theoretical and empirical advantages of truncated count data estimators for analysis of deer hunting in california truncated poisson and truncated negative binomial count data models as well as standard count data models ols nonlinear normal and truncated nonlinear normal mle were used to estimate demand for deer hunting in california the truncated count data estimators and their properties are reviewed a large sample n 2223 allowed random segmenting of the data into specification estimation and out of sample prediction portions statistics of interest are therefore unbiased by the specification search and the prediction results allow comparison of the statistical models robustness the new estimators are found to be more appropriate for estimating and predicting demand and social benefits than the alternative estimators based on a variety of criteria

models for referendum data the structure of discrete choice models for contingent valuation abstract in 1979 bishop and heberlein introduced an appealing variant of the contingent valuation method which required only yes or no responses hanemann developed a utility theoretic interpretation of the yes no responses which has helped popularize the approach recently cameron has offered another interpretation also utility theoretic which she argues is more general than the hanemann random utility model this paper compares the deterministic models suggested by hanemann and cameron showing them to be dual to each other it shows that correct specification of either function must exclude endogenous variables such as quantity demanded it also demonstrates that using utility theoretic models allows one to compare travel cost models and contigent valuation models on the basis of their implied behavior not on the unobservable surplus or variation measure

insecure alliances risk inequality and support for the welfare state popular support for the welfare state varies greatly across nations and policy domains we argue that these variations vital to understanding the politics of the welfare state reflect in part the degree to which economic disadvantage low income and economic insecurity high risk are correlated when the disadvantaged and insecure are mostly one and the same the base of popular support for the welfare state is narrow when the disadvantaged and insecure represent two distinct groups popular support is broader and opinion less polarized we test these predictions both across nations within a single policy area unemployment insurance and across policy domains within a single polity the united states using a new survey results are consistent with our predictions and are robust to myriad controls and specifications when disadvantage and insecurity are more correlated the welfare state is more contested hy do citizens support the welfare state the answer remains as elusive as the question is fundamental we know that patterns of public support vary greatly across nations and domains of social policy we also know that these differences are associated with variations in levels of spending and program generosity brooks and manza 2006a 2006b 2007 kang and powell 2010 svallfors 1997 2004 yet there has only been limited effort to explain why patternsofpublicsupportvary thatis whyaggregatepublic support polarization of opinion and the breadth of opposition to the welfare state differ across societies and social policy areas in this article we develop such a proposition distinguish it from other leading claims and show that it finds strong confirmation not only in cross national analysis but also when examining popular support for different social policies within the united states the proposition is that the structure of support for the welfare state varies with the joint distribution of economic disadvantage low income and economic in

valuing morbidity from wildfire smoke exposure a comparison of revealed and stated preference techniques estimating the economic benefits of reduced health damages due to improvements in environmental quality continues to challenge economists we review welfare measures associated with reduced wildfire smoke exposure and a unique dataset from california s station fire of 2009 allows for a comparison of cost of illness coi estimates with willingness to pay wtp measures the wtp for one less symptom day is estimated to be 87 and 95 using the defensive behavior and contingent valuation methods respectively these wtp estimates are not statistically different but do differ from a 3 traditional daily coi estimate and 17 comprehensive daily coi estimate jel q51 q53

diminished expectations redistributive preferences in truncated welfare states in latin america the relationship between income and support for redistribution is weak and variable despite the region s extreme income inequality this article shows that this condition is rooted in the truncated structure of many latin american welfare states heavy spending on contributory social insurance for formal sector workers flat or regressive subsidies and informal access barriers mean that social spending does far less for the poor in latin america than it does in advanced industrial economies using public opinion data from across latin america and original survey data from colombia the author demonstrates that income is less predictive of attitudes in the countries and social policy areas in which the poor gain less from social expenditures social policy exclusion leads the poor to doubt that they will benefit from redistribution thereby dampening their support for it the article reverses an assumption in political economy models that welfare exclusion unleashes demands for greater redistribution instead truncation reinforces skepticism about social policy helping the poor welfare state reforms to promote social inclusion are essential to strengthen redistributive coalitions

group loyalty and the taste for redistribution interpersonal preferences preferences that depend on the characteristics of others are typically hard to infer from observable individual behavior as an alternative approach this paper uses survey data to investigate interpersonal preferences i show that self reported attitudes toward welfare spending are determined not only by financial self interest but also by interpersonal preferences these interpersonal preferences are characterized by a negative exposure effect individuals decrease their support for welfare as the welfare recipiency rate in their community rises and racial group loyalty individuals increase their support for welfare spending as the share of local recipients from their own racial group rises these findings help to explain why levels of welfare benefits are relatively low in racially heterogeneous states

inequality labor market segmentation and preferences for redistribution we formalize and examine two overlapping models that show how rising inequality combined with ethnic and racial heterogeneity can explain why many advanced industrial countries have experienced a drop in support for redistribution as inequality has risen one model based on altruism and homophily focuses on the effect of increasing social distance between the poor and the middle class especially when minorities are increasingly overrepresented among the very poor the other based on self interest combines an insurance model of preferences for redistribution with increasingly segmented labor markets in which immigration of workers without recognized skills leaves most native workers better off but intensifies competition for low end jobs empirically when we estimate parameters from the two models using data from multiple waves of issp surveys we find that labor market segmentation previously omitted in this literature has more consistent effects than social distance

causes consequences and cures of myopic loss aversion an experimental investigation we examine in an experiment the causes consequences and possible cures of myopic loss aversion mla for investment behaviour under risk we find that both investment horizons and feedback frequency contribute almost equally to the effects of mla longer investment horizons and less frequent feedback lead to higher investments however when given the choice subjects prefer on average shorter investment horizons and more frequent feedback exploiting the status quo bias by setting a long investment horizon or low feedback frequency as a default turns out to be a successful behavioural intervention that increases investment levels

