risk preferences are not time preferences balancing on a budget line comment in a recent experimental study of intertemporal risky decision making andreoni and sprenger 2012 find that subjects exhibit a preference for intertemporal diversification which is inconsistent with discounted expected utility theory it was claimed that their results are also at odds with models involving probability weighting such as rank dependent utility and cumulative prospect theory here we demonstrate however that rank dependent probability weighting explains intertemporal diversification if decision makers care about portfolio risk moreover we provide a unified account of all of andreoni and sprenger s key findings

working over time dynamic inconsistency in real effort tasks experimental tests of dynamically inconsistent time preferences have largely relied on choices over time dated monetary rewards several recent studies have failed to nd the standard patterns of present bias however such monetary studies contain oftendiscussed confounds in this paper we sidestep these confounds and investigate choices over consumption real eort in a longitudinal experiment we pair this eort study with a companion monetary discounting study we conrm very limited time inconsistency in monetary choices however subjects show considerably more present bias in eort furthermore present bias in the allocation of work has predictive power for demand of a meaningfully binding commitment device therefore our ndings validate a key implication of models of dynamic inconsistency with corresponding policy implications

measurement of social well being alternatives to gross domestic product abstract gross domestic product gdp is widely acknowledged to be a poor measure of social well being this paper surveys several substitutes for and modifications of gdp which have been offered as measures of society s welfare the index of sustainable economic welfare a measure endorsed by many ecological economists is found to possess a variety of virtues but also several imperfections the search for a social welfare measure has not yet ended

risk preferences are not time preferences on the elicitation of time preference under conditions of risk comment andreoni and sprenger 2012a b report evidence that distinct utility functions govern choices under certainty and risk i investigate the robustness of this result to the experimental design i find that the effect disappears completely when a multiple price list instrument is used instead of a convex time budget design alternatively the effect is reduced by half when sooner and later payment risks are realized using a single lottery instead of two independent lotteries the result is thus at least partially driven by intertemporal diversification supporting an explanation in terms of concavity of the intertemporal and not only atemporal utility function jel c91 d81 d91

the index of sustainable economic welfare isew for a local authority a case study in italy abstract the index of sustainable economic welfare isew has been calculated for many countries but rarely at the local level this paper shows how the index has been calculated for the province of siena central italy the whole procedure is illustrated step by step including the search for the most suitable and precise methods to obtain reliable values for each item composing the index application of isew at a very local level was found to be feasible the most general difficulty encountered was the lack of an adequate institutionalised source of statistical information to support the construction of indicators other than purely economic or demographic ones this is mainly due to the still low interest for a sustainable management of natural resources and land on the part of local authorities and the related willingness to invest money and human resources on environmental research the isew gives a more realistic representation of the well being of the population than gdp since it includes environmental and social items not considered in conventional national accounting furthermore in italy the principle of administrative decentralization has been implemented in recent years to such an extent that the central government devolved part of its power to regions provinces and municipalities consequently local authorities are called to allocate more resources to pursue their policies towards sustainability an issue which modern electoral campaigns are often based on the results for the province of siena show that there is a large gap between local gdp and isew about 37 of gdp

is there one unifying concept of utility an experimental comparison of utility under risk and utility over time the nature of utility is controversial whereas decision theory commonly assumes that utility is context specific applied and empirical decision analysis typically assumes one unifying concept of utility applicable to all decision problems this controversy has hardly been addressed empirically because of the absence of methods to measure utility outside the context of risk we introduce a method to measure utility over time and compare utility under risk and utility over time we distinguish between gains and losses and also measure loss aversion in two experiments we found that utility under risk and utility over time differed and were uncorrelated utility under risk was more curved than utility over time subjects were loss averse both for risk and for time but loss aversion was more pronounced for risk loss aversion over risk and time were uncorrelated this suggests that loss aversion although important in both decision contexts is volatile and subject to framing

