consumer debt stress changes in household debt and the great recession this research examines psychological debt stress and changes in household debt holdings for consumers during the great recession using data from a monthly national u s household survey covering the period 2006 through 2012 debt stress measures in the population rose by over 50 at the bottom of the recession determining relative stress for eight different types of household debt we find that noncollateralized debts are more stressful than collateralized debt and that during the recession the composition of debt shifted away from collateralized debt and toward noncollateralized our empirical results show that women and hispanics experienced higher measured levels of stress jel d12 d18 i introduction in the latter part of the twentieth century household debt began to rise to high levels in the united states accompanying this there was an upsurge in reports concerning psychological debt stress coming from financial and family counselors health care professionals employers and others these reports pointed to a wide range of health family and job problems for americans arising from this increase in debt after 2007 events in the housing market marked the onset of the great recession and financial crisis many households faced declining home prices and foreclosure as well as changes in other asset values and incomes there was a general tightening of credit and changes in some lending practices by banks here we seek to add additional understanding to changes in consumer debt stress 1 during the great recession by relating them to changes in eight different types of debt holdings during this period we use data covering 2006 through 2012 from the consumer finance monthly survey cfm a national random telephone survey of household finances taken on a monthly basis from a cross

the effect of social security contributions on coverage and wages a gender perspective using a natural experiment from colombia author affiliation andres j vargas andres vargas ttu edu acknowledgment i would like to thank steve trejo dan hamermesh gerald oettinger jacqueline angel dan slesnick adriana kugler stefano farne two anonymous referees and seminar participants at the university of texas at austin the second conference on aging in the americas and texas tech university for their insightful and valuable comments i am also grateful to cesar caballero and alejandra corchuelo from the colombian national department of statistics dane for providing me with the data all remaining errors are mine 1 introductiontheoretically social security contributions are considered a benefit linked payroll tax because of the connection between the taxes paid by or on behalf of each worker and that individual s expected benefits hence with the presence of tax benefits linkages workers receive a higher compensation and the contributions are analogous to a price paid for a privately supplied commodity summers 1989 a general payroll tax on the other hand has no linkage to benefits for the individual taxpayer and therefore carries efficiency costs the benefit linkages of social security contributions depend on the extent to which workers perceive that they are getting the contributions back as benefits and on how much the individual values those benefits this depends in turn on the quality of the services offered by the entities financed by the tax if they are perceived as good employees will consider the contributions as a deferred compensation or insurance program and will accept a reduction in the net wage with no employment effects if they are perceived as bad the contributions will be considered as a pure tax with the corresponding effects on employment kesselman 1997 the objective of this article is to investigate from a gender and marital status perspective the effects of pension and health care contributions on the employment and wages of workers covered by social security regulations it is interesting to study colombia because the country implemented a large social security reform in 1993 that allows the identification the labor market effects of these contributions furthermore payments for pension and health care provisions amount to a quarter of the wage bill there this in conjunction with an 11 average contribution for other payroll taxes positions colombia as the country with the highest payroll tax rate in latin america the end of the 1980s and early 1990s was a period of deep structural transformations in latin america these reforms were part of efforts to liberalize economies and increase the participation of the market in the production and allocation of goods and services and were the product of the collapse most economies in the region experienced during the 1980s due to their mounting fiscal and monetary imbalances heckman and pages 2004 these large exogenous shifts in policy regimes offer very good case studies of the interaction between institutions and labor market outcomes the main reforms in colombia during this period included the approval of a new constitution key reforms to the labor market a major trade reform and liberalization in direct foreign investment more than two years after these reforms were put in place colombia implemented a social security reorganization that transformed the institutional framework for pension funds and health care provision law 100 of december 1993 regarding the health care regime the social security reform replaced the existing discretionary affiliation system that covered only the worker with a mandatory one that features a stricter prepayment system and covers also the family of the worker on the subject of pensions the reform introduced a fully funded social security system and gave the workers the choice between this new scheme of individual capitalization of public funds and the existing pay as you go system

risk aversion revisited in order to supply additional empirical evidence of the effect of wealth on relative risk aversion this study investigates households demand for risky assets using analysis of covariance techniques applied to the asset holdings of canadian individual households the extent and pattern of life cycle effects are also examined results generally point to decreasing relative risk aversion when housing is either excluded from the definition of wealth or treated as a riskless asset the investor s life cycle plays a prominent role in portfolio selection behavior with risk aversion increasing uniformly with age tax differentials do not seem to be an important element in investment decisions with respect to risk when the sample and wealth definitions are censored in order to approximate those of previous empirical studies their findings on relative risk aversion are generally corroborated this study presents an empirical investigation of the demand for risky assets of individual canadian households using data from the survey of consumer finances the results generally point to decreasing relative risk aversion when housing is either excluldied from the definition of wealth or treated as a riskless asset even when life cycle effects are controlled the investor s life cycle plays a prominent role in portfolio selection behavior with risk aversion increasing uniformly with age cohn lewellen schlarbaum 6 also found evidence of decreasing relative risk aversion using a restricted sample of stockowning investors while friend blume 12 concluded that constant relative risk aversion characterized household behavior the present study also finds that by restricting the sample and the wealth definitions to approximate those of cohn lewellenschlarbaum and those used by friend blume their empirical findings on relative risk aversion are generally corroborated the paper is divided into five sections the first reviews the literature on risk aversion and the second briefly describes the theory underlying the empirical tests the third section describes the data and statistical techniques used the empirical results are presented and discussed in the fourth section where the aggregate demand for risky assets is estimated and where the role of life cycle variables is examined the final section summarizes the main conclusions of the study

