crisis or opportunity economic degrowth for social equity and ecological sustainability introduction to this special issue abstract this article reviews the burgeoning emerging literature on sustainable degrowth this is defined as an equitable downscaling of production and consumption that increases human well being and enhances ecological conditions at the local and global level in the short and long term the paradigmatic propositions of degrowth are that economic growth is not sustainable and that human progress without economic growth is possible degrowth proponents come from diverse origins some are critics of market globalization new technologies or the imposition of western models of development in the rest of the world all criticize gdp accounting though they propose often different social and ecological indicators degrowth theorists and practitioners support an extension of human relations instead of market relations demand a deepening of democracy defend ecosystems and propose a more equal distribution of wealth we distinguish between depression i e unplanned degrowth within a growth regime and sustainable degrowth a voluntary smooth and equitable transition to a regime of lower production and consumption the question we ask is how positive would degrowth be if instead of being imposed by an economic crisis it would actually be a democratic collective decision a project with the ambition of getting closer to ecological sustainability and socio environmental justice worldwide most articles in this issue were originally presented at the april 2008 conference in paris on economic degrowth for ecological sustainability and social equity this conference brought the word degrowth and the concepts around it into an international academic setting articles of this special issue are summarized in this introductory article hueting d alessandro and colleagues van den bergh kerschner spangenberg and alcott discuss whether current growth patterns are un sustainable and offer different perspectives on what degrowth might mean and whether and under what conditions it might be desirable matthey and hamilton focus on social dynamics and the obstacles and opportunities for voluntary social action towards degrowth lietaert and cattaneo with gavalda offer a down to earth empirical discussion of two practical living experiments cohousing and squats highlighting the obstacles for scaling up such alternatives finally van griethuysen explains why growth is an imperative in modern market economies raising also the question whether degrowth is possible without radical institutional changes

the proximity of nations to a socially sustainable steady state economy abstract there has been increasing interest in new economic models that aim to improve quality of life without increasing consumption this article provides the first empirical analysis of how close modern day economies are to the concept of a steady state economy and explores whether there is any relationship between a country s proximity to such an economy and its social performance the analysis is carried out using the degrowth accounts a set of 16 biophysical and social indicators that are derived from herman daly s definition of a steady state economy and the social goals of the degrowth movement these indicators are applied to 180 countries over a 10 year period the analysis reveals that the majority of countries in the world are biophysical growth economies there are only a small number of countries where resource use is relatively constant from year to year e g denmark france japan poland romania and the us and only four countries experiencing biophysical degrowth germany guyana moldova and zimbabwe there are no countries that achieve a true steady state economy defined as an economy with a stable level of resource use maintained within ecological limits however a few countries come relatively close including colombia cuba kyrgyzstan romania and south africa in general countries with stable resource use perform better on many social indicators than countries with either increasing or decreasing resource use this finding runs contrary to conventional economic thought however social performance is also higher in countries with greater per capita resource use overall these findings suggest that a steady state economy can be socially sustainable but countries need to become much more efficient at transforming natural resources into human well being if all seven billion people on earth are to lead a good life within ecological limits

differential fertility human capital and development using micro data from 48 developing countries this paper studies changes in crosssectional patterns of fertility and child investment over the course of the demographic transition before 1960 children from larger families obtained more education in large part because they had richer and more educated parents by century s end these patterns had reversed consequently fertility differentials by income and education historically raised the average education of the next generation but they now reduce it while the reversal is unrelated to changes in gdp per capita women s work sectoral composition or health roughly half is attributable to rising aggregate education in the parents generation the results support a model in which rising skill returns lowered the minimum income at which parents invest in education

shifting priorities in degrowth research an argument for the centrality of human needs we present an argument for the deprioritization of subjective well being and a prioritization of human needs within degrowth research first we discuss empirical evidence methodological problems and theoretical shortcomings of subjective well being concepts while data for one country over time suggest a flattening of the happiness curve relative to gdp growth cross country comparisons reveal that the richest and most environmentally unsustainable countries are also the happiest methodologically we point to the issue of adaptability a limitation in the use of positional goods is unlikely to be accompanied by short term increases in subjective well being theoretically we question happiness where it helps promote growth and disguise structural relationships of inequality secondly we sketch out an alternative degrowth research agenda oriented at the satisfaction of human needs here doyal and gough s theory of human needs is especially useful due to its systematic account of environmental limits and the policy auditing approach that follows from it finally we illustrate such a needs based research agenda at the example of food by reviewing recent research on the environmental impacts of different diets and kinds of food production and on how these forms compare in terms of scale and land use

option pricing and timberland s land use conversion option reply thomson s response to my recent article zinkhan 1991 in this journal proposes an alternative approach for valuing a timberland land use conversion option the most significant distinction between the zinkhan model zm and the thomson model tm is the selection of different analogies for two black scholes option pricing model parameters the underlying asset price and the exercise price thomson defines the adjusted price of the alternative land use s in his response to be the underlying asset price the sum of the land expectation value for continuous forest production lev and the physical costs associated with converting from timber to the alternative land use cc is treated as the exercise price x in contrast the gap sadj in zinkhan between the price of the alternative land use pal to after adjustment and the highest bid received for the given tract poffo after adjustment serves as the underlying asset price in the zm zinkhan assumes that the exercise price x is the sum of two values as of the time of expiration of the option t cc and the absolute value of the negative impact on lev resulting from a deviation if any from the optimal rotation age i there are several serious problems associated with the tm first the tm does not recognize the landowner s forfeiture of the land use conversion option from timber production to some alternative use if the tract is converted thus the opportunity cost associated with conversion is underestimated given thomson s framework for estimating the land use conversion option s value a solution to the problem would be indeterminable if the exercise price was simply modified through the addition of an estimate of the land use conversion option a solution would be unattainable since exercise price is an input in the process of calculating the same land use conversion option zinkhan partially avoids this problem by utilizing poffo rather than levo when estimating sadj where a bid is considered by the landowner only if poff levo poffo which is subtracted from palto after necessary adjustments in order to maintain the zm analogy for underlying asset price might at least partially reflect the value of the land use conversion option in contrast the tm s lev does not reflect this option value because of the possibility that the market clearing price of the cutover timberland tract at time 0 will

