mitigating the consequences of a health condition the role of intra and interhousehold assistance the behavior of noncoresident family members motivates much of the literature on consumption smoothing risk sharing and informal networks yet little is known empirically on the topic due to a lack of data simultaneously observing multiple households in an extended family this study utilizes genealogically linked longitudinal data to examine how extended family networks insure against financial risks from severely limiting health conditions we find that nonhealth consumption of unmarried households declines in response to worsening health whereas married households smooth expenditures in a way that is consistent with full insurance families mitigate losses by reallocating home production drawing down home equity holding formal health insurance collecting social security and receiving transfers from noncoresident relatives we illustrate that the costs of health shocks are transmitted throughout family networks and that noncoresident children draw down their assets and consumption when responding to a parent s health decline

consumption and the extended family this study examines whether resources of the extended family influence consumption extending prior tests on just food consumption to total consumption little to no evidence is found in support of the strict definition of altruism among related households however resources of the extended family dynasty do affect one s own consumption

consumer surplus from discrete choice models abstract the budget constrained random utility model rum gives utility consistent measures of welfare but requires the length of the planning period be specified an alternative is to treat the rum probabilities as behavioral and calculate consumer surplus this paper shows that such calculations lead to the same welfare measures as rum calculations the paper provides support and an alternative justification for the standard welfare measured

income dynamics and life cycle inequality mechanisms and controversies this study focuses on the transmission of inequality over the working life a model of constrained intertemporal choice is used to provide structure to the distributional dynamics of wages earnings income and consumption the mechanisms used to insure labour market shocks are examined in a partial insurance setting where the manner and scope for insurance depends on the access to credit the information available to consumers and the durability of income shocks drawing on recent research family labour supply the credit market and the tax system are all shown to play a key role these mechanisms vary in importance across different points of the life cycle and the business cycle 2014 the author s the economic journal published by john wiley sons ltd on behalf of royal economic society

the intergenerational causal effect of tax evasion evidence from the commuter tax allowance in austria does tax evasion run in the family to answer this question we study the case of the commuter tax allowance in austria this allowance is designed as a step function of the distance between the residence and the workplace creating sharp discontinuities at each bracket threshold the distance to these brackets is a strong determinant of compliance since it corresponds to the probability of detection the match of different administrative data sources allows us to observe actual compliance behavior at the individual level across two generations to identify the intergenerational causal effect in tax evasion behavior we use the paternal distance to bracket as an instrumental variable for paternal compliance we find that paternal noncompliance increases children s non compliance by about 20 percent

intergenerational linkages in consumption behavior consumption is partly a social activity yet most studies of consumer behavior treat households in isolation we investigate familial relationships in consumption patterns using a sample of parents and their children from the panel study of income dynamics we nd a positive and statistically signi cant parent speci c eect on children s consumption even after controlling for the eect of parental income and we nd similar eects for sibling pairs child consumption responds negatively to large post retirement shortfalls in consumption of the parents this behavior holds up even after allowing for the possibility of smaller parent to child transfers made necessary by the parental consumption shortfalls these results suggest that although income is an important source of the intergenerational correlation parental choices and experiences also aect consumption behavior of the children

does adversity affect long term financial behaviour evidence from china s rustication programme abstract this paper examines the long term effects of adversity on financial behaviour it draws on the largest forced migration experiment in history china s rustication programme evidence from the chinese twins survey and chinese household income project shows that rusticated individuals behave conservatively with respect to finances over the long term compared with their age eligible but nonrusticated peers they reduce housing consumption and its share of total assets increase savings accumulate more safe assets and invest less in risky assets such patterns are consistent with evidence from manually collected county gazetteer data possible mechanisms include reduced productivity habit formation and psychological changes

the economics of worldwide stagflation the last fifteen years have witnessed dramatic changes in economics not only in the manner in which the economics profession views economics but also in the manner in which the general public views economics and economists by the late 1960 s there had emerged more or less a consensus macroeconomic framework that is an agreed upon structure to be used to study economic problems at the aggregate level robert solow stated as quoted in leijonhufvud 1968

the political economy of government domestic expenditure in the affluent democracies 1960 80 despite the large number of studies of the determination of government expenditure in the affluent democracies most students of the subject admit that we know relatively little about the complex dynamics of spending change using multiple regression analyses of changes in nonmilitary outlays over the years 1960 to 1973 and 1973 to 1980 this study attempts to remedy some of the problems in the literature by providing new tests of several old hypotheses by introducing and testing several relatively new hypotheses and by evaluating such propositions in the context of an integrated theoretical framework and of analyses that span two distinct political economic eras results suggest that the dynamics of domestic expenditure change are partially conditioned by macroeconomic and political environments of particular eras overall the self interests and ideological preferences of policymakers the institutional and extrainstitutional political action of policy relevant groups and needs for state assistance emerge as principal sources of changes in domestic expenditure

