approximating wtp and wta for environmental goods from marginal willingness to pay functions abstract willingness to pay wtp and willingness to accept wta for a change in the quantity of an environmental good can be represented by corresponding hicksian welfare measures the paper suggests a simple method of approximating wtp and wta given the information about the marginal willingness to pay mwtp for it it demonstrates that a polynomial based on the mwtp function allows to approximate the hicksian measures which may differ considerably much better than consumer s surplus in quantity space

preserving religious identity through education economic analysis and evidence from the us abstract this paper models the decision of religious parents to send their children to private religious schools as reflecting their desire to shield their children from external influences and thus preserve their religious identity it follows that when the share of the minority in the local population grows and outside influences become less threatening the demand for separate religious schooling among the members of the religious group decreases this pattern implies concavity in the relationship between enrollment in private and religious schooling and the share of the religious group in the population we present empirical evidence from united states county data on catholic and private school enrollment that strongly supports our theory the paper contributes to a better understanding of the demand for religious education

efficient methods of measuring welfare change and compensated income in terms of ordinary demand functions a utility maximizing consumer with a completely known system of ordinary demand functions q h p c is considered let p qo and p q be two arbitrary equilibrium situations the problem is to evaluate in which of the situations the utility is higher without knowing the utility function revealed preference theory tells that the ordinary demand functions which are in principle observable contain enough information to solve the problem remaining difficulties are therefore mainly computational we present how the compensated income c i c p qo and the compensated demand h p cl1 are calculated with arbitrary accuracy using only the ordinary demand system our two efficient algorithms also have interesting interpretations in terms of index numbers and consumer surplus measures

the theory of mixed demand functions abstract the properties of samuelson s mixed demand functions which express demand as a function of a mixed set of prices and quantities are derived by analyzing compensated or substitution effects and uncompensated effects the relationships between mixed demand functions and conditional or rationed demands are examined this provides insights on the behavioral implications of consumer theory for alternative demand specifications

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

public goods as characteristics of non market commodities in benefit cost analysis it is useful to model public goods as the quality of privately consumed nonmarketed goods this strategy is often pursued in valuing environmental amenities the theoretical foundations of this model have not been fully developed in this paper comparative statics results are derived for quality changes of nonmarket goods the results reveal some common misconceptions about welfare measurement of quality changes conditions are presented for a quality induced change in the marshallian consumer surplus of the nonmarket good to approximate the true compensated welfare measure the conditions are equally necessary for obtaining exact welfare measures copyright 1993 by royal economic society

religious participation and children s education a social capital approach abstract based on the argument in both economic and sociological literature that religion is conducive to children s human capital formation this paper provides a model of religious participation and explores a mechanism that social capital affects children s education a la coleman coleman j s 1988 social capital in the creation of human capital american journal of sociology 94 s95 s120 the model generates several interesting implications which help explain some important stylized facts about education and religion further in a dynamic setting the model shows that there exists a steady state in which individuals allocate a positive amount of time and resources to religious activities thus it complements the existing literature to explain why seemingly unproductive religions can be everlasting

religious adherence and county economic growth in the us abstract we estimate a barro type conditional convergence model using religious adherence data from the american religious data archive to analyze independent effects of church adherence rates on economic growth in the united states at the county level per capita income growth is modeled as a function of initial per capita income initial human capital stock and a set of control and related variables including religious adherence religious diversity and regional indicator variables we also investigate the independent effects of three main denominations namely catholics evangelical christians and mainline christians on county economic growth our results indicate that the religious adherence in general is significantly greater than zero and not beneficial for us county income growth we find mixed results for effects of various denominations

revealed preference and household production abstract the paper deals with the possibilities of recovering the underlying preference ordering from observed behavior when nonmarket goods are employed in household production the problem is relevant for the evaluation of environmental goods and for the measurement of welfare in environmental policy it is shown that preferences can be recovered if and only if a corresponding mixed demand system can be integrated this system can be derived from observable behavior and the household production functions imposed the conditions for its integrability are presented and can be checked therefore the approach suggested is operational and allows to decide whether the behavior observed and the household production functions chosen as maintained hypothesis are consistent this result is important since the evaluation of nonmarket goods in this framework crucially depends on the choice of the household production functions

evaluation of nonmarket goods recovering unconditional preferences a new approach is proposed for the evaluation of nonmarket goods starting from a complete or incomplete conditional demand system for market goods which is observable and depends on nonmarket goods this information is not sufficient to recover the underlying preference ordering of the representative consumer the central idea is to employ additional marginal willingness to pay functions for the nonmarket goods since they can be estimated either together with the demand system or in a separate step they are less arbitrary than the assumptions or hypotheses usually made if the entire system is weakly integrable the underlying ordering and appropriate welfare measures can be derived in this article i investigate the relationship between conditional and unconditional demand systems present sufficient conditions for weak integrability and demonstrate the practicability of the procedure proposed by means of three examples

