economies of density versus natural advantage crop choice on the back forty abstract we estimate the factors determining specialization of crop choice at the level of individual fields distinguishing between the role of natural advantage soil characteristics and economies of density scale economies achieved when farmers plant neighboring fields the same using rich geographic data from north dakota including new data on crop choice collected by satellite we estimate a model of how a farmer plants adjacent fields under the farmer s control we find planting decisions on a field are heavily dependent on the soil characteristics of adjacent fields through this relationship we back out the structural parameters of economies of density

understanding heterogeneous preferences in random utility models a latent class approach a finite mixture approach toconditional logit models is developed in whichlatent classes are used to promoteunderstanding of systematic heterogeneity the model is applied to wilderness recreationin which a branded choice experiment involvingchoice of one park from a demand system wasadministered to a sample of recreationists the basis of membership in the classes orsegments in the sample involved attitudinalmeasures of motivations for taking a trip aswell as their stated preferences overwilderness park attributes the econometricanalysis suggested that four classes of peopleexist in the sample using the model toexamine welfare measures of some hypotheticalpolicy changes identified markedly differentwelfare effects than the standard singlesegment model and provided insight into thedifferential impact of alternative policies

multiple experiments for the causal link between the quantity and quality of children this article presents evidence on the child quantity child quality trade off using quasi experimental variation due to twin births and preferences for a mixed sibling sex composition as well as ethnic differences in the effects of these variables our sample includes groups with very high fertility an innovation in our econometric approach is the juxtaposition of results from multiple instrumental variables strategies capturing the effects of fertility over different ranges for different sorts of people to increase precision we develop an estimator that combines different instrument sets across partially overlapping parity specific subsamples our results are remarkably consistent in showing no evidence of a quantity quality trade off

an empirical analysis of life cycle fertility and female labor supply this paper examines us household fertility and female labor supply over the life cycle using data from the panel study of income dynamics the authors investigate how maternal time inputs and market expenditures on offspring as well as the benefits they yield their parents vary with ages of offspring and influence female labor supply and contraceptive behavior the econometric framework combines a female labor supply model and a contraceptive choice index function it also accounts for the fact that conceptions are not perfectly controllable events using longitudinal data on married couples the authors estimate these equations and test alternative specifications of the technologies governing child care the findings suggest that while parents cannot perfectly control conceptions variations in child care costs do affect life cycle spacing of births furthermore the results demonstrate the gains of modeling the linkages between female labor supply and fertility behavior at the household level authors modified

an investigation into the relationship of retail gas prices on oil company profitability in this article we present several empirical procedures using publicly available data from the us department of energy doe and the securities and exchange commission sec to examine the relationship of oil company gross profit margins to retail gas prices this descriptive analysis indicates that the profit margins of the major integrated oil companies are lower on average during periods of extremely high gas and oil prices and in fact are even lower than in times of extremely low gas and oil prices large oil companies are most profitable during periods of moderate gasoline prices smaller vertically integrated oil companies and firms primarily in the business of refining purchased crude oil exhibit a consistently inverse relationship between profit margins and retail gas prices as gas prices increase these firms become less profitable we find no evidence for the increase in the gross profit margins of oil companies during episodes of very high retail gasoline prices

collusion vs superiority a monte carlo analysis abstract this paper develops a monte carlo procedure which simulates regression equations characteristic of the profit concentration literature given knowledge lacking in empirical work of the underlying parameters true values it is shown that concentration s coefficient in an industry profit concentration regression may overestimate underestimate or accurately reflect the impact of monopoly power on price depending on the assumed underlying model current empirical evidence however tends to be more consistent with the model that predicts concentration overestimates the monopoly power effect

heterogeneity and emotions in the valuation of non use damages caused by oil spills oil spills are capable of causing major environmental insults that raise the emotional loads of individuals across society in this paper we consider the role of emotions in heterogeneous responses of individuals in the non market valuation of an oil prevention program in spain heterogeneity is modeled with a smoothly mixing regression smr model that allows researchers to explain the probability that individuals belong to the latent segments of wtp the results show that heterogeneity in wtp responses is explained by the specific emotional reactions of individuals upset sadness indifference rather than by their socioeconomic characteristics thus the investigation of the emotional reactions of individuals can provide useful tools for the design of non market valuation studies providing more accurate predictions of the potential behavior of individuals in constructed markets for damage assessment

a review of william easterly s the tyranny of experts economists dictators and the forgotten rights of the poor william easterly marshals yet another brilliant critique of established development policies with a focus on the experts excessive focus on state led policies and goals a la myrdal and ignorance of bottom up solutions including technology and individual rights a la hayek it suggests a world where success occurs in spite of nation states yet not all bottom up leads to success and the worst disasters as in civil violence occur where states fail easterly highlights the important links between success and individual freedom and opportunity he fails to note that myriad impoverished individuals cannot exercise these freedoms due to low expectations or compromised rights

incentive effects of the u s welfare system a review the author would like to acknowledge support for prior work on this topic from the u s department of health and human services and helpful comments from three anonymous referees rebecca blank howard chernick john fitzgerald irwin garfinkel peter gottschalk edward gramlich david greenberg judith gueron james heckman v joseph hotz robert hutchens michael keane frank levy larry mead michael murray robert plotnick anuradha rangarajan philip robins howard rolston jeffrey smith and daniel weinberg all opinions and errors are those of the author alone