searching for the correct benefit estimate empirical evidence for an alternative perspective this paper contrasts the results of the contingent valuation hedonic price and property damages avoided valuation techniques each technique was used to estimate the value of flood risk reduction from the construction of a flood control project voting behavior in a referendum called specifically for the provision of the project was used to further interpret the results from the three valuation studies substantial differences were found between the estimates in explaining these differences an alternative perspective on the current debate over the validity and accuracy of nonmarket value estimates is offered

the value of changes in deer hunting quality a travel cost approach 1988 the value of changes in deer hunting quality a travel cost approach applied economics vol 20 no 4 pp 533 539

the self reinforcing dynamics of economic insecurity and obesity this article models the dynamic effects of economic insecurity on body weight using australian panel data we infer an individual s level of economic insecurity as a function of exposure to various financial risks and employ regression equations to explore its effect upon current period body mass index bmi scores estimates reveal that a sustained standard deviation increase in economic insecurity raises an individual s bmi at a rate of approximately 0 35 units per year quantile regressions are then used to estimate the sensitivity of body weight to insecurity at different percentiles of the distribution and we find that persons who are overweight and obese are much more seriously affected this implies that shocks that make individuals more financially vulnerable can generate harmful self sustaining cycles of risk and weight gain we also model the dynamics of insecurity and show that it is a persistent phenomenon for persons with high levels of exposure and lower incomes this finding indicates that persons of lower socio economic status are more likely to encounter vicious cycles of increasing insecurity and obesity which partially explains why weight related health problems are unusually highly concentrated amongst these individuals

income taxation and the diversity of consumer goods a political economy approach after tax income inequality has risen since the mid 1990s as increases in market income inequality have not been offset by greater fiscal redistribution we argue that the substantial increase in the diversity of consumer goods has mitigated mounting political pressures for redistribution within a probabilistic voting framework we demonstrate that if the share of diversified goods in the consumption bundle increases sufficiently with income then an increase in goods diversity can reduce the political equilibrium tax rate focusing on oecd countries we find empirical support for both the model s micro political foundations and the implied relation between goods diversity and fiscal policy outcomes

the problem of instream flows to obtain a surface water right in the arid american west private appropriators have been required to undertake actual physical diversion of the water that requirement largely negates the role of private contacting to preserve or enhance water flows for recreational wildlife and aesthetic purposes in this paper a model is developed and used to examine the courts rationale for denying private claims to instream flows the ways in which such claims can be made amenable to the prior appropriation system are explored the paper is motivated by the failure of public agencies to achieve an approximately optimal solution

valuing non market wildlife commodities an evaluation and comparison of benefits and costs this paper compares the benefits and costs of nature conversation at three sites of special scientific interest benefits are estimated by contigent valuation expressed preferences and also the travel cost method revealed preferences oppurtunity costs are assessed from a financial cost viewpoint and also in terms of shadow prices or social costs results indicate that the valuation of wildlife and nature conservation largely depends upon the frame of reference adopted that social costs are considerably less than financial costs due to the effect of the common agricultural policy that user benefits are considerably less than financial costs and non user benefits must be included to cover even the social costs of nature conservation

self centered inequity aversion and the mass politics of taxation the politics of economic crises brings distributive economic conflict to the fore of national political debates how policy should be used to transfer resources between citizens becomes a central p

appropriative water rights and the efficient allocation of resources this paper investigates the allocative efficiency of the appropriative system of water rights within the context of a simplified model of a water using industry at a long run competitive equilibrium for the industry and with a prohibition on the transfer of water rights among firms it is shown that 1 senior appropriators claim and use more water than junior appropriators 2 senior appropriators bear less risk than junior appropriators 3 the allocation of water and diversion capacitie 6among firms is inefficient being dominated by an equal sharing among firms the equal sharing allocation which is pareto optimal when diversion capacities are supplied by a competitive leasing industry can be achieved under the appropriative system if there are competitive markets in water rights and in leases for the use of diversion capacities an application of the coase theorem

unemployment and other nonemployment benefits unemployment benefit systems in most oecd countries have become more generous since the early 1960s the coverage rate has increased the level of benefits has increased relative to the predisplacement wages and maximum benefit periods in unemployment insurance systems have become longer moreover work availability and willingness to work requirements have most likely been enforced less effectively in the high unemployment environment since the late 1970s the changes in benefit systems have contributed to higher unemployment but may also have increased labor force participation the article stresses the potential importance of invalidity early retirement and sickness benefit systems for labour market outcomes in half of oecd countries the number of recipients of these benefits exceeds the official numbers of unemployed higher replacement ratios in these alternative systems than in unemployment insurance may encourage a migration towards the higher benefit systems but the extent to which this happens depends on administration of the schemes copyright 1995 by oxford university press

voting for redistribution under desert sensitive altruism we endow individuals that differ in skill levels and tastes for working with altruistic preferences for redistribution in a voting model where a unidimensional redistributive parameter is chosen by majority voting in a direct democracy when altruistic preferences are desert sensitive i e when there is a reluctance to redistribute from the hard working to the lazy we show that lower levels of redistribution emerge in political equilibrium we provide empirical evidence based on the issp 1992 dataset that preferences for redistribution are not purely selfish and that desert sensitive motivations play a significant role we estimate that preferences for redistribution are significantly more desert sensitive in the us than in europe we believe that differences in desert sensitive preferences for redistribution help explain the different social contracts that prevail in both continents