consumer preference for a no choice option the traditional focus in the decision making literature has been on understanding how consumers choose among a given set of alternatives the notion that preference uncertainty may lead to choice deferral when no single alternative has a decisive advantage is tested in seven studies building on recent research the article shows that the decision to defer choice is influenced by the absolute difference in attractiveness among the alternatives provided and is not consistent with trade off difficulty or the theory of search these findings are then extended to show that choice deferral can also be modified for the same alternatives by manipulations that make them appear more similar in attractiveness or that decrease the need to differentiate among them the results are consistent with the notion that preference uncertainty results in a hesitation to commit to any single action since small differences in attractiveness among the alternatives are potentially reversible consistent with this premise the effect of attractiveness difference on choice deferral decreased significantly when subjects were first allowed to practice making monetary trade offs among the available alternatives

testing the response of consumption to income changes with noisy panel data this paper tests the rational expectations lifecycle model of consumption against i a keynesian model and ii the rational expectations lifecycle model with imperfect capital markets the tests are based upon the relative responsiveness of consumption to income changes that can be predicted from past information and income changes that cannot he predicted the tests allow for measurement error in income the results reject the keynesian model and generally support the lifecycle model but the results are not sufficiently precise to rule out the possibility that some households are liquidity constrained measurement error has a strong influence on the relationship between consumption and income

habit formation in consumer preferences evidence from panel data this paper tests for the presence of habit formation using household data a simple model of habit formation implies a condition relating the strength of habits to the evolution of consumption over time when the condition is estimated with food consumption data from the panel study on income dynamics the results yield no evidence of habit formation at the annual frequency this finding is robust to a number of changes in the specification it also holds for several proxies for nondurables and services consumption created by combining psid variables with weights estimated from consumer expenditure survey data

consumption in the shadow of unemployment abstract by how much do employed households reduce their consumption when the aggregate unemployment rate rises in spain during the great recession a one point increase in the unemployment rate was related to a strong reduction in household consumption of more than 0 7 per equivalent adult this reduction is consistent with forward looking agents responding to downward revisions of their expectations on future income growth rates the shadow of unemployment using consumption panel data that include information on physical quantities we show that the drop in consumption expenditure was truly a reduction in quantities and not a switch to cheaper alternatives

consumption inequality over the last half century some evidence using the new psid consumption measure this paper contributes to the debate regarding trends in consumption inequality in the united states we present a new measure of consumption inequality based on the redesigned 1999 2011 psid we impute consumption to the families observed before 1999 using the more comprehensive consumption data available from 1999 onward one advantage of this procedure is in sample verification of the quality of the imputation procedure another is that it yields a long time series 1967 2010 consumption inequality was stable in the 1970s as was income inequality it increased significantly after 1980 the great recession was associated with a decline in consumption inequality

electoral competition and the growth of public spending in 13 industrial democracies 1950 to 1983 this article examines a theoretically important issue that has received surprisingly little attention whether the process of democratic competition for public office has fueled the growth of domestic spending in the capitalist democracies since world war ii probably because it is difficult to measure electoral competition in multiparty systems existing comparative studies of public spending either ignore this question or use dubious measures of electoral competition this study presents and tests some conceptually more appealing measures of competition the results show a strong robust relationship between improved indicators of electoral competition and the growth of domestic spending from 1950 to 1973 and 1973 to 1983 the study concludes by analyzing the implications of the findings for economic performance in the capitalist democracies and for the democratic management of fiscal policy

sensitivity of tests of the pih to alternative consumption proxies abstract this note compares tests of the permanent income hypothesis when alternative proxies for consumption are utilized while the results appear to be sensitive to the proxy of consumption j tests show no significant difference between the alternative models

uncertain medical expenses and precautionary saving near the end of the life cycle this paper introduces a dynamic structural model of household consumption decisions in which elderly families consider the effects of uncertain future medical expenses when deciding current levels of consumption the model with uncertain medical expenses implies a potentially important role for precautionary saving incentives to explain slow rates of dissaving among elderly americans during retirement rather than just simulating the stochastic dynamic model preference parameters are estimated using panel data on health wealth and expenditures for retired families the health uncertainty model predicts consumption levels closer to observed expenditures than a life cycle model with uncertain longevity however elderly families typically dissave their financial assets more slowly than even the baseline health uncertainty model predicts is optimal

consumption during retirement the missing link in the life cycle this study presents the first evidence on the relation of consumption to lifetime wealth based on data from the 1973 and 1975 retirement history survey that have been linked to social security earnings records nearly 500 white married fully retired couples ages 62 69 form the basis of the analysis on average their consumption early in retirement exceeds by 14 percent the income that their financial pension and social security wealth can generate this implies that their saving both private and through social security is insufficient to sustain consumption throughout the rest of their lives additional evidence based on changes in spending between 1973 and 1975 shows that these households respond by reducing their real consumption at a rate sufficient to generate positive changes in net financial worth within a few years after retirement these two pieces of evidence can be rationalized by a rate of time preference much higher than the interest rate coupled with either a bequest motive or uncertainty about the length of life they also imply that even when combined with private pensions and savings social security in the united states today does not enable most recipients to maintain their living standard at the levels they enjoyed before they retired this abstract was borrowed from another version of this item