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

vertically summing public good demand curves an empirical comparison of economic versus political jurisdictions fiscal equivalence for efficient provision of a public good requires perfect correspondence between political and economic jurisdictions however the spatial extent of the economic jurisdiction is an empirical question drawing on four survey based valuation studies we measure the relative public good benefit gradient as a function of residential location from six natural resource public goods the results indicate commonly used state political jurisdictions reflect an average of 13 of total benefits in the economic jurisdiction although with a logarithmic form for distance the upper confidence interval of state benefits can include 100 for some species

optimized quantity within distance models of spatial welfare heterogeneity abstract spatial welfare heterogeneity is frequently modeled within stated preference analysis as a function of discrete or continuous distance between households and affected resources a common example is distance decay analysis although distance based models such as these are easily estimated the ubiquity of this paradigm can lead to analyses that overlook other forms of analysis with equal or greater relevance this paper develops an alternative approach to spatial heterogeneity in stated preference willingness to pay wtp based on the quantity or area of an affected resource surrounding each respondent at an optimized distance band or radius with distance bands optimized using a grid search algorithm that maximizes model likelihood methods and results are illustrated using a choice experiment on riparian land restoration in maine usa the resulting quantity within distance model identifies systematic spatial patterns that are undetectable using distance based analysis and directly relevant for welfare analysis

playing the fertility game at work an equilibrium model of peer effects we study workplace peer effects in fertility decisions using a game theory model of strategic interactions among coworkers that allows for multiple equilibria using register based data on fertile aged women working in medium sized establishments in denmark we uncover negative average peer effects allowing for heterogeneous effects by worker type we find that positive effects dominate across worker types defined by age or education negative effects dominate within age groups and among low education types policy simulations show that these estimated effects make the distribution of where women work an important consideration beyond simply if they work in predicting population fertility

estimation of distance decay functions to account for substitution and spatial heterogeneity in stated preference research in a site selection choice experiment various hypotheses are tested related to spatial heterogeneity in willingness to pay wtp for environmental improvements spatial heterogeneity is measured through distance decay effects substitute sites inside and outside the experiment s choice set and spatial trend variables we demonstrate that distance decay functions differ between users and nonusers and across study sites also the distance to substitutes outside the choice set explains spatial variation in wtp we show that further extending the model with spatial trend variables reveals additional spatial heterogeneity in choices accounting for spatial heterogeneity patterns results in significantly different wtp estimates for environmental improvements jel q25 q51

estimating ethnic preferences using ethnic housing quotas in singapore there are many policies around the world aimed at integrating groups gender ethnic national in education employment immigration and housing in the case of housing since prices may not internalize externalities in residential location choices we need to know preferences for welfare analysis this paper estimates people s taste for living with own ethnic groups ethnic preferences using unique policy variation from the ethnic housing quotas in singapore my approach combines policy induced variation commonly used in reduced form settings with a non parametric identi cation strategy in a structural demand estimation framework a la berry levinsohn and pakes 1995 i nd that all groups have strong preferences to live with at least some other

minority advantage and disadvantage in competition and coordination abstract we explore how a minority advantage or disadvantage endogenously arises in two contrasting environments a population comprises two unequally sized groups each individual allocates effort between a majority skill and a minority skill it is cheaper to invest in the skill of one s own group individuals are subsequently pairwise matched in an environment that encourages either competition or coordination we find both theoretically and experimentally that under competition the minority players earn more than the majority players when the share of the minority group is sufficiently small as players acquire more of the majority skill to maximize the chance of winning against a majority opponent moreover when there are no theoretical predictions for a relatively large share of the minority we find experimentally that the minority players still enjoy an advantage and the advantage is smaller under coordination in contrast payoffs are reversed both theoretically and experimentally players are more likely to coordinate on the majority skill and this yields a minority disadvantage the minority disadvantage grows with the imbalance in the size of the two groups

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

substitution effects in the valuation of multiple environmental programs abstract a theoretical framework for understanding substitution and complementary effects between environmental programs is derived a multiple program valuation function is specified and its structure analyzed a maximum likelihood estimator is derived to estimate the parameters of the valuation function using referendum type contingent valuation data the empirical analysis shows that the conventional benefit aggregation approach of independent valuation and summation overstates the benefits of two and three program policies by an average of 24 and 54 respectively

the aggregation of environmental benefit values welfare measures distance decay and total wtp abstract we review the literature regarding the aggregation of benefit value estimates for non market goods two case studies are presented through which we develop an approach to aggregation which applies the spatial analytic capabilities of a geographical information system to combine geo referenced physical census and survey data to estimate a spatially sensitive valuation function these case studies show that the common reliance upon political rather than economic jurisdictions and the use of sample mean values within the aggregation process are liable to lead to significant errors in resultant values we also highlight the fact that for resources with use values then we should expect overall values to reduce with increasing distance from such sites but that changes in the choice of welfare measure will determine whether such distance decay is to be expected within values stated by those who are presently non users the paper concludes by providing recommendations for future improvements to the methodology

the effect of distance on willingness to pay values a case study of wetlands and salmon in california most contingent valuation studies in the literature utilized a pre determined geographic market area for their sample frame in other words they did not include variables that would measure the extent of the geographic areas over which to aggregate willingness to pay these studies implicitly assumed that the effects of geographic distance were moot an assumption that could have led to an understatement of the aggregate benefit values computed in these studies the overall goal of this study was to determine if distance affects willingness to pay for public goods with large non use values the data used came from a contingent valuation study regarding the san joaquin valley ca respondents were asked about their willingness to pay wtp for three proposed programs designed to reduce various environmental problems in the valley a logit model was used to examine the effects of geographic distance on respondents willingness to pay for each of the three programs results indicate that distance affected wtp for two of the three programs wetlands habitat and wildlife and the wildlife contamination control programs we calculate the underestimate in benefits if the geographic extent of the public good market is arbitrarily limited to one political jurisdiction

sect subsidy and sacrifice an economist s view of ultra orthodox jews israeli ultra orthodox men study full time in yeshiva until age 40 on average why do fathers with families in poverty choose yeshiva over work draft deferments subsidize yeshiva attendance yet attendance typically continues long after exemption fertility rates are high tfr 7 6 and rising a social interaction approach explains these anomalies yeshiva attendance signals commitment to the community which provides mutual insurance to members prohibitions strengthen communities by effectively taxing real wages inducing high fertility historically the incursion of markets into traditional communities produces ultra orthodoxy subsidies induce dramatic reductions in labor supply and unparalleled increases in fertility illustrating extreme responses social groups may have to interventions