a dynamic approach to voluntary environmental contributions in tourism abstract in an evolutionary game theoretical model of tourism firms that use an endogenous natural common pool resource cpr we show that stable equilibria with voluntary environmental initiatives may coexist with other equilibria where voluntary abatement is absent the basins of attraction of the equilibria are identified and a bifurcation analysis is carried out producing two results with policy implications first there is a highly non linear relationship between the cost of abatement required to be green and the share of green firms second increases in the number of the cpr s users will ultimately dissipate the incentives to make abatement beyond regulation

can proximity to urban green spaces be considered a luxury classifying a non tradable good with the use of hedonic pricing method abstract environmental goods are sometimes considered a luxury that only the rich can afford this is no less true in the case of green spaces however a typical microeconomic lens is not relevant to study the potential luxury of non tradable goods typically the distributional interpretation of the income elasticity of the willingness to pay wtp for such goods would involve stated preferences valuation methods the possibility to describe the luxury of green space proximity based on revealed preferences methods has not been evaluated yet through this study we would like to fill this gap we proposed a three step analysis of the apartment market in lodz poland based on the hedonic pricing method to check how the marginal wtp mwtp for proximity to parks forests differs among apartment price sub segments we discuss whether and to what extent the variability of the mwtp could be linked with the presumed luxury of green space proximity we found that proximity does not result in increased apartment prices for all parks and forests the estimated mwtp for the proximity to selected parks rises in consecutive apartment price sub segments this could be interpreted as a sign of the luxury of living close to these parks by apartment buyers

endogenous peer effects local aggregate or local average a b s t r a c t we develop a unified model embedding different behavioral mechanisms of social interac tions and design a statistical model selection test to differentiate between them in empirical applications this framework is applied to study peer effects in education effort in study ing and sport activities for adolescents in the united states we find that for education students tend to conform to the social norm of their friends while for sport activities both the social multiplier and the social norm effect matter

exact consumer s surplus and deadweight loss consumer s surplus is a widely used tool in applied welfare economics both economic theorists and cost benefit analysis often use consumer s surplus despite its somewhat dubious reputation the basic idea is to evaluate the value to a consumer or his willingness to pay for a change in price of a good from say pricep to pricep because price changes affect consumer welfare an evaluation of this effect is often a key input to public policy decisions yet consumer s surplus is probably the most controversial of widely used economic concepts both paul samuelson and ian little conclude that the economics profession would be better off without it it is my feeling of the situation that substantial agreement exists on the correct quantities to be measured the amount the consumer would pay or would need to be paid to be just as well off after the price change as he was before the price change the quantities correspond to john hicks compensating variation measures an alternative measure which takes ex post price change utility as the basis of comparison is hicks equivalent variation the controversy arises in the measurement of these quantities the usual measurement procedure is to use the area to the left of the marshallian market demand curve between two price levels jules dupuit originated this measure of welfare change and alfred marshall and hicks derived appropriate conditions for its use the primary condition for the area to the left of the demand curve to correspond to the compensating variation is to have constant marginal utility of income marshall gave this condition and if it holds the same quantity will be derived as the area to the left of the compensated hicksian demand curve this area to the left of the compensated demand curve is exactly what the compensating variation and equivalent variation measure thus the constant marginal utility of income is a sufficient condition for marshallian consumer s surplus to be equal to hicks consumer s surplus in this case arnold harberger s plea to use the welfare triangle as one half times the product of the price change times the quantity change to measure deadweight loss corresponds to the correct theoretical amount of welfare change in a recent paper robert willig derives bounds for the percentage difference between the correct measure of either the compensating or equivalent variation and the marshallian measure derived form the market demand curve his bounds which depend on the income elasticity of demand for the single good in the region of price change being considered as well as the proportion of the consumer s income spent on the good demonstrate that the marshallian consumer s surplus is often a good approximation to hicks consumer s surplus the fact that the proportion of the consumer s income spent matters as well as the income elasticity was first pointed out by harold hotelling willig contends that the approximation error will be less than the errors involved in estimating the demand curve thus he hopes to remove the need for apology that applied economists often need to give to theorists who remark on the inappropriateness of using marshallian consumer s surplus to measure welfare change however in this paper i show that for the case primarily considered by willig of a single price change which is also the situation in which consumer s surplus is often used in applied work no approximation is necessary professor of economics massachusetts institute of technology and research associate national bureau of economic research i would like to thank peter diamond erwin diewert daniel mcfadden robert merton robert solow hal varian joel yellin and the referees for help and comments research support from the national science foundation is acknowledged the reason that we still have two rather than one of samuelson s six measures of consumer s surplus arises from an index number problem of the correct basis for the welfare comparison i will give both measures but plan to concentrate on the compensating variation

