elimination of west european coal subsidies implications for coal production and coal imports expanding volumes of international coal supply can be secured in west european harbours at us 50 60 1993 per tonne in 1993 western europe produced 160 million tonnes of coal but the cost was f

the effect of annuity insurance on savings and inequality this paper examines the amount of precautionary savings and wealth inequality arising from life span uncertainty by comparing saving behavior under perfect insurance arrangements with that arising under imperfect arrangements namely when longevity risk can be pooled only with members of one s own family the central findings of the paper are that 1 perfecting insurance arrangements can sharply lower savings in both intergenerationally altruistic and life cycle economies and that 2 in altruistic economies perfecting annuity insurance can greatly influence inequality indeed in the long run in our model switching from imperfect family insurance to perfect insurance can mean the difference between absolute inequality and absolute equality

wealth accumulation over the life cycle and precautionary savings this article constructs and simulates a life cycle model of wealth accumulation and estimates the parameters of the utility function the rate of time preference and the coefficient of risk aversion by matching the simulated median wealth profiles with those observed in the panel study of income dynamics and in the survey of consumer finances the estimates imply a low degree of patience and a high degree of risk aversion the results are used to study the importance of precautionary savings in explaining wealth accumulation they imply that wealth accumulation is driven mostly by precautionary motives at the beginning of the life cycle whereas savings for retirement purposes become significant only closer to retirement

the effect of food stamps on labor supply a bivariate selection model abstract although there is a large literature on the effects of u s transfer programs on labor supply this is the first such study of the food stamp program we model the nonlinearity and nonconvexity of the budget constraint and use maximum likelihood methods to estimate hours of work functions for female heads of household the largest recipient group in the program we also model the joint response to afdc and food stamps and we account for the existence of a significant number of eligible households who do not participate in the programs a three equation bivariate selection model is estimated on a sample of eligible households with maximum likelihood

household history snap participation and food insecurity abstract food security in an important public policy issue in 2015 approximately 1 in 8 u s households experienced food insecurity at some point in the year low income families are at higher risk for food insecurity than other families and these families may also face higher levels of disruption e g moves loss of income or individuals entering or leaving the household than other families i use data from the survey of income and program participation to explore the relationship between food insecurity the household s history during the previous year and snap participation the results indicate that a number of aspects of the household s recent experience including negative income shocks moves and both increases and decreases in household size increase the probability of being food insecure while snap participation is estimated to reduce the probability of being food insecure

food insecurity and public assistance this paper examines if welfare programs reduce the probability that vulnerable households experience food deprivation because of financial constraints although the 1996 welfare reform legislation specifically limited the eligibility of immigrant households to receive assistance many states chose to protect their immigrant populations by offering state funded aid to these groups i exploit these changes in eligibility rules to examine the link between food insecurity and public assistance the evidence indicates that a 10 percentage point cut in the fraction of the population that receives public assistance increases the fraction of food insecure households by about 5 percentage points

the evolution of time preference with aggregate uncertainty we examine the evolutionary foundations of intertemporal preferences when all the risk affecting survival and reproduction is idiosyncratic evolution selects for agents who maximize the discounted sum of expected utility discounting at the sum of the population growth rate and the mortality rate aggregate uncertainty concerning survival rates leads to discount rates that exceed the sum of population growth rate and death rate and can push agents away from exponential discounting

the effect of safety net programs on food insecurity we investigate to what extent major safety net program benefits affect food insecurity in families we impute program eligibility and benefits in each state for 2001 2009 accounting for cross program eligibility rules we use simulated eligibility and benefits for a nationally representative sample as instruments for imputed eligibility and potential benefits among nonimmigrant low income single parent families 1 000 in potential cash or food benefits reduces the incidence of food insecurity by 1 1 percentage points on a base of 33 percent cash and food both reduce food insecurity the results highlight the importance of jointly considering a full range of safety net programs

germany s solar cell promotion dark clouds on the horizon abstract this article demonstrates that the large feed in tariffs currently guaranteed for solar electricity in germany constitute a subsidization regime that threatens to reach a level comparable to that of german hard coal production a notoriously outstanding example of misguided political intervention yet as a consequence of the coexistence of the german renewable energy sources act eeg and the eu emissions trading scheme ets the increased use of renewable energy technologies does not imply any additional emission reductions beyond those already achieved by ets alone similarly disappointing is the net employment balance which is likely to be negative if one takes into account the opportunity cost of this form of solar photovoltaic pv support along the lines of the international energy agency iea 2007 energy policies of iea countries germany 2007 review international energy agency oecd paris p 77 we recommend the immediate and drastic reduction of the magnitude of the feed in tariffs granted for solar based electricity ultimately producing electricity on this basis is among the most expensive greenhouse gas abatement options

how much does the supplemental nutrition assistance program reduce food insecurity nearly 15 of all u s households and 40 of near poor households were food insecure in 2009 the supplemental nutrition assistance program snap is the cornerstone of federal food assistance programs and serves as the first line of defense against food related hardship this paper measures the effectiveness of snap in reducing food insecurity using an instrumental variables approach to control for selection our results suggest that receipt of snap benefits reduces the likelihood of being food insecure by roughly 30 and reduces the likelihood of being very food insecure by 20

how does parental leave affect fertility and return to work evidence from two natural experiments this paper analyzes the effects of changes in the duration of paid job protected parental leave on mothers higher order fertility and postbirth labor market careers identification is based on a major austrian reform increasing the duration of parental leave from one year to two years for any child born on or after july 1 1990 we find that mothers who give birth to their first child immediately after the reform have more second children than prereform mothers and that extended parental leave significantly reduces return to work employment and earnings also decrease in the short run but not in the long run fertility and work responses vary across the population in ways suggesting that both cash transfers and job protection are relevant increasing parental leave for a future child increases fertility strongly but leaves short run postbirth careers relatively unaffected partially reversing the 1990 extension a second 1996 reform improves employment and earnings while compressing the time between births