changing the cost of children and fertility evidence from the israeli kibbutz prior to 1996 israelis in collective communities kibbutzim shared the costs of raising children equally this paper examines the impact of privatizing costs of children on the behavior of young couples using universal microdata on kibbutz members exploiting variation in the increase in cost sharing across kibbutzim we estimate that lifetime fertility declined by 0 65 children in the cohorts of affected parents we also examine the exit decisions of members and find that couples were most likely to leave the kibbutz if they were either higher income or lower fertility this pattern is also observed among israeli emigrants in which higher educated and lower fertility couples are more likely to leave israel

testing choice experiment for benefit transfer with preference heterogeneity benefit transfer is a cost effective method for estimating the value of environmental goods that relies on information obtained in previous studies the multiattribute approach of choice experiments should provide advantages in terms of benefit transfer allowing differences in environmental improvements between sites as well as differences in socioeconomic and attitude characteristics between respondent populations this article investigates the capability of choice experiment method to be used in environmental benefit transfer when a random parameters approach is used to allow for preference heterogeneity we find that the inclusion of respondents taste heterogeneity reduces the magnitude of the transfer error

set identification in models with multiple equilibria we propose a computationally feasible way of deriving the identified features of models with multiple equilibria in pure or mixed strategies it is shown that in the case of shapley regular normal form games the identified set is characterized by the inclusion of the true data distribution within the core of a choquet capacity which is interpreted as the generalized likelihood of the model in turn this inclusion is characterized by a finite set of inequalities and efficient and easily implementable combinatorial methods are described to check them in all normal form games the identified set is characterized in terms of the value of a submodular or convex optimization program efficient algorithms are then given and compared to check inclusion of a parameter in this identified set the latter are illustrated with family bargaining games and oligopoly entry games copyright 2011 oxford university press

waves in consumption with interdependence among consumers this paper presents a model to analyze the development of consumption patterns when there are social interactions among consumers in particular a consumer in this model recognizes three reference groups a peer group of similar consumers with whom the consumer wishes to share consumption activities a distinction group from which the consumer wishes to distinguish him or herself and an aspiration group to which the consumer does not belong but wishes that he she did and with whom the consumer would like to share consumption activities the interplay of aspiration and distinction can lead to waves in consumption these can happen when for example the avant garde consumption of up market pioneers is copied by other types of consumer as the latter aspire to emulate the former the former in turn seek to distinguish themselves from these unwelcome companions by varying their consumption in consequence a particular consumption activity may start up market an then gradually proceed down the social spectrum more complex patterns with continuing cycles in consumption can also be found the paper argues that this model is not only applicable to the consumption behaviour of an elite or would be elite but is relevant in a wide range of consumption settings

does firm size comfound the relationship between corporate social performance and firm financial performance there has been some theoretical and empirical debate that the positive relationship between corporate social performance csp and firm financial performance ffp is spurious and in fact caused by a third factor namely large firm size this study examines this question by integrating three meta analyses of more than two decades of research on 1 csp and ffp 2 firm size and csp and 3 firm size and ffp into one path analytic model the present study does not confirm size as a third factor which would confound the relationship between csp and ffp that is even if firm size is controlled for across studies comprising on average over 15 000 observations csp and ffp remain positively correlated showing a true score corrected path coefficient p of 0 37

a prospect theory nash bargaining solution and its stochastic stability abstract we consider the long run outcomes of bargaining games when players obey prospect theory we extend the evolutionary bargaining model of young 1993 to a two stage nash demand game two players simultaneously choose whether to exercise an outside option in the first stage and play the nash demand game in the second stage which will be reached only if neither player exercises the outside option we address the influence on the stochastically stable division of reference dependent preferences where the reference point is the value of the outside option we show that the division consistently differs from the nash bargaining solution under expected utility theory inspired by this we propose a prospect theory nash bargaining solution which coincides with the stochastically stable division

peers at work we study peer effects in the workplace specifically we investigate whether how and why the productivity of a worker depends on the productivity of coworkers in the same team using high frequency data on worker productivity from a large supermarket chain we find strong evidence of positive productiv ity spillovers from the introduction of highly productive personnel into a shift worker effort is positively related to the productivity of workers who see him but not workers who do not see him additionally workers respond more to the presence of coworkers with whom they frequently interact we conclude that social pressure can partially internalize free riding externalities that are built into many workplaces jel j24 l81 m54

the political economy of fertility this paper studies the political economy of fertility specifically i argue that fertility may be a strategic choice for ethnic groups engaged in redistributive conflict i first present a simple conflict model where high fertility is optimal for each ethnic group if and only if the economy s ethnic diversity is high institutions are weak or both i then test the model in a cross national dataset consistent with the theory i find that economies where the product of ethnic diversity and a measure of institutional weakness is high have increased fertility rates i conclude that fertility may depend on political factors

successful in the long run a meta regression analysis of persistent firm profits we study the profit persistence literature by applying meta regression analysis mra to a set of 36 empirical papers which analyze the persistence of abnormal firm profits over time the analyzed literature provides evidence for a mediocre degree of persistence in abnormal profits an initial analysis of the distribution of reported profit persistence estimates reveals some degree of excess variation this points toward publication bias that favors significant results independent of their algebraic sign the mra however reveals that publication bias is particularly favoring results that indicate profit persistence and thus contradict the neoclassical model of perfect competition moreover the mra enables to control for heterogeneity driven by the study design we find that the analyzed country developing vs developed the applied econometric approach as well as the analyzed period of time are significant drivers of heterogeneity in reported persistence estimates

crime and social interactions the high variance of crime rates across time and space is one of the oldest puzzles in the social sciences this variance appears too high to be explained by changes in the exogenous costs and benefits of crime we present a model where social interactions create enough covariance across individuals to explain the high cross city variance of crime rates this model provides an index of social interactions which suggests that the amount of social interactions is highest in petty crimes moderate in more serious crimes and almost negligible in murder and rape

how family networks drive residential location choices evidence from a stated preference field experiment in bogota colombia this research quantifies the relative importance of proximity to extended family networks in the stated residential location choices of bogota s low to middle income residents by applying a conditional logistic regression model and using data from an original choice experiment i find that the surveyed individuals prefer living near their extended family and on average prioritise it more than accessibility to the central business district those who have relied on help from extended family members in a personal or economic crisis situation have a stronger preference for living near extended family compared with those who have not as do those who are able to rely on extended family ties for childcare assistance