is food consumption a good proxy for nondurable consumption abstract this paper examines whether there is a discrepancy in estimating the elasticity of intertemporal substitution using food consumption instead of nondurable consumption data we show that a discrepancy exists and that the discrepancy increases as nondurable consumption increases

estimates of annual consumption expenditures and its major components in the psid in comparison to the ce historically empirical research on consumption primarily relied on aggregate data such as the national income and product accounts nipa tables beginning in the 1980s studies of consumption expenditures using household survey data became more common the majority of this research used the consumer expenditure survey ce which for nearly two decades had been essentially the only national survey that provided extensive data on household consumption expenditures though rich in detailed expenditure data the ce has more limited information on income assets and other socioeconomic factors in addition the ce is a short panel that follows each household for at most four quarters limiting the extent to which these data can be used to study dynamic behaviors of households by contrast the panel study of income dynamics psid is a longitudinal survey that collects extensive information on socioeconomic characteristics labor market experiences income wealth health status and family structure however historically only housing and food related expenditure data were collected in the psid in light of the growing interest in household consumption behaviors the psid expanded its questions on consumption expenditures significantly in 1999 and even further in 2005 as a result the psid now covers essentially all major expenditure categories that are included in the ce in this article we describe the features of the psid survey that make it a unique resource for studying household consumption we then present statistical results that show that the psid expenditure data compare favorably to their ce counterparts we take the ce data as our reference point and a comparison benchmark because despite the fact that it has been demonstrated that estimates of aggregate consumption derived using the ce data fall short of estimates based on the nipa data the ce remains the most comprehensive household expenditure survey moreover bee meyer and sullivan 2012 documented that most of the major expenditure categories in the ce are fairly consistent with the nipa estimate

on the political economy of welfare expansion a comparative analysis of 18 advanced capitalist democracies 1960 1971 this article elaborates the thesis that economic growth and various types of collective action by class linked actors determine the expansion and decline of welfare spending in rich capitalist democracies our multivariate model of this thesis specified to 1960 1971 growth rates in direct cash transfer payments as proportions of gross domestic product is supported strongly by regression analyses these indicate that economic growth notably facilitates transfer payment growth they also suggest that rightist party participation in government notably dampens welfare expansion while leftist centrist and christian democratic party participation in government are conducive to welfare expansion and they suggest that the political influences of both unions and large industrial corporations are conducive to growth in transfers payments as well in addition state authorities appear to augment welfare spending in response to working class protests strike activity and capital investment disinvestment activ

workers compensation and consumption smoothing abstract this paper investigates the consumption smoothing benefits of state workers compensation wc programs these programs are among the largest and most controversial forms of social insurance with the putative purpose of supporting families affected by unexpected income shocks due to workplace injuries and illnesses using health and retirement study hrs data for a sample of workers who have experienced a work related work limiting disability i find that a 10 increase in wc benefit generosity offsets the drop in household consumption upon injury by 3 to 5 moreover my estimates imply that if benefits were very low the drop in consumption upon injury would be in the range of 30 a model adapted from the literature on optimal social insurance yields a formula for the optimal level of wc benefits which depends on empirical estimates of the consumption smoothing parameter my calculations suggest that current wc benefit levels are somewhat higher than optimal

does the choice of consumption measure matter an application to the permanent income hypothesis abstract food consumption in the panel study of income dynamics is used as a proxy for total consumption in many applications in economics including tests of the permanent income hypothesis tests of separability between consumption and leisure and tests of intergenerational altruism food however explains only a small fraction of the variation in total consumption i propose a measure of composite consumption based on predicted wealth and compare it both to food consumption and to skinner s 1987 measure of predicted consumption in a test of the permanent income hypothesis using a log linear intertemporal consumption function i find that food does not reject the permanent income hypothesis but both skinner s predicted consumption and the composite measure proposed here to reject the hypothesis

are two cheap noisy measures better than one expensive accurate one 1 survey responses are always subject to measurement error in general surveys and especially longitudinal surveys there are severe constraints on the time that can be spent eliciting a less noisy response for any target variable in this paper we consider when it may be better to consider multiple noisy measures of the target measure rather than improving the reliability of a single measure 2 the kotlarski result states that if the measurement errors in two measures of the same target variable are mutually independent and independent of the true value then we can recover the entire distribution of the quantity of interest up to location 3 we consider designing surveys to deliver measurement error with desirable properties this shifts the emphasis from reliability the signal to noise ratio for any given measure to the joint properties of the multiple measures 4 to illustrate our ideas we consider a concrete example the measurement of consumption inequality a small simulation study suggests that the approach we propose has promise the next step in this research agenda is experiments in survey data collection