social mobility and redistributive politics just like economists voters have conflicting views about redistributive taxation because they estimate its incentive costs differently we model rational agents as trying to learn from their dynastic income mobility experience the relative importance of effort and predetermined factors in the generation of income inequality and therefore the magnitude of these incentive costs in the long run left wing dynasties believing less in individual effort and voting for more redistribution coexist with right wing dynasties this allows us to explain why individual mobility experience and not only current income matters for political attiitudes and how persistent differences in perceptions about social mobility can generate persistent differences in redistribution across countries

how closely do hypothetical surveys and laboratory experiments predict field behavior we compare the ability of three preference elicitation methods hypothetical choices nonhypothetical choices and nonhypothetical rankings and three discrete choice econometric models the multinomial logit mnl the independent availability logit ial and the random parameter logit rpl to predict actual retail shopping behavior in three different product categories ground beef wheat flour and dishwashing liquid overall we find a high level of external validity our specific results suggest that the nonhypothetical elicitation approaches especially the nonhypothetical ranking method outperformed the hypothetical choice experiment in predicting retail sales we also find that the rpl can have superior predictive performance but that the mnl predicts equally well in some circumstances experiment

a theory of the welfare state the welfare state can be seen as an insurance device that makes lifetime careers safer increases risk taking and suffers from moral hazard effects adopting this view the paper studies the trade off between average income and inequality evaluating redistributive equilibria from an allocative point of view it studies the problem of optimal redistributive taxation with tax induced risk taking and shows that constant returns to risk taking are likely to imply a paradox where more redistribution results in more post tax inequality in general optimal taxation will either imply that the redistribution paradox is present or that the economy operates at a point of its efficiency frontier where more inequality implies a lower average income redistribution welfare state

use of dichotomous choice nonmarket methods to value the whooping crane resource market prices for endangered wildlife species rarely exist when prices do exist they arc not likely to reflect accurately individual preferences both consumptive uses such as hunting fishing and trapping boyle and bishop 1985 stou and johnson brookshire eubanks and randall and more esoteric benefits such as viewing and existence values must be considered this article is addressed to the valuation of whooping cranes grus americana a prominent endangered species the purpose of this article is to present a methodology for estimating nonconsumptive benefits associated with the existence of an endangered species a dichotomous choice form of contingent valuation is applied to quantify individuals economic surplus associated with preservation of the whooping crane resource specific issues and limitations of the empirical approach are discussed some of which have been previously examined by bishop and heberlein 1979 and hanemann the present paper expands upon earlier work in several ways fit in addition to discussing the above issues a unique application of the approach to an endangered species is presented second three model specifications are examined two of which arc consistent with utility theory and one which is not hanemann ti again following hanemann economic surplus is estimated at the sample median as well as the mean the dii cussion of the last two issues sheds sit on their implications for estimation of economic surplus throughout the article the suitability of alternative estimation techniques for dichom mous choice or referendum style data is examined the methodological and empirical results are relevant to a number of cumnt issues regarding model specification choice of binary response model and choice of estimator for equivalent surplus hanemann boyle and bishop 1984 sellar chavas and stoll

designing organizations for trading pollution rights regulators and academicians have recently become interested in using a marketable permits program as a new way to control aggregate pollution emissions our research focuses on choosing a permit trading mechanism that is both economically efficient and politically viable we consider an organized trading process and a revenue neutral auction both of which involve an initial allocation of permits based on past history each is tested in a competitive and in a non competitive environment to determine which mechanism performs best the results of our research suggest that overall the organized trading process outperforms the revenue neutral auction

markets for water rights under environmental constraints abstract the cumulative impact of pollutants on water quality at a given location along a river is a function of prior loadings as well as pollution and surface flows at that particular site the question of whether it is possible to maintain water quality under alternative mechanisms for allocating surface water and pollution rights is addressed we model the optimal allocation of surface water and pollution rights along a river with water quality constraints due to cumulative effects the shadow values of water and pollution rights are contingent on location it is shown that a nash equilibrium in a market for tradable surface water rights in conjunction with a market for pollution damages implements the optimal solution the market supports location specific prices for both consumptive water rights and pollution damages

mobility and redistribution the ability of individuals to move freely from one jurisdiction to another is generally seen as a constraint on the amount of redistribution that each jurisdiction within a system of governments can undertake in this paper we look at this proposition by developing a positive analysis of income redistribution by local governments in a federal system we ask how much redistribution occurs when only local governments can have tax transfer instruments individuals can move freely among jurisdictions and voters in each jurisdiction are fully aware of the migration effects of redistributive policies local redistribution is shown to induce sorting of the population with the poorest households located in the communities that provide the most redistribution while the threat of out migration affects the potential for redistribution our results suggest that significant local redistribution is nonetheless feasible numerical computations indicate that the proportion of residents who are renters is a major factor affecting the local choice of level of redistribution

risks at work the demand and supply sides of government redistribution to comprehend how the welfare state adjusts to economic shocks it is important to get a handle on both the genesis of popular preferences and the institutional incentives for governments to respond to these preferences this paper attempts to do both using a general theoretical framework and detailed data at both the individual and national levels in a first step we focus on how risk exposure and income are related to preferences for redistribution to test our hypotheses we extract detailed risk exposure measures from labour force surveys and marry them to cross national opinion survey data results from analysis of these data attest to the great importance of risks within the labour market in shaping popular preferences for redistributive efforts by governments in a second step we turn our attention to the supply side of government redistribution institutions we argue mediate governments reactions to redistributional demands following economic shocks using time series cross country data we demonstrate how national training systems and electoral institutions as well as partisanship shape government responses copyright 2006 oxford university press