factorization of european and american option prices under complete and incomplete markets abstract in a standard option pricing model with continuous trading and diffusion processes this paper shows that the price of one european style option can be factorized into two intuitive components one robust x 0 which is priced by arbitrage and a second 0 which depends on a risk orthogonal to the traded securities this result implies the following 1 in an incomplete market these parts represent the price of a hedging portfolio which is unique and a premium which depends only on the risk premiums associated with the residual risk respectively 2 in a complete market it allows factoring the contribution of the different sources of risk to the final option price for example in a stochastic volatility model we can quantify the impact on the option price of volatility risk relative to market risk 0 and x 0 respectively hence certain misspricings in option markets can be directly related to the premium 0 3 moreover these results extend to american securities which have a third component an additional early exercise premium

the impact of the timing of patents on innovation performance abstract in the context of industry standard setting firms face the strategic decision of whether to move faster than competitors or wait for more information that reduces uncertainty these decisions are even more challenging if there are multiple standards and if there are benefits to belonging to more than one standard this paper examines the effect of the timing of patents on a firm s innovation performance the strategic logic of real options posits that patent timing is determined by the tension between the value of preemption and the value of waiting we analyze 680 dvd disc patents in dvd patent pools to test the effect of the timing of patents on innovation performance consistent with real options logic under high uncertainty the later the timing of the patent the higher the innovation performance while under low uncertainty there is an early mover advantage

spatial sustainability trade and indicators an evaluation of the ecological footprint the search for frameworks and indicators of sustainable development has taken a prominent place in this journal however some specific aspects have received little or no attention notably the spatial dimension and the role of international trade in indicator development moreover many sustainable development indicators comprise implicit valuations weighting schemes and policy objectives which are insufficiently recognised as such this contribution tries to highlight these issues by means of a review of a recently proposed indicator for ecological economic analysis namely the ecological footprint that has been developed by wackernagel and rees its concept and calculation procedure are criticised on a number of points and it is concluded that the ecological footprint is not the comprehensive and transparent planning tool as is often assumed in explaining our position we will argue that spatial sustainability and regional sustainable development have not been precisely discussed so far neither in the literature on trade and environment nor in that on sustainable development we will defend the view that trade can contribute positively and negatively to environmental unsustainability consequently indicators and models are needed that allow for analysing interactions and trade offs between such opposite effects 1999 elsevier science b v all rights reserved

the gender gap fertility and growth changes in fertility have long been recognized as important correlates of economic growth with the relationship between the level of fertility and the level of income per capita being one of the strongest observable correlations in cross country data this paper examines the linkages between fertility and growth theory the structure of the model is presented in sections on production couples decision making system dynamics and steady state equilibria the first component of the model is that increases in capital per worker raise womens relative wages since capital is more complementary to womens labor input than to mens the second component is that increasing womens relative wages reduces fertility by raising the cost of children more than household income finally lower fertility raises the level of capital per worker a positive feedback loop generates demographic transition a rapid decline in fertility accompanied by accelerated output growth

ecological macroeconomic models assessing current developments our society faces a dilemma while continued economic growth is ecologically unsustainable low or negative rates of economic growth are accompanied by adverse social impacts hence there is a need for macroeconomic tools that can help identify socially sustainable post growth pathways the emerging field of ecological macroeconomics aims to address this need and features a number of new macroeconomic modelling approaches this article provides 1 a review of modelling developments in ecological macroeconomics based on the literature and interviews with researchers and 2 an analysis of how the different models incorporate policy themes from the post growth literature twenty two ecological macroeconomic models were analysed and compared to eight policy themes it was found that environmental interactions and the monetary system were treated most comprehensively themes of income inequality work patterns indicators of well being and disaggregated production were addressed with less detail while alternative business models and cross scale interactions were hardly addressed overall the combination of input output analysis with stock flow consistent modelling was identified as a promising avenue for developing macroeconomic models for a post growth economy however due to the wide interpretation of what the economy entails future research will benefit from employing a range of approaches

ecological well being performance growth in china 1994 2014 from perspectives of industrial structure green adjustment and green total factor productivity abstract industrial structure green adjustment isga and green total factor productivity gtfp deriving from development processes for green goals recently attracted great attention as two ways to achieve ecological well being performance ewp growth which is one of the main green development goals that humanity should pursue and which affects the efficiency improvement of transforming ecological consumption into human well being in this paper the effects of isga and gtfp on ewp growth are empirically tested in a dynamic panel model of spatial econometrics using statistics from 30 provinces of china in the 1994 2014 period in particular the indicator system of isga is firstly constructed based on the theories of ewp and three dimensional industrial ecological footprint 3dief the results indicate that spatial spillovers are important factors in the effects the main driving force for ewp growth in provinces of china had gradually shifted from isga to gtfp and gtfp is essential for structural bonuses from isga to take effect in addition a provincial government needs to target reference objects from not only other provinces in the same economic zone s yardstick competition but also isga and gtfp situations in geographically close or economically similar provinces in addition the adverse ewp effects of isga can be mitigated by gtfp increase or a combination of gtfp and isga for provinces in all stages of isga in general improving gtfp will be the main driving force for china s provincial ewp growth and the main venue through which the adverse effects of improper isga can be mitigated the present study contributes to explore the ewp growth effect of isga and gtfp can at least provide a valuable guidance and in depth understanding to researchers operators and policy makers who wish to improve human well being in an ecologically efficient way as well as for the follow up studies