the rise and fall of german hard coal subsidies abstract beginning with the coal crisis of 1958 the survival of the german hard coal mining sector has been heavily dependent on subsidies for several decades these subsidies are a complex system of almost 60 different measures often with conflicting objectives annual financial support for this subsidy system grew from 0 6 billion in 1958 to 7 5 billion in 1989 with the majority of the funding financed outside the public budget by a special fund based on the coal penny kohlepfennig in 1995 the abolishment of the coal penny in connection with budget constraints led to a significant subsidy decrease to 3 5 billion a recent agreement between the federal government and the mining state of north rhine westphalia in 2003 however seems to have fixed german hard coal subsidies at the 2 billion level for the time after 2012

evolution and growth this paper presents an evolutionary growth theory that captures the interplay between the evolution of mankind and economic growth since the emergence of the human species this uni ed theory encompasses the observed evolution of population technology and income per capita in the long transition from an epoch of malthusian stagnation to sustained economic growth 2001 elsevier science b v all rights reserved jel classixcation b22 e10 o11 o14 o33 o40 j10 j13

secular changes in wealth inequality and inheritance data suggest that the distribution of wealth among households in the usa and uk has become more equal over the last century though at least for the usa the pattern may have reversed recently this paper shows that a model in which all households save for life cycle reasons and some for dynastic purposes as well offers a possible or partial explanation the model predicts rising cross sectional equality of wealth when longevity increases there may also be implications about very recent changes expansion of social security programmes and government deficits can lead toward more wealth inequality slower growth may do the same

private incentives and social interactions fertility puzzles in israel this paper explores how private and social incentives for fertility may have combined to produce the complex fertility pattern observed in israel in the past half century fertility has declined within some ethnic religious groups moderately increased in others and parts of the ultra orthodox jewish population have experienced a reverse fertility transition in which childbearing has increased rapidly and substantially we present a theoretical analysis of the social dynamics of fertility that shows how private preferences preferences for conformity to social norms in childbearing and piecewise linear child allowances could have combined to yield such a complex fertility pattern we then explain the identification problem that makes it so difficult to infer the actual israeli fertility process from data on completed fertility jel jel jel jel jel jel

the evolutionary theory of time preferences and intergenerational transfers at each age an organism produces energy by foraging and allocates this energy among reproduction survival growth and intergenerational transfers we characterize the optimal set of allocation decisions that maximizes fitness time preference the discount rate is derived from the marginal rate of substitution between energy obtained at two different times or ages holding fitness constant time preference varies with age in different ways depending on whether an individual is immature or mature and during the transition between these stages we conclude that time preference and discount rates are likely to be u shaped across age

food stamps and food insecurity what can be learned in the presence of nonclassical measurement error policymakers have been puzzled to observe that food stamp households appear more likely to be food insecure than observationally similar eligible nonparticipating households we reexamine this issue allowing for nonclassical reporting errors in food stamp participation and food insecurity extending the literature on partially identified parameters we introduce a nonparametric framework that makes transparent what can be known about conditional probabilities when a binary outcome and conditioning variable are both subject to nonclassical measurement error we find that the food insecurity paradox hinges on assumptions about the data that are not supported by the previous food stamp participation literature

who are the world s food insecure new evidence from the food and agriculture organization s food insecurity experience scale summary until recently there was lacking a common food security measure and the necessary data to study the individual level determinants of food insecurity around the world in 2014 the food and agriculture organization s voices of the hungry project developed an experiential measure of food insecurity the food insecurity experience scale fies translated it into 200 languages and contracted gallup inc for collection of data through the gallup world poll this is the first paper that identifies and examines the common determinants of food insecurity in 134 countries using this cross country comparable experiential measure of food insecurity we also investigate whether and to what extent the common determinants of food insecurity identified in a global model differ across rankings of economic development using a series of multilevel linear probability models we find that the five characteristics associated with the largest increase in the likelihood of experiencing food insecurity around the world are having low levels of education weak social networks less social capital low household income and being unemployed we also find significant heterogeneity in the determinants of food insecurity over development rankings this study is an important first step in utilizing the new fies to document risk factors of food insecurity around the globe

the thrifty food plan and low income households in the united states what food groups are being neglected food assistance programs in the united states provide low income households with the resources to purchase a healthy nutritious and palatable diet if they buy the market baskets of food outlined in the thrifty food plan this study compares the cost of these baskets with actual spending on food at home by low income households simulations reveal at home food spending by low income households to represent only 86 of what is needed to follow the thrifty food plan married couples with children and female headed households with children spend only 73 and 82 respectively and just 43 and 50 for at home fruits and vegetables

taxes in a life cycle growth model with bequests and inheritances in a recent paper lawrence summers 1981 analyzes alternative taxes in a life cycle growth model this paper extends his analysis to include bequests and inheritances this inclusion is worth undertaking for several reasons first several recent empirical studies have suggested that bequests may account for an important share of the capital stock laurence kotlikoff and summers 1981 second it is important to explore whether the comparison of taxes is significantly affected when a bequest motive is introduced third the treatment of bequests under a consumption tax is controversial the endowment rationale calls for treating a bequest as taxable consumption by the deceased peter mieszkowski 1980 the real wage rationale calls for exempting bequests if such exemption raises the steady state capital intensity and real wage my 1980 article this paper confines itself to positive analysis of steady states transition paths and normative implications are explored elsewhere see my 1982 paper

evaluating environmental programs the perspective of modern evaluation research large scale environmental programs generally commit substantial societal resources making the evaluation of their actual effects on the relevant outcomes imperative as the example of the subsidization of energy saving appliances illustrates much of the applied environmental economics literature has yet to confront the problem of proper attribution of effects to underlying causes on a convincing methodological basis this paper argues that recent results in the econometrics and statistics literature on program evaluation could be utilized to advance considerably in this context in particular the construction of a credible counterfactual situation is at the heart of the formal statistical evaluation problem even when controlled experiments are not a viable option appropriate approaches might succeed where traditional empirical strategies fail to uncover the effects of environmental interventions