on the complexities of complex economic dynamics complex economic nonlinear dynamics endogenously do not converge to a point a limit cycle or an explosion their study developed out of earlier studies of cybernetic catastrophic and chaotic systems complexity analysis stresses interactions among dispersed agents without a global controller tangled hierarchies adaptive learning evolution and novelty and out of equilibrium dynamics complexity methods include interacting particle systems self organized criticality and evolutionary game theory to simulate artificial stock markets and other phenomena theoretically bounded rationality replaces rational expectations complexity theory influences empirical methods and restructures policy debates

welfare measurement in the household production framework the household production approach to consumer behavior developed from the work of gary becker william gorman and kelvin lancaster has considerable descriptive appeal in modelling the decisions of households the approach derives from the observation that households frequently purchase market goods that do not yield utility directly but are combined to produce commodity service flows which the household values thus observed behavior is determined by household production technology as well as by tastes the advantage of this distinction is that we can pose reasonable hypotheses about characteristics of technology though we rarely possess useful a priori information regarding tastes the putative advantages of the household production approach are questioned on empirical and conceptual grounds by robert pollak and michael wachter 1975 they show that jointness in production or nonconstant returns to scale cause implicit commodity prices to depend on both tastes and technology raising serious econometric difficulties in the estimation of commodity demand functions in addition since commodity prices become functions of the commodity bundle consumed the analogy to traditional demand theory breaks down joint production occurs when a good enters several production processes simultaneously or equivalently when a good in one production process also enters directly into the individual s utility function the most common example is time which provides the context for all production processes and is often associated with the production of several commodities simultaneously since joint production in the household is likely to be pervasive the critique by pollak and wachter cannot be ignored in response to the comment by william barnett pollak and wachter 1977 suggest dispensing with the notion of commodity prices and treating the demand for commodities as a function of goods prices this approach confounds tastes and technology but it eliminates the troublesome concept of commodity prices as parameters when in fact they are likely to be endogenous in this paper we show that results from positive analysis such as the critique by pollak and wachter have implications for the use of the household production framework for welfare analysis the household production function approach has had considerable appeal for measuring welfare effects of public actions in the environmental and natural resource areas gardner brown john charbonneau and michael hay elizabeth wilman yet traditional approaches to welfare measurement are frequently inapplicable we argue that welfare measurement in this framework is complicated by the difficulties of unravelling tastes and technology we extend pollak and wachter s results by demonstrating that marshallian demand functions for commodities cannot be uniquely defined thus marshallian functions cannot be used to derive exact compensated functions in the manner of jerry hausman and of george mckenzie and i f pearce nor can compensating and equivalent variation measures be bounded by marshallian consumer s surplus estimates following robert willig in fact duality results that normally allow us to move between marshallian and hicksian functions are not assistant and associate professors respectively department of agricultural and resource economics university of maryland college park md 20742 this paper is scientific article no a3404 contribution no 6476 of the maryland agricultural experiment station we wish to thank darrell hueth james opaluch v kerry smith and elizabeth wilman for comments on an earlier draft

averting behavior and the benefits of reduced soiling abstract the individual s choice of cleaning frequency is examined theoretically under assumptions more general than those of previous authors the individual is assumed to maximize utility over cleanliness and a general commodity where cleanliness is determined by frequency of cleaning and ambient pollution allowance is made for the possibility that the cost per cleaning episode is positively affected by pollution and negatively affected by the frequency of cleaning the present framework is used to make comparisons and comments regarding the assumptions and results of watson and jaksch j environ econ manag 9 1982 248 262 and courant and porter j environ econ manag 8 1981 321 329

what s the use welfare estimates from revealed preference models when weak complementarity does not hold abstract in this paper we consider the theoretical and empirical ramifications of welfare measurement in revealed preference models when weak complementarity does not hold in the context of a kuhn tucker model of recreation demand we show that while it is possible to estimate preferences that do not appear to exhibit weak complementarity the calculation of welfare measurements from these models requires a cardinal interpretation of preferences that cannot be tested furthermore we reiterate the under appreciated fact that even traditional use value estimates require a cardinal restriction on preferences that while often intuitive also cannot be tested we demonstrate empirically that the choice of restrictions can have significant ramifications as use value estimates can vary based on the assumed preference structure