sustainable development and a dwindling carbon space curbing global warming by setting long term maxima for temperature rise or concentrations of greenhouse gases defines spaces within which further emissions of these gases are to remain referred to here as carbon spaces this paper addresses questions related to how to share between countries the carbon space and or efforts to stay within it in the perspective of sustainable development different allocation mechanisms are reviewed responding to criteria such as responsibility for climate change capability to engage in abating it and potential or future contribution the carbon space remaining at any time will depend on effective mitigation up till that time and will condense if more stringent maxima are to be set per capita this space becomes smaller with rising population sharing the carbon space in a fair way requires convergence of currently widely unequal per capita emissions if the world is to stay within the carbon space consistent with 2 warming then developed economies the wealthiest sources of greenhouse gases should quickly and deeply engage in mitigation also substantial mitigation is to take place in developing countries and that this will require substantial support to developing countries financially technologically changing development paths can make a major contribution to climate change mitigation this requires changes in investment production and consumption patterns green new deals as proposed in the context of a widened response to the current economic crisis could become a first phase of a fundamental transition towards a decarbonised global economy worldwide concerns to do with equity as well as sustainability must be incorporated and integrated into coherent transitory strategies

the option value of tax delinquency theory abstract how taxes are enforced matters current enforcement of real property taxes does not consider the option value of delinquency the ultimate penalty is confiscation of property sometime in the future but the value of the property to be confiscated is not known with certainty if redemption fees are sufficiently small it can be optimal to wait and see what the size of the penalty will be before paying taxes we show how this can lead to excessive abandonment and examine proposals for reform

predicting dax trends from dow jones data by methods of the mathematical theory of democracy abstract the mathematical theory of democracy operates on the indices of popularity and universality which are used to find socially optimal representatives and representative bodies regarded mathematically neither the society nor its representatives are necessarily human so that some objects can represent the behavior of other objects this idea is applied to predicting the dax trends german stock index from the actual dow jones data the current fluctuations of stock prices in new york are regarded as representative indicators of future stock price fluctuations in frankfurt in particular it is found that american express anticipates on the average the price fluctuations of 2 3 of the dax stocks the statistical significance of the null hypothesis that such a bias from the uncertainty 50 can occur by chance is only 3 5

economic development and the family structure from the pater familias to the nuclear family we provide a theory that is able to account for the observed comovement between the shift in intergenerational living arrangements from coresidence to non coresidence and economic development our theory is consistent with the diminution in the status of the elderly documented by some sociologists the results from our analysis show that when technical progress is fast enough the economy experiences a shift from stagnation to growth there is a transition from coresidence to non coresidence and the social status of the elderly tends to deteriorate

adherence to cultural norms and economic incentives evidence from fertility timing decisions abstract i analyze the interplay between culture and economic incentives in decision making to this end i study fertility timing decisions of second generation migrant women to france and the us while i confirm that originating from a high fertility country correlates to having larger families i also find that it does not predict earlier entry into motherhood i propose a model that rationalizes these findings in which decisions are the result of a trade off between an economic cost benefit analysis and a cultural norm the model predicts that decisions with a higher cost of deviation from the economic optimum should be less prone to cultural influence this is consistent with substantial evidence showing that the timing of the first birth bears much larger costs for mothers in terms of labor market outcomes than that of subsequent births

strategic investment under uncertainty a synthesis abstract investment is a central theme in economics finance and operational research traditionally the focus of analysis has been either on assessing the value of flexibility investment under uncertainty or on describing commitment effects in competitive settings industrial organization research contributions addressing the intersection of investment under uncertainty and industrial organization have become numerous in recent years in this paper we provide an overview aimed at categorizing and relating these research streams we highlight managerial insights concerning the nature of competitive advantage first versus second mover advantage the manner in which information is revealed firm heterogeneity capital increment size and the number of competing firms

measuring progress in the degrowth transition to a steady state economy article i nfo in order to determine whether degrowth is occurring or how close national economies are to the concept of a steady state economy clear indicators are required within this paper i analyse four indicator approaches that could be used 1 gross domestic product 2 the index of sustainable economic welfare 3 biophysical and social indicators and 4 a composite indicator i conclude that separate biophysical and social indicators represent the best approach but a unifying conceptual framework is required to choose appropriate indicators and interpret the relationships between them i propose a framework based on ends and means and a set of biophysical and social indicators within this framework the biophysical indicators are derived from herman daly s definition of a steady state economy and measure the major stocks and flows in the economy environment system the social indicators are based on the stated goals of the degrowth

valuing flexibility as a complex option this paper develops an approach for valuing flexible production systems using contingent claims pricing demand curves for our model s underlying assets output products may be downward sloping in contrast with the standard option pricing assumption also our marginal production exercise costs may be increasing in addition we allow for multiple products and a production capacity constraint these elements of the model result in complex exercise decisions for the contingent claims which comprise the production system s value we illustrate our approach by valuing a flexible system that produces two products which have profit margin functions with stochastic parameters