data gaps data incomparability and data imputation a review of poverty measurement methods for data scarce environments this paper reviews methods that have been employed to estimate poverty in contexts where household consumption data are unavailable or missing these contexts range from completely missing and partially missing consumption data in cross sectional household surveys to missing panel household data the paper focuses on methods that aim to compare trends and dynamic patterns of poverty outcomes over time it presents the various methods under a common framework with pedagogical discussion on the intuition empirical illustrations are provided using several rounds of household survey data from vietnam furthermore the paper provides a practical guide with detailed instructions on computer programs that can be used to implement the reviewed techniques

the saving of the elderly in micro and macro data examination of household micro data on the elderly has generally concluded that they do not dissave significantly whereas estimates using aggregate macro data have shown that the presence of a large elderly population leads to a lower saving rate this paper shows that if interactions between generations are important one would not expect these estimates to be the same the paper presents new evidence that bequests are plausibly the source of this discrepancy examination of data from young households that have received or expect bequests confirms that bequests are indeed an important factor determining the saving of the young

bayesian inference for comparative research rv egression analysis in comparative research suffers from two distinct problems of statistical inference first because the data constitute all the available observations from a population conventional inference based on the long run behavior of a repeatable data mechanism is not appropriate second the small and collinear data sets of comparative research yield imprecise estimates of the effects of explanatory variables we describe a bayesian approach to statistical inference that provides a unified solution to these two problems this approach is illustrated in a comparative analysis of unionization a widely used tool in quantitative comparative politics is the linear regression model estimating relationships between institutional and economic variables observed for a set of countries constituting some population of interest a brief survey of recent comparative research finds no shortage of work of this type for instance remmer 1991 identifies economic crisis as a source of electoral volatility in latin american countries in the 1980s robertson 1990 presents evidence that institutions moderating the transaction costs of negotiations between capital and labor reduce industrial conflict and golden 1993 finds that union wage moderation in industrialized democracies results from coordinated collective bargaining although the methodological advantages are well documented jackman 1985 we identify two distinct problems of statistical inference endemic to this type of quantitative comparative research first because the data constitute all the available observations from a population conventional inference based on the long run behavior of some repeatable data mechanism is not appropriate second because data sets tend to be small and collinear the effects of explanatory variables are estimated imprecisely in most applications the first problem is generally ignored and the second is solved by imposing restrictions on the regression model to obtain sensible results the bayesian model of statistical inference provides a unified solution to these two distinct problems of quantitative comparative research two features of bayesian inference are important in this context first probability is conceived subjectively as characterizing a researcher s uncertainty about the parameters of a statistical model this subjective probability concept seems particularly useful in comparative settings where the data are typically convenience samples not generated by a known probability mechanism such as random sampling second bayesian inference allows the inclusion of other information in addition to the quantitative sample information again this seems useful in the comparative context where rich historical material is commonly available sparking ideas for researchers but formally discarded in the final analysis in the bayesian approach this historical material can be formally incorporated into the analysis we begin by detailing why the nonstochastic and weak data typical of comparative research are problematic for conventional linear regression analysis we next introduce some ideas about bayesian inference and describe bayesian regression analysis these ideas are applied to a comparative analysis of unionization the subject of a recent exchange in the american political science review between michael wallerstein and john stephens stephens and wallerstein 1991 wallerstein 1989 the bayesian regressions we present are supplemented with a sensitivity analysis that investigates how our conclusions depend upon the sample data and our prior beliefs although we survey some ideas in bayesian statistics a full introduction to the bayesian approach to statistical inference is beyond our scope here good book length treatments are pollard 1986 lee 1989 and at a slightly higher level press 1989 our intention here is to spotlight problematic but ignored issues of statistical inference in a common area of application the bayesian alternative that we present represents just one way forward to address these inferential problems

the determinants of bargaining power in an empirical model of transfers between adult children parents and in laws for south korea abstract we derive a bargaining model of transfers between adult children and their parents and then estimate the model using data from south korea our analysis extends the literature on family bargaining by i arguing that transfers from the couple represent semiprivate consumption e g it is plausible that the wife cares more about her parents than about the husband s parents and vice versa and ii using results from laboratory experiments to help identify the model we find that women have slightly more bargaining power than men in the couple s decision making we also find that when an adult child receives an extra dollar of income she transfers half of it to her parents this result is consistent with previous work finally we reject the null hypothesis that bargaining power within the family depends only on the potential wage of each spouse

reexamining the consumption smoothing benefits of unemployment insurance abstract the great recession spurred renewed interest in the moral hazard effects of the unemployment insurance ui program however little research has focused on determining its benefits this paper examines the consumption smoothing benefit of the ui program over the last 40 years finding strong evidence of heterogeneity in this effect over time in particular the effects of ui are smaller in the 1990s compared with the 1970s the 1990s were unique because of the long period of low unemployment rates as well as relatively low ui program generosity thus we test whether the consumption smoothing effects vary by the state unemployment rate and average program generosity we find suggestive evidence that the effects are larger when the state unemployment rate and average generosity are high together these two dimensions can explain around 30 46 of the differential effect that we find in the 1990s