on the long run evolution of inheritance france 1820 2050 this paper attempts to document and account for the long run evolution of inheritance we find that in a country like france the annual flow of inheritance was about 20 25 of national income between 1820 and 1910 down to less than 5 in 1950 and back up to about 15 by 2010 a simple theoretical model of wealth accumulation growth and inheritance can fully account for the observed u shaped pattern and levels using this model we find that under plausible assumptions the annual bequest flow might reach about 20 25 of national income by 2050 this corresponds to a capitalized bequest share in total wealth accumulation well above 100 our findings illustrate the fact that when the growth rate g is small and when the rate of return to private wealth r is permanently and substantially larger than the growth rate say r 4 5 vs g 1 2 which was the case in the 19th century and early 20th century and is likely to happen again in the 21st century then past wealth and inheritance are bound to play a key role for aggregate wealth accumulation and the structure of lifetime inequality contrarily to a widely spread view modern economic growth did not kill inheritance

a biological theory of social discounting we consider a growth model in which intergenerational transfers are made via stocks of private and public capital private capital is the outcome of individuals private savings while decisions regarding public capital are made collectively we hypothesize that private saving choices evolve through individual selection while public saving decisions are the result of group selection the main result of the paper is that the equilibrium rate of return to private capital is at least 2 3 percent more than the rate of return to public capital in other words social choices involving intertemporal trade offs exhibit much more patience than individual choices do jel d11 d71 d91 h43 policy issues often involve intergenerational trade offs one highly publicized and polarizing example concerns the appropriate response to global warming while nordhaus 1994 concluded that there was no need to enact draconian policies to reduce co 2 emissions immediately stern 2006 insisted that the situation was in fact dire the difference in position can be attributed almost exclusively to the rates of time preference assumed by these two authors nordhaus used a few percent based on estimates deriving from private economic behavior while stern essentially set it equal to zero on the basis of a philosophical stance it then becomes clear that co 2 emissions should be taken seriously if for some reason private rates of time preference are too high when applied to public decisions since such decisions should then be made on the basis of a lower rate 1

time preference and life cycle consumption with endogenous survival we provide a structural theory of time preference and derive a functional form of intertemporal preferences by postulating that individuals make their life cycle consumption choices as if to maximize expected lifetime this yields a nontime separable expected utility representation where the inverse of the coefficient of intertemporal substitution exceeds the coefficient of relative risk aversion the rate of time preference depends on the inverse of expected remaining lifetime and the effect of age on the productivity of consumption in affecting health the preference formulation is applied in a standard intertemporal consumption model to illustrate the implied life cycle consumption choices

poverty and the distribution of material hardship public concern with poverty derives in large part from the assumption that low income families cannot afford necessities yet official poverty statistics focus on measuring income not on measuring material hardship two surveys of chicago residents measure whether families could afford food housing and medical care a family s official income to needs ratio explained 24 percent of the variance in the amount of material hardship it reported adjustments for family size age health noncash benefits home ownership and access to credit explain another 15 percent variations in permanent income explain almost none of the remaining variance in hardship among families with the same official income toneeds ratio material hardship varies by age family size and composition

partial identification methods for evaluating food assistance programs a case study of the causal impact of snap on food insecurity we illustrate how partial identification methods can be used to provide credible inferences on the causal impacts of food assistance programs focusing on the impact that the supplemental nutrition assistance program snap formerly known as the food stamp program has on food insecurity among households with children recent research applies these methods to address two key issues confounding identification missing counterfactuals and nonrandomly misclassified treatment status in this paper we illustrate and extend the recent literature by using data from the survey of income and program participation sipp to study the robustness of prior conclusions the sipp confers important advantages the detailed information about income and eligibility allows us to apply a modified discontinuity design to sharpen inferences and the panel nature allows us to reduce uncertainty about true participation status we find that snap reduces the prevalence of food insecurity in households with children by at least six percentage points

financial incentives and fertility using panel data on over 300 000 israeli women from 1999 to 2005 we exploit variation in israel s child subsidy to identify the impact of changes in the price of a marginal child on fertility we find a positive statistically significant and economically meaningful price effect on overall fertility and consistent with becker 1960 and becker and tomes 1976 a small effect of income on fertility which is negative at low and positive at high income levels we also find a price effect on fertility among older women suggesting that part of the overall effect is due to a reduction in total fertility

an economic model of welfare stigma perhaps the most basic assumption of the economic theory of consumer demand is that more is better than less virtually all of the major propositions of consumer theory can in a certain sense be derived from the assumption that goods are good interestingly however this tenet seems to be violated by the behavior of many individuals in the low income population for many turn out to be eligible for a positive welfare benefit but do not in fact join the welfare rolls for example it has been estimated that in 1970 only about 69 percent of the families eligible for afdc aid to families with dependent children participated in the program see richard michel 1980 the corresponding percentage for afdc u the program for which families with an unemployed male are eligible was only 43 percent and the participation rate in the food stamp program was only 38 percent see maurice mcdonald 1977 this phenomenon has puzzled many investigators because such individuals do not locate on the boundaries of their budget sets consequently most investigators ignore the problem when studying the effects of welfare programs on behavior in this paper this seemingly irrational rejection of an increase in income is modeled as resulting from welfare stigma that is from disutility arising from participation in a welfare program per se 1 the existence of stigma has been amply documented in the sociological literature patrick horan and patricia austin 1974 lee rainwater 1979 where interviews of recipients have often uncovered feelings of lack of self respect and negative self characterizations from participation in welfare nevertheless this phenomenon has not been modeled and many questions consequently remain when is the disutility of participation strong enough to prevent participation shouldn t we expect individuals to weigh the disutility of participation against the potential benefit in their decisions what is the elasticity of participation with respect to the potential benefit also in a slightly different vein how are the work disincentives of welfare affected by stigma these questions have been given scant attention by economists yet they are crucial for our ability to predict the impact of various welfare programs on the lowincome population here these questions are addressed by modeling nonparticipation as a utility maximizing decision the model is developed and estimated for the afdc program 2 the model posits an individual utility function containing not just disposable income but