testing the influence of substitute sites in nature valuation by using spatial discounting factors this paper investigates the effect of nearby nature substitute sites on preferences for nature restoration contrary to prior studies we use a respondent centric approach to control for substitute sites we assess each respondent specific spatial context by computing densities of nature substitute sites within various ranges from each respondent s home this approach considers the use and non use values of nature together data from three similar discrete choice experiments carried out in flanders belgium are compared different spatial discounting factors are tested to explore how the substitution effect behaves with regard to distance latent class analyses are performed to account for preference heterogeneity among respondents we observe divergent behaviours across groups of respondents the distance to substitutes affects how respondents gauge substitute sites we find a significant influence of the squared average buffer distance but this effect varies in sign across case studies and classes of respondents our results demonstrate that individual specific gis data can significantly improve the representation of the spatial context and the transferability of value functions however the roles played by preference heterogeneity and nature perception on respondents capacity to value nature still deserves further attention in future research

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

intrinsic heterogeneity in expectation formation we introduce the concept of misspecification equilibrium to dynamic macroeconomics agents choose between a list of misspecified econometric models and base their selection on relative forecast performance a misspecification equilibrium is a stochastic process in which agents forecast optimally given their choices with forecast model parameters and predictor proportions endogenously determined under appropriate conditions the misspecification equilibrium will exhibit intrinsic heterogeneity in which all predictors are used at all times even in the neoclassical limit in which only the most successful predictors are used this equilibrium is attainable under least squares learning and dynamic predictor selection based on average profits

understanding regression versus variance tests for social interactions this article considers the relationship between the use of regressions and the use of variance contrast methods to uncover social interactions we illustrate how these methods employ different identifying assumptions and are therefore complementary approaches we also provide formal identification results that extend existing ones for the two methods jel c12 c21 c23 z13 this article is designed to understand the relationshipbetweentwoapproachestotheempirical analysis of social interactions the first approach is the use of linear regressions to uncover social interactions this approach estimates social interaction effects through changes in the conditional linear expectation of individual outcomes when group level variables are included in the conditioning set in econometrics this method was first analyzed by manski 1993 who dubbed it the linearin means model since the group level variables are typically averages of individual variables within the group this model is also studied by brock and durlauf 2001a 2001b cohencole 2006 and graham and hahn 2005 among others durlauf 2004 surveyed empirical studiesof social interactionsbasedonsuch regressions the second approach originally proposed by glaeser sacerdote and scheinkman 1996 and developed into a full inferential procedure by graham 2005 who refers to this approachasvariancecontrasts usesintragroup variation in behavior to infer social interactions the idea in this approach is that social interactions willinduceintragroupdependences in behavior that affect sample variances for intragroup outcomes there has been relatively little work evaluating social interactions using variance contrasts one reason is that with the exception of graham s work there is little formal statistical theory for the approach the purpose of this article was to clarify the relationship between regression and variance contrast tests weclarify how these tests employ different informational assumptions to achieve identification of social interaction specifically we argue that regression and variance contrast approaches correspond to identification via exclusion restrictions in the one case and covariance restrictions on errors in the other as such the two approaches replicate the classes of identification strategies that appear in the classical simultaneous equations literature see fisher 1966 for a classic treatment the remainder of the article is organized as

spatial externalities in agriculture empirical analysis statistical identification and policy implications summary spatial externalities can affect economic welfare and landscape pattern by linking farm returns on adjoining parcels of land while policy can be informed by research that documents spatial externalities statistically quantifying the presence of externalities from landscape pattern is insufficient for policy guidance unless the underlying cause of the externality can be identified as positive or negative this article provides a springboard for empirical research by examining the underlying structure social environmental interactions and statistical identification strategies for the analysis and the quantification of agricultural spatial externalities that are derived from observations of landscape change the potential for original policy treatments of agricultural spatial externalities in development and environment outcomes is highlighted

the population problem theory and evidence this study is concerned with the relationships among population growth poverty and environmental degradation with particular focus on the situation in developing countries the author rejects the concept of a general theory of fertility behavior in favor of an interpretation of these relationships which might be applicable to certain situations in the poorest parts of the indian subcontinent and sub saharan africa such situations include unacceptable risks of maternal death for poor illiterate women and a condemnation to extreme poverty in conditions of the deterioration of local resources and of the environment the author concludes that population growth rates are too high in certain specific areas and that an appropriate policy reaction to such conditions would be to try to change the options that men and women face so that their reasoned choice would be to lower their fertility

on the misuse of the profits sales ratio to infer monopoly power the common use of the profits sales ratio as a measure of the lerner index of monopoly power is flawed even with the assumption of constant returns because of problems connected with the valuation of capital the size of the error is related to the cost of capital the growth rate of the firm the depreciation method used and most important the shape of the stream of benefits resulting from an investment examples show that the error can be quite large further the error is likely to be systematically related to the variables used in regression studies

nash equilibrium and the evolution of preferences abstract a population of players is randomly matched to play a normal form game g the payoffs in this game represent the fitness associated with the various outcomes each individual has preferences over the outcomes of the game and chooses an optimal action with respect to those preferences however these preferences need not coincide with the fitness payoffs when evolution selects individuals on the basis of the fitness of the actions they take the distribution of aggregate play must be a nash equilibrium of g weak additional assumptions on the evolutionary process imply perfect equilibrium journal of economic literature classification number c72

discrete choice with social interactions this paper provides an analysis of aggregate behavioural outcomes when individual utility exhibits social interaction effects we study generalized logistic models of individual choice which incorporate terms reflecting the desire of individuals to conform to the behaviour of others in an environment of noncooperative decisionmaking laws of large numbers are generated in such environments multiplicity of equilibria in these models which are equivalent to the existence of multiple self consistent means for average choice behaviour will exist when the social interactions exceed a particular threshold local stability of these multiple equilibria is also studied the properties of the noncooperative economy are contrasted with the properties of an economy in which a social planner determines the set of individual choices finally a likelihood function based on the theoretical model is given and conditions for the econometric identifiability of the model are established