measuring the well being of the poor using income and consumption we examine the relative merits of consumption and income as measures of the material well being of the poor consumption offers several advantages over income because consumption is a more direct measure of well being than income and is less subject to underreporting bias measurement problems with income are problematic for analyses of changes in well being of the poor because the biases appear to have changed over time and are correlated with government policies on the other hand income is often easier to report and is available for much larger samples providing greater power to test hypotheses we begin by considering the conceptual and pragmatic reasons why consumption might be better or worse than income then we employ several empirical strategies to examine the quality of income and consumption data first we compare income and consumption reports for those with few resources as well as their assets and liabilities to examine measurement errors and under reporting second we examine other evidence on the internal consistency of reports of low income or consumption third we compare how well micro data in standard datasets weight up to match aggregates for classes of income and consumption that are especially important for low resource families fourth we validate income and consumption measures by comparing them to other measures of hardship or material well being although the evidence tends to favor consumption measures our analyses suggest that both measures should be used to assess the material well being of the poor

intergenerational mobility new evidence from consumption data the intergenerational persistence of consumption describes the extent to which children inherit the living standards of their parents evidence on this parameter is scarce due to limited data on the joint consumption of parents and children this paper identifies parents who participated in the danish expenditure survey links them to their children through population wide danish registries and estimates the intergenerational elasticity of consumption in denmark the results suggest that consistent with intergenerational consumption smoothing the persistence of consumption across generations is higher than the persistence of earnings and income

a superior measure of consumption from the panel study of income dynamics abstract this paper provides a simple technique for assigning a measure of total consumption to households in the panel study of income dynamics psid using regressions from the consumer expenditure surveys of 1972 1973 and 1983 linear predictions of total consumption are estimated which are stable over time and explain up to 78 percent of the total variance in consumption

the effect of forced choice on choice abstract whereas most academic and industry studies of consumer preferences and decision making involve forced choice i e participants are told to choose one of the presented product or service alternatives buyers usually also have the option not to select any alternative an implicit assumption in the experimental practice of forcing choice is that the no choice option draws proportionately from the various available alternatives such that the qualitative conclusions are unaffected however the authors propose that the no choice option competes most directly with alternatives that buyers tend to select when they are uncertain about their preferences building on this general proposition the authors show that the introduction of the no choice option strengthens the attraction effect weakens the compromise effect and decreases the relative share of an option that is average on all dimensions they also examine the mechanisms underlying the impact of having the option not to choose and the condi

disability earnings income and consumption using longitudinal data for the period 1968 2005 for a sample of male household heads we determine the prevalence of disability during the working years and examine how the extent of disability affects a range of outcomes including earnings income and consumption we have seven main findings first disability rates are high we divide the disabled along two dimensions based on the persistence and severity of their work limiting condition we estimate that a person reaching age 56 has a 53 percent chance of having been disabled at least once during his working years and a 19 percent chance that he has begun a chronic and severe disability second the economic consequences of disability are frequently profound ten years after disability onset a person with a chronic and severe disability on average experiences a 68 percent decline in earnings a 32 percent decline in after tax income a 22 percent decline in food and housing consumption and a 21 percent decline in food consumption third the various economic consequences differ sharply across disability groups the outcome declines for those with a chronic and severe disability are often more than twice as large as those for the average disabled fourth our findings show the partial and incomplete roles that individual savings family support and social insurance play in reducing the consumption drop that follows disability only about half of this most disabled group reports receiving social security disability insurance or supplemental security income fifth we find a noticeable fall in earnings and income prior to the onset of a reported disability consumption also falls somewhat suggesting that future disability is partially but incompletely predictable in the short run sixth time use and detailed consumption data further indicate that disability is associated with a decline in well being seventh the quantities we have estimated combined with elasticities from the literature allow us to examine the optimality of current compensation for the disabled we find that the current compensation for our most disabled group appears to be lower than is optimal

galton versus the human capital approach to inheritance a century ago francis galton proposed a simple yet powerful model of inheritance gary backer s human capital model is often used to analyze important empirical and policy questions but does it dominate galton s from a positive point of view i derive nine implicatiions of the human capital approach that are distinct from galton s evidence from the pis scf and nlsy micro data sets as well as results reported in previous literatures suggest that four of the unique implications are refuted two implications are verified and mixed results are obtained for three others some extensions of economics recently developed by becker and others when applied to inheritance may improve economics predictions

intertemporal preferences and labor supply in this paper the authors examine whether nonseparable preference structures ar e important in characterizing life cycle labor supply using longitud inal data on prime age males from the panel study of income dynamics they estimate a model of life cycle leisure and consumption under un certainty in which intertemporal preferences are allowed to be nonsep arable in leisure the model tests several alternative specifications considered in the literature they investigate the robustness of the ir findings to certain forms of population heterogeneity and types of model misspecification across alternative specifications the autho rs find that the standard assumption of intertemporally separable pre ferences for leisure is not consistent with the data copyright 1988 by the econometric society

