applied econometrics rankings 1989 1995 this paper ranks academic institutions by publication activity in applied econometrics over the period 1989 1995 fourteen leading international journals that publish applied econometrics articles are used to provide the database the rankings are based on standardized page counts of articles published in these journals over the stated period a hall of fame is developed listing the top 100 individual producers of applied econometrics in the fourteen journals considered to control for quality differences among the applied journals separate rankings are provided both for institutions and for individuals according to econometrics publications by journal

rankings methodology for international comparisons of institutions and individuals an application to economics in australia and new zealand abstract the objectives of this paper are threefold first we critically survey and analyse the different methodologies that have been adopted in the rankings literature second using journal articles included in the econlit database and on the basis of two criteria one based on citations and the other on perceptions of journal quality we rank economics teaching departments in australia and new zealand for 1988 2002 and 1996 2002 and for individual academic economists for the periods 1988 2002 1988 1995 and 1996 2002 furthermore we identify individual star performers and recognize them in a designated hall of fame for 1988 2002 third our methodology enables us to make international comparisons on total and per capita bases previous multi country ranking studies in economics do not rank economics departments they provide rankings based on total publications in economics in universities regardless of whether the economists are in the economics departments or in other departments thus no rankings on per capita bases are provided we correct this shortcoming by providing total and per capita rankings and analysing the correlations between total and per capita rankings this is the first study to examine whether the size of the economics department matters with regard to productivity

labor supply and the optimality of social security abstract traditional economic theory predicts that an unfunded public pension system can be justified on the basis of its ability to provide intergenerational transfers and also for its ability to provide partial insurance against mortality and labor income risks in this paper i demonstrate that the quantitative importance of these traditional roles depends on how the pension system distorts households labor supply decisions using a general equilibrium life cycle consumption model calibrated to the u s economy i show that these distortions can be large enough to erase much of the traditional welfare gains from social security i also find that this fact is robust within the range of labor supply elasticities usually encountered in the macroeconomic literature

political regimes and international trade the democratic difference revisited how do domestic political institutions affect the outcomes of international trade negotiations specifically are the aggregate trade barriers agreed upon by a democratic pair lower than those by a pair composed of a democracy and an autocracy i revisit these important questions by highlighting some problematic aspect of the analysis by mansfield milner and rosendorff 2000 contrary to their central conclusion i find that whether the aggregate trade barriers are lower for a democratic pair than those for a mixed pair depends on the preferences of the decision makers involved thus although domestic political institutions are important they alone are insufficient to predict a higher level of cooperation among democracies

evaluation of the subjective probabilities of survival in the health and retirement study in the health and retirement study respondents were asked about the chances they would live to 75 or to 85 we analyze these responses to determine if they behave like probabilities of survival if their averages are close to average probabilities in the population and if they have correlations with other variables that are similar to correlations with actual mortality outcomes we find that generally they do behave like probabilities and that they do aggregate to population probabilities most remarkable however is that they covary with other variables in the same way actual outcomes vary with the variables for example respondents with higher socioeconomic status give higher probabilities of survival whereas respondents who smoke give lower probabilities we conclude that these measures of subjective probabilities have great potential use in models of intertemporal decision making under uncertainty

survival ambiguity and welfare abstract nearly all life cycle models adopt yaari s 1965 assumption that individuals know the survival probabilities that they face given that an individual s exact survival probabilities are likely unknown we explore the implications of relaxing this assumption if there is no annuity market then the welfare cost of survival ambiguity is large and regressive ambiguity neutral individuals would pay as much as 1 of total lifetime consumption for immediate resolution of ambiguity and the bottom income quintile is 4 times worse off than the top quintile alternatively with the availability of competitive annuity contracts survival ambiguity is welfare improving because it allows competitive insurance companies to pool risk across survival types even though social security and annuities share some properties social security does not help to hedge survival ambiguity

dynamically consistent beliefs must be bayesian abstract experimental evidence such as the ellsberg paradox contradicts the savage model of decision making under uncertainty since the representation of beliefs underlying preferces by a single probability measure leaves no room for the degree of imprecision in information to affect decisions proceeding axiomatically this paper shows that the existence of a bayesain prior is implied even if savage s sure thing principle is deleted if preferences i are based on beliefs and ii admit dynamically consistent updating in response to new information the result raises questions about the appeal of models of preference that feature a separation of tastes and beliefs journal of economic literature classification number d81