trust social capital and economic development many argue that elements of a society s norms culture or social capital are central to understanding its development however these notions have been difficult to capture in economic models here we explore ap ossible role for trustworthiness as corresponding to social capital individuals are trustworthy when they perform in accordance with promises even if this does not maximize their payoffs the usual focus on incentive structures in motivating behaviour plays no role here instead we emphasize more deep seated modes of behaviour and consider trustworthy agents being socialized to act as they do to model this socialization we borrow from a process of preference evolution pioneered by bisin and verdier 2001 the model developed endogenously accounts for social capital and explores its role in the process of economic development it captures in a simple formal way the interaction between social capital and the economy s productive processes the results obtained caution against rapid reform and provide an explanation for why late developing countries may not easily be able to transplant the modes of production that have proved useful in the west

measuring lying aversion abstract we introduce a new method for measuring the decision to lie in experiments in the game the decision to lie increases own payment independent of the counterpart s decision but potentially at a cost for the counterpart we identify at the individual level the decision to lie and measure how individuals react to different incentives to lie furthermore we investigate how lying behavior changes over time our method allows us to classify people into types including those who never lie those who always lie and those who react to incentives to lie we suggest this method as a useful instrument for examining factors that influence the decision to lie

dynamic instability of a mixed city in the presence of neighborhood externalities it has been often asked whether a city currently accommodating a variety of economic social and racial groups will continue to be a mixed city or will become exclusively occupied by a single group particularly poor blacks with all other groups moving out of the city in the long run in order to answer this question properly it seems essential to develop a long run dynamic model of a city with emphasis on socioeconomic factors like neighborhood externalities within or among various groups of residents as well as spatial factors like the individual choice of residential space and location it might be safely said that in the literature the only theoretical work which employs a long run dynamic approach to this kind of problem is a paper on dynamic models of segregation by thomas schelling 197 1 although his socioeconomic analysis has revealed some of the dynamic properties of a racially mixed area with neighborhood externalities his model itself is quite unsatisfactory from the economic point of view since it lacks individual utility functions and thereby disregards the aspect of the individual choice of space and location within the city 2 as a result he failed to analyze the effect of spatial segregation within the city on the long run nature of the residential composition of the city in this paper i develop a long run dynamic model of an open city which accommodates two groups of households for example blacks and whites rich and poor young and old with their utility functions depending on a consumption good and residential space i also assume two kinds of neighborhood externalities the first is called negative intergroup externalities that is the utility level of a typical household in one group is adversely affected by an increase in the number of households in the other group living in the city the second is called positive intragroup externalities that is the utility level of a typical household in one group is positively affected by an increase in the size of its own group in in the city first i define a mixed city equilibrium as a long run equilibrium which allows the two groups to coexist in the city in the long run and then introduce a dynamic adjustment process of household movement into and out of the city it is proved that the mixed city equilibrium is always unstable in the presence of negative intergroup externalities and or positive intragroup externalities if residential land is perfectly homogeneous and there is no differential transport cost incurred within the city it turns out however that in the case of a monocentric city with positive transport cost the mixed city equilibrium may be stable or unstable depending on the degree of neighborhood externalities because of the stabilizing effect of spatial segregation between the two groups within the city

how to grow a bubble a model of myopic adapting agents abstract we present a simple agent based model to study the development of a bubble and the consequential crash and investigate how their proximate triggering factor might relate to their fundamental mechanism and vice versa our agents invest according to their opinion on future price movements which is based on three sources of information i public information i e news ii information from their friendship network and iii private information our bounded rational agents continuously adapt their trading strategy to the current market regime by weighting each of these sources of information in their trading decision according to its recent predicting performance we find that bubbles originate from a random lucky streak of positive news which due to a feedback mechanism of these news on the agents strategies develop into a transient collective herding regime after this self amplified exuberance the price has reached an unsustainable high value being corrected by a crash which brings the price even below its fundamental value these ingredients provide a simple mechanism for the excess volatility documented in financial markets paradoxically it is the attempt for investors to adapt to the current market regime which leads to a dramatic amplification of the price volatility a positive feedback loop is created by the two dominating mechanisms adaptation and imitation which by reinforcing each other result in bubbles and crashes the model offers a simple reconciliation of the two opposite herding versus fundamental proposals for the origin of crashes within a single framework and justifies the existence of two populations in the distribution of returns exemplifying the concept that crashes are qualitatively different from the rest of the price moves

ownership versus competition efficiency in public enterprise certainly the introduction of product market competition into potentially competitive or at least contestable markets can improve performance to take just one example morrison and whinston 1986 1986 estimate that even in the imperfectly contestable u s airline industry the annual u s welfare gains from deregulation have been around 6 billion

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

habits peers and happiness an evolutionary perspective the principal motivating factor in our lives is the pursuit of happiness in most cultures when seeking this end individuals place a high priority on income and spend much of their waking time procuring this intermediate goal the connection between income and happiness is by no means trivial however two critical factors come into play first beyond subsistence level the positive effect of a permanent change in income tends to be short lived we rapidly become accustomed to a more expensive lifestyle a common name for this feature is habit formation second the satisfaction derived from a given level of income is sharply dependent on how it compares to the income of peers see for example andrew b abel 1990 becker 1996 and william a brock and steven n durlauf 2001 for a demonstration of the influence of habits and peer comparisons over behavior and see shane frederick and george loewenstein 1999 for a review of the underlying psychology habits and peer comparisons mean that an individual is not concerned mainly with her absolute level of income but rather with the difference between her income and a benchmark that changes over time in recent years economists have become increasingly interested in this fact this interest has been both applied i e the study of habits and peer influences over behavior and the analysis of happiness surveys and theoretical i e a search for biological foundations but unlike other more developed areas of economics these two approaches remain fairly separate from each other in particular the existing theoretical work is motivated only by the most basic empirical observations and the existing applied work for the most part has not been influenced by theoretical results in this essay we seek to reduce the distance between these two literature strands in particuhabits peers and happiness an evolutionary perspective