belief in a just world and redistributive politics international surveys reveal wide differences between the views held in different countries concerning the causes of wealth or poverty and the extent to which people are responsible for their own fate at the same time social ethnographies and experiments by psychologists demonstrate individuals recurrent struggle with cognitive dissonance as they seek to maintain and pass on to their children a view of the world where effort ultimately pays off and everyone gets their just deserts this paper offers a model that helps explain i why most people feel such a need to believe in a just world ii why this need and therefore the prevalence of the belief varies considerably across countries iii the implications of this phenomenon for international differences in political ideology levels of redistribution labor supply aggregate income and popular perceptions of the poor the model shows in particular how complementarities arise endogenously between individuals desired beliefs or ideological choices resulting in two equilibria a first american equilibrium is characterized by a high prevalence of just world beliefs among the population and relatively laissez faire policies the other european equilibrium is characterized by more pessimism about the role of effort in economic outcomes and a more extensive welfare state more generally the paper develops a theory of collective beliefs and motivated cognitions including those concerning money consumption and happiness as well as religion

allocating resources in an uncertain world water management and endangered species instream flows may be essential in protecting aquatic species that are threatened or endangered an economic model of the optimal allocation of water under pure uncertainty is developed with particular attention paid to the situation when a species characterized by critical depensation is affected by instream flows we adopt the notion of pure uncertainty that frank knight and daniel ellsberg intended which applies when decision makers cannot reduce their uncertainty to a unique probability distribution following recent work by hansen sargent and others we employ robust control as a way to deal with this problem copyright 2008 oxford university press

who gives who gains progressivity and preferences the extent to which popular support for the welfare state depends on income varies greatly across nations and policy domains we argue and show formally that these variations largely overlooked yet essential to understanding the politics of redistribution reflect in part the design of tax and transfer policies in terms of progressivity when progressivity is high politics is perceived by income groups as a zero sum game and conflicts over who gets what intensify when progressivity is low and tax contributors and benefit recipients overlap redistributive struggles become politically less salient we test these predictions both across nations and across policy domains within a sample of advanced industrial democracies our findings indicate that the progressivity of the tax and transfer system is a major determinant of the predictive power of income on preferences for redistribution

a trading ratio system for trading water pollution discharge permits abstract the fact that water flows to the lowest level uni directionally is a very specific and useful property of water by utilizing this property we design a trading ratio system trs of tradable discharge permits for water pollution control such a trading ratio system has three main characteristics 1 the zonal effluent cap is set by taking into account the water pollutant loads transferred from the upstream zones 2 the trading ratios are set equal to the exogenous transfer coefficients among zones and 3 permits are freely tradable among dischargers according to the trading ratios this paper shows that the trs can take care of the location effect of a discharge and can achieve the predetermined standards of environmental quality at minimum aggregate abatement costs problems with hot spots and free riding can be avoided and the burdens on both dischargers and the environmental authority should be relatively light

welfare measurements using contingent valuation a comparison of techniques three commonly used techniques of asking contingent valuation questions are compared iterative bidding payment cards and dichotomous choice the results reveal that no single contingent valuation technique is neutral in the elicitation of hicksian surplus and each technique has its strengths and weaknesses the iterative bidding estimates contain a starting point bias while the payment card and dichotomous choice estimates were influenced by the interviewers soliciting the contingent values finally the analysis of dichotomous choice responses involves unresolved issues that warrant further investigation on the other hand dichotomous choice is the easiest technique to administer in a survey setting

social limits to redistribution in many countries equality of political rights including the right to vote over taxes and transfers goes along with substantial inequality of economic conditions this observation lies at the root of one fundamental issue in political economy one about the factors that limit the extent of redistribution in democracies the conventional economic wisdom on this issue can roughly be summarized by two arguments firstly redistributive taxation may be limited by various kinds of incentive costs of taxation as e g in james a mirrlees 1971 kevin w s roberts 1977 dennis n epple and thomas romer 1991 and thomas piketty 1995 secondly redistribution may be dampened by the lobbying activity of high income groups and by various imperfections inherent to the political process that determines the tax system as e g in gary s becker 1983 and john e roemer 1995 while both arguments offer illuminating insights into the phenomenon of redistribution they are also based on a very crude description of human behavior one which ignores social motivations of action both in the economic and the political sphere the present paper develops an explanation that takes such motivations into account specifically it shows that limits to redistribution may arise when economic inequality has an informational value for social decisions our approach is based upon the following observation many goods and decisions that heavily affect an individual s quality of life are not allocated or made through markets but through social interactions thomas scitovsky 1976 for instance although people have strong preferences over how they are treated by others and over whom they mate with these things are not the object of market transactions a number of sources of satisfaction like conversation dinners and parties playing with others and being observed and admired are nonmarket goods for which a keen social competition between individuals often develops as shown by harold cole et al 1992 the existence of social rather than market competition for some goods can endogenously generate a concern for relative position in the income distribution when information about relative income is private individuals become interested in the observable consumption differentials between them and their social competitors since consumption differentials are influenced by redistributive taxation the political attitudes of people toward redistribution will be shaped by its expected impact on social competition in some identifiable environments this concern for social success may be the crucial factor that limits the extent of redistribution desired by a majority of voters specifically while the middle class may obtain economic benefits from a large amount of redistributive taxation it may oppose an equalization of living standards since this would harm its social success the fear of losing social status in favor of the poor induces the middle class to enter a political alliance with the rich which supports conservative taxation programs in the sociological literature scholars of voting behavior have often suggested that the need for social recognition plays a crucial role in shaping political attitudes seymour m lipset 1967 pointed out that white collar workers tend to be socially valued similarly as those higher in the system and although their income may be only slightly larger than that of manual workers white collars are much more likely to corneo department of economics university of osnabruck rolandstrasse 8 d 49069 osnabruck germany cesifo munich and cepr london gruner department of economics university of mannheim d 68131 mannheim germany iza bonn and cepr london we would like to thank emmanuelle auriol dieter bos peter funk mike hout olivier jeanne peter jonas georg noldeke thomas piketty regis renault john roemer jens weidmann and three anonymous referees for insightful comments and suggestions we have also benefited from the comments of participants at workshops and conferences in barcelona bonn davis jena maastricht magdeburg mannheim montreal munich rotterdam silvaplana tel aviv tilburg toulouse and warwick at which we presented earlier versions of this work financial support from the deutsche forschungsgemeinschaft sfb 303 at the university of bonn is gratefully acknowledged