trends in rankings of economics departments in the u s an update economics departments in the u s are ranked based on 1 the number of pages published in thirty six economics journals 2 publications in five of the top journals 3 output per faculty member and 4 an index of the concentration of research in a department evidence shows that the top twenty departments have generally retained their positions since the 1970s but rather large changes have occurred in departments ranked from 240 to 100 an economists hall of fame is developed listing the top fifty individual producers of research in the thirty six journal set and the top five journals

cognitive constraints on valuing annuities this paper documents consumers difficulty valuing life annuities using a purpose built experiment in the american life panel we show that the prices at which people are willing to buy annuities are substantially below the prices at which they are willing to sell them we also find that buy values are negatively correlated with sell values and that the sell buy valuation spread is negatively correlated with cognition this spread is larger for those with less education weaker numerical abilities and lower levels of financial literacy our evidence contributes to the emerging literature on heterogeneity in financial decision making abilities particularly regarding retirement payouts jel d14 d91 g11 h55

on the robustness of alternative rankings methodologies australian and new zealand economics departments 1988 to 2002 just as friendly arguments based on an ignorance of facts eventually led to the creation of the definitive guinness book of world records any argument about university rankings has seemingly been a problem without a solution to state the obvious alternative rankings methodologies can and do lead to different rankings this article evaluates the robustness of rankings of australian and new zealand economics teaching departments for 1988 to 2002 and 1996 to 2002 using alternative rankings methodologies and compares the results with the rankings obtained by macri and sinha 2006 in the overall mean rankings for both 1988 to 2006 and 1996 to 2002 the university of melbourne is ranked first followed by uwa and anu

rising mortality and life expectancy differentials by lifetime earnings in the united states are mortality and life expectancy differences by socioeconomic groups increasing in the united states using a unique data set matching administrative and survey data this study explores trends in these differentials by lifetime earnings for the 1983 2003 period results indicate a consistent increase in mortality differentials across sex and age groups the study also finds a substantial increase in life expectancy differentials by lifetime earnings the top to bottom quintile premium increased 30 percent for men and almost doubled for women these results complement recent research to point to almost five decades of increasing differential mortality in the united states

are overall journal rankings a good mapping for article quality in specialty fields overall journal rankings which are generated with sample articles in different research fields are commonly used to measure the research productivity of academic economists in this article we investigate a growing concern in the profession that the use of the overall journal rankings to evaluate scholars relative research productivity may exhibit a downward bias toward researchers in some specialty fields if their respective field journals are under ranked in the overall journals rankings to address this concern we constructed new journal rankings based on the intellectual influence of research in 8 specialty fields using a sample consisting of 26 401 articles published across 60 economics journals from 1998 to 2007 we made various comparisons between the newly constructed journal rankings in specialty fields and the traditional overall journal ranking our results show that the overall journal ranking provides a considerably good mapping for the article quality in specialty fields supplementary

why don t people insure late life consumption a framing explanation of the under annuitization puzzle rational models of risk averse consumers have difficulty explaining limited annuity demand we posit that consumers evaluate annuity products using a narrow investment frame that focuses on risk and return rather than a consumption frame that considers the consequences for lifelong consumption under an investment frame annuities are quite unattractive exhibiting high risk without high returns survey evidence supports this hypothesis whereas 72 percent of respondents prefer a life annuity over a savings account when the choice is framed in terms of consumption only 21 percent of respondents prefer it when the choice is framed in terms of investment features

do you trust your insurer ambiguity about contract nonperformance and optimal insurance demand abstract we study optimal insurance demand for a risk and ambiguity averse consumer under ambiguity about contract nonperformance ambiguity aversion lowers optimal insurance demand and the consumer s degree of ambiguity aversion is negatively associated with the optimal level of coverage a more pessimistic belief and greater ambiguity may increase or decrease the optimal demand for insurance and we determine sufficient conditions for a negative effect we also discuss wealth effects and evaluate the robustness of our results by considering several alternative models of ambiguity aversion our findings show how ambiguity about contract nonperformance can undermine the functioning of insurance markets making it a concern for regulators caution is required though because demand reactions are only imperfectly informative about the welfare effects of ambiguity about contract nonperformance

planning and financial literacy how do women fare many older us households have done little or no planning for retirement and there is a substantial population that seems to undersave for retirement of particular concern is the relative position of older women who are more vulnerable to old age poverty due to their longer longevity this paper uses data from a special module we devised on planning and financial literacy in the 2004 health and retirement study it shows that women display much lower levels of financial literacy than the older population as a whole in addition women who are less financially literate are also less likely to plan for retirement and be successful planners these findings have important implications for policy and for programs aimed at fostering financial security at older ages