environmental value transfer state of the art and future prospects abstract the main objectives of the paper are to 1 give an overview of the state of the art of environmental value transfer 2 discuss its prospects and potential role in cba as a decision support tool and 3 provide further guidelines for proper use and application environmental value or benefit transfer is a technique in which the results of studies on monetary environmental valuation are applied to new policy contexts the technique is controversial not least because of academic and political reservations over the usefulness and technical feasibility of economic valuation tools to demonstrate the importance of environmental values in project or programme appraisals testing of environmental value transfer so far has been unable to validate the practice taking into account the conditions set out in the literature for valid and reliable value transfer most transfers appear to result in substantial transfer errors this paper discusses why and addresses the question of which factors may have been overlooked it is argued that the problem is much more fundamental than previously acknowledged strict guidelines in terms of quantitative adjustment mechanisms to valid value transfer are meaningless if the more fundamental issue of differences in the very nature of the values elicited is not addressed at the same time

some evolutionary foundations for price level rigidity this paper shows that price rigidity evolves in an economy populated by imperfectly rational agents who experiment with alternative rules of thumb in the model firms must set their prices in face of aggregate demand shocks their payoff depends on the level of aggregate demand as well as on their own price and their neighbor s price the latter assumption captures local interactions despite the fact that the rational expectations equilibrium ree is characterized by a simple pricing rule that firms can easily adopt the economy does not converge to the ree for all parameter values when the volatility of monetary innovations is low and interactions among firms are high the aggregate price level exhibits rigidity in that it does not fully react to contemporaneous aggregate demand shocks we discuss the role of the nature of experimentation and of path dependence driven by interactions in explaining these results

inter industry differences in profitability the legacy of the structure efficiency debate revisited this study presents a simple model on the sources of inter industry variation in profitability and tests its empirical implications in order to shed new light on the long lasting debate over industry profitability the model identifies four key factors that jointly influence an industry s price cost margin i the intensity of strategic investment e g r d and advertising ii the skewness of the distribution of market share or market concentration iii the appropriability of strategic investment and iv the extent to which firms market shares are determined by the intensity of their strategic investment these factors are expected to be positively related to industry profitability and our empirical analysis provides supportive evidence the model also suggests that the conventional single dimensional hypotheses on profitability the market power or market structure hypothesis and the efficiency hypothesis are overly simplified more importantly existing empirical results allegedly supporting each of these hypotheses are spurious to the extent that the distribution of firm specific strategic competence reflects firm heterogeneity in efficiency and at the same time underlies the distribution of market share or market concentration copyright 2009 oxford university press

norm conformity across societies this paper studies the aggregate distribution of declared opinions and behavior when heterogeneous individuals make the trade off between being true to their private opinions and conforming to a social norm the model sheds light on how various sanctioning regimes induce conformity and by whom and on phenomena such as societal polarization and unimodal concentration in strict societies individuals will tend to either fully conform to the social norm or totally ignore it while individuals in liberal societies will tend to compromise between these two extremes furthermore the degree of strictness determines whether those who nearly agree with the norm or those who strongly disagree with it will conform the degree of liberalism similarly determines which individuals will compromise the most a number of empirical predictions and several methods of how to test them are suggested

the economic benefits of reducing the environmental effects of landfills heterogeneous distance decay effects this paper estimates the economic benefits of different alternative policies considered for reducing the external effects caused by the utilization of landfills in solid waste management the preferences of the local population in the surrounding areas of a landfill are evaluated utilizing a discrete choice experiment in which subjects are presented with alternative policy decisions that involve reducing the material processed through the landfill various models were employed in order to capture heterogeneous preferences resulting in a mixture of normals modelling approach mn mnl outperforming other alternative models of heterogeneity the results show that the policy of moving the landfill away from the population does not provide the most benefits when compared to a policy of increasing recycling in the household the economic benefits of the waste management policies are heterogeneous across the population surrounding the landfill and so the distance decay functions thus the economic benefits for most waste management policies can increase or decrease the further away the subject lives from the landfill depending on the preferences of his her segment and the type of policy employed

economics and identity this paper considers how identity a person s sense of self affects economic outcomes we incorporate the psychology and sociology of identity into an economic model of behavior in the utility function we propose identity is associated with different social categories and how people in these categories should behave we then construct a simple game theoretic model showing how identity can affect individual interactions the paper adapts these models to gender discrimination in the workplace the economics of poverty and social exclusion and the household division of labor in each case the inclusion of identity substantively changes conclusions of previous economic analysis

structure and performance with profit measures based on stock market prices the theory that there is a causal relationship between industry structure conduct and performance is the fundamental premise in the field of industrial organization the most carefully researched component of that general theory is the hypothesis that increasing industrial concentration will give rise to increasing profits this traditional view is important not only because of its prominence in the academic analysis of industrial markets but also because of its implications for government policy especially antitrust policy the traditional view typically has been tested by treating an accounting based measure of industry profit as the dependent variable with concentration and other structural variables as independent variables within a cross section of manufacturing industries at a given point in time numerous papers have found that concentration has a positive impact on profits the methodology adopted in this paper is different the profit measures are based on stock market prices and are adjusted for risk this is an improvement because accounting methods are so poorly adapted to the measurement of economic profit and because risk may vary with concentration 2 39 another methodological innovation is the choice of time series over cross section analysis the question asked is whether the change over time in each industry s level of concentration had an impact on profits this minimizes the problem of omitted or inaccurately measured independent variables since there should be less change in basic structural characteristics over short time periods within an industry than between industries at a single point in time 2 a second important advantage is freedom from a basic assumption of crosssection studies the assumption that the relationship between concentration and profit is homogeneous across industries if the assumption is invalid empirical results are subject to bias two tests 7 26 have firmly rejected the homogeneity assumption 3

equity and efficiency in human capital investment the local connection a general model of community formation and human capital accumulation with social spillovers and decentralized school funding is used to analyse the causes of economic segregation and its consequences for equity and efficiency significant polarization arises from minor differences in endowments preferences or access to capital markets this makes income inequality more persistent across generations but the same need not be true for wealth equilibrium stratification tends to be excessive resulting in low aggregate surplus whether state equalization of school resources can remedy these problems hinges on how purchased social and family inputs interact in education and in mobility decisions

