hot stuff index insurance for indian pepper growers summary we simulate the impact of a joint price and yield index insurance on the basis of a small representative panel data set of indian smallholder pepper growers affordable and feasible index insurance reduces crop revenue risk to around 68 of its original level while a reduction to 50 of this level can be achieved with ideal insurance basis risk is large for only a small fraction of farm households depending on risk aversion 5 30 of farm households is willing to pay for index insurance increasing to 12 50 with a 50 premium reduction opportunity costs of consumption smoothing in the form of lower productivity levels suggest potential welfare gains of specialization with insurance

designing and rating an area yield crop insurance contract this article documents the design and rate making procedures used in the development of the group risk plan grp the new federal crop insurance product that insures based on area yield the authors of this article worked closely with personnel in the federal crop insurance corporation and others in developing methodological and practical constraints needed in implementing a workable area yield contract grp indemnity payments are made based on percentage shortfalls in actual county yields relative to a forecasted yield historical county yield data are used to develop forecasted yields and premium rates

determinants of donations in private nonprofit markets abstract we estimate the responsiveness of donations to a number of economic variables including price advertising and the availability of revenue from such other sources as government grants and program service sales utilizing a set of irs data on individual nonprofit organizations in each of seven industries including hospitals and higher education for the years 1982 1994 we find distinct overall patterns as well as notable variation across industries a nonprofit organization s fundraising expenditures are estimated to exert two countervailing effects on donations the direct advertising and information effect augments donations while the indirect effect on the price of donating has a negative effect we do not find evidence that fundraising is carried to the profit maximizing levels in some industries fundraising is substantially short of that level while in other industries it is excessive implying that the marginal return to fundraising is exceeded by the cost focusing on whether revenue from other sources affects donations to a nonprofit organization we find evidence that revenue from either government grants or from the organization s own program sales activity generally does not crowd out private donations to the contrary in most industries there are significant positive effects

are church and state substitutes evidence from the 1996 welfare reform abstract churches provide community services similar to those provided by the government but there has been no convincing analysis of the extent to which church activity can substitute for government activity to address this important issue this paper uses a new panel data set of presbyterian church usa congregations to regress both church member donations and a church s community spending on a number of variables including government welfare expenditures a provision of the 1996 welfare law that decreased the availability and use of welfare services by non citizens serves as an instrument to identify the causal effect of government spending on church activity the results show that church activities substitute for government activities extrapolating the findings to all denominations the estimated crowd out effect lies between 20 and 38 cents on the dollar the results are subjected to a number of robustness tests

optimal producer behavior in the presence of area yield crop insurance optimal producer behaviour in the presence of area yield insurance is studied the producer s optimal production and insurance choices are characterized the effect of the provision of area yield insurance on production patterns is studied and sufficient conditions for the provision of area yield insurance to increase the riskiness of the individual producer s decisions are derived a separation result is derived for area yield insurance contracts and stochastic technologies

constrained efficient contracts for area yield crop insurance with area yield crop insurance indemnification occurs when area yield falls below a yield trigger that is chosen by the producer the maximum value for this yield trigger is generally restricted e g 80 of the long term area average yield the impact of this trigger constraint on the optimal design of an area yield insurance contract is examined within the constrained efficient contract indemnities consist of both a lump sum payment and a payment that is proportional to the yield shortfall because lump sum payments may not be feasible to implement efficiency enhancing modifications to standard contracts are also proposed copyright 2000 oxford university press

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

does market competitiveness significantly affect public intervention in agricultural insurance the case in italy analyses of agricultural insurance failures often assume the existence of competitive supply tracing the reasons for high insurance cost and limited farmer participation to informational problems and suggesting the need for premium subsidization in order to increase participation however in countries such as spain and italy where agricultural insurance is most highly subsidized it could be that supply is not fully competitive in this article we explore the incidence of public subsidies to agricultural insurance premia when supply is noncompetitive through the use of a simple empirical model of an insurance market it is shown that while in the case of a competitive supply subsidies to insurance would benefit farmers a monopolistic supply would capture most of the subsidy thus eliminating the potential incentive towards wider participation by farmers the model is applied to a panel of italian farms for different levels of risk aversion to demonstrate the limited effect that a subsidy to a hyp

modeling conditional yield densities given the increasing interest in agricultural risk many have sought improved methods to characterize conditional crop yield densities while most have postulated the beta as a flexible alternative to the normal others have chosen nonparametric methods unfortunately yield data tends not to be sufficiently abundant to invalidate many reasonable parametric models this is problematic because conclusions from economic analyses which require estimated conditional yield densities tend not to be invariant to the modeling assumption we propose a semiparametric estimator that because of its theoretical properties and our simulation results enables one to empirically proceed with a higher degree of confidence copyright 2003 oxford university press

optimum area yield crop insurance cet article determine le contrat optimal d assurance dont l indemnite depend du rendement agrege sur recoltes d un bassin de production le schema optimal d assurance est base sur le coefficient individuel de regression qui mesure la sensibilite du rendement agrege a des variations du rendement agrege une indemnite est versee lorsque le rendement agrege est inferieur superieur a un rendement critique si le coefficient de regression est positif negatif le contrat optimal contient une franchise evanescente si le coefficient de regression est superieur a l unite