the political determinants of international trade the major powers 1907 1990 we test three arguments about the effect of international politics on trade flows the first argument states that trade flows are greater between states with similar interests than those with dissimilar interests the second that trade flows are greater in democratic dyads than nondemocratic dyads and the third that trade flows are greater between allies we examine trade flows between the major powers from 1907 to 1990 this period provides variation on all three independent variables of interest and allows us to separate the three arguments empirically we estimate a gravity model of trade with the above political variables added our results demonstrate that joint democracy and common interests increase trade in a dyad but alliances generally do not even when controlling for polarity of the system

adverse selection in the annuity market and the role for social security i study the role of social security in providing insurance when there is adverse selection in the annuity market i calculate welfare gain from mandatory annuitization in the social security system relative to a laissez faire benchmark using a model in which individuals have private information about their mortality i estimate large heterogeneity in mortality using the health and retirement study despite that i find small welfare gain from mandatory annuitization social security has a large effect on annuity prices because it crowds out demand by high mortality individuals welfare gain would have been significantly larger in the absence of this effect

the meaning of failed replications a review and proposal the welcome rise of replication tests in economics has not been accompanied by a consensus standard for determining what constitutes a replication a discrepant replication in current usage of the term can signal anything from an unremarkable disagreement over methods to scientific incompetence or misconduct this paper proposes a standard for classifying one study as a replication of some other study it is a standard that places the burden of proof on a study to demonstrate that it should have obtained identical results to the original a conservative standard that is already used implicitly by many researchers it contrasts this standard with decades of unsuccessful attempts to harmonize terminology and argues that many prominent results described as replication tests should not be described as such adopting a conservative standard like this one can improve incentives for researchers encouraging more and better replication tests

the welfare cost of perceived policy uncertainty evidence from social security policy uncertainty reduces individual welfare when individuals have limited opportunities to mitigate or insure against the resulting consumption fluctuations we field an original survey to measure the degree of perceived policy uncertainty in social security benefits and to estimate the impact of this uncertainty on individual welfare our central estimates show that on average individuals are willing to forgo 6 percent of the benefits they are supposed to get under current law to remove the policy uncertainty associated with their future social security benefits this translates to a risk premium from policy uncertainty equal to 10 percent of expected benefits

the cost of uncertainty about the timing of social security reform abstract we develop a model to study optimal decision making in the face of uncertainty about the timing and structure of a future event the model is used to study optimal decision making and welfare when individuals face uncertainty about when and how social security will be reformed for young individuals with many years to optimally hedge the risks that they face the welfare cost of uncertainty about the timing and structure of reform is just a few basis points of total lifetime consumption in contrast the cost of reform uncertainty can be greater than 1 of total lifetime consumption for individuals close to retirement even if they have saved optimally up to that point finally the cost is significantly higher still for those who do not save optimally to hedge these risks

optimal annuitization with stochastic mortality and correlated medical costs the conventional wisdom since yaari 1965 is that households without a bequest motive should fully annuitize their investments numerous frictions do not break this sharp result we modify the yaari framework by allowing a household s mortality risk itself to be stochastic due to health shocks a lifetime annuity still helps to hedge longevity risk but the annuity s remaining present value is correlated with medical costs such as those for nursing home care thereby reducing annuity demand even without ad hoc liquidity constraints we find that most households should not hold a positive level of annuities and many should hold negative amounts jel d14 d82 g23 i12 j14 j26

general interest versus specialty journals using intellectual influence of econometrics research to rank economics journals and articles this paper demonstrates the potential problem in using existing economics journal rankings to evaluate the research productivity of scholars by constructing a new ranking of economics journals and articles based on 2142 econometrics sample articles published from 2000 to 2005 our ranking results show that the intellectual influence of an econometrics article published in several econometrics statistics journals is much higher than if it were published in the most prestigious general interest journal given that a study s potential influence is integrated into the submission decision this suggests a substantial downward bias toward econometricians when existing rankings are used to evaluate their research productivity copyright 2009 john wiley sons ltd

uncertainty resolution and the timing of annuity purchases abstract this paper considers the question of why the annuity market is thin a model is presented in which consumers have the option of purchasing annuities before discovering their survival probability they can then recontract the initial choice after the resolution of this form of uncertainty it is shown that consumers purchase insurance against their own survival probability type at a very young age and do not undertake further transactions this characterization is then used to analze the effects of introducing future income uncertainty and to investigate the trade off between old age insurance motive and portfilio flexibility