interval risk aversion the conventional measures of absolute and relative risk aversion are appropriate for measuring preferences locally but because they rely on differential calculus they cannot accurately capture attitudes towards high stakes risks involving potentially large changes in wealth eisenhauer 2006 has recently proposed an alternative approach which avoids the use of calculus the present article extends that work in two ways first the pratt arrow coefficient of absolute risk aversion is generalized into a measure of interval risk aversion suitable for analysing preferences over risks of any magnitude and a corresponding interval measure of relative risk aversion is constructed from preference and risk parameters without explicit reference to initial wealth or income second the new measures are applied to survey data from the bank of italy to illustrate their empirical applicability to large scale risk

marriage and other risky assets a portfolio approach we study the joint impact of gender and marital status on financial decisions first we test the hypothesis that marriage represents in a portfolio framework a sort of safe asset and that this effect is stronger for women controlling for a number of observable characteristics we show that single women have a lower propensity to invest in risky assets than married females and males second we show that the differential behavior of single women evolves over time reflecting the increasing incidence of divorce and the expansion of female labor market participation in particular towards the end of our sample period we observe a reduction in the gap between women with different family status which can be attributed to the gradual erosion of the perception of marriage as a sort of safe asset our results therefore suggest that the differential behavior of single vs married women can be explained by the evolution of gender roles in society even after controlling for differential risk attitudes our empirical investigation is based on a dataset drawn from the 1989 2006 bank of italy survey of household income and wealth

why can t a woman bid more like a man abstract we investigate gender differences and menstrual cycle effects in first price and second price sealed bid auctions with independent private values in a laboratory setting we find that women bid significantly higher and earn significantly less than men do in the first price auction while we find no evidence of a gender difference in bidding or earnings in the second price auction focusing on the first price auction we find that while the gender gap in bidding and earnings persists over the entire course of the menstrual cycle bidding of contraceptive pill users follows a sine like pattern throughout the menstrual cycle with higher than average bidding in the follicular phase and lower than average bidding in the luteal phase in comparison pill non users have a flat bidding profile throughout the cycle

women business owners a source of stability during the great recession during the period of the great recession previous research has found that women owned firms were less likely to lay off workers than were firms owned by men given that the individual firm behavio

does gender inequality affect household green consumption behaviour in china abstract in this paper we examine whether gender inequality affects a household s decision to adopt green consumption behaviour in china building upon the literature that claims women tend to be more environmentally friendly than men we hypothesise that households in which women play a stronger role adopt greener consumption lifestyles based on a nationwide survey our empirical results show that households in counties with greater gender inequality use less energy efficient electric products and are less willing to save energy the results are robust to a number of variations in our empirical models social and economic factors are included to further explore the mechanisms underlying households decisions our findings provide new insights into green development from a micro level bottom up perspective they are relevant for policy makers because they indicate that promoting gender equality can have a favourable impact on green development

gender differences in firm performance evidence from new ventures in the united states abstract prior studies examining the performance of female and male owned firms have generally reported that female owned firms underperform male owned firms however it is conceivable that the performance measures used by previous studies and or their inability to control for key demographic differences may have contributed to this finding for example few studies use size adjusted performance measures and yet we know that female owned firms tend to be smaller than their male counterparts similarly risk is typically not considered even though evidence suggests that women tend to be more risk averse than men we use a longitudinal five year database of more than 4000 new ventures that began operations in the u s in 2004 to determine whether potential differences in the performances of female and male owned firms disappear when appropriate performance measures are used and important demographic differences are controlled for in the models the performance measures we examine include 4 year closure rates return on assets roa and a risk adjusted measure sharpe ratio univariate test results confirm our expectation based on both liberal and social feminist theory that there is no difference in the performance of female and male owned new ventures provided performance is appropriately measured further these results are supported by our multivariate analyses which control for demographic differences such as industry experience and hours worked our findings should be of interest to researchers financiers advisors and policy makers perhaps more importantly our findings should also ensure that women who are contemplating starting a new venture are not discouraged from doing so by a false belief that new ventures initiated by women are less likely to succeed than those initiated by men

a dynamic model of differential human capital and criminal activity this paper presents a dynamic model of criminal activity individuals are endowed with legal and criminal human capital potential incomes in legal and criminal sectors depend on the level of the relevant human capital the rate of return and random shocks human capital can be enhanced by participating in both sectors legal human capital can also be enhanced through investment human capital is subject to depreciation individuals maximize expected discounted lifetime utility which depends on consumption the model allows analyses of the effects of recessions imprisonment rehabilitation scenarios sanctions and returns to human capital new insights such as hysteresis in criminal behaviour are obtained