memory and discounting theory and evidence abstract heterogeneous memory capacity is largely neglected in the economics literature although it may have profound economic implications adopting the concept of memory utility proposed by gilboa postlewaite and samuelson 2016 we explore the relationship between memory capacity and individual discounting behavior by building a simple two period model and comparing its predictions with experimental data both theoretical and experimental evidence confirm that memory capacity and discount rates are positively correlated

the index of sustainable economic welfare isew as an alternative to gdp in measuring economic welfare the results of the austrian revised isew calculation 1955 1992 abstract although the inadequacy of gdp to measure economic welfare is widely accepted theoretically it is still used as the key indicator for economic policy this article s aim therefore is to give some empirical evidence to the theoretical critique economic welfare or at least its change over time is estimated by the index of sustainable economic welfare isew which takes account of gdp unpaid household labor social costs environmental damage and income distribution the concept of the isew which was originally developed by herman daly and john cobb is entirely reformulated with special regard to questions of inner consistency and clarity in structure as an illustration the methods of the calculation in the austria case study and its results are presented the main result is that gdp and economic welfare as measured by the isew differ significantly up until the 1970s gdp only slightly overestimated the growth of economic welfare but since then it has been completely misleading while gdp continues to rise sustainable economic welfare has been stagnating since the middle of the 1980s the main causes have been growing future welfare reductions increasing income inequality and a stagnation in the value of unpaid household labor as gdp neglects those aspects it systematically misinterprets economic welfare however the isew does not intend to simply replace gdp as a unique welfare measure but should form part of a more holistic social reporting system

diminishing and negative welfare returns of economic growth an index of sustainable economic welfare isew for thailand thailand has achieved remarkable levels of economic growth over the last three decades this sustained economic growth has played a major role in reducing absolute poverty levels from nearly one third of the population in 1975 to presently less than 10 thus increasing the welfare of many thais this performance ranks thailand as one of the world s most successful economies during this period however an increasing number of studies have begun to find that at a certain point achieving economic growth stops improving welfare and actually begins to diminish it due to the hidden and traditionally unreported costs of associated with this growth with one exception these new studies have focussed on high income countries this study will estimate an index of sustainable economic welfare isew for a developing country thailand over a 25 year period 1975 1999 this paper concludes that even low middle income countries are beginning to approach the point in which economic growth produces both diminishing and at times negative welfare returns as the costs of achieving economic growth begin to outweigh the benefits these results are important for policy makers and highlight the importance of implementing alternative welfare enhancing interventions that must be considered in place of simply achieving economic growth the emphasis of this paper is not on the methodology of estimating the isew for thailand but rather on the policy implications for developing countries of diminishing and negative welfare returns brought about through the achievement of economic growth

the genuine progress indicator methodological developments and results from australia abstract this paper is a contribution to the continuing development of the methods and results for the index of sustainable economic welfare also known as the genuine progress indicator gpi it attempts a more systematic approach to some of the components of the gpi it includes a more careful specification of types of capital and more plausible methods of estimating the costs of depletion of non renewable resources and environmental damage due to ozone depletion in addition the paper attempts a more comprehensive treatment of the value of time including the costs of unemployment and overwork results of the gpi calculations for australia over the period 1950 1996 are presented and analysed

the economics of corporate social responsibility a firm level perspective survey this paper analyzes the economics of corporate social responsibility csr as a private response to market imperfections in order to satisfy social preferences depending on whether they affect regulation competition or contracts market imperfections driving csr decisions are classified in three categories public goods and bads and altruism imperfect competition and incomplete contracts we successively present these drivers of csr decisions and highlight the nature of incentives external or internal at work and the testable and tested hypotheses in the reviewed studies we finally review the link between csr and financial performance as well as between csr and social and environmental performance a twofold discrepancy appears in the literature opening future research paths a disconnection between our understanding of csr drivers and csr impacts and a knowledge gap between csr financial and social consequences the latter having received little attention