the politics of trade offs studying the dynamics of welfare state reform with conjoint experiments welfare state reform in times of austerity is notoriously difficult because most citizens oppose retrenchment of social benefits governments thus tend to combine cutbacks with selective benefit

economic and social class voting in a model of redistribution with social concerns we investigate how concerns about social status may affect individuals preferences for redistribution in our model agents are heterogeneous across two dimensions productivity and social class and an individual s social status is de ned as his relative standing in terms of a weighted average of these two components the weight on each component depends positively on its standard deviation redistribution thus simultaneously affects labor supply and the weights that determine social status as such taxation not only redistributes resources from the rich to the poor but also becomes a way of preserving or modifying social status thus individuals who have the same productivity but belong to different social classes support different tax rates we characterize the equilibrium of the political game as the solution of a system of non linear equations and identify the interclass coalition of voters who support the equilibrium tax rate

social policy by popular demand why are unemployment benefits more generous in some countries this article argues that citizens trade off the redistributive and insuring effect of social insurance as a result the distribution of risk in a society has important consequences via popular demand for social policy making at the microlevel the article shows that in addition to income the risk of unemployment is a key predictor of individual level preferences for unemployment benefits based on the microlevel findings the article argues that at the macrolevel the homogeneity of the risk pool is an important determinant of benefit generosity the more equally unemployment risk is distributed the higher unemployment replacement rates are empirical testing at both levels finds support for this account of social policy by popular demand

the behavioral foundations of social politics evidence from surveys and a laboratory democracy the dominant theoretical approaches in the comparative political economy of the welfare state provide alternative accounts for why some governments spend more on social policies than others in the first poor voters seek to increase their current income by taxing the rich and social policy serves to redistribute income from the rich to the poor in the second account voters seek social insurance against future job loss and social policy serves as an insurance mechanism rather than a redistributive one both of these accounts share the assumption that voters can clearly distinguish between the redistributive and insurance elements of public policy and therefore that individual level characteristics income labor market risks systematically shape preferences over social policy our goal is to examine the soundness of that behavioral assumption we do so with a laboratory experiment that involves economic production voting on taxation and fiscal transfers we treat subjects with social policies that

why the poor do not expropriate the rich an old argument in new garb we consider a political economy with two partisan parties each party represents a given constituency of voters if one party labour represents poor voters and the other christian democrats rich voters if a redistributive tax policy is the only issue and if there are no incentive considerations then in equilibrium the party representing the poor will propose a tax rate of unity if however there are two issues tax policy and religion for instance then this is not generally the case the analysis shows that if a simple condition on the distribution of voter preferences holds then as the salience of the non economic issue increases the tax rate proposed by labour in equilibrium will fall possibly even to zero even though a majority of the population may have an ideal tax rate of unity 1998 elsevier science s a all rights reserved

does unemployment insurance displace familial assistance the objective of this study is to examine the extent to whichbenefits received from the unemployment insurance programdisplace assistance that the unemployed receive from theirextended family using data from a supplement to the panelstudy of income dynamics it is found that the unemployedreceive private support and that these private networks arefairly pervasive twenty nine percent of those receivingunemployment insurance benefits also receive cash transfersfrom their family or friends moreover it is found thatunemployment benefits displace familial support by as much as24 40 cents per dollar

tourism and economic development a survey this article surveys the literature on tourism and economic development identifying the contribution that tourism can make to development including foreign currency income and employment and the costs that it entails single equation and system of equations models for estimating tourism demand are provided indicating developing countries potential to benefit from increasing expenditure on tourism but their susceptibility to deterioration in price competitiveness the main sectors of tourism supply transportation tour operators travel agents and accommodation are examined and the importance of cross country integration between firms is highlighted the article argues that many of the problems associated with the use of environmental resources for tourism stem from market failure and it considers methods for increasing sustainably the returns from them

social mobility and the demand for redistribution the poum hypothesis this paper examines the often stated idea that the poor do not support high levels of redistribution because of the hope that they or their offspring may make it up the income ladder this prospect of upward mobility poum hypothesis is shown to be fully compatible with rational expectations and fundamentally linked to concavity in the mobility process a steady state majority could even be simultaneously poorer than average in terms of current income and richer than average in terms of expected future incomes a e rst empirical assessment suggests on the other hand that in recent u s data the poum effect is probably dominated by the demand for social insurance in the future everyone will be world famous for e fteen minutes andy warhol 1968