are women more risk averse we find that single women exhibit relatively more risk aversion in financial decision making than single men using u s sample data we examine household holdings of risky assets to determine whether there are gender differences in financial risk taking as wealth increases the proportion of wealth held as risky assets is estimated to increase by a smaller amount for single women than for single men gender differences in financial risk taking are also influenced by age race and number of children greater financial risk aversion may provide an explanation for women s lower levels of wealth compared with men s jel j16 d81 g11

gender based risk aversion and retirement asset allocation this research examines whether women have higher risk aversion than men as demonstrated by their retirement asset allocation the analysis is extended to investigate how retirement asset investment decisions are made in married households initial results suggest controlling for demographic income and wealth differences lead to no significant difference in the proportion of retirement assets held in stocks between women and male faculty for married households with joint investment decision making results indicate that gender differences are a significant factor in explaining individual retirement asset allocation our estimates imply that women faculty are more risk averse than their male spouse jel j16 g11 d10

outside enterpreneurial capital this article investigates factors that affect rejection rates in applications for outside finance among different types of investors banks venture capital funds leasing firms factoring firms trade customers and suppliers partners and working shareholders private individuals and other sources taking into account the non randomness in a firm s decision to seek outside finance the data support the traditional pecking order theory further the data indicate that firms seeking capital are typically able to secure their requisite financing from at least one of the different available sources however external finance is often not available in the form that a firm would like this article engages with four interrelated empirical questions first what are the characteristics of privately held entrepreneurial firms that seek external outside finance and what drives the request for capital from the different potential sources of external finance banks venture capitalists private individuals leasing factoring suppliers customers partners working shareholders among other sources second what are the factors that lead to rejection or acceptance of requests for external finance given this non randomness in the types of firms that seek external finance in the spirit of heckman 1976 1979 third as various forms of financing are far from being perfect substitutes are there differences in the ability of firms to obtain capital from the different available sources fourth can firms obtain all of their desired capital from the different available sources even if it is not in the form they would like it is widely recognised that the decision to seek external finance and the type of financing sought is related to information asymmetries faced by investors regarding the entrepreneurial firm s quality see for example jensen and meckling 1976 1 where

gender diversity in the boardroom and firm performance what exactly constitutes a critical mass the under representation of women on boards is a heavily discussed topic not only in germany based on critical mass theory and with the help of a hand collected panel dataset of 151 listed german firms for the years 2000 2005 we explore whether the link between gender diversity and firm performance follows a u shape controlling for reversed causality we find evidence for gender diversity to at first negatively affect firm performance and only after a critical mass of about 30 women has been reached to be associated with higher firm performance than completely male boards given our sample firms the critical mass of 30 women translates into an absolute number of about three women on the board and hence supports recent studies on a corresponding magic number of women in the boardroom

did women s suffrage change the size and scope of government this paper examines the growth of government during this century as a result of giving women the right to vote using cross sectional time series data for 1870 1940 we examine state government expenditures and revenue as well as voting by u s house and senate state delegations and the passage of a wide range of different state laws suffrage coincided with immediate increases in state government expenditures and revenue and more liberal voting patterns for federal representatives and these effects continued growing over time as more women took advantage of the franchise contrary to many recent suggestions the gender gap is not something that has arisen since the 1970s and it helps explain why american government started growing when it did

how do long shot outcomes affect preferences for climate change mitigation this article takes a fresh look at how public uncertainty influences willingness to pay wtp for climate change mitigation programs i elicit subjective distribution functions over future global mean temperatures and wtp for mitigation i find not surprisingly that subjects on average view climate change as a bad and the higher the expected temperature increase they perceive the more they are willing to pay for mitigation subjects are generally risk averse so that they are wtp more for mitigation programs when the outcome of the program is more certain the skew of the subjective climate change distribution also affects preferences so that aversion to catastrophic outcomes is an important component of wtp for mitigation i find that models that ignore skew are likely to underestimate the influence of uncertainty on willingness to pay for climate change mitigation

gender differentiation in risk taking behavior on the relative risk aversion of single men and single women we relate an observed difference between single men sm and single women sw in attitudes towards risk to the higher value assigned to social status by sm than by sw in the marriage market low status carries a harsher penalty for sm than for sw because when selecting a partner the social status of a man is more important to a woman than the social status of a woman is to a man correlating social status with relative wealth we show how intensified distaste at experiencing low relative wealth reduces relative risk aversion

household investment decisions and offspring gender parental accounting numerous behavioural factors have been identified as having an impact on household stockholding decisions given there is both theoretical and empirical evidence to support the premise that offspring gender can influence specific types of parental preferences i test the theory that offspring gender has an effect on parental investment decision making i find that offspring gender does influence household stock market participation specifically i find that having only female offspring can significantly increase the probability of stockholding given stockholding can have large effects on household wealth levels and that family wealth levels affect intergenerational transfers this finding could have important implications for understanding distributional welfare issues

self directed pensions gender risk and portfolio choices in this paper i investigate gender differences in financial risk taking from a new perspective and i show that gender plays a different role across the risk distribution to evaluate risk taking i exploit portfolio choices following a reform that entitles almost the entire swedish workforce to choose a risk profile for a part of their public pension contributions the novel finding is that portfolio risk does not differ much between the men and women who choose less risky portfolios while the men who choose risky portfolios take on significantly more risk than do the women who choose risky portfolios the findings are robust to investors choosing the default alternative chasing past returns rebalancing and different measures of risk taking