food environment in the united states as a complex economic system the food environment in the united states is complex sixteen socio economic demographic variables from various public data sources are studied with a machine learning algorithm to ascertain the causality structure associated with the food environment in the united states high levels of unemployment and poverty are direct causes of high levels of food insecurity while low income causes high levels of food insecurity via increased levels of poverty unemployment is a common cause for both increased levels of food insecurity and poverty we find that food insecurity and participation in supplemental nutrition assistance program snap are related yet no direct causality is observed contrary to past studies which find that snap participation decreased the occurrences of poverty in contemporaneous time we find that poverty and snap participation are related through several back door paths via food insecurity unemployment race and food taxes obesity and snap participation are indirectly related via several back door paths namely race income poverty and food insecurity and unemployment also food insecurity and obesity are related by several back door paths low income high food taxes and race being black and non hispanic are direct causes of obesity the complex causality structure in the us food environment reveals that policy variables cannot be treated independently of their rich causal structure government agencies responsible for designing policies for food assistance poverty alleviation combating food insecurity and obesity need to consider the interrelationships among these variables

dietary effects of the food stamp program based on data from the 1979 80 survey of food consumption in low income households this paper estimates the effects of changes in cash income and the food stamp benefit on household nutrient availability while controlling for two potential sources of selection bias the major finding of the empirical analysis is that the estimated dietary effects of changes in food stamp benefits are considerably larger than those resulting from changes in cash income with estimates of the ratios of the mpc for the food stamp benefit to the cash income mpc ranging from three to seven across nutrients no significant evidence of selection bias was found and the estimated dietary effects of food stamp benefits from the selection bias models are similar to those from the basic model estimated by ordinary least squares regression

on the evolution of attitudes towards risk in winner take all games abstract a long standing conjecture is that winner take all games such as patent races lead to the survival of risk takers and the extinction of risk averters in many species a winner take all game determines the males right to reproduce and the same argument suggests that males will evolve to be risk takers psychological and sociological evidence buttresses the argument that males are more risk taking than females using an evolutionary model of preference formation we investigate to what extent evolution leads to risk taking in winner take all environments journal of economic literature classification numbers c7 d8

government debt human capital and endogenous growth the effect of government debt on capital accumulation has been debated for more than a century the debate has focused on the validity of the ricardian equivalence hypothesis which asserts that the mix of government debt and nondistorting taxes to finance government expenditures has no real effect on an economy in models with infinitely lived agents government bonds increase private assets by the full amount that offsets the rise in future tax liabilities for interest payments and the retirement of public debt even in a model with finitely lived agents barro 1 showed that government debt is neutral when private intergenerational transfers are positive and when the rate of growth is lower than the interest rate with operative intergenerational transfers carmichael 4 extended the debt neutrality into a regime where the rate of growth is greater than the interest rate while suggesting some sources of nonneutrality of public debt such as heterogeneous tastes and uncertainty moreover drazen 6 argued that when intergenerational transfers take the form of investments in human capital which have higher marginal returns than investments in physical capital government bonds affect the equilibrium solution and increase welfare in contrast assuming that private intergenerational transfers are zero van der ploeg and alogoskoufis 10 argued that an increase in government debt depresses real growth through reducing savings in an endogenous growth overlapping generations model with constant population the models mentioned above ignore possible responses of fertility to changes in government debt in an overlapping generations model with operative bequests becker and barro 3 showed that the neutrality of social security needs modification if fertility is endogenous lapan and enders 9 extended the insight of becker and barro 3 to examine the effects of government debt and found that a rise in government debt reduces fertility and raises capital intensity through increasing bequests which are part of the cost of having children wildasin 11 also obtained similar results while endogenizing fertility none of these models has endogenous growth of per capita income

the evolution of intertemporal preferences where do preferences come from what determines their properties though traditionally reluctant to ask such questions economists have recently turned to evolutionary models for answers we focus on intertemporal preferences here arising out of the evolutionary implications of different reproductive strategies or life histories an agent s life history specifies the agent s number and timing and in a richer model quality of offspring evolution will select the life history that maximizes the growth rate of the associated group of individuals we begin with the simplest possible biological life history that of a semelparous agent that if it survives a fixed number of years reproduces and then dies we show the evolutionary criterion for success in this case entails hyperbolic time discounting of the log of the number of offspring produced the rate of time preference is a function of age however not of time relative to the present and there are no preference reversals in the sense of behavioral economics at the same time the optimal strategy maximizes the exponentially discounted number of offspring provided we discount at the sum of the death rate and the maximal growth rate conventional discounting thus suffices to induce optimal choices from the agent more generally if the animal is iteroparous that is has a nondegenerate profile of offspring we show the evolutionary indifference curves over offspring of various ages are hyperplanes that are not parallel but tilt to reflect greater impatience as the growth rate increases there is no additively separable function of the age profile of expected offspring that is globally equivalent to this basic biological growth rate the evolution of intertemporal preferences

the problem of population and growth a review of the literature from malthus to contemporary models of endogenous population and endogenous growth abstract this paper deals with the evolution of the literature on the problem of population and growth from the classical period to the recent literature on endogenous growth and development the problem concerns two distinct issues 1 how to explain the observed covariation of the levels and rates of growth of per capita income and population size over time and space and 2 how to improve the human condition represented by these variables through an accommodating social policy the evolution of the literature we survey is reflected by the progressive treatment of key variables as endogenous rather than exogenous to the growth process it is also reflected by a shift from the historical concern about population explosion and its implications for growth to the more recent concern about the association between growth and population implosion in many developed countries

the food stamp program and food insufficiency food stamp participants have higher food insufficiency rates than eligible nonparticipants even after controlling for other factors given the food stamp program s prominent role in the alleviation of hunger this is a counterintuitive result we conjecture that these higher rates are due to adverse selection insofar as households more likely to be food insufficient are also more likely to receive food stamps we establish a theoretical framework to address this adverse selection using a simultaneous equation model with two probits we show that once one controls for this adverse selection food stamp recipients have the same probability of food insufficiency as nonrecipients copyright 2001 oxford university press