inner conflict between nuclear power generation and electricity rates a japanese case study abstract since the march 11 earthquake japanese households have been facing a trade off problem between decreasing dependency on nuclear power generation and avoiding an increase in electricity rates we analyze this inner conflict quantitatively adopting two economic psychological approaches first we note that the trade off causes cognitive dissonance after making a choice that results in a wider desirability gap between the chosen and rejected alternatives second the consumer surplus improves by 11 2 with a no choice option for suspending judgment in the presence of cognitive dissonance third individual characteristics such as gender and annual household income are significantly correlated with both cognitive dissonance and a preference for the no choice option

public preferences for alternative electricity mixes in post fukushima japan abstract using representative household survey data from japan after the fukushima accident we estimate peoples willingness to pay wtp for renewable nuclear and fossil fuels in electricity generation we rely on random parameter econometric techniques to capture various degrees of heterogeneity between the respondents and use detailed regional information to assess how wtp varies with the distance to both the nearest nuclear power plant and to fukushima compared to fossil fuels we find a positive wtp for renewable and a negative wtp for nuclear fuels these effects in absolute terms increase with the proximity to fukushima

intertemporal substitution in labor supply evidence from micro data the sensitivity of the supply of labor to intertemporal variation in the wage is an important issue in macroeconomics the analysis of social security and pensions and the study of life cycle patterns of work this paper explores two approaches to the measurement of intertemporal substitution that have appeared in the literature the first approach is to use consumption to control for wealth and unobserved expectations about future wages in the labor supply equation the second approach is to estimate a first difference equation for hours in which labor supply from the previous period serves as a control for wealth and wage expectations the results indicate that intertemporal substitution elasticity for married men is positive but small

the intergenerational transmission of generosity abstract this paper estimates the correlation between the generosity of parents and the generosity of their adult children using regression models of adult children s charitable giving new charitable giving data are collected in the panel study of income dynamics and used to estimate the regression models the regression models are estimated using a wide variety of techniques and specification tests and the strength of the intergenerational giving correlations is compared with intergenerational correlations in income wealth and consumption expenditure from the same sample using the same set of controls we find the religious giving of parents and children to be strongly correlated as strongly correlated as are their income and wealth the correlation in the secular giving e g giving to the united way educational institutions for poverty relief of parents and children is smaller similar in magnitude to the intergenerational correlation in consumption parents religious giving is positively associated with children s secular giving but in a more limited sense overall the results are consistent with generosity emerging at least in part from the influence of parental charitable behavior in contrast to intergenerational models in which parental generosity towards their children can undo government transfer policy ricardian equivalence these results suggest that parental generosity towards charitable organizations might reinforce government policies such as tax incentives aimed at encouraging voluntary transfers

the sensitivity of consumption to transitory income estimates from panel data on households we investigate the stochastic relation between income and consumption specifically consumption of food within a panel of about 2 000 households our major findings are 1 consumption responds much more strongly to permanent than to transitory movements of income 2 the response to transitory income is nonetheless clearly positive 3 a simple test independent of our model of consumption rejects a central implication of the pure life cycle permanent income hypothesis the observed covariation of income and consumption is compatible with pure life cycle permanent income behavior on the part of80 percent of families and simple proportionality of consumption and income among the remaining 20 percent as a general matter our findings support the view that families respond differently to different sources of income variations in particular temporary income tax policies have smaller effects on consumption than do other more permanent changes in income of the same magnitude this abstract was borrowed from another version of this item

parental net wealth and personal consumption this paper uses data from the 1988 to 1991 psid to examine the relationship between parental net wealth and consumption behavior of adult children in a model where the probability of receiving a future transfer from the parent is an increasing function of the level of parental net wealth a non linear relationship is expected the results in this study are consistent with such a relationship parental net wealth is found to have a positive influence on children s consumption only at very high levels in addition this relationship appears to apply only to parental housing wealth and not parental non housing wealth

health and other asset holdings despite clear evidence of correlations between financial and medical statuses and decisions most models treat financial and health related choices separately this article bridges this gap by proposing a tractable dynamic framework for the joint determination of optimal consumption portfolio holdings health investment and health insurance we solve for the optimal rules in closed form and capitalize on this tractability to gain a better understanding of the conditions under which separation between financial and health related decisions is sensible and of the pathways through which wealth and health determine allocations welfare and other variables of interest such as expected longevity or the value of health furthermore we show that the model is consistent with the observed patterns of individual allocations and provide realistic estimates of the parameters that confirm the relevance of all the main characteristics of the model