deceleration of economic growth the main course seeking sustainability in developed countries abstract deceleration of economic growth is a characteristic feature of developed countries percentage gross domestic product gdp growth rate in the old organization for economic co operation and development oecd countries has decreased approximately 2 3 times over the last 50 years and countries have managed successfully to adopt this trend the largest reduction of gdp growth rate was observed in countries such as japan where the biocapacity exceedance was the largest in addition the analysis of long term changes of gdp and self reported life satisfaction in developed countries supports easterlin s paradox indicating that richer people do not feel more satisfied with their lives however people from countries with higher per capita gdp feel more satisfied at the same time a statistically insignificant correlation was detected between gdp growth rate and life satisfaction supporting a conclusion that in the developed countries further economic growth does not increase people s well being this suggests that decelerating the rate of economic growth gradually approaching the zero growth steady state phase is the natural way towards sustainability and it does not contradict the well being objective in developed countries especially ones with high biocapacity exceedance

should degrowth embrace the job guarantee degrowth should consider the right to work a job guarantee jg as a way of making a smaller economy more just and socially sustainable economic shrinkage in richer countries is accompanied by increased unemployment a bad enough problem in itself but also a barrier to voters acceptance of the degrowth path since being out of work is distinct from being poor anti poverty income policies should be approached separately the jg is one of several paths to full employment including reduced working time this essay only briefly mentions some real world jg programs and some technical objections the main suggestion is to move employment from being a matter of economics particularly economic growth to being a political right a right to work is necessarily effective and would avoid sacrificing the ecological and social goals of degrowth on the altar of full employment

options on the minimum or the maximum of two risky assets analysis and applications this paper provides analytical formulas for european put and call options on the minimum or the maximum of two risky assets the properties of these formulas are discussed in detail options on the minimum or the maximum of two risky assets are useful to price a wide variety of contingent claims of interest to financial economists applications discussed in this paper include the valuation of foreign currency debt option bonds compensation plans risk sharing contracts secured debt and growth opportunities involving mutually exclusive investments

how far can economic incentives explain the french fertility and education transition abstract we analyze how much a core rational choice model can explain the temporal and spatial variation in fertility and school enrollment in france during the 19th century the originality of our approach is in our reliance on the structural estimation of a system of first order conditions to identify the deep parameters another new dimension is our use of gendered education data allowing us to have a richer theory having implications for the gender wage and education gaps results indicate that the parsimonious rational choice model explains 38 percent of the variation of fertility over time and across counties as well as 71 percent and 83 percent of school enrollment of boys and girls respectively the analysis of the residuals unexplained by the economic model indicates that additional insights might be gained by interacting incentives with cross county differences in family structure and cultural barriers

in honor of the nobel laureates robert c merton and myron s scholes a partial differential equation that changed the world the nobel prize was given to robert c merton and myron s scholes for discovering a new method for determining the value of an option this is known as the black merton scholes option pricing formula the purpose of this essay is to explain why the black merton scholes option pricing formula is so important to the finance profession the economics profession the financial industry and society at large this is done by studying the history of the formula s development the economic logic underlying the formula s derivation and the formula s ramifications for the various professions

applications of option pricing theory twenty five years later nobel lecture to the memory of alfred nobel december 9 1997 this abstract was borrowed from another version of this item

searching for an optimal rotation age for forest stand management under stochastic log prices due to rapid change in timber prices in the japanese market most likely affected by imported timber from countries such as the u s canada and the nordic countries the domestic forest managers have been facing a large degree of future price uncertainty because of this it becomes necessary to take the future price uncertainty into account within the forest management framework in this paper the continuous time stochastic process i e the geometric brownian motion has been used to model the log price process the binomial option pricing approximation was then applied to value the sugi cryptomeria japonica and hinoki chamaecyparis obtusa forested land under stochastic log prices in order to search for an optimal rotation age our experiments with the proposed two state stochastic dynamic programming model showed that when the current log price is high enough to cover all costs an optimal rotation age from the stochastic price and deterministic price models coincides although the total expected present net value from management activities differs also it was shown that as the current log price decreases an optimal rotation age derived from the stochastic price model becomes longer than that from the deterministic price model if the current log price further decreases then forest management will be abandoned and the forest stand will be converted into alternative uses

the economics of degrowth economic degrowth is ecologically desirable and possibly inevitable but under what conditions can it become socially sustainable how can we have full employment and economic stability without growth what will happen to public spending and to public debt how would production be organised in a degrowing economy and under what plausible socio political conditions could such grand changes happen standard economic theories and models ignore these questions for them economic growth is an axiomatic necessity this article reviews recent contributions in the economics of degrowth and identifies research avenues for ecological economists

in defence of degrowth abstract this article defends the proposal of sustainable degrowth a starting premise is that resource and co2 limits render further growth of the economy unsustainable if degrowth is inevitable the question is how it can become socially sustainable i e a prosperous and stable rather than a catastrophic descent pricing mechanisms alone are unlikely to secure smooth adaptation a full ensemble of environmental and redistributive policies is required including among others policies for a basic income reduction of working hours environmental and consumption taxes and controls on advertising policies like these that threaten to harm the economy are less and less likely to be implemented within existing market economies whose basic institutions financial property political and redistributive depend on and mandate continuous economic growth an intertwined cultural and political change is needed that will embrace degrowth as a positive social development and reform those institutions that make growth an imperative sustainable degrowth is therefore not just a structuring concept it is a radical political project that offers a new story and a rallying slogan for a social coalition built around the aspiration to construct a society that lives better with less