malthus in sweden this paper presents some new and unique cross county data from 19th century sweden over birth death and marriage rates grain prices and harvests local grain prices correlate negatively with local harvests suggesting imperfectly integrated food markets the so called positive and preventive checks are also present good local harvests are associated with high birth and marriage rates and low death rates we also find that the fertility and marriage effects from changes in prices but not harvests are greater in counties that rely more on manufacturing consistent with an open economy model of fertility choice where agents earn income from both agriculture and manufacturing

does religion constrain the risky sex behaviour associated with hiv aids this article examines the likely effectiveness of public health interventions designed to change the risky sexual behaviour associated with human immunodeficiency virus acquired immune deficiency syndrome hiv aids by faith based organizations fbos we utilize data from the general social survey gss to estimate an economic model of sexual behaviour our theoretical approach proceeds by rationalizing on evolutionary grounds the existence of sexual activity in individual preference functions with unobservable costs imposed by religious beliefs and participation given the objective of utility maximization we justify the existence of demand functions for sexual activity that generate empirically testable hypotheses about the effects of religion and religious participation on risky sexual activity our results suggest that at least in the case of heterosexuals fbos can indeed influence the risky sexual behaviour that is associated with the transmission of hiv aids

the evolution of preferences and competition a rationalization of veblen s theory of invidious comparisons we examine how preferences evolve by natural selection in a competitive environment similar to that characterizing much of our evolutionary past we find that the evolutionarily stable preferences in this context exhibit a concern not only for absolute payoffs but also for relative payoffs and that this intensifies the degree of competition relative to what obtains when players consider only absolute payoffs we argue that this has consequences for the equilibrium population size we argue that the premise of this analysis is consistent with the available anthropological evidence and that the prediction is broadly consistent with the findings of experimental game theory

on the growth maximizing distribution of income this paper presents an unconventional argument based on population growth to bolster marginal productivity theory there is an economy with a single output produced from a number of different types of labor each type of labor is reproduced from that type itself and from the amount of the output devoted to it under some income distributional norm any norm which fails to induce convergence to maximal balanced growth is growth dominated in that the population and income it induces can be overwhelmed eventually on the maximal balanced growth path the norm divides output according to marginal productivity copyright 1997 by economics department of the university of pennsylvania and the osaka university institute of social and economic research association

reform of coal policies in western and central europe implications for the environment abstract a subsidy to a polluting activity increases the level of that activity and therefore the amount of pollution it generates ceteris paribus in western europe coal production is generally subsidized through price support and budgetary transfers in central europe both production and consumption are subsidized to analyse the net effects of coal policies in europe however one cannot treat them simply as equivalent to pure taxes or subsidies other distortions besides those that are price induced have to be taken into account our qualitative assessment suggests that eliminating producer and consumer subsidies to coal in europe would lead to environmental improvements and remove an important barrier to introducing greater competition in national electric power industries

the food stamp participation and labor supply of married couples an empirical analysis of joint decisions this paper examines the effect of the food stamp program on intrafamily labor supply and program participation decisions married couples simultaneously choose the labor supply of the husband and wife and whether to participate in the food stamp program using data from the survey of income and program participation the author estimates a nested multinomial logit model simulations indicate smaller labor supply effects to changes in the food stamp benefit than the previous research which focused on single parents married couple program participation is found to be relatively responsive to changes in food stamp benefits

biodiesel a new oildorado guaranteeing tax reductions and exemptions the european governments intend to increase the share of biofuels in total eu fuel consumption to 5 75 by 2010 the financial support of this eu objective is frequently justified by expected positive environmental impacts most notably the mitigation of climate change and by favorable employment effects in the agricultural sector this paper investigates the environmental and economic implications of the support of rapeseed based biodiesel as a substitute for fossil diesel based on a survey of recent empirical studies we find that the energy and greenhouse gas balances of this environmental strategy are clearly positive yet it appears to be unclear whether the overall environmental balance is also positive most importantly though biodiesel is not a cost efficient emission abatement strategy thus for the abatement of greenhouse gases we recommend more efficient alternatives based on both renewable and conventional technologies

evolution of preferences we endogenize preferences using the indirect evolutionary approach individuals are randomly matched to play a two person game individual subjective preferences determine their behaviour and may differ from the actual objective pay offs that determine fitness matched individuals may observe the opponents preferences perfectly not at all or with some in between probability when preferences are observable a stable outcome must be efficient when they are not observable a stable outcome must be a nash equilibrium and all strict equilibria are stable we show that for pure strategy outcomes these conclusions are robust to allowing almost perfect and almost no observability with the notable exception that inefficient strict equilibria may fail to be stable with any arbitrarily small degree of observability despite being stable with no observability

a theory of time preference grant a taylor this article proposes that people generally prefer present consumption to future consumption because their expected utility from consumption eventually falls as their mental and physical abilities eventually decline with age moreover contrary to the ubiquitous intertemporal formulation with a constant rate of time preference and contrary to three recent theories of time preference that predict decreasing discounting as people age this article asserts that discounting increases over the life cycle this hypothesis is supported by data from the panel study of income dynamics as well as evidence from numerous previous studies jel d91 1 introduction despite the almost universal assumption of time preference in models of intertemporal choice an adequate explanation of why people discount the future has not been provided 1 olsen and bailey 1981 make a convincing case for positive time preference by contradiction i e without time preference models of intertemporal choice do not yield predictions consistent with observed behavior but they do not explain why individuals would rationally discount the future 2 three recent studies have attempted to provide the explanation rogers 1994 argues that societies that discount the future at a rate of about 2 will be the long run survivors in an evolutionary fitness situation 3 posner 1995 argues that discounting occurs because individuals have multiple selves that is people are weighting their present consumption far more heavily than their future consumption because the present self and the future self are in some meaningful sense separate persons 92 becker and mulligan 1997 argue that discounting occurs because of a rational defective recognition of future utilities 730 but as will be shown these three theories are inconsistent with empirical evidence on consumption over the life cycle in at least one important aspect this article constructs and empirically supports a new theory of time preference the hypothesis is that people do not have an intrinsic preference for present consumption relative to future consumption instead the instantaneous utility function also known as the felicity function is expected to vary with age just as people s physical and mental abilities vary with age in other words the ability to enjoy consumption eventually deteriorates over the life cycle along with other abilities this life cycle view of the expected utility function causes people to rationally devalue consumption in periods of low expected felicity that is discount future consumption perhaps this is what is meant by the cliche don t wait until you are too old to enjoy it moreover this causes individuals implicit discount rates to vary systematically with age 4 in fact this provides the testable implication of the theory the standard specification of intertemporal preferences holds the discount rate constant over th e life cycle 5 to be more precise in the early stage of the life cycle the capacity to enjoy consumption may be expected to rise hence a young individual s discount rate may be negative figure 1 illustrates this possibility with a hypothetical adult life cycle marginal felicity function for a given level of consumption u sub c c a c denotes consumption and a denotes age and its corresponding discount rate function rho a the vast majority of wealth is held by older people that is those in the declining stage of their abilities thus the preference for present consumption over future consumption appears to hold in the aggregate this view of intertemporal preferences may at first seem inconsistent with practically all dynamic analyses which are based on the notion of stationary utility on further consideration however the hypothesis is quite consistent with modern consumer theory since becker 1965 it has been widely accepted that households derive utility from commodities that are produced with market goods combined with household time and skills i