mean reverting financial leverage theory and evidence from pakistan abstractgrounding concepts of the two competing theories of capital structure trade off theory pecking order theory are quite opposite to each other trade off theory claims that there is an optimal target capital structure and firms try to achieve that optimal target point whereas pecking order theory argues that there is no optimal target capital structure but the firms follow a specific pattern of financing using the two competing theoretic frameworks this study applies fisher type panel unit root test to an unbalanced panel data of 13 115 firm year observations of nonfinancial firms listed on karachi stock exchange pakistan spread over 38 years 1973 2010 overall panel test results for short term long term as well as total leverage support trade off financing behaviour while individual firm results do not individual firm results show that only 16 of the firms have short term target 25 of the firms have long term target and 12 of the firms have total target leverage ratio further

mr smith and the preachers the economics of religion in the wealth of nations the extension of economic analysis to problems beyond the domain of formal markets and explicit prices represents a major recent intellectual development but economic imperialism is not new and was not invented in chicago adam smith in his wealth of nations extended economic reasoning to a variety of nonmarket exchange problems one example is his analysis of religious behavior smith viewed participation in religion as a rational device by which individual enhanced the value of their human capital he also explained the behavior of the clergy and other suppliers of religious services from an economic perspective

demand for collective goods in private nonprofit markets can fundraising expenditures help overcome free rider behavior abstract economic theory ascribes the primary role in the provision of public goods to government this emphasis on government overlooks the role of the not for profit sector in providing collective type goods in this paper we seek to determine the factors influencing charitable contributions to private nonprofit organizations by estimating a demand function for the output of these collective good providers specifically we test the hypothesis that voluntary giving is responsive to conventional market variables such as advertising expenditures price and quality overall the results are strongly supportive

faith based charity and crowd out during the great depression abstract interest in religious organizations as providers of social services has increased dramatically in recent years churches in the u s were a crucial provider of social services through the early part of the twentieth century but their role shrank dramatically with the expansion in government spending under the new deal in this paper we investigate the extent to which the new deal crowded out church charitable spending in the 1930s we do so using a new nationwide data set of charitable spending for six large christian denominations matched to data on local new deal spending we instrument for new deal spending using measures of the political strength of a state s congressional delegation and confirm our findings using a different instrument based on institutional constraints on state relief spending with both instruments we find that higher government spending leads to lower church charitable activity crowd out was small as a share of total new deal spending 3 but large as a share of church spending our estimates suggest that benevolent church spending fell by 30 in response to the new deal and that government relief spending can explain virtually all of the decline in charitable church activity observed between 1933 and 1939

the impact of financial liberalization on capital structure adjustment in pakistan a doubly censored modelling abstractthe purpose of the study is to explain adjustment rate towards target capital structure of pakistani nonfinancial listed firms and to investigate the impact of financial liberalization fl on capital structure adjustment rate we control for the unobserved heterogeneity and the fractional nature of adjustment rate by applying an unbiased dynamic panel fractional estimator on an unbalanced panel data of pakistani nonfinancial firms listed during 1972 2010 we find that these firms adjust at an annual rate of 24 51 to reach their capital structure targets we argue that in order to optimize the benefits of fl the government should strengthen financial as well as judicial institutions to enforce the creditors rights that will enable access to more options to pakistani firms to raise cheaper external financing

aggregation in area yield crop insurance the linear additive model previous analyses of area yield crop insurance have used a linear additive model lam to express the relationship between individual and area yield however the theoretical foundations of the lam are unknown this shortcoming is addressed by establishing two conditions linking microvariables and lam parameters the conditions relate to the interaction of risks in individual technologies and the extent of aggregation if systemic and individual risks are additive in individual yields and if the law of large numbers hold then the lam obtains this article also shows how departures from these conditions affect the results derived from a lam analysis a classic issue in agricultural economics is the design of schemes that would offer insurance against risks in agriculture the experience with conventional crop insurance has been disappointing as insurers have struggled to obtain reliable actuarial data on individual yields skees black and barnett the primary attraction of area yield insurance schemes is that insurers do not have to contend with the informational problems of moral hazard and adverse selection halcrow these problems can be dismissed because indemnities and premiums are based not on a producer s individual yield but rather on the aggregate yield of a surrounding geographical area however the key question is how adequate are aggregate yield instruments for reducing the risks faced by producers to address this question previous studies have expressed individual yields as a linear stochastic function of area yield mahul miranda vercammen the approach has been to use the form of a linear regression model where the dependent variable is the yield of an individual producer the only independent variable is area yield and the additive random error term measures omitted individual specific factors uncorrelated with area yield thus the model decomposes variations in individual yield in to variations in area yield that represent systemic risk and bharat ramaswami is senior economist in the indian statistical

parametric and nonparametric statistical modelling of crop yield implications for pricing crop insurance contracts this article considers alternative methods to calculate the fair premium rate of crop insurance contracts based on county yields the premium rate was calculated using parametric and nonparametric approaches to estimate the conditional agricultural yield density these methods were applied to a data set of county yield provided by the statistical and geography brazilian institute ibge for the period of 1990 through 2002 for soybean corn and wheat in the state of parana in this article we propose methodological alternatives to pricing crop insurance contracts resulting in more accurate premium rates in a situation of limited data