baby boomer retirement security the roles of planning financial literacy and housing wealth abstract we compare wealth holdings across two cohorts of the health and retirement study the early baby boomers in 2004 and individuals in the same age group in 1992 levels and patterns of total net worth have changed relatively little over time though boomers rely more on housing equity than their predecessors most important planners in both cohorts arrive close to retirement with much higher wealth levels and display higher financial literacy than non planners instrumental variables estimates show that planning behavior can explain the differences in savings and why some people arrive close to retirement with very little or no wealth

replication realism and robustness analyzing political regimes and international trade makers who formulate trade policy we show that dai fails to accurately replicate our model and hence erroneously claims that the new equilibria she deduces are consistent with it in addition we demonstrate that in altering one of our assumptions dai offers a model that is less realistic as well as inconsistent with the substantive literature on international bargaining finally we question the robustness of her approach due to these problems of replication realism and robustness we conclude that dai s model is of limited utility ur article established that pairs of democracies trade more freely than mixed country pairs composed of a democracy and an autocracy mansfield milner and rosendorff 2000 hereafter mmr xinyuan dai 2002 asserts that our conclusion depends on the preferences of the decision makers who formulate trade policy dai is incorrect her results differ from ours solely because she has changed a key assumption of the model given the stated assumptions of our model each player s behavior in equilibrium is optimal and is a best reply it is often useful to debate the merits of a model s assumptions and it is not surprising that altering the assumptions can affect a model s results dai however ignores one of our explicitly stated assumptions and fails to acknowledge that her results differ from ours as a consequence moreover she never touches upon the relative merits of her assumption but when choosing a modeling strategy it is important to be attentive to the assumptions one uses preferring those that are more realistic and result in more general conclusions dai s model suffers from serious problems in this regard particularly because of its unrealistic assumptions about international economic negotiations furthermore dai offers no evidence about the robustness of her claims in contrast to our model finally the empirical record lends greater support to our argument than dai s since we found strong evidence that democratic pairs have had more open trade relations than mixed pairs irrespective of policy makers preferences in the following sections we elaborate on these problems of replication realism and robustness first we show that dai fails to replicate our model faithfully and hence erroneously claims that the new equilibria she deduces are consistent with it second we show that altering our assumption as dai does yields a model that is less realistic and less consistent with the substantive literature on international bargaining third we question the robustness of her approach we conclude that her model is of limited utility not only does our model capture an important element of international economic negotiations missing in dai s approach but also it yields results that are robust and have empirical support

adverse selection in insurance markets policyholder evidence from the u k annuity market in this paper we investigate the importance of adverse selection in insurance markets we use a unique data set consisting of all annuity policies sold by a large u k insurance company since the early 1980s to analyze mortality differences among individuals who purchased different types of policies we find systematic relationships between ex post mortality and annuity policy characteristics such as whether the annuity will make payments to the estate in the event of an untimely death and whether the payments from the annuity rise over time these mortality patterns are consistent with the presence of asymmetric information in the annuity market we find no evidence of substantive mortality differences however across annuities of different size even though models of insurance market equilibrium with asymmetric information would predict such differences we also find that the pricing of various features of annuity contracts is consistent with the self selection patterns we find in mortality rates our results therefore suggest that selection may occur across many specific features of insurance contracts and that the absence of selection on one contract dimension does not preclude its presence on others this highlights the importance of considering the detailed features of insurance contracts when testing theoretical models of asymmetric information

annuities and individual welfare advancing annuity demand theory we present suffcient conditions for the optimality of full annuitization under market completeness that are substantially less restrictive than those used by yaari 1965 we examine demand with market incompleteness finding that positive annuitization remains optimal widely but complete annuitization does not how uninsured medical expenses affect demand for illiquid annuities depends critically on the timing of the risk a new set of calculations with optimal consumption trajectories very different from available annuity income streams still shows a preference for considerable annuitization suggesting that limited annuity purchases are plausibly due to psychological or behavioral biases

optimal financial knowledge and wealth inequality we show that financial knowledge is a key determinant of wealth inequality in a stochastic life cycle model with endogenous financial knowledge accumulation where financial knowledge enables individuals to better allocate lifetime resources in a world of uncertainty and imperfect insurance moreover because of how the us social insurance system works better educated individuals have most to gain from investing in financial knowledge our parsimonious specification generates substantial wealth inequality relative to a one asset saving model and one in which returns on wealth depend on portfolio composition alone we estimate that 30 40 percent of retirement wealth inequality is accounted for by financial knowledge