the role of intergenerational transfers in aggregate capital accumulation this paper uses historical u s data to directly estimate the contribution of intergenerational transfers to aggregate capital accumulation the evidence presented indicates that intergenerational transfers account for the vast majority of aggregate u s capital formation only a negligible fraction of actual capital accumulation can be traced to life cycle or hump savings a major difference between this study and previous investigations of this issue is the use of more accurate longitudinal age earnings and age consumption profiles these profiles are simply too flat to generate substantial life cycle savings this paper suggests the importance of and need for substantially greater research and data collection on intergenerational transfers life cycle models of savings that emphasize savings for retirement as the dominant form of capital accumulation should give way to models that illuminate the determinants of intergenerational transfers

food stamp program participation and food insecurity an instrumental variables approach the relationship between food stamp program fsp participation and household food insecurity fi is investigated using data from the 1996 1997 national food stamp program survey endogeneity of fsp participation is accommodated with an instrumental variables approach in contrast to other findings reported in the literature results suggest participation in the fsp reduces the severity of fi sociodemographic variables play important roles in fsp participation and fi underreporting of fsp participation and limited observations of food insecure households in previous studies may have also been factors copyright 2008 oxford university press

assessing food insecurity in latin america and the caribbean using fao s food insecurity experience scale abstract the complexity of the operational concept and definition of food insecurity has complicated the study of the food insecure and efforts to determine clear policy directions previous findings on the prevalence and severity of food insecurity are inconsistent and often depend on the measure used to overcome limitations in food security measurement the food and agriculture organization of the united nations developed the food insecurity experience scale which is the first survey protocol to measure people s direct experience of food insecurity on a global scale using this new measure our study contributes to the understanding of the food insecure by examining the determinants of food insecurity within and across countries in latin america and the caribbean lac using a series of multilevel linear models we find the three determinants associated with the largest increase in the likelihood of experiencing food insecurity in lac are low levels of education limited social capital and living in a country with low gdp per capita results suggest the need to promote education of the most vulnerable encourage social interactions that help build individuals social capital and adopt gender sensitive programs the results also suggest the need for a shift in policy from short term strategies to long term efforts that sustain household productive capacity and employment to promote sustained economic growth

the impact of food stamp program participation on household food insecurity this study examines the impact that participation in the food stamp program has on household food insecurity using data from the panel survey of income dynamics two strategies are used to identify the causal effect of the program first endogenous treatment effect models are estimated using state level errors in payments of benefits as instruments additionally the impact of losing benefits due to a government decision on the food insecurity of program participants is examined the paper finds that program participation lowers food insecurity by at least 18

cash equivalence welfare stigma and food stamps the food stamp program fsp is one of the largest domestic redistributive transfer programs with approximately 22 million participants at a cost of 12 billion in 1983 the stated objective of the fsp is to raise the levels of nutrition among low income households by providing such households with an opportunity to obtain a low cost nutritionally adequate diet 29 5 for program evaluation and cost forecasting accurate estimates of the determinants of eligible households program participation and food expenditure decisions are of particular concern in light of the elimination of the purchase requirement epr and other recent structural changes in the program the problem of obtaining these estimates has three dimensions first observations on the behavior of eligible households under the post epr institutional setting are required second the roles of welfare stigma and the cash equivalence of the in kind food stamps must be clarified finally because program participation is a household choice that affects food expenditures the interdependence of eligible households fsp participation and food expenditure decisions must be accommodated emphasizing an important component of this interdependence the connection between cash equivalence of stamps in the participation decision and in expenditures for food this paper tackles all three dimensions the purpose of this study is to determine the extent to which food stamps are cash equivalent and to determine which program and household characteristics including the degree of cash equivalence and stigma affect post epr food stamp program participation

how trade saved humanity from biological exclusion an economic theory of neanderthal extinction abstract one of the great puzzles in science concerns the rise of early modern humans and the fall of neanderthals a number of theories exist and many support the biological principle of competitive exclusion but the evidence for such mechanistic theories in which biology is destiny is limited in response this paper develops a behavioral model of neanderthal extinction we show how the endogenous division of labor and subsequent trading among early modern humans could have helped them to overcome potential biological deficiencies we discuss the relation between economics and natural selection and show how trade may partially offset natural selection

cultural constraints on innovation based growth to what extent does the cultural composition of a society impose a constraint on its long run growth potential we study this question in the context of an innovation based model of growth where cultural attitudes are endogenously transmitted from one generation to the next focusing on attitudes regarding patience we analyze the two way interaction between economic growth and the intergenerational transmission of patience exploiting this interaction we compare the long run growth performance of a culturally heterogeneous society where patience is initially underrepresented in the population with a culturally homogeneous society where all agents are perfectly patient our main result is that in the absence of any intrinsic preferences of patient parents to transmit their attitudes to their children the development paths of the two societies are bound to diverge with the culturally heterogeneous society experiencing lower growth rates yet if patient parents ceteris paribus prefer their children to be patient like them we show that the two societies can in the long run grow at the same rate jel d91 e24 o30 o40 z10

