is plausible that the observed social preference patterns are at least partly shaped by this culture thus an exciting question for future research is the extent to which different institutions and cultures produce preferences that are conducive or detrimental to economic development