inequality social insurance and redistribution is the political support for welfare policy higher or lower in less egalitarian societies we answer the question using a model of welfare policy as publicly financed insurance that pays benefits in a redistributive manner when voters have both redistributive and insurance motives for supporting welfare spending the effect of inequality depends on how benefits are targeted greater inequality increases support for welfare expenditures when benefits are targeted to the employed but decreases support when benefits are targeted to those without earnings with endogenous targeting support for benefits to those without earnings declines as inequality increases whereas support for aggregate spending is a v shaped function of inequality statistical analysis of welfare expenditures in advanced industrial societies provides support for key empirical implications of the model

the political economy of ownership housing markets and the welfare state the major economic story of the last decade has been the surge and collapse of house prices worldwide yet political economists have had little to say about how this critical phenomenon affects citizens welfare and their demands from government this article develops a novel theoretical argument linking housing prices to social policy preferences and policy outcomes i argue that homeowners experiencing house price appreciation will become less supportive of redistribution and social insurance policies since increased house prices both increase individuals permanent income and the value of housing as self supplied insurance against income loss political parties of the right will responding to these preferences cut social spending substantially during housing booms i test these propositions using both microdata on social preferences from panel surveys in the usa the uk and a cross country survey of 29 countries and macrodata of national social spending for 18 countries between 1975 and 2001

market power in water markets abstract we model market power in water markets as multi market cournot competition with a river structure suppliers are connected through water balances which imposes resource constraints and they are connected to heterogeneous water users via a water delivery infrastructure our model captures a wide range of specific water market structures we establish conditions for existence of an equilibrium and we assess the effects of market power on water extraction delivery and water prices although the monopoly case is similar to standard economic theory three other specific water market structures illustrate that standard intuition has to be revisited

the optimal size of a permit market regulating the emissions of non uniformly mixed pollutants with a permit market carries the risk of hot spot formation which can be reduced by dividing the regulation area into trading zones the trading zone approach has been extensively discussed for the full information case we consider incomplete information concerning the emitters abatement costs their locations and pollution dispersion we derive the optimal number of trading zones and the optimal number of permits per zone and analyze under which conditions a system of independent trading zones is superior to other policy measures our results show that appropriately sized permit markets are well suited to regulating non uniformly mixed pollutants under informational constraints if firms are not too heterogeneous only for substantial heterogeneity and a highly non linear damage function can it be optimal to use command and control strategies

social norms savings behavior and growth we argue that many goods and decisions are not allocated or made through markets we interpret an agent s status as a ranking device that determines how well he or she fares in the nonmarket sector the existence of a nonmarket sector can endogenously generate a concern for relative position in for example the income distribution so that higher income implies higher status moreover it can naturally yield multiple equilibria it is thus possible to explain differences in growth rates across countries without recourse to differences in underlying preferences technologies or endowments different social organizations lead to different reduced form preferences which lead to different growth rates

risks and redistribution an individual level analysis much of the disagreement in the debate about globalization and its present or absent effects on the welfare state stems from competing assumptions about the individual level determinants of redistributional preferences this article calls for and provides testing of these causal mechanisms at the individual level traditional accounts suggest that risks at the industry level are important determinants of redistributional preferences this article argues that risks at the occupational level should also be considered a comprehensive new data set is used to test whether and what types of risks in the labor market play an important role in shaping preferences statistical analyses of public opinion surveys european social survey show strong evidence for the assumed causal mechanism contrary to much of the literature but in line with this article s claims it is the occupational rather than the industry level that is most important the article lays out implications of these findings

preferences in context micro preferences macro contexts and the demand for social policy political economists have increasingly looked to understand social welfare policy as a product of individual level demand for social spending this work hypothesizes that individuals with riskier j

consumer s surplus without apology the purpose of this paper is to settle the controversy surrounding consumer s surplus and by so doing to validate its use as a tool of welfare economics i will show that observed consumer s surplus can be rigorously utilized to estimate the unobservable compensating and equivalent variations the correct theoretical measures of the welfare impact of changes in prices and income on an individual i derive precise upper and lower bounds on the percentage errors of approximating the compensating and equivalent variations with consumer s surplus these bounds can be explicitly calculated from observable demand data and it is clear that in most applications the error of approximation will be very small in fact the error will often be overshadowed by the errors involved in estimating the demand curve the results in no way depend upon arguments about the constancy of the marginal utility of income consequently this paper supplies specific empirical criteria which can replace the apologetic caveats frequently employed by those who presently apply consumer s surplus moreover the results imply that consumer s surplus is usually a very good approximation to the appropriate welfare measures to preview below i establish the validity of these rules of thumb for a

work norms social insurance and the allocation of talent abstract this paper challenges the view that weak work norms make generous welfare states economically unsustainable i develop a dynamic model of family transmitted values that has a laissez faire equilibrium with strong work norms coexisting with a social insurance equilibrium with weak work norms while the former has better incentives the latter induces more intergenerational occupational mobility which improves the allocation of talent and fuels growth strong work norms arise as a way for parents to protect their children from the risk of lacking talent i present evidence from microdata showing that generous social insurance correlates with high intergenerational occupational mobility and that more mobile individuals endorse weaker work norms

the effect of common sources of regression error on benefit estimates discussions of the sources of error in recreation demand analysis are common in the existing literature the most traditional line of thought e g gum and martin considers the error component in predicting the individual s recreation behavior to arise from unmeasured socioeconomic factors others e g hanemann attribute at least some of this error to fundamental randomness in human behavior applied statisticians e g hiett and worrall on the other hand suggest that recall of annual number of recreational trips i e the quantity demanded is subject to substantial error still others e g brown et al have argued that recall of explanatory variables such as travel expenses contains error despite the discussion of potential error sources there is no work which relates the sources of error in the demand relationship with benefit measurement 1 of practical importance in recreational demand estimation is whether error assumptions have an influence on welfare measures since it is for public policy decision purposes that recreational demand estimation is usually undertaken will the estimated consumer surplus derived from demand analysis be independent of the assumed source of the error in the regression the purpose of this paper is to explore how the assumptions about sources of error influence estimates of recreation benefits a discussion of the various sources of error in de