does the government crowd out private donations new evidence from a sample of non profit firms abstract during the 1980s government grants to non profit organizations declined dramatically and the price of private donations increased given there are different costs associated with government grants and private donations to non profits it is important to study the relationship between these two sources and determine whether government grants crowd out private donations i take a fresh look at the issue of crowd out and improve upon the literature by exploiting a panel data set that links private donations to non profit firms with the government grants they received i study 430 non profit shelter human services and other similar types of organizations that were in operation between 1982 and 1992 i find private donations to these non profits effectively do not change with changes in government grants after controlling for firm heterogeneity and political and economic factors under an ols specification in a 2sls specification after controlling for possible endogeneity of the government grants the estimated crowd out is significantly different from zero and one dollar on average the estimated crowd out is 50 cents

crowd out and diversity abstract research has shown that altruism is lower in diverse communities can this phenomenon be counteracted by government intervention to answer this question this paper introduces diversity to the canonical model of warm glow giving diversity may have two effects on incentives it may attenuate individuals altruistic preferences for public goods and it may cool off the warm glow that individuals get from voluntarism either of these effects leads to diverse communities having lower levels of public goods consistent with prior research however these effects have opposite implications for the efficacy of government intervention i then empirically investigate whether government intervention is more effective in diverse communities for identification i exploit the supreme court mandated 1991 expansion of the ssi program using a new dataset of united methodist churches from 1984 to 2000 the results show that the expansion of ssi crowded out charitable spending by churches the crowd out estimate for the average church is reasonably large but this masks significant differences in crowd out between communities crowd out occurred almost entirely in relatively homogeneous communities there is only modest evidence of crowd out in racially diverse communities thus diverse communities while having the lowest levels of altruism are in this instance the most amenable to government intervention

kids or cash exploring charter school responses to declining government revenues while the literature is extensive on school districts revenue sources less research has been done on the impact of donations on school district funds in this paper we extend the theoretical literature on crowding out of private donations by government grants for one type of nonprofit firm namely charter schools the theoretical model leads us to focus on the key relationships among fundraising effort enrollment which is tied to federal and state funding and donations using a dataset on texas charter schools we adopt a two stage approach to examine the empirical relationship between changes in nondonor revenues and the donations received by charter schools like the extensive empirical estimates of the effects of government grants on donations for other types of nonprofit firms we find evidence of crowding out with respect to our sample of charter schools we also find a significant positive effect of fundraising on donations with a 1 increase in fundraising associated to a 0 58 increase in donations a pattern consistent with overinvestment in fundraising enrollments exhibit a robust inverse relationship to changes in nondonor revenues jel h00 h32 h50

crop insurance in a political economy an alternative perspective on agricultural policy lawmakers often subsidize farmers in times of financial distress this article models this political impulse as a constraint on government farm policy describing how ex ante government farm insurance can deter ex post disaster relief and improve production incentives by countering the moral hazard that otherwise prevails absent ex ante government policy ex post relief takes the form of revenue insurance which prompts excessive entry into farm production and under production by operating farmers ex ante government policy can raise economic and political welfare by buying out low productivity farmers and offering profitable farmers a combination of revenue insurance price supports and a program participation fee copyright 2003 oxford university press

race and charitable church activity i introduction faith based organizations provide social services for more than 70 million americans annually johnson tompkins and webb 2002 of the more than 350 000 congregations in the country more than 85 support some type of social service activity solomon 2003 biddle 1992 estimates that each year congregations spend 24 billion dollars on philanthropic activities these actions have gained new relevance for policymakers as the availability of public funding for charitable church activity has dramatically increased in the past decade starting with the charitable choice provision of the 1996 welfare reform law and continuing with the creation of centers for faith based and community initiatives located in 11 different federal agencies policymakers have instituted a devolution of federal funds intended to provide community services in 2005 more than 2 1 billion dollars in government grants were awarded to religious organizations by federal agencies office of the press secretary 2006 1 some observers fear that this policy trend will encourage racial discrimination by congregations leonard 2002 as bartkowski and regis 2003 write congregational definitions of legitimate social problems that members care about are in actuality influenced by various considerations among them racialized perceptions of welfare recipients past studies by economists have postulated but not substantiated that churchgoers warrant special consideration as individuals whose actions are sensitive to community demographics e g alesina and la ferrara 2000 gruber 2005 alternately some policymakers have championed faith based organizations because they are not likely to display sensitivity to community demographics when providing services as president bush stated in a speech in 2002 faith based charities work daily miracles because above all they recognize the dignity of every citizen and the possibilities of every life office of the press secretary 2002 john diiulio the former director of the white house office of faith based and community initiatives argued for charitable choice by saying government at all levels blatantly denies the equal protection of the laws to low income urban african american and latino children and families who depend disproportionately on faith based organizations for both basic life necessities and the delivery of specific social welfare benefits diiulio 2002 there is also noneconomic research consistent with this view e g billiet 1995 johnson 1977 the goal of this article was to examine whether congregations are affected by the racial composition of the local community when deciding whether and how much charitable activity to provide exploring this relationship is valuable not only because it addresses a key policy debate but also because it contributes to existing economic work on diversity and redistribution much prior work on socioeconomic conditions and tastes for redistribution relies on hypothetical questions asked to respondents in the general social survey or in gallop polls examples include alesina and la ferrara 2005b luttmer 2001 fong 2001 this article examines how a community s racial composition affects actual charitable expenditures studying actual charitable activities will be valuable if individuals stated preferences are different from their actual preferences or if stated preferences are sensitive to the wording of a question as is the case in alesina and la ferrara 2005b to investigate the effect of race on charitable church activity we compare how racially homogeneous congregations respond to the community s racial composition relative to other congregations several factors support this approach first members of homogeneous congregations have ostensibly taken race into account when selecting a congregation to attend consequently these congregations may be especially likely to display sensitivity to a community s racial composition when providing charitable services