convex time budgets and individual discount rates in the long run the purpose of this study is to use experimental data to estimate individual discount rates and test for hyperbolic discounting over a long time horizon to do this we employ the convex time budget experimental approach with cash payments over a 20 year time horizon to date there are few experimental studies that explore discount rates beyond a 1 year time horizon previous experimental studies that focus on short time horizons find high discount rates which may not be applicable to decisions that affect outcomes in the distant future our findings are quite similar to the average rate of 4 9 found by grijalva et al environ resour econ 59 39 63 2014 who similarly use a 20 year time horizon but use the multiple price list elicitation method along with payment via government savings bonds we find annual discounts rates in the range of 1 9 5 5 depending on the specific model used we also find evidence for declining discount rates and that this hyperbolic pattern of behavior is related to the confidence subjects have in receiving distant future payments

case study on the use of genuine progress indicator to measure urban economic welfare in china abstract the gross domestic product gdp has been widely used to measure the economic growth of a region or a country however it does not distinguish between economic activities that improve the well being and those that impair it it does not reflect the social economical and environmental sustainability either this paper presents a case study using the newly developed economic indicator genuine progress indicator gpi to evaluate the economic performance and human well being in china at an urban level the study also shows how the deficiencies of gdp in measuring the economic performance and well being can be overcome by gpi four cities in china suzhou and yangzhou in jiangsu province ningbo in zhejiang province and guangzhou in guangdong province were chosen in the case study important components of gpi for cost and benefit analysis were developed to address the depletion of nonrenewable resources cost of environmental pollution and net capital investment etc the comparison between gdp and gpi for the four cities and the comparison among the gpis of the four cities and other countries were made over the period of 1991 2001 based on the gpi results recommendations on policy making and infrastructural development were made for the improvement of the overall economic welfare of the cities the advantages and limitations of the gpi method were discussed

incomplete market demand tests for kreps porteus selden preferences abstract what does utility maximization subject to a budget constraint imply for intertemporal choice under uncertainty assuming consumers face a two period consumption portfolio problem where asset markets are incomplete we address this question following both the standard local infinitesimal and finite data approaches to focus on the separate roles of time and risk preferences individuals maximize kps kreps porteus selden preferences the consumption portfolio problem is decomposed into a one period portfolio problem and a two period certainty consumption saving problem we derive demand restrictions which are necessary and sufficient for portfolio choices and certainty intertemporal consumption to have been generated by maximization respectively of a one period expected utility representation and a certainty representation of time preferences conditions are provided for recovering the building block time and risk preference utilities for the finite data case we derive a set of linear inequalities that are necessary and sufficient for observations to be consistent with the maximization of kps utility

sustainability indexes why join in a study of the corporate sustainability index ise in brazil abstract in the past decade indicators have been created to assess the sustainability performance of companies listed in stock exchange markets academics and practitioners expect companies to benefit from being listed in such indexes but evidence of value creation is still scarce since virtually all studies about the corporate sustainability index ise of the sao paulo stock exchange brazil the object of the present study focused on the value of shares we initially looked for answers in the finance theory we collected secondary data about the financial and economic performance of companies forming the ise s theoretical portfolio as these kinds of indexes are also known in a second stage we sought additional motivations for companies to make efforts to be listed in the index we collected additional data and interviewed representatives of key companies listed in the ise as well as industry leaders who chose not to participate in the selection process the results support the main propositions of the institutional theory as well as the pays to be green literature that the intangible value created by voluntary environmental initiatives such as access to knowledge new capabilities and reputational gain better explain the efforts companies make to be listed in the ise index

recent theoretical results for time series models with garch errors this paper provides a review of some recent theoretical results for time series models with garch errors and is directed towards practitioners starting with the simple arch model and proceeding to the garch model some results for stationary and nonstationary arma garch are summarized various new arch type models including double threshold arch and garch arfima garch charma and vector arma garch are also reviewed copyright 2002 by blackwell publishers ltd