linear social interactions models this paper provides a systematic analysis of identification in linear social interactions models this is a theoretical and econometric exercise as the analysis is linked to a rigorously delineated model of interdependent decisions we develop an incomplete information game for individual choice under social influences that nests standard models as special cases we consider identification of both endogenous and contextual social effects under alternative assumptions regarding an analyst s a priori knowledge of social structure or access to individual level or aggregate data finally we discuss potential ramifications for identification of endogenous formation of social structure

a discrete choice model with social interactions with an application to high school teen behavior we develop an empirical discrete choice interaction model with a finite number of agents we characterize its equilibrium properties in particular the correspondence between interaction strength number of agents and the set of equilibria and propose to estimate the model by means of simulation methods in an empirical application we analyze the individual behavior of high school teenagers in almost 500 school classes from 70 schools in our baseline model endogenous social interaction effects are strong for behavior closely related to school truancy somewhat weaker for behavior partly related to school smoking cell phone ownership and moped ownership and absent for behavior far away from school asking parents permission for purchases intra gender interactions are generally much stronger than cross gender interactions in a model with school specific fixed effects social interaction effects are insignificant with the exception of intra gender interactions for truancy copyright c 2007 john wiley sons ltd

the state of the art of environmental valuation with discrete choice experiments abstract this paper provides with a review of the state of the art of environmental valuation with discrete choice experiments dces the growing body of literature on this field serves to emphasize the increasing role that dces are playing in environmental decision making in the last decade the paper attempts to cover the full process of undertaking a choice experiment including survey and experimental design econometric analysis of choice data and welfare analysis the research on this field is found to be intense although many challenges are put forward e g choice task complexity and cognitive effort experimental design preference and scale heterogeneity endogeneity or model uncertainty reviewing the state of the art of dces serves to draw attention to the main challenges that this methodological approach will need to overcome in the coming years and to identify the frontiers in discrete choice analysis

identification of endogenous social effects the reflection problem this paper examines the reflection problem that arises when a researcher observing the distribution of behaviour in a population tries to infer whether the average behaviour in some group influences the behaviour of the individuals that comprise the group it is found that inference is not possible unless the researcher has prior information specifying the compisition of reference groups if this information is available the prospects for inference depend critically on the population relationship between the variables defining reference groups and those directly affecting outcomes inference is difficult to implossible if these variables are functionally dependent or are statistically independent the prospects are better if the variables defining reference groups and those directly affecting outcomes are moderately related in the population

the social multiplier aggregate data is often used to make inferences about individual level behavior if there are social interactions in which one person s actions influence his neighbor s incentives or information then these inferences are inappropriate the presence of positive social interactions or strategic complementarities implies the existence of a social multiplier where aggregate relationships will overstate individual elasticities we present a brief model and then estimate the size of the social multiplier in three areas the impact of education on wages the impact of demographics on crime and group membership among dartmouth roommates in these contexts there is a significant social multiplier jel ho jo co

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

effects on welfare measures of alternative means of accounting for preference heterogeneity in recreational demand models multiattribute revealed preference data are used to investigate heterogeneity in a sample of kayakers for a panel of whitewater sites in ireland this article focuses on a comparison of preference heterogeneity using a random parameter logit model with correlated tastes and a latent class model in terms of the implications for welfare measures of environmental quality and site access changes recreationalists skill levels are found to affect preferences in both approaches statistics for the estimated distribution of welfare changes for the average respondent are computed for changes in site attributes but contrary to previous work these are found to be of similar magnitude

modeling choice interdependence in a social network this paper investigates how individuals product choices are influenced by the product choices of their connected others and how the influence mechanism may differ for fashion versus technology related products we conduct a novel field experiment to induce and observe choice interdependence in a closed social network in our experiment we conceptualize individuals choices to be driven by multiattribute utilities and we measure their initial attribute preferences prior to observing their choice interdependence and collecting network information these design elements help alleviate concerns in identifying social interaction effects from other confounds given that we have complete information on choices and their sequence we use a discrete time markov chain model nonetheless we also use a markov random field mrf model as an alternative when the information on choice sequence is missing we find significant social interaction effects our findings show that whereas experts exert asymmetrically gre

cultural integration and its discontents a community s culture is defined by the preferences and equilibrium behaviours of its members contacts among communities alter individual cultures through two interrelated mechanisms behavioural adaptations driven by pay offs to coordination and preference changes shaped by socialization and self persuasion this paper explores the workings of these mechanisms through a model of cultural integration in which preferences and behaviours vary continuously it identifies a broad set of conditions under which cross cultural contacts promote cultural hybridization the analysis suggests that policies to support social integration serve to homogenize preferences across communities thereby undermining a key objective of multiculturalism yielding fresh insights into strategies pursued to influence cultural trends it also shows that communities benefit from having other communities adjust their behaviours

effects of accounting techniques on the study of market power abstract this study uses a time series analysis to test for the effects of alternative depreciation and inventory accounting techniques on the estimation of firm level market power the key finding is that while alternative inventory measurement techniques have a significant effect on the estimated coefficients of a firm level profit structure model depreciation techniques have an insignificant effect on these coefficients this result is notable because previous researchers have focused exclusively on the biases due to accounting depreciation techniques and failed to see that alternative inventory techniques have the potential for causing the more significant biases

evaluating q as an alternative to the rate of return in measuring profitability the ratio of a firm s market value to its replace ment cost q is often used to measure firms profitability the use of q is increasin g in large part because of the growing realization that errors in evaluating firms capital assets may cause errors in estimates of the accounting rate of return r the same objection however applies t o q this paper reports the results of monte carlo experiments designed to determine whether q is superior to r errors in both q and r are large and potentially serious but do not render either measure useless copyright 1988 by mit press

presidential address social transmission bias in economics and finance i discuss a new intellectual paradigm social economics and finance the study of the social processes that shape economic thinking and behavior this emerging field recognizes that people observe and talk to each other a key underexploited building block of social economics and finance is social transmission bias systematic directional shift in signals or ideas induced by social transactions i use five fables models to illustrate the novelty and scope of the transmission bias approach and offer several emergent themes for example social transmission bias compounds recursively which can help explain booms bubbles return anomalies and swings in economic sentiment