an empirical analysis of the demand for multiple peril crop insurance knowledge of factors affecting farmer purchases of crop insurance is essential for evaluating the soundness and profitability of crop insurance programs despite this importance the demand for crop insurance has received limited empirical attention the present paper reports on an empirical assessment of the demand for crop insurance by iowa corn producers adverse selection in the insured pool suggests that producers with differing levels of loss risk have different demand elasticities loss risk is included in the empirical analysis and is found to influence the elasticity of demand results show average demand elasticities of about 0 32 for relative insured acres and 0 73 for liability per planted acre implications for the actuarial soundness of the industry are provided

coping with systemic risk in index based crop insurance the implementation of index based crop insurance is often impeded by the existence of systemic risk of insured losses we assess the effectiveness of two strategies for coping with systemic risk regional diversification and securitization with catastrophe cat bonds the analysis is conducted in an equilibrium pricing framework which allows the optimal price of the insurance and the number of traded contracts to be determined we also explore the role of basis risk and risk aversion of market agents the model is applied to a hypothetical area yield insurance for rice producers in northeast china if yields in two regions are positively correlated we find that enlarging the insured area leads to higher insurance premiums unless capital market investors are very risk averse a cat bond written on an area yield index outperforms regional diversification in terms of certainty equivalents of both farmers and insurers

club goods and group identity evidence from islamic resurgence during the indonesian financial crisis this paper tests a model in which group identity in the form of religious intensity functions as ex post insurance i exploit relative price shocks induced by the indonesian financial crisis to demonstrate a causal relationship between economic distress and religious intensity koran study and islamic school attendance that is weaker for other forms of group identity consistent with ex post insurance credit availability reduces the effect of economic distress on religious intensity religious intensity alleviates credit constraints and religious institutions smooth consumption shocks across households and within households particularly for those who were less religious before the crisis

pay or pray the impact of charitable subsidies on religious attendance abstract the economic argument for subsidizing charitable giving relies on the positive externalities of charitable activities particularly from the religious institutions that are the largest recipients of giving but the net external effects of subsidies to religious giving will also depend on a potentially important indirect effect as well impacts on religious participation religious participation can be either a complement to or a substitute with the level of charitable giving understanding these spillover effects of charitable giving may be quite important given the existing observational literature that suggests that religiosity is a major determinant of well being among americans in this paper i investigate the impact of charitable subsidies on a measure of religious participation attendance at religious services i do so by using data over three decades from the general social survey as well as confirming the impact of such subsidies on religious giving using the consumer expenditure survey i find strong evidence that religious giving and religious attendance are substitutes larger subsidies to charitable giving lead to more religious giving but less religious attendance with an implied elasticity of attendance with respect to religious giving of as much as 1 1 these results have important implications for the debate over charitable subsidies they also serve to validate economic models of religious participation

the church versus the mall what happens when religion faces increased secular competition recently economists have begun to consider the causes and consequences of religious participation an unanswered question in this literature is the effect upon individuals of changes in the opportunity cost of religious participation in this paper we identify a policy driven change in the opportunity cost of religious participation based on state laws that prohibit retail activity on sunday known as blue laws many states have repealed these laws in recent years raising the opportunity cost of religious participation we use a variety of data sets to show that when a state repeals its blue laws religious attendance falls and that church donations and spending fall as well these results do not seem to be driven by declines in religiosity prior to the law change nor do we see comparable declines in membership in or giving to nonreligious organizations after a state repeals its laws we then assess the effects of changes in these laws on drinking and drug use behavior in the nlsy we find that repealing blue laws leads to an increase in drinking and drug use and that this increase is found only among the initially religious individuals who were affected by the blue laws the effect is economically significant for example the gap in heavy drinking between religious and nonreligious individuals falls by about half after the laws are repealed

optimal area yield crop insurance reconsidered the implementability of area yield insurance contracts in the presence of symmetric and asymmetric information about the farmer s beta linking his yield to the risk pool s yield is examined in the presence of fixed costs and symmetric information mahul s result that optimality requires setting the slope of the indemnity schedule equal to each farmer s beta is confirmed when there is asymmetric information between the insurer and the farmer however this full insurance contract is vulnerable to adverse selection and therefore may not be implementable for general cost structures the optimal area yield insurance contract under asymmetric information is characterized