thar she blows gender competition and bubbles in experimental asset markets do women and men behave differently in financial asset markets our results from an asset market experiment show a marked gender difference in producing speculative price bubbles mixed markets show intermediate values and a meta analysis of 35 markets from different studies confirms the inverse relationship between the magnitude of price bubbles and the frequency of female traders in the market women s price forecasts also are significantly lower even in the first period implications for financial markets and experimental methodology are discussed jel d14 d81 g01 g11 j16

what determines the level of informal venture finance investment market clearing forces and gender effects we undertake the first research to move analysis beyond estimating the propensity for a person to become an informal investor and onto the core concern which is the total volume of venture finance we find that a 1 increase in entrepreneurial activity increases the number of informal investors by 1 7 however the average invested amount declines by 0 8 leading to a net positive total increase of about 0 9 this result indicates that to a considerable extent demand for informal investment creates its own supply as a result the research finds that market forces help solve finance constraints for new ventures and hence lessen the need for public policy intervention this effect is stronger for males than females

political economy of pension plans impact of institutions gender and culture abstract national pension systems are an important part of financial intermediation and worker welfare in most countries but how and why do they differ internationally controlling for important political economic and social institutions we document that international differences in pension progressivity or how pensions reflect lifetime earnings are negatively related to masculinity uncertainty avoidance individualism long term orientation employment rights average pension levels social trust and economic inequality we also find that pension progressivity is positively related to the economic and societal role of women the extent of catholicism as well as political voice and accountability these results provide important insights for both public policy and mnc managers

gender differences in time preferences this paper reports the results from a large online experiment in which we examine gender differences in time preferences subjects choose in different situations between receiving an immediate payment and receiving a different sum later we find that more men than women are impatient and choose to receive the immediate payment at least if the implicit interest rate of the late option is neither too high nor too low

business ownership and attitudes towards risk we explore the relationship between business ownership and attitudes towards financial risk using individual level data drawn from the us survey of consumer finances scf the scf includes a measure of individuals attitudes towards risk allowing us to explore the implications of interpersonal differences in risk attitudes for the probability and success of business ownership our empirical findings suggest that willingness to take financial risk is positively associated with both the incidence and success of business ownership we find that this relationship is particularly pronounced in cases where the individual actually started the business

risk preferences in multi period consumption models the equity premium puzzle and habit formation utility abstract the relationship between the relative risk aversion measure for the utility function for consumption and that for the value function for wealth is a derived relationship whose properties depend on how consumption and wealth are defined and measured this fact together with information concerning estimates for these two relative risk aversion measures is used to give another perspective on the equity premium puzzle and to explain why it is that the habit formation utility function is effective in eliminating that puzzle a time separable utility function that can serve as an alternative to the assumption of habit formation is also presented

gender differences in portfolio risk across birth cohort and marital status this paper investigates gender differences in portfolio risk among canadian men and women and finds that controlling for a variety of personal and household characteristics never married men born post 1966 hold significantly higher risk portfolios relative to single women and married couples conversely observed gender differences among pre 1943 birth cohorts are primarily driven by disparities in characteristics rather than gender or marital status previously married women born 1955 1966 have remarkably high predicted portfolio risk relative to other women and men in the same cohort

mortgage choice as a natural field experiment on choice under risk data on approximately 280 000 borrowers from the uk survey of mortgage lenders are used to model choices between variable and fixed rate mortgages the choice is assumed to depend on three factors risk attitude interest rate expectations and individual discount rate the ordered probit model is used for estimation while taking account of a number of econometric issues including missing counterfactuals selectivity and endogeneity a large number of strong effects are found including higher income borrowers are less risk averse and have a lower discount rate and risk aversion rises with the amount borrowed providing evidence of increasing relative risk aversion

are people inequality averse or just risk averse individuals preferences for risk and inequality are measured through choices between imagined societies and lotteries the median relative risk aversion which is often seen to reflect social inequality aversion is between 2 and 3 most people are also found to be individually inequality averse reflecting a willingness to pay for living in a more equal society left wing voters and women are both more risk and inequality averse than others the model allows for non monotonic swfs implying that welfare may decrease with an individual s income at high income levels which is illustrated in simulations based on the empirical results

leveraging entrepreneurship through private investments does gender matter using project data from a random sample of phase ii research awards from the national institutes of health sbir program we estimate the relative probability that woman owned firms are able to attract private investments to fund the transition of the technology developed under the sponsorship of the sbir program to an innovation to enter the market we find that women owned firms are as much as 16 points less likely to attract private investment dollars compared to male owned firms factors excluding the size of the sbir award held constant women owned firms that received larger awards performed substantially better although the sbir program has a legislated directive to increase the participation of woman owned firms in the program our findings suggest that it might not be sufficient to overcome market perceptions about the profitability of such investments actually bringing a developed technology to market