comment on risk preferences are not time preferences separating risk and time preference andreoni and sprenger 2012a b observe that utility functions are distinct for risk and time preferences and show that their findings are consistent with a preference for certainty we revisit this question in an enriched experimental setting in which subjects make intertemporal decisions under different risk conditions the observed choice behavior supports a separation between risk attitude and intertemporal substitution rather than a preference for certainty we further show that several models including epstein and zin 1989 chew and epstein 1990 and halevy 2008 exhibit such a separation and can account for the overall experimental findings jel c91 d81 d91 risk and time preferences are the cornerstones of economic analyses regarding risk preference expected utility eu has been the predominant theory in which the curvature of the utility index captures risk attitude regarding time preference discounted utility is the most widely used model in which the curvature of the utility index captures intertemporal substitution when risk and time are intertwined integrating the two theories yields discounted expected utility deu which evaluates a contingent consumption plan c c c 3 as follows

poverty and economic decision making evidence from changes in financial resources at payday we study the effect of financial resources on decision making low income u s households are randomly assigned to receive an online survey before or after payday the survey collects measures of cognitive function and administers risk and intertemporal choice tasks the study design generates variation in cash checking and savings balances and expenditures before payday participants behave as if they are more present biased when making intertemporal choices about monetary rewards but not when making intertemporal choices about non monetary real effort tasks nor do we find before after differences in risk taking the quality of decision making the performance in cognitive function tasks or in heuristic judgments

measuring sustainable development some empirical evidence for france from eight alternative indicators abstract this paper presents results from a time series analysis of eight measures of development and or sustainability for france the measures chosen are green national net product genuine savings ecological footprint indicator of sustainable economic welfare genuine progress indicator pollution sensitive human development indicator sustainable human development indicator and french dashboard on sustainable development a theoretical description of each index highlights their advantages and drawbacks underlining the fact that no indicator is perfect and no one can give an exhaustive view of sustainable development therefore the analysis of various indicators is necessary to evaluate sustainable development with accuracy empirical results of measures of well being show that french development was improving between 1990 and 2000 concerning sustainability indicators support different conclusions it seems that french development was weakly sustainable but unsustainable in the strong sense over the period examined

measuring sustainability a time series of alternative indicators for scotland this paper presents results from a time series analysis of seven alternative measures of sustainability for scotland the measures chosen are green net national product genuine savings ecological footprint environmental space net primary productivity the index of sustainable economic welfare and the genuine progress indicator these are all measures at the national or macro level we note arguments in the literature that no one single measure of sustainability is likely to be sufficient however very different messages concerning the sustainability of scotland over the period in question 1980 1993 emerge from these measures chosen we also argue that different indicators provide different insights for policy making

proposed changes to the index of sustainable economic welfare an application to belgium abstract this paper presents the results of a belgian case study on the index of sustainable economic welfare isew the index is first compiled using the standard methodology applied in other international studies owing to the short period in which belgium s traditional isew has recently declined it is not possible to draw any solid conclusion regarding max neef s threshold hypothesis after a brief review of the criticism that the isew has attracted over the years the paper then explains and discusses the rationale for omitting the net capital growth and change in net international investment position items it is argued that these items do not comply with the theoretical foundation underpinning the isew the paper also puts forward new valuation methods for several items within the index the escalation factor in the valuation of natural capital depletion is dropped long term environmental damage is valued using a stock based approach and considerably more government expenditures are considered to be non defensive the results of the revised isew show significant improvements in sustainable economic welfare over the entire study period these findings are not in line with the threshold hypothesis finally the paper offers some guidelines for communicating about the isew namely that a all methodological assumptions should be made explicit and b all raw unadjusted data used should be included in any final isew report so as to enable the reader to make his or her own assessment about the assumptions the researcher has employed