emergent extremism in a multi agent model of religious clubs i introduction religious extremism is as old as religion itself but the tendency to promote militancy and terrorism from within extremist religions appears to be much more common now than in times past juergensmeyer 2001 stern 2003 wiktorowicz 2005 1 today s terrorists routinely frame their objectives in religious terms and organize their activities within religious movements this shift is not due to increased militancy within religion as a whole not even within the stricter subset of religious groups commonly labeled sectarian or fundamentalist bromley and melton 2002 marty and appleby 1995 rather groups with militant objectives are increasingly leveraging the latent potential for violence within extremist religion krueger and maleckova 2003 and krueger 2007 have shown that contrary to popular hypotheses regarding the salience of poverty and education it is instead institutional conditions such as civil liberties that contribute to the origination of terrorists within a country religious extremism has been shown to be a potentially powerful input into the production of terrorism berman 2004 2 and the origination of terrorists has been empirically connected to civil liberties we seek to complete the triangle and connect religious extremism to social conditions in an extension of existing theory and test the predictions of the model in an empirical context with an eye toward civil liberties this paper extends previous models of religious clubs to better account for observed patterns of extremism across different settings and test policies most likely to reduce the appeal of extremism economists at first blush should have trouble explaining the survival of groups that demand large sacrifices from their members successful religious groups however routinely impose all sorts of apparently unproductive costs on their members iannaccone 1992 introduced a formal model of religious clubs within which apparently irrational sacrifice and stigma enhances the individual and collective utility his model demonstrated the feasibility of extremist groups but does less to explain the relative prevalence of extremism across time and place further the original model allows for only corner solutions and as such the viability of extreme groups is indistinguishable from the viability of the more moderate groups they must compete with for members in the religious marketplace in section ii we revisit analyze and extend the club model of religion we push the analysis of the original model exploring sacrifice substitutability of club and private goods and their relationships to member commitment and the viability of extremist groups in this preliminary analysis we illustrate not only the potential insights of the club theory of religion into the strength and viability of extremist groups but also the limitations inherent to the representative agent model we proceed by extending the model in a multi agent ma computational framework this framework permits us to analyze the distributions of agents and clubs that make up a religious economy the computational nature of the model is critical because it allows for sufficient heterogeneity of agents and clubs and given this heterogeneity agent decision making absent closed form solutions via nash equilibria extremists groups emerge as just one segment the high cost tail of a distribution of religious clubs that range across the full spectrum of potential group imposed sacrifice and stigma extremism is identifiable and comparable in the model because it exists within a full spectrum of clubs by varying the parameters of the model that control the distribution of secular wages across agents and the degree of substitutability between religious and secular commodities we can better explain where and when religious extremism is most popular its strength relative to more moderate groups and which economic policies reduce its prevalence

an accurate measurement of the crowd out effect income effect and price effect for charitable contributions in the past empirical research on charitable contributions has focused on two issues estimating the income and price elasticities of contributions and estimating the extent to which government funding crowded out private contributions the two fundamental problems in all these studies are the differences in the underlying conceptual models and the use of imperfect data for empirical analysis this paper addresses both of these problems

church state separation and redistribution we analyze how religion affects voting and redistribution our model directs attention away from the particular faith belief or risk attitudes of religious individuals and emphasizes instead how organized religion opens the door to standard group based distributive politics we argue that organized religion makes it possible for the rich and the religious poor to form electoral coalitions in favor of low taxes and limited redistribution such electoral coalitions form out of simple material self interest and they occur at the expense of the secular poor however the material reward to the religious poor from supporting such electoral coalitions depends on the institutional context as state support for religion increases poor religious voters have greater incentives to vote with poor secular voters in favor of parties that support high taxes the analysis therefore highlights the possibilities of understanding how religion affects politics without asserting that religious individuals differ systematically from secular ones in their values or preferences

testing theories of capital structure and estimating the speed of adjustment this paper examines time series patterns of external financing decisions and shows that publicly traded u s firms fund a much larger proportion of their financing deficit with external equity when the cost of equity capital is low the historical values of the cost of equity capital have long lasting effects on firms capital structures through their influence on firms historical financing decisions we also introduce a new econometric technique to deal with biases in estimates of the speed of adjustment toward target leverage we find that firms adjust toward target leverage at a moderate speed with a half life of 3 7 years for book leverage even after controlling for the traditional determinants of capital structure and firm fixed effects

is there a viable market for area based crop insurance the performance of area yield insurance and farm level multiple peril crop insurance is analyzed for cotton and soybean production in georgia and south carolina the analysis improves on many previous studies by utilizing actual farm level yield data and by comparing the two types of insurance products not only for actuarially fair premium rates but also for actual unsubsidized and subsidized premium rates results suggest that even in heterogeneous production regions area yield insurance may be a viable alternative to farm level insurance when premium rates for farm level insurance contain large positive wedges

do lenders favor politically connected firms rent provision in an emerging financial market corruption by the politically connected is often blamed for economic ills particularly in less developed economies using a loan level data set of more than 90 000 rms that represents the universe of corporate lending in pakistan between 1996 and 2002 we investigate rents to politically connected rms in banking classifying a rm as political if its director participates in an election we examine the extent nature and economic costs of political rent provision we nd that political rms borrow 45 percent more and have 50 percent higher default rates such preferential treatment occurs exclusively in government banks private banks provide no

dynamic income progressive taxes and the timing of charitable contributions using an econometric model of charitable giving and a 10 year panel of tax return data i find that previous studies have underestimated the effects of permanent income and overestimated the effects of permanent changes in tax prices the significant statutory tax changes that occurred during the 1980s especially in 1986 serve to identify the key model parameters my results imply that people smooth their giving when transitory income changes but also time their giving to exploit transitory changes in tax prices the results also raise questions about how effectively the tax incentives permanently influence the level rather than just the timing of charitable giving by individuals