from unanimity to consensus an analysis of the negotiations at the eu s constitutional convention disputes filed at the world trade organization wto are attracting a growing number of third parties most observers argue that their participation influences the institution s rulings the authors argue that third parties undermine pretrial negotiations their influence on rulings is conditioned by this selection effect they test their hypotheses along with the conventional wisdom using a data set of wto disputes initiated through 2002 consistent with the authors argument they find that third party participation lowers the prospects for early settlement controlling for this selection effect the evidence also suggests that third party support increases the chances of a legal victory at the wto

wealth accumulation and the propensity to plan why do similar households end up with very different levels of wealth we show that differences in the attitudes and skills with which they approach e nancial planning are a signie cant factor we use new and unique survey data to assess these differences and to measure each household s propensity to plan we show that those with a higher such propensity spend more time developing e nancial plans and that this shift in planning is associated with increased wealth these e ndings are consistent with broad psychological evidence concerning the benee cial impacts of planning on goal pursuit those with a high propensity to plan may be better able to control their spending and thereby achieve their goal of wealth accumulation we e nd direct evidence supporting this effortful self control channel in the very strong relationship we uncover between the propensity to plan and budgeting behavior

revisiting precautionary saving under ambiguity abstract i study the two period consumption saving problem with non separable utility under ambiguity under smooth ambiguity aversion ambiguity and greater ambiguity aversion raise optimal saving when relative prudence in ambiguity preferences does not exceed 2 agents who perceive greater ambiguity have a higher demand for saving while a convex marginal ambiguity function is not sufficient for precautionary saving in time separable models berger 2014 i show that it is not even necessary in a time non separable setting

ambiguity aversion and household portfolio choice puzzles empirical evidence we test the relation between ambiguity aversion and five household portfolio choice puzzles nonparticipation in equities low allocations to equity home bias own company stock ownership and portfolio under diversification in a representative us household survey we measure ambiguity preferences using custom designed questions based on ellsberg urns as theory predicts ambiguity aversion is negatively associated with stock market participation the fraction of financial assets in stocks and foreign stock ownership but it is positively related to own company stock ownership conditional on stock ownership ambiguity aversion is related to portfolio under diversification and during the financial crisis ambiguity averse respondents were more likely to sell stocks

longevity risk retirement savings and financial innovation abstract over the last couple of decades unprecedented increases in life expectancy have raised important concerns for retirement savings we solve a life cycle model with longevity risk which can be hedged through endogenous saving and retirement decisions we investigate the benefits of financial assets designed to hedge the shocks to survival probabilities when longevity risk is calibrated to match forward looking projections those benefits are substantial this lends support to the idea that such hedging should be pursued by defined benefit pension plans on behalf of their beneficiaries finally we draw implications for optimal security design

free to trade democracies autocracies and international trade trade relations we address this issue by analyzing the relationship between regime type and trade policy in a formal model of commercial policy we establish that the ratification responsibility of the legislature in democratic states leads pairs of democracies to set trade barriers at a lower level than mixed country pairs composed of an autocracy and a democracy we test this hypothesis by analyzing the effects of regime type on trade during the period from 1960 to 1990 the results of this analysis accord with our argument democratic pairs have had much more open trade relations than mixed pairs t he effects of domestic political institutions on trade policy have long been a source of controversy among social scientists despite the widespread interest that this debate has prompted however remarkably few studies have addressed the links between political regime type and commercial policy 1 most work on the political economy of trade policy that examines institutional factors focuses only on variations in policy among democracies and avoids comparing democracies with other types of regimes moreover many analyses of trade barriers especially those by economists ignore the effects of domestic political

uncertain lifetime and intertemporal choice risk aversion as a rationale for time discounting this article makes explicit the links between preferences over lotteries on length of life and intertemporal choice it shows that the approach used by traditional life cycle models to account for uncertain survival corresponds to a strong assumption of risk neutrality with respect to length of life relaxing such an assumption leads us to develop a more general formulation of lifetime utility in which time discounting is directly related to preferences over length of life exponential and hyperbolic discounting are found to result in a first approximation from constant and hyperbolic risk aversion with respect to length of life

assessing editorial preferences towards industrial organization articles in order to evaluate the relative importance of articles on industrial organization published in major generalist or specialized scientific journals this empirical study has used the new 1991 jel classification system by regrouping contributions according to the type of article theoretical analysis industrial policy or industry studies a rate of multiple reference index has been introduced to examine the degree of relation between these three categories and used as a proxy for editorial preferences towards the type of treatment of the subject usually expected by the journal the article contents of nine generalist and five specialized journals are analysed for the two periods 1991 1995 and 1996 2000