rationalizability learning and equilibrium in games with strategic complementarities we study a rich class of noncooperative games that includes models of oligopoly competition macroeconomic coordination failures arms races bank runs technology adoption and diffusion r d competition pretrial bargaining coordination in teams and many others for all these games the sets of pure strategy nash equilibria correlated equilibria and rationalizable strategies have identical bounds also for a class of models of dynamic adaptive choice behavior that encompasses both best response dynamics and bayesian learning the players choices lie eventually within the same bounds these bounds are shown to vary monotonically with certain exogenous parameters we study the class of noncooperative supermodular games introduced by topkis 1979 and further analyzed by vives 1985 1989 who also pointed out the importance of these games in industrial economics supermodular games are games in which each player s strategy set is partially ordered the marginal returns to increasing one s strategy rise with increases in the competitors strategies so that the game exhibits strategic complementarity 2 and if a player s strategies are multidimensional marginal returns to any one com ponent of the player s strategy rise with increases in the other components this class turns out to encompass many of the most important economic applications of noncooperative game theory in macroeconomics diamond s 1982 search model and bryant s 1983 1984 rational expectations models can be represented as supermodular games in each of these models more activity by some members of the economy raises the returns to increased levels of activity by others in oligopoly theory some models of bertrand oligopoly with differentiated products qualify as supermodu lar games in these games when a firm s competitors raise their prices the marginal profitability of the firm s own price increase rises a similar structure is present in games of new technology adoption such as those of dybvig and spatt 1983 farrell and saloner 1986 and katz and shapiro 1986 when more users hook into a communication system or more manufacturers adopt an interface standard the marginal return to others of doing the same often rises similarly in some specifications of the bank runs model introduced by diamond and dybvig 1983 when more depositors withdraw their funds from a bank it is more worthwhile for other depositors to do the same in the warrant exercise

quantifying equilibrium network externalities in the ach banking industry we seek to estimate the causes and magnitudes of network externalities for the automated clearinghouse ach electronic payments system using a panel data set on individual bank usage of ach we construct an equilibrium model of consumer and bank adoption of ach in the presence of a network the model identifies network externalities from correlations of changes in usage levels for banks within a network from changes in usage following changes in market concentration or sizes of competitors and from adoption decisions of banks outside the network with small branches in the network and can separately identify consumer and bank network effects we structurally estimate the parameters of the model by matching equilibrium behavior to the data using simulated maximum likelihood and a data set of localized networks and use a bootstrap to recover confidence intervals the parameters are estimated with high precision and fit various moments of the data reasonably well we find that most of the impediment to ach adoption is due to large consumer fixed costs of adoption the deadweight loss from the network externality is moderate the optimal number of ach transactions is about 16 higher than the equilibrium level

the validity of roi as a measure of business performance business performance at the corporate level is widely assessed by the return through changes in the price of the stock and dividends to shareholders however corporate level performance analysis whether for strategic or public policy purposes is inappropriate in many instances because of the heterogeneity of the corporation s operations the strategic business units sbus comprising a corporation are often very diverse profitability analysis grouping these entities together yields few of the insights needed for strategic or public policy decision making because of this heterogeneity profitability analysis is often advocated and undertaken at the sbu level the absence of an equity market at the sbu level means that a measuring instrument other than that based on stock price must be used to assess profitability due to the lack of alternatives the performance of an sbu is almost always based on accounting data in particular the accounting measure return on investment roi is widely regarded as the most useful measure and ultimate bottom line test of business performance james reese and william cool 1978 it is used both as an objective of management and as a dependent criterion variable to evaluate the effect of various factors on performance despite its widespread use roi has been extensively criticized as being a totally inadequate indicator of economic rate of return g c harcourt 1965 ezra solomon 1971 franklin fisher and john mcgowan 1983 roi most typically defined as net income total assets 1 does not properly relate the stream of profits to the investment that produced it the earnings numerator is a consequence of investment decisions made in the past but the assets denominator can be expected to have had influence on not only past and current earnings but also to have influence on future earnings because of this failure to produce an accurate mapping roi has been criticized as being so seriously flawed that it bears little if any resemblance to the crucial concept of internal or economic rate of return the shortcomings of roi are said to be so severe that its cross sectional variations can be completely explained by the inappropriateness of the measure due to a lack of proven validity empirical investigations using roi have been labeled by fisher and mcgowan as totally misleading enterprises and by george benston 1985 as of doubtful value those making use of accounting roi argue that the noise created by the accounting distortions need not be expected to drown out the underlying signal of economic return contained in roi and therefore roi is still appropriate for use in analysis f m scherer 1979 and william long and david ravenscraft 1984 this paper examines the validity of roi as a measure of economic rate of return by ascertaining the existence and extent of the association of corporate level accounting roi with stock return a widely accepted indicator of business performance the null hypothesis for the analysis is that roi has no validity as a measure of business performance and as such will not exhibit an association with stock return while the tests provide direct evidence on the validity of corporate level roi the same underlying theorized inadequacies of accounting roi are also present at the sbu level 1 conclu

profit rates and intangible capital a central question in industrial organization is why profit rates differ so dramatically across firms and industries one of the many explanations offered for this phenomenon is the failure of conventional accounting methods to adjust for intangible capital stocks i e it is argued that profit rates do not differ dramatically when capital stocks are correctly calculated to include intangible r d and advertising capital to test this hypothesis individual advertising capital stocks are calculated for firms in the toys distilled beverages cosmetics and pharmaceuticals industries and r d stocks are calculated for the pharmaceuticals firms the adjustments do not eliminate the wide dispersion in profit rates copyright 1991 by mit press

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

social norms and welfare state dynamics the paper analyses the interaction between economic incentives and work norms in the context of social insurance if the work norm is endogenous in the sense that it is weaker when the population share of beneficiaries is higher then voters will choose less generous benefits than otherwise we also discuss welfare state dynamics when there is a time lag in the adjustment of the norm in response to changes in this population share and show how a temporary shift in the unemployment rate may cause persistence in the number of benefi