voluntary donations and public expenditures in a federal system proponents of the new federalism argue that nonprofit organizations and local governments will fully offset federal social service expenditure cutbacks the author analyzes this proposition as a competitive game in which donations are motivated by private and public good considerations the author characterizes the response of political economic equilibrium to exogenous changes in federal expenditures when local voters are cognizant of donor reactions partial replacement is the most likely outcome though others are possible copyright 1987 by american economic association

government growth and private contributions to charity we exploit the time series properties of charitable giving to provide additional insights into the relationship between charitable contributions and government spending cointegration tests reveal a significant long run relationship between several categories of charitable giving and government spending granger causality tests provide evidence on the short run giving and spending relationship evidence suggests that charitable contributions to education respond quite differently to state and local government education expenditures versus federal government expenditures we argue that the government spending and charitable giving relationship depends on the source of government revenue how this revenue is used and the rational ignorance of private donors

identifying the causal effect of income on religiosity using the earned income tax credit abstract how do economic conditions income and the generosity of social insurance affect religious behavior this paper provides novel evidence for the united states using variation in earned income tax credit benefits across states over time and by number of children in the raw data income and religiosity have a trivial relationship in contrast the instrumental variables strategy shows that increases in income from the eitc are found to sizably reduce religious attendance among low income individuals among individuals who attend the results indicate that an additional 1000 in annual income is associated with a decrease of roughly 1 service per year as compared to an average of 16 services per year the effect arises mainly along the intensive margin decreasing devout behavior and increasing more marginal attendance but having little impact on whether an individual participates at all or on beliefs there are also minimal effects on the occurrence and amount of contributions to religious organizations the results extend our understanding of the determinants of religiosity the relationship between governmental income support and religious behavior and the social effects of the earned income tax credit

religiosity and state welfare abstract the catholic sex abuse scandals reduced both membership and religiosity in the catholic church because government spending on welfare may substitute for the religious provision of social services we consider whether this plausibly exogenous decline in religiosity affected several measures of the public taste toward government and spending on welfare between 1990 and 2008 in places where there were more scandals individuals state a preference for less government provision of social services in contrast a higher level of abuse is also associated with an increase in voting for democratic candidates for president state legislatures and the us house of representatives and an increase in per capita government welfare spending although this increase is insufficient to replace the decrease in catholic provided charity

optimal insurance against climatic experience an optimal insurance contract against a climatic risk is derived in the presence of an uninsurable and dependent aggregate production risk the optimaldesign depends on the stochastic dependency between both sources of uncertainty and on the producer s attitude towards risk especially on his prudent behavior rationalweather insurance purchasing decisions are al so derived the prudent producer responds to actuarially fair weather insurance by increasing his exposure towards risk the u s multiple peril crop insurance program in which indemnity payments are based on the producer s individualyiel ds has been disappointing in that premiums have not been sufficient to cover indemnity payments and administrative costs this failure has induced the u s government to promote alternative insurance policies since 1993 the risk management agency has offered areayield contracts under its group risk plan in selected counties skees black and barnett another alternative is to base the indemnity on a weather index such as rainfall or temperature this policy was proposed in the past by sanderson but has failed to gain acceptance among policy makers the difficulties of rainfall insurance were a subject of debate in australia e g bardsley abey and davenport quiggin 1986 patrick the recent development of weather based instruments on financialmarkets known as weather derivatives for which the payoff depends on the cause of risk rather than on its effect on yield provide new opportunities for covering exposure to unfavorable weather events the objective of this article is threefold first a stochastic production function affected by a climatic risk and by an aggregate production risk where both sources of risk are stochastically dependent is de

economic growth and the separation of church and state the french case i introduction historically the decision to establish or forsake a state religion was seldom democratic it resulted from the political leaders willingness to consolidate their hold on power and did not reflect the people s attitudes toward a state religion even in a democracy like the united states the separation of church and state did not result from a popular vote but was derived from the first amendment of the u s constitution and subsequently reaffirmed by the supreme court france is actually one of the few countries where citizens had a say in the separation between church and state in 1905 the democratically elected french representatives adopted a bill that separated religion from the state the bill abolished the concordat which had been instituted by napoleon bonaparte in 1801 so as to govern the relationship between the french state and the roman catholic church under this arrangement the members of the catholic clergy were paid by the french state which in return had a say in their appointment the 1905 bill ended state subsidies for the church but also governmental interventions in the appointment of the church s personnel the passing of the 1905 bill illustrates the progressive rejection of the church in french politics it occurred at a time when france remained an agricultural country even though a growing share of the population worked in industrial activities in addition because primary education had been made compulsory in 1881 for both boys and girls illiteracy was decreasing nevertheless there remained many disparities between the different french departements 1 for instance the share of the french army s conscripts who were illiterate substantially varied between the different departements from 0 32 in haute savoie to 16 89 in morbihan in the academic literature economists have shown that religious laws have consequences on economic growth and human capital for example kuran 2003 botticini and eckstein 2005 hillman 2007 but they still debate the causal relationship between a nation s actual degree of religious observance and economic development there are indeed two major theories of religiosity the religion market model and the secularization hypothesis the religion market model developed by iannaccone 1991 iannaccone and stark 1994 iannaccone finke and stark 1994 and gill 1999 among others argues that religious participation is mainly supply driven in other words the government s intervention such as the establishment of state religion is a major determinant of religiosity however following weber 1905 proponents of the secularization hypothesis such as chaves 1994 and bruce 2001 argue that religious participation is demand driven they consider that economic development which includes industrialization an increase in literacy and wealth and a decrease in fertility rates entails a decline in religiosity this secularization process supposedly leads individuals to define themselves as less religious and decreases the influence of religion on social and political institutions as a matter of fact mccleary and barro 2006 find in a study of religiosity in 68 countries that economic development has an overall negative effect on religiosity urbanization also makes individuals less observant but education and the presence of children are positively correlated with religiosity still studies by finke and stark 1992 iannaccone and stark 1994 and stark 1999 among others argue that there is no empirical evidence to support secularization theories in particular the secularization hypothesis predicts that the separation between religion and state should become widespread as countries become richer but barro and mccleary 2005 cannot find any link between wealth measured by a country s gross domestic product gdp and the current existence of a state religion