the intergenerational correlation of consumption expenditures academic researchers and policymakers have a long standing interest in the extent to which economic well being is transmitted across generations most of the research on this issue has focused on the intergenerational correlation in income see solon 1999 for a review and wealth charles and hurst 2003 where as relatively little attention has been paid to the intergenerational correlation in consumption expenditures mulligan 1997 aughinbaugh 2000 and waldkirch ng and cox 2004 yet consumption is arguably more directly related to consumers utility than other indicators of material well being and there are reasons to suppose that the intergenerational correlation in consumption may reveal new insights about the extent and explanation for the transmission of material well being across generations

what accounts for the variation in retirement wealth among u s households even among households with similar socioeconomic characteristics saving and wealth vary considerably life cycle models attribute this variation to differences in time preference rates risk tolerance exposure to uncertainty relative tastes for work and leisure at advanced ages and income replacement rates these factors have testable implications concerning the relation between accumulated wealth and the shape of the consumption profile using the panel study of income dynamics and the consumer expenditure survey we find little support for these implications the data are instead consistent with rule of thumb mental accounting or hyperbolic discounting theories of wealth accumulation jel di d91 e21

politics and the structural dependence of the state in democratic capitalist nations i explore empirically a central claim of the structural dependence thesis namely that capitalists ability to disinvest fundamentally conditions policy choices in democratic capitalist systems utilizing time series data for 16 affluent democracies from 1965 to 1984 i find that indeed low rates of business investment are associated with reductions in corporate tax burdens and that these reductions are more pronounced in periods of economic crisis moreover low rates of capital formation engender cuts in personal income taxes during periods of economic stress however i also find that the magnitude of responsiveness of taxation to low rates of investment is relatively small and that analyses of the political context of investment and taxation indicate that governments have choices the responsiveness of corporate tax burdens to capital formation may under some governments be part of a policy mix designed to maintain adequate investment and to address the demands of core constituencies

collective decisions household production and labor force participation in this paper we generalize the collective model of household labor supply with domestic production to allow for the possibility of nonparticipation in the labor market we also relax the marketability assumption according to which domestic goods and market goods are perfectly substitutable our results are twofold first we show that the main structural components of the decision process can be retrieved from observed behavior second we estimate a system of market and domestic labor supply using the panel study of income dynamics and apply the theoretical results to recover the intra household sharing of resources

the effect of income taxation on consumption and labor supply we estimate the incentive effects of income taxation in a life cycle model of consumption and labor supply without intratemporal strong separability we find that consumption and hours worked are direct complements in utility both increase with a compensated increase in the net wage the compensated net wage elasticity is about 0 3 nearly double estimates for u s men from a linear labor supply specification estimated intertemporal elasticities indicate significant intertemporal smoothing of utility the estimated marginal welfare cost of government revenue is 6 20 which is about half the estimated welfare cost when additivity between consumption and leisure is incorrectly imposed

the consumption effects associated with filing for personal bankruptcy this article examines the response of food consumption to filing for personal bankruptcy in the spirit of previous work on the benefits of other social insurance programs using the panel study of income dynamics psid we find that an increase in the financial benefit to filing for bankruptcy increases the growth in food consumption in addition we find that filing under chapter 7 of the bankruptcy code provides consumption insurance while filing under chapter 13 of the bankruptcy code provides no significant consumption benefits personal bankruptcy in the united states is part of the social insurance structure provided by the federal and state governments other programs in this network include but are not limited to unemployment insurance ui temporary assistance to needy families tanf and food stamps while these latter three programs are targeted to specific groups the recently unemployed for ui and low income households for tanf and food stamps personal bankruptcy is not much like these other programs though bankruptcy reduces income uncertainty and reduces wealth uncertainty surprisingly little work has been done on the direct benefits to filing for bankruptcy this is in contrast with the growing literature on the costs of bankruptcy 1 fay hurst and white 2002 estimate the financial benefit to filing for bankruptcy which equals the debt forgiven minus any lost assets this measure is a good predictor of whether the household files for bankruptcy but it is not clear that the financial benefit is the true measure of the welfare gain from bankruptcy in fact the financial benefit is most likely an overestimate of the household s gain in the year it files for bankruptcy unlike ui or tanf bankruptcy provides no increase in money income for that period but rather increases net of debt income this change is felt over the household s lifetime and filers will most likely smooth this effect over multiple years because households cannot file for bankruptcy again for six years further using the financial benefit makes it difficult to compare results against the

whatever the customer wants the customer gets exploring the gap between consumer preferences and default electricity products in germany abstract in liberalized electricity markets residential customers can choose their preferred provider and select among a variety of different electricity products including green power options successful product design and marketing strategies for green electricity may provide electricity providers with a competitive advantage while at the same time contributing to energy policy objectives this requires however a thorough understanding of customer preferences we investigate the relative importance of different product attributes in creating customer value and find that price and electricity mix are the two most important attributes the german electricity customers we surveyed in 2009 expressed an implicit willingness to pay a premium of about 16 for electricity from renewable sources we conclude that consumers are willing to pay a significant price premium for an upgrade from the current default electricity mix in germany to a more environmentally friendly default electricity mix and discuss implications for marketing strategy and energy policy our findings are based on a dataset of 4968 experimental choices made by 414 german residential consumers collected in a stated preference survey