product market competition and the financing of new ventures this paper examines the interaction between venture risk product market competition and the entrepreneur s choice between bank financing and venture capital vc financing under bank financing a debt type contract emerges as optimal which allows the entrepreneur to retain full control of the venture and thus yields strong effort incentives as long as the entrepreneur can service the debt repayment however this leads to liquidation in the case of default making the venture s success quite sensitive to exogenous even temporary shocks that may hinder debt repayment under vc financing an equity type contract emerges as optimal although it is not sensitive to exogenous shocks this contract requires the entrepreneur to share a fraction of the rents with the financier thus yielding lower effort incentives for the entrepreneur there exists a threshold level of venture risk such that bank financing is optimal if and only if venture risk is below that threshold product market competition increases the value of stronger entrepreneurial incentives and thus increases the maximum level of risk the entrepreneur is willing to take before switching from bank financing to vc financing this is a robust result that is shown to hold in various models of competition including the hotelling salop dixit stiglitz and cournot to bertrand switch this paper was accepted by lee fleming entrepreneurship and innovation

who holds the purse strings within the household the determinants of intra family decision making abstract we study the determinants of intra household decision making responsibility over economic and financial choices using a direct measure provided in the 1989 2010 bank of italy survey of household income and wealth we find that the probability that the wife is responsible for decisions increases as the wife s characteristics in terms of age education and income become closer or even higher than those of her husband s thus consistently with a bargaining approach decision making responsibility is associated with marriage heterogamy and not only along strictly economic dimensions however in support of an alternative household production approach we also find that the probability that the wife is responsible is lower when she is employed which suggests the presence of a specialization pattern assigning responsibility to the spouse with more available time our results are robust to additional controls and alternative samples

the spirit of capitalism and expectation driven business cycles abstract while news shocks are believed to be instrumental in explaining business cycles many existing models fail to predict a boom in consumption investment employment output and asset prices in response to good news about future productivity a model with the intrinsic desire for wealth is shown to generate the aforementioned responses a news driven boom is explained predominantly by an expansion of labor supply and is characterized by the falling real wage the simulated model not only captures well conventional business cycle statistics but also reproduces countercyclical real returns and hump shaped responses of hours and output to an unexpected technology shock

asset allocation and individual risk aversion 1992 asset allocation and individual risk aversion financial analysts journal vol 48 no 6 pp 32 37

risk sharing with limited commitment and preference heterogeneity structural estimation and testing in order to analyze the role of limited commitment and preference heterogeneity in explaining the consumption allocation i propose a theoretical and empirical framework to estimate and evaluate a risk sharing model where insurance transfers have to be self enforcing and the coefficient of relative risk aversion may depend on observable household characteristics i compare this model to benchmark models with full commitment and or without preference heterogeneity using data from three indian villages i find that the limited commitment model with heterogeneous preferences outperforms the benchmark models in a statistical sense and in terms of i explaining the dynamic response of consumption to idiosyncratic income shocks ii accounting for the variation of consumption unexplained by household and time effects and iii capturing the variation of inequality across time and villages and predicting changes in inequality i also use the estimated models to predict the effects of a counterfactual tax and transfer policy on the consumption allocation the limited commitment model with preference heterogeneity predicts larger benefits to the poor than its homogeneous counterpart

do finance professors invest like everyone else comparing the results of the fed s survey of consumer finances with those of a survey of finance professors at u s universities the authors found that finance professors are significantly more likely than others to invest in equities they also found that finance professors are less prone to behavioral biases because their decision not to invest in equities is based on neither the outcome of their past investments nor their short term expectations of the market see comments and response on this article

gender differences in marketing styles recent research has found that men trade stocks more frequently than women and receive a lower price as a result the behavioral finance literature attributes this greater trading activity to men s overconfidence women s lack of overconfidence and past agricultural economics research suggest the possibility that women may be better at marketing grain than men this article uses actual transactions of farmers marketing wheat and also finds that men trade more often than women women also sell two weeks later in the marketing year there is no direct effect of gender on price received but by storing longer women receive 1 4 cents bushel less than men on average in contrast to the arguments in previous research we argue that men s greater number of trades can be better explained by men enjoying trading rather than by overconfidence

gender differences in willingness to guess we present the results of an experiment that explores whether women are less willing than men to guess on multiple choice tests our test consists of practice questions from sat ii history tests we vary whether a penalty is imposed for a wrong answer and the salience of the evaluative nature of the task we find that when no penalty is assessed for a wrong answer all test takers answer every question but when there is a penalty for wrong answers women answer significantly fewer questions than men we see no differences in knowledge of the material or confidence in the test takers and differences in risk preferences explain less than half of the observed gap making the evaluative aspect of the test more salient does not impact the gender gap we show that conditional on their knowledge of the material test takers who skip questions do significantly worse on our test data as supplemental material are available at http dx doi org 10 1287 mnsc 2013 1776 this paper was accepted by uri gneezy behavioral economics