valuing agricultural insurance this paper proposes a method for estimating a farmer s stochastic discount factor that is independent of his or her risk preferences and shows that that stochastic discount factor is appropriate for calculating a farmer s willingness to pay for a crop insurance product an empirical example illustrates how production and price data might be combined with returns data to permit econometric estimation of the stochastic discount factor and the implications of those illustrative results are briefly discussed

nonparametric estimation of crop insurance rates revisited with the crop insurance program becoming the cornerstone of u s agricultural policy recovering accurate rates is of paramount interest lack of yield data presents by far the most fundamental obstacle to recovery of accurate rates thisarticle employsnew methodology to estimate conditional yield densities and derive the insurance rates in our application we find the nonparametric kernel density estimator requires an additional twenty six years of yield data to estimate the shape of the conditional yield dens itiesasaccurately asthe recently developed empirical bayesnonparametric kernel density estimator such methodological improvements can significantly aid in ameliorating the data problem recovering accurate premium ratesis paramount to the actuarial soundness of the crop insurance program a program which hasgained prominence in the overall u s agricultural policy agenda the 1996 federal agricultural improvement and reform fair act signaled a new policy environment under which farmerswould be s to market forces under this policy regime crop insurance remains in some respects one of the only government subsidized income stabilizing mechanisms available to agricultural producers in addition it appears that current political forcesare in the proces sof fashioning crop insurance as the cornerstone of u s agricultural policy consider the 1999 state of the union address in which the president stated

economics religion and culture a brief introduction in this introduction we will avoid laboring over a definition of the economics of religion culture but this will not stop us from arguing that it is a burgeoning area of research work focusing on religious practice and related cultural issues dates back at least to adam smith but until the 1990s there had been little published by mainstream economists in this area recently however a variety of subfields in economics have taken up work here the jel classification code system includes a designation for papers on religion z12 and the american economic association via econlit keeps track of the number of journal articles published under this section of the code in fig 1 we show the number of papers published in this area in recent years as the picture shows there has been a sixfold increase in the total number of papers published in this area over the past decade including a number of truly excellent works some of the topics considered here include studies of how public policy affects attitudes and beliefs studies on the lasting economic implications of historic cultural institutions work on religious schooling versus secular schooling investigations of faith based social service provision work on violence and religious extremism analyses of religious donations and research on the connection between beliefs such as religious beliefs and behaviors

introduction to the economics of religion after a very long hiatus economists have begun again to study the relationship between economics and religion this article seeks to summarize and evaluate the principal themes and empirical findings that have appeared in some 200 recent papers on the economics of religion although some of the research concerns the economic consequences of religiosity most applies standard economic theory to the study of individual religious activity the characteristics of religious groups and the impact of regulation and competition on religious markets

partners in giving the crowding in effects of uk government grants abstract this study examines the determinants of voluntary donations to uk charities using empirical specifications that combine error component and simultaneous equations methods in a series of tests we identify the one way fixed effects endogenous representation for government grants as the best empirical model when this endogeneity is taken into account government grants cause significant crowding in for the full sample and the two largest cohorts price coefficients are negative and fund raising coefficients are positive religion charities are net revenue maximizers whereas other charity cohorts fund raise short of net revenue maximization

simultaneous determination of church contributions and church attendance in a standard model of household allocation of time and income church attendance and church contributions are determined simultaneously there are life cycle aspects to both attendance and contributions as azzi and ehrenberg 1975 and ehrenberg 1977 have argued and contributions behavior is affected by tax treatment and by a potential free rider problem as well this paper motivates an econometric specification which recognizes these features and estimates the parameters with a data set of over 2000 protestant church members

preaching matters replication and extension statistical evidence in a recent excellent paper by lipford mccormick and tollison shows a negative relationship between church membership and social misbehavior this paper replicates that relationship using more comprehensive data by u s county we provide theoretical support for the statistical evidence by showing that churches encourage appropriate behavior thus providing property rights enforcement because doing so benefits churches and their members aa church membership increases property rights enforcement increases although at a diminishing rate

do immigrants and their children free ride more than natives the main goal of this paper is to analyze the differences between immigrant and native households in their volunteer contributions and private transfer behavior as well as their receipt of assistance from nongovernment sources in addition we examine how the immigrant native differences evolve over time as immigrant households accumulate us experience finally we examine the voluntary contribution behavior of second generation immigrants and children in immigrant households to gain insight into the long term impact of immigration we do not find evidence that immigrant households free ride more than native born households first immigrant households when compared to similar native born households are less likely to receive assistance from nongovernment sources second immigrant status has no statistically significant impact on monetary contributions toward public good provision we also find that the immigrant native differences in monetary and time contributions tend to diminish over time as immigrants acquire us experience finally we find no significant differences between the second generation of immigrants and third or higher generations of americans in their voluntary contributions of money and time we obtain similar results for children in immigrant households they are not significantly different from children in native households in their time contribution and in their enrollment in federal meal programs the results are robust to various income and wealth controls do immigrants and their children free ride more than natives