measuring risk in environmental finance abstract environmental sustainability indices such as the dow jones sustainability indexes and the ethibel sustainability index quantify the development and promotion of sustainable social ethical and environmental values in the community moreover such indices provide a benchmark for managing sustainability portfolios and developing financial products and services that are linked to sustainable economic environmental social and ethical criteria this paper reviews the existing data and risk indices in environmental finance the main purpose of the paper is to analyse existing sustainability and ethical indices in environmental finance and evaluate empirical environmental risk by estimating conditional volatility clustering that is inherent in these indices financial volatility models are estimated to analyse the underlying conditional volatility or time varying risk that is inherent in alternative environmental sustainability indices volatility clustering is observed for most series but some extreme observations are also evident the log and second moment conditions suggest that valid inferences can be drawn for purposes of sensible empirical analysis

a summary of isew and gpi studies at multiple scales and new estimates for baltimore city baltimore county and the state of maryland this paper 1 summarizes a number of previous index of sustainable economic welfare isew and genuine progress indicator gpi studies at various scales 2 estimates the gpi for baltimore baltimore county and the state of maryland and 3 compares these results with previous and parallel studies gpi incorporates environmental social and economic information into a single metric to represent economic well being at all three scales gpi was found to grow at a slower rate than the conventional economic measure of gross domestic product gdp while at the us national scale gpi has been relatively flat since 1975 state level results match an independently calculated maryland gpi confirming that gpi methods are robust and reproducible in addition the state of maryland has recently made gpi one of their official state statistics reported annually state level gpi results were also compared with studies for the states of ohio and vermont to explore regional differences we recommend that the gpi research community develop consensus on a standardized measurement approach and seek common ground for advancing the use of improved indicators and accounting systems in official policy settings

revising commitments field evidence on the adjustment of prior choices the very poor in developing countries often make intertemporal choices that seem at odds with their individual self interest there are many possible reasons why this paper investigates several of these reasons with a lab in the field experiment in rural malawi involving large stakes it makes two contributions first it constructs a new dependent variable revisions of prior choices regarding the allocation of future income this allows us to directly examine intertemporal choice revision and its determinants in particular this dependent variable permits a novel test for the existence of self control problems it turns out revisions of money allocations toward the present are positively associated with measures of present bias from an earlier baseline survey as well as the randomly assigned closeness in time to the first possible date of money disbursement second the paper investigates other potential determinants of revision aside from self control problems it finds little evidence that revisions of money allocations toward the present are associated with spousal preferences for such revision household shocks or the financial sophistication of respondents

present bias predicts participation in payments for environmental services evidence from a behavioral experiment in uganda farmers are necessary agents in global efforts to conserve the environment now that croplands and pastures together constitute the largest terrestrial system on earth covering some 48 of ice free land surface whereas standard economic models predict that farmers will participate in conservation programs so long as they are profitable empirical findings from behavioral economics point to a number of normally unobservable preferences that may influence the decision making process this study tests for the first time whether heterogeneity in behavioral preferences correlates with decisions to participate in payments for environmental services pes programs we elicit individual trust and time preferences using economic experiments and link resulting measures to household survey data and participation decisions in a ugandan pes program we find that farmers who exhibit a preference for proximate gains present biased preferences are 47 7 more likely to participate in the program than those who show time consistent or future biased preferences this result has implications for ongoing and planned pes programs involving farmers particularly in africa by highlighting a potential relationship between payment timing and participation and further validates the use of behavioral experiments in explaining real world decisions

consistency and heterogeneity of individual behavior under uncertainty by using graphical representations of simple portfolio choice problems we generate a very rich dataset to study behavior under uncertainty at the level of the individual subject we test the data for consistency with the maximization hypothesis and we estimate preferences using a two parameter utility function based on faruk gul 1991 this specification provides a good interpretation of the data at the individual level and can account for the highly heterogeneous behaviors observed in the laboratory the parameter estimates jointly describe attitudes toward risk and allow us to characterize the distribution of risk preferences in the population