life insurance and life settlement markets with overconfident policyholders abstract we analyze how the life settlement market the secondary market for life insurance may affect consumer welfare in a dynamic equilibrium model of life insurance with one sided commitment and overconfident policyholders in our model policyholders may lapse their life insurance policies when they lose their bequest motives however they are overconfident in the sense that they may underestimate the probability of losing their bequest motives we show that in the competitive equilibrium without life settlement overconfident consumers will buy life insurance contracts with too much reclassification risk insurance for later periods the life settlement market can impose a limit on the extent to which primary insurers can exploit overconfident consumers we show that the life settlement market may increase the equilibrium consumer welfare of overconfident consumers when they are sufficiently vulnerable in the sense that they have a sufficiently large intertemporal elasticity of substitution of consumption our result is robust to alternative specifications where i insurers cannot observe the subjective or objective probability that policyholders will lose their bequest motives ii insurers can include health contingent cash surrender values csvs in the life insurance contract and iii policyholders underestimate their future mortality risk

gender diversity in the boardroom and firm financial performance the monitoring role performed by the board of directors is an important corporate governance control mechanism especially in countries where external mechanisms are less well developed the gender composition of the board can affect the quality of this monitoring role and thus the financial performance of the firm this is part of the business case for female participation on boards though arguments may also be framed in terms of ethical considerations while the issue of board gender diversity has attracted growing research interest in recent years most empirical results are based on u s data this article adds to a growing number of non u s studies by investigating the link between the gender diversity of the board and firm financial performance in spain a country which historically has had minimal female participation in the workforce but which has now introduced legislation to improve equality of opportunities we investigate the topic using panel data analysis and find that gender diversity as measured by the percentage of women on the board and by the blau and shannon indices has a positive effect on firm value and that the opposite causal relationship is not significant our study suggests that investors in spain do not penalise firms which increase their female board membership and that greater gender diversity may generate economic gains

being in someone else s shoes the role of gender in nascent entrepreneurship several studies have shown the existence of significant differences in the rate of new business creation between men and women specifically it has been shown that women are much less likely to be involved in entrepreneurship than men worldwide it is not yet understood however if such differences are the result of personal characteristics of the individual and of her economic environment or are instead the result of universal and perhaps evolutionary phenomena our empirical analysis is conducted using representative samples of population for 37 countries and a special form of bootstrapping that allows us to equalize individuals conditions and as a result analyze the choices of men and women put in identical economic environments and socio economic circumstances

social identity and preferences social identities prescribe behaviors for people we identify the marginal behavioral effect of these norms on discount rates and risk aversion by measuring how laboratory subjects choices change when an aspect of social identity is made salient when we make ethnic identity salient to asian american subjects they make more patient choices when we make racial identity salient to black subjects non immigrant blacks but not immigrant blacks make more patient choices making gender identity salient has no effect on intertemporal or risk choices

risk return preferences in the pension domain are people able to choose this paper presents new evidence for the netherlands on pension preferences and investor autonomy in the pension domain using a representative survey of about 1000 dutch citizens our main conclusions are the following risk aversion is domain dependent and highest in the pension domain the vast majority of respondents favours the currently dominant defined benefit pension system if offered a combined defined benefit defined contribution system the majority would like to have a guaranteed pension income of at least 70 of their net labour income self assessed risk tolerance and financial expertise are important individual explanatory variables of pension attitudes the average respondent considers himself financially unsophisticated and is reluctant to take control of retirement savings investment even when offered the possibility to increase expertise respondents who have chosen a relatively safe portfolio tend to switch to the riskier median portfolio when they are shown future income streams this again suggests that many respondents currently lack the skills to have investor autonomy over investment for retirement

anyone for higher speed limits self interested and adaptive political preferences swedish survey evidence indicates that variables reflecting self interest are important in explaining people s preferred speed limits and that political preferences adapt to technological development drivers who believe they drive better than the average driver as well as drivers of cars that are newer and hence safer bigger and with better highspeed characteristics prefer higher speed limits in contrast elderly people prefer lower speed limits furthermore people report that they themselves vote more sociotropically than they believe others vote on average indicating that we may vote less sociotropically than we believe ourselves one possible reason for such self serving biases is that people desire to see themselves as socially responsible

are risk averse agents more optimistic a bayesian estimation approach our aim is to analyze the link between optimism and risk aversion in a subjective expected utility setting and to estimate the average level of optimism when weighted by risk tolerance this quantity is of particular importance since it characterizes the consensus belief in risk taking situations with heterogeneous beliefs its estimation leads to a nontrivial statistical problem we start from a large lottery survey 1 536 individuals we assume that individuals have true unobservable characteristics and that their answers in the survey are noisy realizations of these characteristics we adopt a bayesian approach for the statistical analysis of this problem and use an hybrid mcmc approximation method to numerically estimate the distributions of the unobservable characteristics we obtain that individuals are on average pessimistic and that pessimism and risk tolerance are positively correlated as a consequence we conclude that the consensus belief is biased towards pessimism