revisiting the role of labor worker solidarity employer opposition and the development of old age pensions in the netherlands and the united kingdom the purpose of this article is to emphasize the importance of the organizational blueprint of labor unions for welfare state outcomes as a result of the tendency of scholars to view labor as a homogenous and disadvantaged class the existing literature has paid little attention to this many scholars have simply taken labor union support for welfare state development for granted and consequently have focused only on labor union strength this article argues rather that labor union support for welfare state development cannot be taken for granted it shows that labor unions support or oppose welfare state development depending on their organizational blueprint this new approach highlights the importance of the labor union movement s organizational structure as opposed to its organizational strength for welfare state outcomes the article also explores how the organizational structure of the labor union movement shapes the stance of employer interest groups toward welfare state development the empirical findings are based on a comparison of british and dutch postwar old age pension development

the long run consumption effects of earnings shocks although prior studies of job displacement and disability have measured the impact of these shocks in terms of lost earnings no previous research has linked these permanent earnings shocks to the

imputing consumption from income and wealth information we investigate the feasibility of deriving a measure of total expenditure at the household level from administrative micro data on income and wealth we use danish administrative data that provides measures of disposable income and the holding of different assets at the end of the year the ability to link the households in the 1994 6 danish expenditure survey to their administrative data for the years around the survey year offers a unique possibility for constructing a measure of total expenditure and of checking directly on the reliability of the imputation the results are promising

modeling u s budgetary and fiscal policy outcomes a disaggregated systemwide perspective this paper develops and estimates a model of u s federal budgetary outcomes that allows for considerable disaggregation across spending categories while providing through cross equation coefficient restrictions substantially more statistical power than traditional approaches we identify significant top down fiscal policy effects on budgetary allocations primarily within the defense budget budgetary responses to macroeconomic conditions are generally countercyclical although middle class entitlements appear to react procyclically to inflation political control of congress influences budgetary outcomes with democrats giving higher priority to domestic spending programs the relative rate of public sector inflation affects spending growth consistent with baumol s disease public opinion affects defense and low income entitlement spending defense spending has also been influenced by perceived soviet threat as well as the level of armed conflict there appear to be small election year effects although not of the sort predicted by political business cycle models with a few exceptions administration specific impacts are relatively small and not systematically related to the party of the president

short versus long coalitions electoral accountability and the size of the public sector this article examines the policy consequences of the number of parties in government we argue that parties externalize costs not borne by their support groups larger parties thus internalize more costs than small parties because they represent more groups this argument implies that the public sector should be larger the more parties there are in the government coalition we test this prediction using yearly time series cross sectional data from 1970 to 1998 in 17 european countries we find that increasing the number of parties in government increases the fraction of gdp accounted for by government spending by close to half a percentage point or more than one billion current dollars in the typical year we find little support for the alternative claim that the number of legislative parties affects the size of the public sector except via the number of parties in government

the illusion of choice defense and welfare in advanced industrial democracies 1948 1978 research on the tendency of governments to trade off welfare spending for defense has generated diverse and often contradictory findings this study attempts to clarify the issue of trade offs by examining expenditure patterns since 1948 for the four major na to allies united states united kingdom federal republic of germany and france when viewed from the perspective of long term trends in shares of outlays trade offs are evident when short term changes in expenditure which are more germane to the potential for one spending category to benefit at the expense of the other are studied no pattern of trade off can be detected a three equation model is estimated to control for the variety of possible determining factors of public resource allocation in none of the four nations does a pattern of trade off emerge except in periods of wartime or postwar reconstruction these findings are consistent with the ability of governments to finance new spending through either increased taxes or larger budget deficits the growing disinclination to use these methods however suggests that the potential for trade offs has perhaps reappeared in the 1980s

money and majorities in the federal republic of germany evidence for a veto players model of government spending i formulate a veto players model of policy making by coalition government in the federal republic of germany the model gives testable predictions about how patterns of federal spending respond to changes in government some of the predictions are consistent with conventional wisdom namely that the spd fdp government decreased spending on right wing items when it came to power in 1969 and the return of cdu fdp coalition in 1982 produced a decline in leftwing spending other predictions are less intuitive for example there is no predicted increase in left wing spending associated with the spdfdp coalition and no increase in right wing spending with the cdu fdp government these predictions and those of competing models are tested using disaggregated budget data from fiscal years 1961 1989 controlling for category specific effects and economic conditions the data support the veto players model and this support is robust to a wide variety of plausible assumptions about the parties spending preferences

is the extended family altruistically linked direct tests using micro data this paper uses panel study of income dynamics data on parents and their adult children to test the standard altruism model this model predicts that within the extended family the distribution of consumption is independent of the distribution of resources the authors findings strongly reject this prediction copyright 1992 by american economic association