the paradox of redistribution and strategies of equality welfare state institutions inequality and poverty in the western countries the structure of welfare state institutions 2 a trade off exists between the degree of low income targeting and the size of redistributive budgets 3 outcomes of market based distribution are often more unequal than those of earnings related social insurance programs we argue that social insurance institutions are of central importance for redistributive outcomes using new data our comparative analyses of the effects of different institutional types of welfare states on poverty and inequality indicate that institutional differences lead to unexpected outcomes and generate the paradox of redistribution the more we target benefits at the poor and the more concerned we are with creating equality via equal public transfers to all the less likely we are to reduce poverty and inequality social scientists and social reformers have long debated how the welfare state and social policies should be designed so as to best reduce poverty and inequality this debate involves two different issues one question concerns whether social policies should be targeted or universal that is should they be organized for the poor only or should the welfare state include all citizens in the context of nontargeted programs another question concerns the level of benefits should benefits be equal for all or should they be related to previous earnings and in

preferences for redistribution in the land of opportunities this paper explores how individual preferences for redistribution depend on future income prospects in addition to estimating the impact of individuals socioeconomic background and of their subjective perceptions of future mobility we employ panel data to construct dobjectivet measures of expected gains and losses from redistribution for different categories of individuals we find that such measures have considerable explanatory power and perform better than dgeneral mobilityt indexes we also find that preferences for redistribution respond to individual beliefs on what determines one s position in the social ladder ceteris paribus people who believe that the american society offers equal opportunities are more averse to redistribution d 2004 published by elsevier b v

social policy responsiveness in developed democracies do mass policy preferences influence the policy output of welfare states in developed democracies this is an important issue for welfare state theory and research and this article presents an analysis that builds from analytical innovations developed in the emerging literature on linkages between mass opinion and public policy the authors analyze a new dataset combining a measure of social policy preferences with data on welfare state spending alongside controls for established causal factors behind social policy making the analysis provides evidence that policy preferences exert a significant influence over welfare state output guided also by statistical tests for endogeneity the authors find that cross national differences in the level of policy preferences help to account for a portion of the differences among social christian and liberal welfare state regimes the results have implications for developing fruitful connections between welfare state scholarship comparative opinion research and recent opinion policy studies

a theory of competition among pressure groups for political influence this paper presents a theory of competition among pressure groups for political influence political equilibrium depends on the efficiency of each group in producing pressure the effect of additional pressure on their influence the number of persons in different groups and the deadweight cost of taxes and subsidies an increase in deadweight costs discourages pressure by subsidized groups and encourages pressure by taxpayers this analysis unifies the view that governments correct market failures with the view that they favor the politically powerful both are produced by the competition for political favors

conspicuous consumption snobbism and conformism abstract we develop a model in which consumers purchase a conspicuous good in order to signal high income and thereby achieve greater social status in equilibrium the signalling value of conspicuous consumption depends in an identifiable way on the number of consumers and consumer behaviour is characterized by either snobbism or conformism the market demand curve for the conspicuous good may exhibit a positive slope if consumers are conformist we derive some unconventional policy implications concerning the taxation of luxuries and the voluntary provision of public goods

measuring the benefits of local publilc goods environmental quality in gaston county north carolina local governments across the united states have been confronted with a growing range of federal and state mandated environmental protection programmes it is found that an application of contingent valuation to a local environmental policy is internally valid by theoretically and empirically examining the economic determinants of responses to a hypothetical referendum the resulting option price estimate is statistically reliable and has a reasonable order of magnitude results indicate that respondents are willing to pay for improvements in water quality but not air qualilty it is found that informatiion from various external sources helps to explain risk perceptions and these perceptions in turn influence willingness to pay the aggregate benefits of an air and water polllution control programme to gaston county are estimated to be 13 07 million annually with a 90 confidence interval of 11 07 million and 16 12 million

unemployment compensation and high european unemployment a reassessment with new benefit indicators generous unemployment benefits lie at the heart of the conventional explanation for persistent high unemployment the effects of benefit generosity on work incentives are more ambiguous in a broader behavioural framework in which workers get substantial disutility from unemployment given income and know that unemployment has scarring effects in the future the micro evidence suggests modest effects of changes in generosity but there are reasons to doubt that the impacts on national unemployment rates are consequential the empirical case for the orthodox prediction comes from cross country regressions on the oecd s gross replacement rate grr but the published evidence is mixed and we find little support in the pattern of annual changes in the grr and the unemployment rate for oecd countries over the last three decades we take advantage of new and much improved net replacement indicators from the oecd which show little correlation with either the grrs or with unemployment and employment rates we conclude that the available evidence does not offer compelling support for the conventional view

social preferences self interest and the demand for redistribution preferences for redistribution may be influenced by values and beliefs about distributive justice as well as by self interest people may prefer more redistribution to the poor if they believe that poverty is caused by circumstances beyond individual control therefore beliefs about the causes of income may affect demand for redistribution alternatively the effect of these beliefs on redistributive preferences may be spurious if they are correlated with income and self interest is not properly controlled for they may also measure incentive cost concerns using social survey data i find that self interest cannot explain the effect of these beliefs on redistributive preferences 2001 elsevier science b v all rights reserved