financial literacy financial education and downstream financial behaviors policy makers have embraced financial education as a necessary antidote to the increasing complexity of consumers financial decisions over the last generation we conduct a meta analysis of the relationship of financial literacy and of financial education to financial behaviors in 168 papers covering 201 prior studies we find that interventions to improve financial literacy explain only 0 1 of the variance in financial behaviors studied with weaker effects in low income samples like other education financial education decays over time even large interventions with many hours of instruction have negligible effects on behavior 20 months or more from the time of intervention correlational studies that measure financial literacy find stronger associations with financial behaviors we conduct three empirical studies and we find that the partial effects of financial literacy diminish dramatically when one controls for psychological traits that have been omitted in prior research or when one uses an instrument for financial literacy to control for omitted variables financial education as studied to date has serious limitations that have been masked by the apparently larger effects in correlational studies we envisage a reduced role for financial education that is not elaborated or acted upon soon afterward we suggest a real but narrower role for just in time financial education tied to specific behaviors it intends to help we conclude with a discussion of the characteristics of behaviors that might affect the policy maker s mix of financial education choice architecture and regulation as tools to help consumer financial behavior this paper was accepted by uri gneezy behavioral economics

the gender of opponents explaining gender differences in performance and risk taking abstract analyzing 8169 contestants over 32 years of the us game show jeopardy we find that women compete more aggressively become marginally more competitive and take on more risk when paired against men specifically a woman is more likely to win a jeopardy episode and within the show to respond to a clue once responding she is also marginally more likely to respond correctly potentially most surprising even the sizeable gender gap in risk taking analyzing daily double wagering decisions disappears once a woman competes in an otherwise all male field of competitors men on the other hand wager significantly less when paired against women only but the gender of opponents does not affect their competitive performance otherwise our rich sample allows us to control for a host of potentially confounding factors and player fixed effects thereby eliminating potential biases from unobservable individual characteristics our findings are consistent with an explanation that emphasizes an adaptation to social norms applied to gender

understanding the effects of marriage and divorce on financial investments the role of background risk sharing we investigate how changes in marital status affect financial investments and how these effects vary with background risk we use detailed register based panel data and difference in differences estimators to benchmark common unobserved influences on financial investments women increase the fraction of wealth invested in stocks after marriage and decrease it after divorce whereas men show the opposite behavior households whose joint labor income risk is reduced more by marriage have a higher increase in their exposure to risky assets in marriage thus income risk sharing in the household is important for financial risk taking and investment responses to marital transitions jel g11 j12 j16 d14

gender differences in risk aversion and expected retirement benefits women are generally considered more risk averse than men controlling for age income and education this study examined the impact of gender on the superannuation retirement fund risk preferences of staff in the australian university sector the findings suggest that women choose more conservative investment strategies than men and that lower income which affects the amount members contribute to their superannuation funds is the primary contributor to the lower projected retirement benefits of women providing members with a choice among risk levels in their retirement investments should significantly benefit male and female retirees

relative risk aversion revisited through cross sectional analysis of the asset holdings of individual households this study adds to the evidence available on relative risk aversion it utilizes the national longitudinal surveys nls 1 which have advantages over the data bases used in previous studies assumptions about relative risk aversion are made in a number of theoretical economic and financial models 2 an empirical study by cohn lewellen lease and schlarbaum clls 1975 concluded that relative risk aversion declined as wealth increased across households while a second empirical study by friend and blume f b 1975 concluded from mixed evidence that relative risk aversion remained relatively constant as wealth increased the present study finds that by restricting the sample to higher wealth households and by defining wealth narrowly patterns consistent with decreasing or constant relative risk aversion emerge and these are compatible with the earlier studies however the use of a broader based sample and a more comprehensive measurement of wealth alters the conclusions and a pattern indicative of increasing relative risk aversion emerges thus the paper cautions that constant or decreasing relative risk aversion assumptions in theoretic models may not be realistic descriptions of the risk attitudes of typical u s households first the literature on relative risk aversion will be reviewed second the model used to estimate the coefficient of relative risk aversion will be discussed the third section will present empirical results and contrast them with those of earlier studies finally the material will be summarized and the conclusions indicated

gender differences in optimism and asset allocation we investigate two alternative explanations why men may hold more stocks than women do apart from the traditional explanation of a gender difference in risk aversion gender differences in either optimism or in perceived risk of financial markets might cause men to hold riskier assets our results show that men tend to be significantly more optimistic than women regarding a broad range of issues including the economy and financial markets after we take differences in optimism into account systematic gender differences in asset allocations disappear

who benefits from economic freedom unraveling the effect of economic freedom on subjective well being who benefits from economic freedom results from a panel of 86 countries over the 1990 2005 period suggest that overall economic freedom has a significant positive effect on subjective well being its dimensions legal security and property rights sound money and regulation are in particular strong predictors of higher well being the overall positive effect is not affected by socio demographics the effects of individual dimensions vary however developing countries profit more from higher economic freedom in particular from reducing the regulatory burden culture moderates the effect societies that are more tolerant and have a positive attitude toward the market economy profit the most

country effects on information seeking in global electronic networks we examine the existence of country effects on information seeking in response to market volatility and explore the institutional factors underlying these effects the empirical setting is the use of an electronic inter bank network over twelve months by 3 266 banks located in twenty five countries we find significant differences across countries in banks information seeking behavior in response to market volatility influenced both by differences in national industry arrangements and by national culture however national industry arrangements and national culture influence banks information seeking in distinct ways