subsidizing the stork new evidence on tax incentives and fertility this paper exploits the introduction of a pronatalist transfer policy in the canadian province of quebec that paid up to c 8 000 to families having a child i implement a quasi experimental strategy by forming treatment and control groups defined by time jurisdiction and family type the incentive was available broadly rather than to a narrow population as studied in previous work providing an exceptional opportunity to investigate heterogeneous responses i find a strong effect of the policy on fertility and some evidence of a heterogeneous response that may help reconcile these results with previous estimates

food stamp benefits and child poverty in 2000 8 8 million children lived in households participating in the food stamp program making this assistance program a crucial component of the social safety net despite its importance little research has examined food stamps effect on children s overall well being using the current population survey from 1989 to 2001 we consider the impact of food stamps on three measures of poverty the headcount the poverty gap and the squared poverty gap we find that in comparison to the headcount measure food stamp benefits lead to large reductions in the poverty gap and squared poverty gap measures

the origin of utility sexual selection and conspicuous consumption abstract this paper proposes an explanation for the universal human desire for increasing consumption and the associated propensity to trade survival opportunity off conspicuous consumption i argue that this desire was moulded in evolutionary times by a mechanism known to biologists as sexual selection whereby an observable trait conspicuous consumption in this case is used by members of one sex to signal their unobservable characteristics valuable to members of the opposite sex it then shows that the standard economics problem of utility maximisation is formally equivalent to the standard biology problem of the maximisation of individual fitness the ability to pass genes to future generations and thus establishes a rigorous theoretical foundation for including conspicuous consumption in the utility function

evolution of time preferences and attitudes toward risk this paper explores a general model of the evolution and adaption of hedonic utility it is shown that optimal utility will be increasing strongly in regions where choices have to be made often and decision mistakes have a severe impact on fitness several applications are suggested in the context of intertemporal preferences the model offers an evolutionary explanation for the existence of conflicting short and long run interests that lead to dynamic inconsistency concerning attitudes toward risk an evolutionary explanation is given for s shaped value functions that adjust to the decision maker s environment jel d81 d83 this paper is based on the hypothesis that individual decisions are guided by hedonic util ity an individual who faces several alternatives will choose the one that promises the greatest pleasure or happiness then given that the properties of a hedonic utility function determine individual behavior and individual behavior determines biological fitness evolutionary forces will have shaped our utility during the long time in which the modern human being evolved in this sense hedonic utility can be considered as a reward system that induces individuals to make optimal choices a view that is supported both by theory and evidence from neuroscience 1 as irving kupfermann eric r kandel and susan iversen 2000 express it pleasure is unques tionably a key factor in controlling the motivated behaviors of humans 1007 for the econo mist the interesting question is then about the properties of the evolutionary optimal reward system and how these properties adapt to the environment in which individuals make choices the present paper reconsiders and solves a general model of the evolution of utility suggested by arthur j robson 2001a which predicts how cardinal properties of utility functions should adapt to the decision environment it turns out that the optimal utility function will be steep in regions where decisions have to be made frequently and where wrong decisions would lead to large losses in fitness in those regions even small changes in consumption will cause large changes in happiness the evolution of context specific utility functions is then shown to be optimal whenever the decisions our ancestors had to make arrived in distinct choice situations the model can also be extended to incorporate learning about evolutionary relevant attributes of available options

savings and wealth in models with altruistic bequests during recent years much attention has been given to the role of bequests in explaining various aspects of economic behavior for example authors have studied the impact of bequests on physical wealth accumulation laurence kotlikoff and lawrence summers 1981 the interest elasticity of savings owen evans 1983 tax reform laurence seidman 1984 and the distribution of wealth alan blinder 1976a more recently economists have begun to distinguish between human and physical bequests gary becker and nigel tomes 1986 acknowledging the presence of bequest in human form is important in analyzing each of the issues mentioned above outlays on children affect the shape of the family s labor supply and expenditure profiles upon which the level of aggregate savings crucially depends if these outlays are interest sensitive substitutes for physical bequests they will also influence the interest elasticity of savings in the area of tax reform the neutrality of the consumption tax depends on the ability of the government to identify human capital bequests from general consumption raymond batina 1987 if this is not possible the portfolio choice of investment in human versus physical capital may be distorted at the margin finally the unequal transmission of wealth across generations may be explained by the lack of physical bequests and the inefficiently low levels of human bequests made by wealthconstrained households becker and tomes 1986 to distinguish clearly the behavior of constrained households from unconstrained households who make sizeable physical bequests both types of bequests must be recognized this paper introduces a model that makes explicit examination of these issues possible it extends lord s 1989 multiperiod model of life cycle savings and adult human capital investment by adding altruistically motivated human and physical bequests 2 the model is calibrated using microeconomic data on earnings time and goods expenditures on children s human capital and physical bequests we then use the model to examine the contribution of bequests to wealth accumulation and the level of savings this topic is the source of an important but yet unresolved debate between franco modigliani 1988 and kotlikoff 1988 kotlikoff maintains that u s wealth accumulation is primarily the consequence of bequests as opposed to life cycle savings for retirement one type of evidence cited by kotlikoff comes from simulation results demonstrating the failure of realistically calibrated life cycle models to generate sufficiently high saving rates and wealth income ratios alan auerbach and kotlikoff 1987 we show however that if a pure life cycle

cyclical uncertainty precautionary saving and economic growth this paper studies the interaction between cyclical uncertainty precautionary saving and economic growth in a stochastic endogenous growth model the analysis provides insight into the potential connection between technological uncertainty of the sort popularized in real business cycle models and the determinants of economic growth in a stochastic version of a popular model of endogenously determined economic growth the magnitude of the link between cyclical uncertainty and growth is quantified and found to be small in terms of its effect on the growth rate but possibly large in terms of its effect on levels of macroeconomic variables moreover the welfare costs of reduced cyclical uncertainty can be substantial owing to the lower historical rate of capital accumulation induced by a decrease in precautionary saving the chief implications of the model are found to be roughly consistent with the postwar experience of several countries although the predictions of the model with regard to growth rates are too small to explain much of the variation in growth rates across time or across countries