religions fertility and growth in south east asia through indirect inference we investigate the extent to which religions supposed pronatalism is detrimental to growth via the fertility education channel using censuses from south east asia we first estimate an empirical model of fertility and show that having a religious affiliation significantly raises fertility this effect is stronger for couples with intermediate to high education levels we next use these estimates to identify the parameters of a structural model of fertility choice on average catholicism is the most pro child religion increasing spending on children followed by buddhism while islam has a strong pro birth component redirecting spending from quality to quantity we show that pro child religions depress growth in the early stages by lowering saving physical capital and labor supply these effects account for 10 to 50 of the actual growth gaps between countries over 1950 1980 at later stages of growth pro birth religions lower human capital accumulation explaining between 10 and 20 of the gap between muslim and buddhist countries over 1980 2010

growth in global materials use gdp and population during the 20th century the growing industrial metabolism is a major driver of global environmental change we present an assessment of the global use of materials since the beginning of the 20th century based on the conceptual and methodological principles of material flow accounting mfa on the grounds of published statistical data data compilations and estimation procedures for material flows not covered by international statistical sources we compiled a quantitative estimate of annual global extraction of biomass fossil energy carriers metal ores industrial minerals and construction minerals for the period 1900 to 2005 this period covers important phases of global industrialisation and economic growth the paper analyses the observed changes in the overall size and composition of global material flows in relation to the global economy population growth and primary energy consumption we show that during the last century global materials use increased 8 fold humanity currently uses almost 60 billion tons gt of materials per year in particular the period after wwii was characterized by rapid physical growth driven by both population and economic growth within this period there was a shift from the dominance of renewable biomass towards mineral materials materials use increased at a slower pace than the global economy but faster than world population as a consequence material intensity i e the amount of materials required per unit of gdp declined while materials use per capita doubled from 4 6 to 10 3 t cap yr the main material groups show different trajectories while biomass use hardly keeps up with population growth the mineral fractions grow at a rapid pace we show that increases in material productivity are mostly due to the slow growth of biomass use while they are much less pronounced for the mineral fractions so far there is no evidence that growth of global materials use is slowing down or might eventually decline and our results indicate that an increase in material productivity is a general feature of economic development

conservation payments under uncertainty the decision of whether to retain forest or convert to another land use is affected by uncertainty over future land use returns this paper examines the design of conservation payments to landowners under uncertainty payments are either indexed to the returns from deforestation agriculture or to a market value associated with forest nonuse benefits payment size depends on the degree of correlation between payments and agricultural returns and their relative volatility market based payments for reducing emissions from deforestation and degradation redd are simulated for brazilian soybean growers payments indexed to carbon prices are larger than those indexed to international soybean prices

human capital and industrialization evidence from the age of enlightenment while human capital is a strong predictor of economic development today its importance for the industrial revolution is typically assessed as minor to resolve this puzzling contrast we differentiate average human capital worker skills from upper tail knowledge both theoretically and empirically we build a simple two sector model where worker skills raise the productivity in both agriculture and manufacturing and scientific knowledge affects the entrepreneurial ability to keep up with a rapidly advancing technological frontier the model predicts that the local presence of knowledge elites is unimportant in the pre industrial era but drives growth thereafter worker skills in contrast are not crucial for growth to measure the historical presence of knowledge elites we use city level subscriptions to the famous encyclopedie in mid 18th century france we show that subscriber density is a strong predictor of city growth after 1750 but not before the onset of french industrialization alternative measures of development confirm this pattern soldier height and industrial activity are strongly associated with subscriber density after but not before 1750 literacy on the other hand does not predict growth finally by joining data on british patents with a large french firm survey from 1837 we provide evidence for the mechanism upper tail knowledge raised the productivity in innovative industrial technology

degrowth taking stock and reviewing an emerging academic paradigm degrowth has evolved within a decade from an activist movement into a multi disciplinary academic paradigm however an overview taking stock of the peer refereed degrowth literature is yet missing here we review 91 articles that were published between 2006 and 2015 we find that the academic degrowth discourse occupies a small but expanding niche at the intersection of social and applied environmental sciences the discourse is shaped by authors from high income mainly mediterranean countries until 2012 articles largely constitute conceptual essays endorsed by normative claims more recently degrowth has branched out into modelling empirical assessments and the study of concrete implementations authors tend to agree in that economic growth cannot be sustained ad infinitum on a resource constraint planet and that degrowth requires far reaching societal change whether degrowth should be considered as a collectively consented choice or an environmentally imposed inevitability constitutes a major debate among degrowth thinkers we argue that the academic discourse could benefit from rigid hypotheses testing through input output modelling material flow analysis life cycle assessments or social surveys by analyzing the potentials for non market value creation and identifying concrete well being benefits the degrowth discourse could receive wider public support and contribute to a paradigmatic change in the social sciences

women s liberation what s in it for men the nineteenth century witnessed dramatic improvements in the legal rights of married women given that these changes took place long before women gained the right to vote they amounted to a voluntary renouncement of power by men in this paper we investigate men s incentives for sharing power with women in our model women s legal rights set the marital bargaining power of husbands and wives we show that men face a tradeoff between the rights they want for their own wives namely none and the rights of other women in the economy men prefer other men s wives to have rights because men care about their own daughters and because an expansion of women s rights increases educational investments in children we show that men may agree to relinquish some of their power once technological change increases the importance of human capital we corroborate our argument with historical evidence on the expansion of women s rights in england and the united states

option valuation of claims on real assets the case of offshore petroleum leases this paper extends financial option theory by developing a methodology for the valuation of claims on a real asset an offshore petroleum lease several theoretical and practical problems not present in applying option pricing theory to financial assets are addressed most importantly we show the necessity of combining option pricing techniques with a model of equilibrium in the market for the underlying asset petroleum reserves the advantages of this approach over conventional discounted cash flow techniques are emphasized the methodological development provides important insights for both company behavior and government policy promising empirical results are reported