does religion matter to owner manager agency costs evidence from china in china buddhism and taoism are two major religions using a sample of 10 363 firm year observations from the chinese stock market for the period of 2001 2010 i provide strong and robust evidence that religion i e buddhism and taoism on the whole is significantly negatively associated with owner manager agency costs in particular using firm level religion data measured by the number of religious sites within a radius of certain distance around a listed firm s registered address i find that religion is significantly negatively positively associated with expense ratio asset utilization ratio the positive reverse proxy for owner manager agency costs this finding is consistent with the following view religiosity has remarkable effects on the way how an individual thinks and behaves and thereof can curb managers from unethical business practices moreover my findings suggest that the negative association between religion and owner manager agency costs is attenuated for firms with strong external monitoring mechanisms such as higher marketization and high quality auditors furthermore after separating buddhism from taoism my finding indicates that above conclusions are only available for buddhism suggesting that different religions may have asymmetric influence on owner manager agency costs above results are robust to various measures of religiosity and a variety of robustness checks

averting expenditure and the cost of pollution the paper considers the relationship between the willingness to pay for environmental quality and averting expenditures that is the costs of measures undertaken in efforts to counteract the consequences of pollution the models used assume perfect mobility among locations with different levels of environmental quality the major results are i averting expenditures are not in general a good measure of willingness to pay 2 averting expenditures are not always even a lower bound on willingness to pay 3 even when averting expenditures are a lower bound the difference between the level of such expenditures and willingness to pay carmot be attributed to the unavertible aesthetic consequences of pollution for almost every kind of environmental unpleasantness we face there are averting expenditures we can make to reduce and sometimes completely remove the damage for air pollution house paint air conditioners soap for water pollution wells bottled water purifiers for noise pollution storm windows thicker walls economists have long been aware that averting behavior is both possible and practiced and they have often suggested that expenditures on such behavior can be used as a measure of the costs imposed on society by various forms of pollution the literature on this subject is difficult to characterize but to the extent that a consensus has been reached it is that averting expenditures provide a lower bound estimate of the total costs imposed by pollution and the divergence between averting expenditures and the total costs of pollution arises from the fact that some consequences of pollution e g the simple unpleasantness of breathing dirty air cannot be averted 2 3 in this note we develop two simple models of the response of utility maximizing consumers to small changes in the level of pollution which they face in the first model we assume that environmental quality is desired solely because it reduces the need for averting expenditure we show that 1 the level of averting expenditure may be either a lower bound or an upper bound estimate of the consumer s

on the measurement of welfare for market and nonmarket goods a numerical approach extending vartia s 1983 framework the paper presents a simple numerical approach to the measurement of welfare for market and nonmarket goods on the basis of an incomplete mixed demand system the method allows the determination of exact welfare measures it provides a flexible and well founded alternative to ad hoc methods based on consumer surplus

weak complementarity path independence and the intuition of the willig condition abstract weak complementarity is usually invoked for valuing public goods using information on private goods however using uncompensated demands requires a second condition the willig condition this paper present an intuitive explanation of the willig condition and shows that the alternative versions are equivalent to a path independence condition for line integrals this condition is fulfilled for compensated demands but not uncompensated demands except in restrictive special cases it is shown that this is a type of quasi homotheticity and requires that the income flexibility of quality must equal the income elasticity of the weak complement the importance and restrictiveness of the willig condition are shown using three alternative functional forms

hope springs eternal learning and the stability of cooperation in short horizon repeated games abstract this paper considers learning rates in finitely repeated prisoners dilemmas if players think their opponents might be relatively cooperative e g tit for tat or grim types they will cooperate in finitely repeated prisoners dilemmas see kreps et al j econom theory 27 1982 245 however if there are actually no cooperative types players will eventually learn this and cooperation will break down this paper shows that this learning is extremely slow so it will take an extremely long time for cooperation to break down thus suppose the world is either good or bad the probability of a grim type is 0 if the world is good and zero if the world is bad successive generations pair up to play finitely repeated prisoners dilemmas players observe play in previous generations and use bayes rule to update their prior that the world is good we show that if the world is really bad then falls o 2 log 1 per generation on average thus if is small there is less cooperation if the world is good but cooperation may become more stable for a representative 19 period repeated prisoners dilemma beliefs fall one percentage point on average after a thousand generations to derive these learning rates we must refine existing results on the sensitivity of repeated games to kreps et al 1982 type perturbations specifically we show cooperation is possible in perturbed prisoners dilemmas repeated o log 1 times this improves significantly on the o 1 results in previous work the paper thus provides two new reasons why cooperation tends to be stable even in short horizon repeated games