malthusian selection of preferences the authors study natural selection of preferences using a golden age model with endogenous population in equilibrium all agents have preferences with maximum biological fitness given resource constraints and total population is the maximum the environment can sustain naturally selected agents follow the golden rule acting as if they maximize the undiscounted sum of per capita felicities of current and future generations selected preferences and hence work saving consumption and population density vary predictably with environmental differences copyright 1990 by american economic association

the role of food stamps in consumption stabilization although the food stamp program is the largest universal entitlement program in the social safety net little is known about its stabilizing role in household income and consumption using data from the panel study of income dynamics spanning 1980 99 we estimate the volatility of income with and without food stamps coupled with a variance decomposition of consumption among families at high ex ante risk of food stamp participation food stamps reduced income volatility by about 12 percent and food consumption volatility by about 14 percent there was however a marked decline in consumption smoothing benefits of the program in the early 1990s relative to the 1980s

hard coal subsidies a never ending story abstract in germany hard coal has been subsidized for almost half a century despite the declining significance of hard coal production for the domestic labor market the subsidies have continued to increase until the middle of the last decade reaching a peak at 6 7 billion in 1996 while these subsidies have been continually shrinking since then settling at 2 7 billion in 2005 it is very likely that hard coal support will be extended in germany well into the next decade and even beyond this article questions the main arguments raised by the proponents of hard coal subsidization in germany and other eu countries most importantly in addition to the drain these subsidies impose on public budgets substantial opportunity costs are implied leading funds away from alternative more beneficial public investments from a social welfare perspective we therefore recommend the rapid abolition of these subsidies not only in germany where in real terms the accumulated amount of subsidies has now far exceeded 165 billion but also all across europe

trade and the political economy of redistribution this paper shows how international trade affects the support for policies which redistribute income between workers across sectors and how the existence of such policies changes the support for trade liberalization workers who are imperfectly mobile across sectors vote on whether to subsidize ailing sectors thereby redistributing income but also distorting the labor allocation we present three main findings first redistributive policies are more likely to arise in a small open than in a closed economy for a broad range of parameters second if a redistributive policy is adopted in both situations income differences across sectors tend to be lower in the open economy third the possibility to redistribute income across sectors raises the political support for trade liberalization in the first place

optimal social security in a dynastic model with human capital externalities fertility and endogenous growth abstract in this paper we investigate the optimal scale of pay as you go social security in a dynastic family model with human capital externalities fertility and endogenous growth human capital externalities reduce the return to human capital investment and hence lead to under investment in human capital and over reproduction of the population if the taste for the number of children is sufficiently weak relative to the taste for the welfare of children social security can be welfare enhancing by reducing fertility and raising human capital investment per child

malthus was right after all poor relief and birth rates in southeastern england the payment of child allowances to laborers with large families was widespread in early nineteenth century england this paper tests thomas malthus s hypothesis that child allowances caused the birth rate to increase a cross sectional regression model is estimated to explain variations in birth rates across parishes in 1826 30 birth rates are found to be related to child allowances income and the availability of housing as malthus contended the paper concludes by examining the role played by the adoption of child allowances after 1795 in the fertility increase of the early nineteenth century

evaluating the effects of optimally distributed public programs child health and family planning interventions this paper develops and tests an optimizing model determining the distribution of family planning and health subsidies across heterogeneous households and assesses the biases in cross area estimates of the health effects of such subsidies due to public resource optimization the model incorporates both health externalities and the endogenous response of the size of the recipient population to program subsidies longitudinal data describing child health and publicly provided family planning and health programs in 20 barrios in laguna province in the philippines are used to estimate the effects of such programs on child health and the relationships between the distribution of the programs and preprogram health levels the impact of a program on a particular childs health status is viewed as dependent upon the childs length of exposure to the program a basic feature of the model is the presence of health externalities which is shown to be sufficient along with plausible features of household behavior to make selective subsidization of fertility control either alone or in combination with health investment subsidies pareto efficient the model suggests that subsidization of fertility control is likely to be pareto efficient in the presence of health or human capital externalities when human capital and family size are gross substitutes and or when any per child human capital subsidies may substitute for direct subsidies to health investment and an equalizing distribution of the subsidies the highest family planning subsidies to the lowest health recipient households is efficient when both health and family planning subsidies are used fertility control subsidies minimize the subsidy burden for donors and are highest when total subsidy expenditures per child are greatest

is there a retirement savings puzzle in this paper we ask whether households are saving enough for their retirement we use data on income expenditure and expenditure components to analyse patterns of behaviour at and around the time of retirement for successive date of birth cohorts we compare periods of unemployment to periods of retirement and separate expenditures into categories reflecting work related expenditures basic necessities and other goods we find that income typically falls by more at unemployment than retirement but the reverse is true for expenditure we observe falls in expenditure at retirement for all expenditure categories using a stochastic life cycle model including mortality rates we assess the anticipated impact of retirement on consumption against that of unemployment the inter relationship between goods and leisure explains a large part of the persistent fall in expenditure at retirement we argue that the only way in which the life cycle hypothesis could be reconciled with the remaining unanticipated dip in consumption would be with the systematic arrival of unexpected adverse information at the time of retirement

the political economy of coal subsidies in europe abstract both the mining and the burning of coal is polluting so we might expect to observe taxes on coal production and consumption yet several countries of western europe subsidize coal production and most east european countries subsidize coal consumption the first part of this paper shows that those subsidies which are emulated by other rich and poor countries respectively have become enormous neoclassical political economy is used to examine why governments adopt such inappropriate policies when they are so wasteful of resources and damaging to the environment several new and offsetting political forces have been at work in western europe in recent years though causing some countries to dismantle their coal producer subsidies the paper concludes that these pressures for reform will continue to operate in the few remaining protectionist countries if coupled with more commercial diplomatic pressure from coal exporting countries they could be sufficient to see the end of such protection by early next century