happy degrowth through more amateur economy abstract this paper outlines a simple aggregate descriptive model of what is here termed a whole economy covering all human involvement in the economy from ultimate means or ecological sacrifices to the ultimate ends of human satisfaction the model embraces not only the formal professional economy driven by money but also the parallel non paid voluntary economy here termed amateur economy driven by peoples affective motivations the input of work to the economy plays an essential role in the paper s analysis of options for reducing ecological sacrifices hence part of the paper is devoted to a brief historical overview of the role of work including turning points in the 1930s in the united states when work sharing was displaced by work creation through consumerism and in the post war economy when gdp became the dominant economic indicator the paper proposes the aim of a happy and sustainable degrowth for affluent countries implying the transfer of some activities from the professional economy to the less labor productive amateur economy this will tend to reduce overall labor productivity and hence resource throughput but increase satisfaction and happiness a key element in the analysis is combining a reduction in consumption with a reduction in production which is obtainable through lowering either working time or work productivity and turning some of the leisure time into voluntary activities economic growth is not a law of nature but the consequence of explicit political decisions taken hence growth is also open to new political decisions in recognition of physical limits to growth and the human quest for replacing economic growth with life satisfaction including increased free time

have countries moved towards sustainable development or not definition criteria indicators and empirical analysis abstract have countries moved towards sustainable development sd or not to answer the question first a new sd definition i e achieving higher and more equally distributed well being levels within ecological limits is proposed second based on the definition and from a global perspective four criteria are established to judge whether countries have moved towards sd which are 1 well being levels have been higher and more equally distributed 2 levels of ecological consumption have been lower 3 ecological capacities have strengthened and 4 the ultimate efficiency which is the efficiency of transforming ecological consumption into human well being has improved developing countries with ecological consumption below global average do not have to meet the second criterion third the happy and equal human development index the ecological footprint and the biocapacity are selected to measure human well being ecological consumption and ecological capacities respectively and two consistent methods are used to measure the ultimate efficiency the empirical analysis of 102 countries during 2011 2016 demonstrates that 19 countries have met the required four or three criteria and moved towards sd and that 12 countries have met none of the required criteria and moved against sd the main contribution is to provide a clear sd definition specific criteria and reliable indicators for measuring national performance and informing decision making on moving towards sd therefore whether countries have moved towards sd or not can be judged and measured continuously and regularly future research needs to detailedly explore why countries have met or not met one certain criterion

from stagnation to sustained growth the role of female empowerment this paper explores the role of gender equality over a long run economic and demographic development path of industrialized countries our unified cliometric growth model of female empowerment suggests that changes in gender relations are a key ingredient of economic development the economy evolves from a malthusian regime with slow technological progress low income and low fertility to a modern growth regime with high living standards and low fertility the rise in technological progress together with improvements in gender equality generates a positive feedback loop that engages the process of human capital accumulation economic transition and triggers the demographic transition

uncertainty real options and cost behavior evidence from washington state hospitals this study tests an implication of the real options theory of investment that uncertainty leads firms to prefer technologies with low fixed and high variable costs in 1983 a change in medicare reimbursement increased the uncertainty of revenues for hospitals using a sample of 831 departments in 59 washington state hospitals over the 1977 1994 period we find that the ratio of variable to total costs increased after 1983 this increase is not attributable to a gradual increase in the ratio over time we estimate a significant increase after 1983 even after controlling for a time trend further we find a greater increase in the variable to total cost ratio for hospitals that had higher percentages of medicare patients increasing our confidence in the conclusion that the change in cost behavior is attributable to medicare s change in reimbursement copyright university of chicago on behalf of the institute of professional accounting 2005

evaluation of urban green development transformation process for chinese cities during 2005 2016 abstract urban green development transformation ugdt has become a new direction for chinese urban development in the 21st century in this paper firstly constructs an index system for dynamic assessment of ugdt based on resource consumption economic development and social welfare secondly propose a two stage decomposition to further open the black box of ugdt process from the perspective of ecological welfare performance this paper empirically investigates the evaluation and staged decomposition of the ugdt process in 286 cities of china over the period 2005 2016 and propose improvement paths based on this our results show that the ugdt of chinese cities will gradually begin and be in a benign state of time after 2014 moreover find that low eco economic efficiency ee is the main reason for the low level of overall cgdt in cities and that the cgdt in regions has shown a trend of the highest in the central the second in the east and the lowest in the west correspondingly based on the principles of obvious short board priority improvement between green development and urban social welfare this paper can explore the different improvement paths of cgdt in different cities

was weber wrong a human capital theory of protestant economic history max weber attributed the higher economic prosperity of protestant regions to a protestant work ethic we provide an alternative theory protestant economies prospered because instruction in reading the bible generated the human capital crucial to economic prosperity we test the theory using county level data from late nineteenth century prussia exploiting the initial concentric dispersion of the reformation to use distance to wittenberg as an instrument for protestantism we find that protestantism indeed led to higher economic prosperity but also to better education our results are consistent with protestants higher literacy accounting for most of the gap in economic prosperity

arbitrage pricing capital asset pricing and agricultural assets a new asset pricing model the arbitrage pricing theory has been developed as an alternative to the capital asset pricing model the arbitrage pricing theory model is used to analyze the relationship between risk and return for agricultural assets the major conclusion is that the arbitrage pricing theory results support previous capital asset pricing model findings that the estimated risk associated with agricultural assets is low this conclusion is more robust for the arbitrage pricing theory application because it provides a better explanation of the relationship between risk and returns than does the capital asset pricing model