recovering weakly complementary preferences abstract this paper demonstrates a method for recovering weakly complementary expenditure and indirect utility functions while integrating back from marshallian demand specifications that do not intrinsically embody weak complementarity weak complementarity of a good with quality provides information about how the constant of integration over price must behave with respect to quality and this information can be incorporated into the process of recovering preferences the weakly complementary expenditure and indirect utility functions are recovered for the linear demand specification and for the stone geary utility function with any value of the subsistence parameter

evaluating policy interventions with general equilibrium externalities abstract we report on the results of analytical and numerical models that describe the effects of non separable externalities or public goods on public policies with important general equilibrium consequences in the numerical exercise we calibrate a general equilibrium model with non separable air quality benefits in order to measure the excess burden and total net benefits of transportation and energy taxes in the 1995 u s economy the change in the physical level and the economic value in air quality associated with a given policy is a function of the substitution patterns between air quality and market goods that we assume the size of the deadweight loss due to pre existing distortions such as a tax on labor income is substantially affected by these substitution patterns

religious participation and income the relationship between religion and income has been explored in several studies in this paper we extend this inquiry by arguing that religious participation through its effects on preferences and net earnings potential reduces participants incomes similarly we argue that high incomes discourage religious participation by encouraging individuals to substitute market work for religious activities in an empirical model we simultaneously estimate the effects of religious participation on income and income on religious participation using us state data on per capita personal income and church membership the results strongly support our hypotheses 2002 elsevier science b v all rights reserved

revealed preference for public goods the most serious problem for the modern theory of optimal public expenditure is that although it has to be based on some social welfare function individual preferences for public goods which constitute the elements of any individualistic social welfare function are hard to assess it is argued that since every individual can freely participate in the consumption of a public good there is an incentive for him to either underreport or overreport his preferences depending on how the reported preferences are used in the financing process of the public good i this argument will be correct if an individual s preferences for public goods can be expressed only directly in many cases however the consumption of a public good has some technical or objective relationship with the consumption of some private goods thus the benefit an individual derives from free highways depends on how much he spends on a car and gasoline even the benefit an individual derives from the judicial system depends on how much he spends to hire the services of lawyers also an individual can enjoy the same security police provide by hiring private guards and installing locks and so on in these cases if we know the technical relationships between the consumption of private goods and the consumption of public goods then from the market data relating the amounts of private goods bought to prices and the data on the existing amounts of public goods we might be able to infer i the amounts of final goods consumed say the number of trips from one point to another the degree of justice the security from robbery etc and ii their opportunity costs which the individual was willing to pay but if we succeed in this inference then all that remains to be done in order to find the individual s utility function will be to integrate back the relationship between the amounts of final goods consumed and their opportunity costs a trivial example can be provided by assuming that each public good is perfectly substitutable with a private good let yi be the quantity of the ith public good and xi be the quantity of a private good which is a perfect substitute for the ith public good then the benefit derived from the ith public good and its perfect substitute can be measured by xi yi suppose we have ascertained an individual consumer s demand functions for private good when all the yi are zero we know from the revealed preference theory that if these demand functions satisfy a certain condition namely the symmetry of the slutsky matrix then there exists a utility function unique up to a monotone transformation

designing global collective action in population and hiv aids programs 1983 2002 has anything changed the 1994 international conference of population and development icpd in cairo established goals for the expansion of assistance in matters of reproductive health and hiv aids this global effort marked a structural break in principle from the past but did it also change funding behavior panel data on expenditures of oecd donors for three types of aid agencies multilateral non governmental agencies and bilateral aid for the years 1983 2002 do not reveal an unambiguous improvement in donor behavior funding choices for multilateral organizations and ngos have become more interdependent but burden sharing remained stable and generosity dropped substantially after 1994

equilibrium selection in a nonlinear duopoly game with adaptive expectations abstract we analyze a nonlinear discrete time cournot duopoly game where players have adaptive expectations the evolution of expected outputs over time is generated by the iteration of a noninvertible two dimensional map the long run behavior is characterized by multistability that is the presence of coexisting stable consistent beliefs which correspond to nash equilibria in the quantity space hence a problem of equilibrium selection arises and the long run outcome strongly depends on the choice of the players initial beliefs we analyze the basins of attraction and their qualitative changes as the model parameters vary we illustrate that the basins might be nonconnected sets and reveal the mechanism which is responsible for this often neglected kind of complexity the analysis of the global bifurcations which cause qualitative changes in the topological structure of the basins is carried out by the method of critical curves