functional form and the statistical properties of welfare measures this paper uses monte carlo analysis to compare the variance of consumer s surplus for several functional forms for demand although the semilog and linear forms fit the data well by statistical criteria the coefficients of variation for consumer s surplus generated by these forms were substantially larger than for the double log and linear log forms while this paper is framed in the travel cost approach to recreational demand there are implications for the choice of functional form whenever the measure of interest is a nonlinear transformation of the estimated parameters in an influential article ziemer musser and hill note the importance of the choice of functional form for the magnitude of estimated measures of welfare change in a study of the demand for a recreation site based on the travel cost model they report nearly a fourfold difference between consumer s surplus based on a linear demand curve and surplus computed from a semilog demand their research emphasizes that good estimates of demand may not yield good estimates of welfare the estimate of consumer s surplus is a

a comparison of contingent valuation method and random utility model estimates of the value of avoiding reductions in king mackerel bag limits this paper estimates the value of king mackerel bag limit changes with both stated and revealed preference methods the 1997 marine recreational fishery statistical survey allows estimation of the value of avoiding bag limit reductions with the random utility model and the contingent valuation method using the contingent valuation method the willingness to pay to avoid a one fish reduction in the bag limit is 2 45 per year using the random utility model the willingness to pay to avoid a one fish reduction in the bag limit is 2 24 per trip and 7 71 for a two month time period considering several methodological issues the difference in willingness to pay between the stated and revealed preference methods is in the expected direction

the structure of inequality and the politics of redistribution against the current consensus among comparative political economists we argue that inequality matters for redistributive politics in advanced capitalist societies but it is the structure of inequality not the level of inequality that matters our theory posits that middle income voters will be inclined to ally with low income voters and support redistributive policies when the distance between the middle and the poor is small relative to the distance between the middle and the rich we test this proposition with data from 15 to 18 advanced democracies and find that both redistribution and nonelderly social spending increase as the dispersion of earnings in the upper half of the distribution increases relative to the dispersion of earnings in the lower half of the distribution in addition we present survey evidence on preferences for redistribution among middle income voters that is consistent with our theory and regression results indicating that the left parties are more likely to participate in government when the structure of inequality is characterized by skew

political reinforcement how rising inequality curbs manifested welfare generosity we propose a political reinforcement hypothesis suggesting that rising inequality moves party politics on welfare state issues to the right strengthening rather than modifying the impact of inequality we model policy platforms by incorporating ideology and opportunism of party members and interests and sympathies of voters if welfare spending is a normal good within income classes a majority of voters moves rightward when inequality increases as a response the left in particular shift their welfare policy platform toward less generosity we find support for our arguments using data on the welfare policy platforms of political parties in 22 oecd countries

referendum models and economic values theoretical intuitive and practical bounds on willingness to pay innovations in the estimation of referendum type contingent valuation models have led to willingness to pay wtp measures inconsistent with consumer preferences and unbounded from above or below we propose a set of criteria which guarantee a bounded measure of wtp the criteria reject the traditional random utility model with unrestricted error terms in favor of the random wtp model with bounds on wtp once wtp is bounded by zero and income the form of the distribution is less consequential a new model for wtp is developed based on the beta distribution and is compared to previously estimated models

comparing benefit estimates from travel cost and contingent valuation using confidence intervals for hicksian welfare measures an approach to determining whether benefit estimates derived from the travel cost method and contingent valuation method are statistically different is presented unlike past comparisons compensating variation is estimated for both methods benefit comparisons are made more rigorous by use of confidence intervals which are developed using the same krinsky and robb simulation technique for both valution mothods the techniques are applied to deer hunting in california while point estimates of benefits from both truncated and untruncated adjusted travel cost methods are lower than the contingent valuation method the confidence intervals on the untruncated travel cost method do overlap the contingent valution method benefit estimates

earnings inequality and welfare spending a disaggregated analysis the welfare state is generally viewed as either providing redistribution from rich to poor or as providing publicly financed insurance both views are incomplete welfare policies provide both insurance and redistribution in varying amounts depending on the design of the policy the authors explore the political consequences of the mix of redistribution and insurance in the context of studying the impact of income inequality on expenditures in different categories of welfare spending in advanced industrial societies from 1980 to 1995 they find that spending on pensions health care family benefits poverty alleviation and housing subsidies is largely uncorrelated with income inequality but that spending on income replacement programs such as unemployment insurance sickness pay occupational illness and disability are significantly higher in countries with more egalitarian income distributions they show that this pattern is exactly what a theory of political support for redistributive social insurance programs would predict

veblen effects in a theory of conspicuous consumption the authors examine conditions under which veblen effects arise from the desire to achieve social status by signaling wealth through conspicuous consumption while veblen effects cannot ordinarily arise when preferences satisfy a single crossing property they may emerge when this property fails in that case budget brands are priced at marginal cost while luxury brands though not intrinsically superior are sold at higher prices to consumers seeking to advertise wealth luxury brands earn strictly positive profits under conditions that would with standard formulations of preferences yield marginal cost pricing the authors explore factors that induce veblen effects and they investigate policy implications copyright 1996 by american economic association

remittances and social spending remittances are a significant source of foreign exchange for developing economies i argue that remittances due to their compensation and insurance functions will increase the general income level and economic security of recipients thereby reducing their perceived income risk over time this will dampen demand from recipients for government taxation and social insurance therefore i expect increases in income remitted to an economy to result in reduced levels of social welfare transfers at the macro level this dynamic can help us to understand spending patterns in developing democracies and the absence of demand for social security transfers in countries with high levels of inequality and economic insecurity i test this argument with a sample of 18 latin american states over the period 1990 to 2009 and subject the central causal mechanism to a battery of statistical tests the results of these tests provide strong support for this argument