impure altruism in dictators giving abstract we design an experiment to test whether incomplete crowding out in dictator games can be rationalized by the impurely altruistic preferences by giving the recipients an endowment of varying levels we create an environment in which crowding out may occur we find that the behavior of 66 of the dictators can be rationalized by the impurely altruistic utility function

investigating the performance of different estimation techniques for crop yield data analysis in crop insurance applications we investigate the performance of the ordinary least squares ols m mm and the theil sen ts estimator for crop yield data analysis in crop insurance applications using monte carlo simulations more specifically the performance is assessed with respect to trend estimation prediction of future yield levels and the estimation of expected indemnity payments in agreement with earlier findings other estimators are found to be superior to ols in simple regression problems if yield distributions are outlier contaminated and heteroscedastic while this conclusion is also valid for subsequent applications such as yield prediction and the estimation of expected indemnity payments the difference between the considered estimators becomes less distinct for these applications we find particularly the m estimator to be a good compromise between high breakdown very robust estimators and the very efficient ols estimator because no regression technique dominates all others in all applications and scenarios for error term distributions our results underline that the choice of the estimation technique should be dependent on the purpose of the crop yield data analysis however alternative estimators such as m mm and ts estimator can reduce and bound the risk of unreliable or inefficient crop yield data analysis in crop insurance applications

bayesian estimation of possibly similar yield densities implications for rating crop insurance contracts the agricultural act of 2014 solidified insurance as the cornerstone of u s agricultural policy the congressional budget office 2014 estimates that this act will increase spending on agricultural insurance programs by 5 7 billion to a total of 89 8 billion over the next decade in light of the sizable resources directed toward these programs accurate rating of insurance contracts is of the utmost importance to producers private insurance companies and the federal government unlike most forms of insurance agricultural insurance is plagued by a paucity of spatially correlated data a novel interpretation of bayesian model averaging is used to estimate a set of possibly similar densities that offers greater efficiency if the set of densities are similar while seemingly not losing any if the set of densities are dissimilar simulations indicate that finite sample performance in particular small sample performance is quite promising the proposed approach does not require knowledge of the form or extent of any possible similarities is relatively easy to implement admits correlated data and can be used with either parametric or nonparametric estimators we use the proposed approach to estimate u s crop insurance premium rates for area type programs and develop a test to evaluate its efficacy an out of sample game between private insurance companies and the federal government highlights the policy implications for a variety of crop state combinations consistent with the simulation results the performance of the proposed approach with respect to rating area type insurance in particular small sample performance remains quite promising

estimation of mixture models using cross validation optimization implications for crop yield distribution modeling a critical issue in identifying an appropriate characterization of crop yield distributions is that the best fitting distribution in an in sample framework is not necessarily the best choice out of sample this study provides a methodology for estimating flexible and efficient mixture models using cross validation that alleviates many of these associated model selection issues the method is illustrated in an application to the rating of group risk insurance products results indicate that nonparametric models often fit best in sample but are inefficient and consistently overstate true rates and vice versa for parametric models the proposed model provides unbiased rates and also has desirable efficiency properties

relaxing heteroscedasticity assumptions in area yield crop insurance rating this article focuses on the effect of differing heteroscedasticity assumptions on derived premium rates of area yield crop insurance tests of the proportional and absolute heteroscedasticity assumptions are conducted using both in sample and out of sample measures our results suggest that arbitrarily imposing a specific form of heteroscedasticity or homoscedasticity in insurance rate calculations limits actuarial soundness our results have practical implications for the federal crop insurance programs as we reject the traditional rating assumptions for many cotton regions and lower yielding higher risk corn and soybean counties but not in the heart of the cornbelt copyright 2011 oxford university press

precautionary saving in the small and in the large the theory of precautionary saving is shown to be isomorphic to the arrow pratt theory of risk aversion making possible the application of a large body of knowledge about risk aversion to precautionary saving and more generally to the theory of optimal choice under risk in particular a measure of the strength of the precautionary saving motive analogous to the arrow pratt measure of risk aversion is used to establish a number of new propositions about precautionary saving and to give a new interpretation of the dreze modigliani substitution effect copyright 1990 by the econometric society

voluntary donations and public expenditures in a federalist system comment and extension in a recent paper richard steinberg 1987 examines the effects upon private donations of federal and local government spending for a public good unfortunately when discussing the consequences of changes in local spending he mis specifies the demand function for donations this error enables one to conclude from his model that it is a priori impossible for government to crowd out private donations one for one such a conclusion violates intuition because one for one crowding out should be at least theoretically possible and steinberg s model when corrected does allow donations to fall as much as the government increases its spending as this comment will show one can further conclude from the model presented in the body of steinberg s paper that the structure of the government s tax policy has no effect on the level of crowding out however the corrected model implies that the government can influence changes in private donations that are caused by increased government spending the degree of control depends upon the size of the donors income effects and upon the ability of the government to allocate the extra tax burden