is financial instability male driven gender and cognitive skills in experimental asset markets abstract the hypothesis that price stability would reliably increase with the fraction of women operating in financial markets has been frequently suggested in policy discussions to test this hypothesis we conducted 10 male only 10 female only and 10 mixed gender experimental asset markets and compared the effects of gender composition confidence risk attitude and cognitive skills male and female markets have comparable volatility and deviations from fundamentals whereas mixed gender markets are substantially more stable on the other hand higher average cognitive skills of the group are associated with reduced market volatility individual level analysis shows that subjects with higher cognitive skills trade at prices closer to fundamental values and earn significantly higher profits similarly mixed markets exhibit lower mispricing particularly for traders with lower cognitive skills our results are demonstrated to hold in other experimental asset market studies suggesting that a mixed gender composition reduces mispricing across different types of asset markets

the trade off between supervision cost and performance based pay does gender matter the study adds to the literature by providing new empirical evidence consistent with efficiency wage theory and by providing estimates of the average cost of supervising a worker by industry this research uses the 1996 wave of the nlsy and incorporates estimates of supervision cost computed from industry classifications we further detect presence of no gender differences neither in risk averseness nor in productivity gains associated with cost of supervision and performance based pay while the findings imply that employers should consider the incentive effects of supervision and performance based pay when constructing pay schemes there is no need for employers to devote resources to constructing gender specific payment mechanisms our evidence suggests that profit maximizing firms should treat males and females equally and develop gender neutral pay schemes

the role of risk and risk aversion in adoption of alternative marketing arrangements by the u s farmers the objective of this article is to analyse the relationship between farmers risk aversions and the riskiness of various agricultural enterprises to see which marketing arrangements would typically emerge relying on the basic agency theory model we hypothesize the prevalence of alternative marketing arrangements amas in situations with high risk averse farmers and high risk enterprises and the prevalence of spot cash markets for low risk averse participants and less risky enterprises our empirical tests are carried out using the 2004 agricultural resource management survey arms the empirical results are largely supportive of the agency theory of contract choice

exploring the determinants of on farm transitions evidence from rural china to shed light on the sustainable development of rural areas we study the determinants of transitions from subsistence farming into either formal agricultural employment or agricultural entrepreneu

the risk preferences of u s executives in this paper i elicit risk attitudes of u s executives by calibrating a subjective option valuation model for option exercising data 1996 to 2008 yielding approximately 65 000 values of relative risk aversion rra for almost 7 000 executives the observed behavior is generally consistent with moderate risk aversion and a median mean rra close to one three values are validated for chief executive officers ceos by testing theory based predictions on the influence of individual characteristics on risk preferences such as gender marital status religiosity and intelligence senior managers such as ceos presidents and chairpersons of the boards of directors are significantly less risk averse than non senior executives rra heterogeneity is strongly correlated with sector membership and firm level variables such as size performance and capital structure alternative factors influencing option exercises are tested for their influence on rra values this paper was accepted by brad barber finance

gender bias and credit access we extract an exogenous measure of gender bias from survey responses by descendants of u s immigrants on questions about the role of women in society we then use data on around 6 000 small business firms from 17 countries and find that in high gender bias countries female entrepreneurs are more likely to opt out of the loan application process and to resort to informal finance even though banks do not appear to actively discriminate against them these results are not driven by credit risk differences between female and male owned firms or by any idiosyncrasies in the set of countries in our sample

uncertainty and ratification failure i study a game where two agents bargain on an agreement to replace the status quo for their agreement to come into effect they need the approval of a third agent the preferences of this third agent is private information but there is communication among agents i study this game in the context of international agreements to provide an explanation for involuntary ratification failures i show that under certain assumptions the informational deficiency is incurable due to incentives to misrepresent preferences and that a parliament whose majority is more hawkish than their executive prefers the executive to be risk averse

gender differences in risk behavior an analysis of asset allocation decisions in ghana abstract within a developing country context little is known about gender differences in risk preferences as reflected in asset allocation decisions much of the empirical literature within development studies on risk and investment in assets centers on risk coping and risk management strategies of households with some exceptions this literature primarily focuses on household and household level outcomes previous experimental studies have explored gender differences in risk preferences in developing countries with inconclusive results using unique national representative sex disaggregated data with self reported asset ownership and wealth information of individuals within households in ghana from a multi country project the gender asset gap project this paper explores men and women s risk preferences as reflected in asset allocation decisions through a decomposition method typically used to explore gender differences in wage employment the study finds that although women hold significantly fewer risky assets than men in absolute terms and as a proportion of their wealth in the sample men and women do not have systematically different risk preferences the results in this paper differ from the results in many empirical studies in developed countries where women are often found to be more risk averse than men as the first study to look at gender differences in risk aversion in terms of asset allocation with in the developing country context the results from this study provide evidence that gender differences in risk attitudes may vary by cultural context as the growing experimental literature in developing countries suggests

self selection and the forecasting abilities of female equity analysts this paper investigates whether there are systematic differences between the forecasting style and abilities of female and male analysts and whether market participants recognize these differences my key conjecture is that only female analysts with superior forecasting abilities enter the profession due to a perception of discrimination in the analyst labor market consistent with this conjecture i find that female analysts issue bolder and more accurate forecasts and their accuracy is higher in market segments in which their concentration is lower further the stock market participants are aware of the male female skill