options on the maximum or the minimum of several assets using an intuitive approach that also provides new intuition concerning the black and scholes equation this paper extends the results of johnson and stulz to the pricing of options on the minimum or the maximum of several risky assets

pricing an option on revenue from an innovation an application to movie box office revenue we develop a model for valuing revenue streams from innovations the stochastic properties of revenue from innovations create a more difficult environment in which to value options than when the underlying is a security there is no initial revenue and cumulative revenue cannot decrease revenues from innovations are characterized by different lives and different rates of the resolution of uncertainty a common deterministic model for predicting revenue from an innovation is known as the bass model we embed the bass model in a gamma process resulting in a stochastic process with moments proportional to the mean of the bass model to illustrate this model we choose the valuation of options on movie box office revenue these options enable film distributors to manage the risk of a movie and they offer diversification opportunities for investors we develop the econometric methodology for ex ante parameter estimation and a bayesian updating scheme using markov chain monte carlo simulation as data after release become available call prices obtained using the maximum likelihood ml parameter estimates from the full data set closely approximate the average discounted value of ex post call payouts that would have occurred at option maturity

on the use of period average stumpage prices to estimate forest asset pricing models several recent papers thomson 1987 zinkhan 1988 zinkhan and mitchell 1988 cubbage harris and redmond 1988 binkley and washburn 1988a 1988b including one in this journal redmond and cubbage 1988 use either sharpe s 1963 single index market model with returns to the overall market portfolio serving as the index or the capital asset pricing model capm sharpe 1964 lintner 1965 to measure the risk and evaluate the performance of timberland investments the capm specifies an equilibrium relationship between asset i s expected rate of return eri the risk free rate of return rf and the expected risk premium on the market portfolio of all assets in the economy the expected market rate of return erm minus the risk free rate rf

project management under risk using the real options approach to evaluate flexibility in r d managerial flexibility has value in the context of uncertain r d projects as management can repeatedly gather information about uncertain project and market characteristics and based on this information change its course of action this value is now well accepted and referred to as real option value we introduce in addition to the familiar real option of abandonment the option of corrective action that management can take during the project the intuition from options pricing theory is that higher uncertainty in project payoffs increases the real option value of managerial decision flexibility however r d managers face uncertainty not only in payoffs but also from many other sources we identify five example types of r d uncertainty in market payoffs project budgets product performance market requirements and project schedules how do they influence the value from managerial flexibility we find that if uncertainty is resolved or costs revenues occurafter all decisions have been made more variability may smear out contingencies and thus reduce the value of flexibility in addition variability may reduce the probability of flexibility ever being exercised which also reduces its value this result runs counter to established option pricing theory intuition and contributes to a better risk management in r d projects our model builds intuition for r d managers as to when it is and when it is not worthwhile to delay commitments for example by postponing a design freeze thus maintaining flexibility in r d projects

on the valuation of american call options on stocks with known dividends both the roll and the geske equations for the valuation of the american call option on a stock with known dividends are incorrectly specified this note presents the corrected valuation formula explains the misspecifications and provides a numerical example

investments in flexible production capacity abstract we examine the technology and capacity choice problem of a multi output firm facing stochastic demands in a continuous time framework the firm can install output specific capital or at greater cost flexible capital that can be used to produce different outputs investment is irreversible the firm must choose a technology and decide how much capital to install knowing it can add more later as demand evolves we formulate the capacity choice problem as a singular stochastic control problem show that the value of the firm equals the value of its installed capital plus the value of its options to add capacity in the future and derive an optimal investment rule that maximizes the firm s market value we also address the analogous problem for a multi input firm that faces stochastically evolving factor costs and can install input specific or flexible capital

not measuring sustainable value at all a response to kuosmanen and kuosmanen abstract in their article in this issue of ecological economics kuosmanen and kuosmanen kuosmanen t and kuosmanen n this issue how not to measure sustainable value and how one might ecological economics aim to criticise the measurement of sustainable value as proposed in our previous research by adopting a production perspective and based on a productive efficiency analysis they claim that the proposed way of measuring sustainable value represents an invalid simplification that rests on restrictive and unrealistic assumptions our response is to show that their argument rests on a fundamental misspecification of the sustainable value approach we identify three conceptual misfits a mismatch in the perspective of the analysis a misspecification of opportunity costs and the irrelevance of production functions ultimately kuosmanen and kuosmanen s train of thought rests entirely within the realm of productive efficiency analysis whereas sustainable value builds on the foundations of financial economics and consequently adopts a macro rather than a firm perspective it is thus not surprising that the findings of kuosmanen and kuosmanen appear to contradict the sustainable value approach however this is due to their fundamental misspecification of the sustainable value approach as a result rather than providing novel insights into how sustainable value might be measured in a better way they do not measure sustainable value at all

population technology and growth from malthusian stagnation to the demographic transition and beyond this paper develops a unied growth model that captures the historical evolution of population technology and output it encompasses theendogenous transitionbetween three regimes that have characterized economic development the economy evolves from amalthusianregime wheretechnologicalprogressis slow andpopulationgrowthprevents anysustainedriseinincomepercapita intoapost malthusianregime wheretechnological progress rises and population growth absorbs only part of output growth ultimately a demographic transition reverses the positive relationship between income and population growth andtheeconomyentersamoderngrowthregimewithreducedpopulationgrowth