estimating time preferences from convex budgets experimentally elicited discount rates are frequently higher than what seems reasonable for economic decision making such high rates are often attributed to present biased discounting a well known bias of standard measurements is the assumption of linear consumption utility attempting to correct this bias using measures of risk aversion to identify concavity researchers find reasonable discounting but at the cost of exceptionally high utility function curvature we present a new methodology for identifying time preferences both discounting and curvature from simple allocation decisions we find reasonable levels of both discounting and curvature and surprisingly dynamically consistent time preferences jel c91 d12 d81 understanding and estimating time preferences is obviously of great importance to economists marketers and policy makers consumers decide how much to invest in savings education real estate and life insurance how much to diet exercise and smoke whether to marry when to have children and what to leave in their wills while there has been substantial research estimating time preferences using aggregate consumption data 1 the bulk of the effort has occurred in laboratory environments 2 among the many laboratory techniques employed recent studies have favored multiple price lists mpl with monetary payments 3 with mpls individuals are asked multiple times to choose between smaller payment amounts closer to the present and larger amounts further into the future the interest rate increases monotonically in a price list such that the point where an individual switches from preferring sooner payments to later payments carries interval

risk preferences are not time preferences risk and time are intertwined the present is known while the future is inherently risky this is problematic when studying time prefer ences since uncontrolled risk can generate apparently present biased behavior we systematically manipulate risk in an intertemporal choice experiment discounted expected utility performs well with risk but when certainty is added common ratio predictions fail sharply the data cannot be explained by prospect theory hyperbolic discounting or preferences for resolution of uncertainty but seem consistent with a direct preference for certainty the data suggest strongly a difference between risk and time preferences jel c91 d81 d91 understanding individual decision making under risk and over time are two foundations of economic analysis 1 in both areas there has been research to suggest that standard models of expected utility eu and exponential discounting are flawed or incomplete regarding time experimental research has uncovered evidence of a present bias or hyperbolic discounting frederick loewenstein and o donoghue 2002 regarding risk there are number of well documented departures from eu such as the allais 1953 common consequence and common ratio paradoxes an organizing principle behind expected utility violations is that they seem to arise as so called boundary effects where certainty and uncertainty are combined camerer 1992 harless and camerer 1994 and starmer 2000 indicate that violations of expected utility are notably less prevalent when all choices are uncertain this observation is especially interesting when considering decisions about risk taking over time in particular certainty and uncertainty are combined in intertemporal decisions the present is known and certain while the future is inherently risky this observation is problematic if one intends to study time preference in isolation from

risk preferences are not time preferences reply can the well known experimental phenomenon of present bias in intertemporal choice be confounded with the risks associated with receiving payment can measurements of risk preferences be used to represent desires for smoothness in intertemporal payments in our two 2012 papers in this journal we explored these two questions and found the answer to the first to be yes and the second to be no we feel the three papers inspired by our work and published here underscore these arguments and point to interesting new possibilities for modeling and measuring risk over time jel c91 d81 d91

patience self control and the demand for commitment evidence from a large scale field experiment patience and self control are important non cognitive skills that are associated with favorable educational economic and social outcomes this paper provides empirical evidence to inform discussions on possible educational interventions to make children more forward looking or less present biased by putting forward a way to identify self control problems in children and exploring the role of commitment devices in mitigating such problems we report results from an experiment that measures planned allocations the demand for a commitment device and actual choices in the context of chocolate consumption over two days the experiment is conducted as part of a large field study on children s preferences which allows us to correlate behavior with variables related to the subjects socio economic background and educational environment as well as preference parameters elicited through other tasks and surveys we find a large demand for commitment among children in addition we identify important correlations between patience commitment demand and time inconsistency as well as student specific personality traits and outcomes such as school success