less is more the influence of aspirations and priming on well being abstract if resource consumption is to be reduced through economic de growth individuals in industrialized countries may have to accept a reduction in their consumption levels in democratic societies implementing this process requires the consent of a majority of the population however as long as people have high reference levels of consumption lower consumption will induce feelings of loss and hence evoke resistance this paper summarizes recent experimental evidence on some of the factors that determine the utility costs involved in decreasing consumption the results suggest that the acceptance of economic de growth would be facilitated if people s material aspirations were moderated and the extent to which material achievements are emphasized in our daily environment were reduced an analysis of the financial and economic crisis that developed during 2008 suggests that it will not contribute to either of these points rather by increasing the public s focus on the economic sphere even beyond pre crisis levels it may lead to a further decrease in the acceptance of de growth policies in the population

inequality and growth why differential fertility matters we argue that inequality and growth are linked through differential fertility and the accumulation of human capital we build an overlapping generations model in which dynasties differ in their initial endowment with human capital growth the income distribution and fertility are endogenous due to a quantiy quality tradeoff families with less human capital decide to have more children and invest less in education when initial inequality is high large fertility differentials lower the growth rate of average human capital since poor families who invest little in education make up a large fraction of the population in the next generation a calibrated model shows that this fertility differential effect is quantitatively important we also provide empirical evidence to confirm the links between inequality differential fertility and growth suggested by the model

discounting inside the washington d c beltway places more weight on costs and benefits in the near term over costs and benefits in the future the choice of the discount rate is therefore critical in evaluating the merits of many public policy proposals this article focuses on how the choice of discount rate can dramatically affect policy choices these policies include whether to build a bridge whether to privatize a power marketing administration which sells electricity generated by government owned facilities such as dams how much money should be spent on early childhood education or options for reforming social security the ongoing challenge is to discount future costs or benefits in a way that matches the project s level of riskiness we begin by discussing the underlying issues in choosing an appropriate discount rate we then discuss the variety of different discount rates that are actually used by various washington policymakers and the biases they often generate

the condition of the working class in england 1209 2004 i use building workers wages for 1209 2004 and the skill premium to consider the causes and consequences of the industrial revolution real wages were trendless before 1800 as would be predicted for the malthusian era comparing wages with population however suggests that the break from the technological stagnation of the malthusian era came around 1640 long before the classic industrial revolution and even before the arrival of modern democracy in 1689 building wages also conflict with human capital interpretations of the industrial revolution as modeled by gary becker kevin murphy and robert tamura oded galor and david weil and robert lucas human capital accumulation began when the rewards for skills were unchanged and when fertility was increasing

which countries avoid carbon intensive development abstract this paper explores the underlying development outcomes and cumulative emissions trajectories of 20 middle income countries from eastern europe latin america north africa and south asia first well being outcomes are assessed defined in terms of access to education democratic and legal rights and the infrastructures that support physical health second emissions trajectories are estimated to 2050 taking into account current trends in energy consumption and carbon intensity a likely start date for stringent climate policy arising from the paris agreement 2020 and maximum feasible rates of mitigation comparing these estimates to a per capita allocation from the global carbon budget associated with 2 c ten countries have low carbon development trends that will not exceed their allocation of these costa rica and uruguay are achieving very high well being outcomes while many more are delivering good outcomes in at least two domains of human need however most are seriously deficient in terms of social well being education democratic and legal rights these results call into question the socio economic convergence of developing countries with industrialised countries but they also reaffirm the low emissions cost of extending good infrastructure access and physical health outcomes to all demonstrated by the existence of multiple countries that continue to avoid carbon intensive development

economic de growth vs steady state economy in recent years the concept of economic de growth decroissance based on the literature of nicolas georgescu roegen e g 1 3 has found a revival in france italy spain and other countries in the popular as well as in the academic literature therein authors took on board georgescu roegens categorical rejection of a steady state economy sse as proposed by herman daly 4 they argue that economic degrowth is the only viable alternative goal to the growing economy this position is challenged in this article and it is concluded that the two concepts are in fact complements economic de growth is not a goal in itself but the rich north s path towards a globally equitable sse moreover the de growth literature can benefit from the strong economic historic roots of the sse and from daly s macroeconomic concepts while in return being able to give lessons about bottom up approaches this would be particularly important for the population issue where daly proposes limited birth licences unfortunately statements on demography are inconsistent and underdeveloped in the de growth literature further it is concluded that most criticisms of the sse are due to a too narrow and technocratic interpretation of the concept instead the sse should be defined as a quasi steady state resting in a dynamic equilibrium and as an unattainable goal which can and probably should be approximated

the value of flexibility preservation remediation or development for ginostra we are concerned with land allocation andinvestment decisions when dealing withpartially degraded areas that might be 1 remediated and returned to a more natural state or 2 irreversibly developed this type ofproblem seems particularly relevant in europewhere the issue of wilderness conservation isof less concern than the remediation oflandscapes which have been altered by previouseconomic activities traditional expectedpresent value analysis will fail to capture thevalue of investments that might be undertakensequentially or when certain investments areirreversible we show how to determine withina discrete time stochastic model the optimaladaptive development strategy and how tocalculate the option value of flexibility thetheoretical model is then applied to ginostra a town on stromboli an island off the southerncoast of italy

nobel lecture the economic way of looking at behavior an important step in extending the traditional theory of individual rational choice to analyze social issues beyond those usually considered by economists is to incorporate into the theory a much richer class of attitudes preferences and calculations while this approach to behavior builds on an expanded theory of individual choice it is not mainly concerned with individuals it uses theory at the micro level as a powerful tool to derive implications at the group or macro level the lecture describes the approach and illustrates it with examples drawn from my past and current work