individual risk attitudes measurement determinants and behavioral consequences this paper studies risk attitudes using a large representative survey and a complementary experiment conducted with a representative subject pool in subjects homes using a question asking people about their willingness to take risks in general we find that gender age height and parental background have an economically significant impact on willingness to take risks the experiment confirms the behavioral validity of this measure using paid lottery choices turning to other questions about risk attitudes in specific contexts we find similar results on the determinants of risk attitudes and also shed light on the deeper question of stability of risk attitudes across contexts we conduct a horse race of the ability of different measures to explain risky behaviors such as holdings stocks occupational choice and smoking the question about risk taking in general generates the best all round predictor of risky behavior

representative trust and reciprocity prevalence and determinants this paper provides evidence about the determinants of trust and reciprocal inclinations that is a tendency for people to respond in kind to hostile or kind actions in a representative setting we investigate the prevalence of reciprocity in the population the correlation between trust and positive and negative reciprocal inclinations within person the individual determinants of reciprocity and the relationship with psychological measures of personality we find that most people state reciprocal inclinations in particular in terms of positive reciprocity as well as substantial heterogeneity in the degree of trust and reciprocity trust and positive reciprocity are only weakly correlated while trust and negative reciprocity exhibit a negative correlation in terms of determinants being female and increasing age are associated with stronger positive and weaker negative reciprocal tendencies taller people are more positively reciprocal but height has no impact on negative reciprocity psychological traits also affect trust and reciprocity jel d63 j3 j6

the economic consequences of extending the use of fair value accounting in regulatory capital calculations a discussion abstract when the federal reserve following basel iii proposed removing the accumulated other comprehensive income aoci filter that shields regulatory capital from unrealized gains and losses on available for sale afs debt securities it triggered fierce opposition the topic is at the heart of the debate about the role of fair value accounting for financial stability chircop and novotny farkas 2016 investigate banks stock price reaction and investment behavior around news events up to the announcement of the final decision i focus on the question of whether their evidence is sufficiently strong to convince either side in the debate

the economic consequences of extending the use of fair value accounting in regulatory capital calculations we investigate the economic consequences of the basel iii requirement to include unrealized fair value gains and losses on available for sale afs securities in regulatory capital using data for u s banks we find negative market reactions around news indicating an increased likelihood of this regulatory change being implemented consistent with increased regulatory costs we also find that banks affected by this regulation reduce their investment in risky afs securities relative to unaffected banks this result suggests that extending the use of fair values for regulatory purposes reduces ex ante risk taking

panacea pandora s box or placebo feedback in bank mortgage backed security holdings and fair value accounting we examine the relation between bank holdings of mortgage backed securities mbs and mbs prices theory suggests feedback between mbs holdings and underlying asset markets can be aggravated by mark to market accounting we measure feedback by the relation between asset returns and the changes in bank mbs holdings consistent with the existence of feedback effects related to mark to market we find that for banks with high mbs more nonperforming loans and lower total capital ratio changes in bank mbs positions are positively associated with changes in mbs prices and that this relation is reduced after the april 2009 mark to market rule clarification to assess the effect of feedback on shareholder value we test whether the stock price response of banks to the announcement of the mark to market accounting rule clarification is associated with the intensity of feedback behavior we find that the stock market reaction to the rule change is more positive for banks with more mbs higher nonperforming loans and higher pre rule change feedback we also find positive bond price reactions to the rule change overall our results suggest feedback related to mark to market accounting had a measurable effect on shareholder value 2011 published by elsevier b v

energy conservation investment do consumers discount the future correctly we argue that the apparently high discount rates attributed to investors making energy conservation investments are not irrational or the result of some market failure rather they may result from an investor recognizing that many conservation investments entail substantial sunk costs in the presence of these costs and uncertainty over future conservation savings consumers should use a higher hurdle rate for investment than if there were no uncertainty simulations suggest that the hurdle rate should be about four times greater than the standard rate an implication of our model is that tax subsidies for the purchase of conservation capital are likely to be ineffective we discuss alternative policy approaches which are more likely to increase energy efficient investment namely mandatory efficiency standards and energy taxes

price sensitivity of residential energy consumption in norway abstract the main aim of this paper is to test the stability of the results of a model which focus on the relationship between the choice of heating equipment and the residential energy consumption the results for the income and energy price variables are of special interest stability in the time dimension is tested by applying the model on micro data for each of the years 1993 1995 the parameter estimates are stable within a 95 confidence interval however the estimated impact of the energy price variable on energy consumption was considerably weaker in 1994 than in 1993 and 1995 the results for two different income groups in the pooled data set are also subject to stability testing the energy price sensitivity in residential energy consumption is found to be higher for high income households than for low income households

determinants of residential space heating expenditures in germany abstract we first examine the determinants of household expenditures on space heating and hot water supply in germany a number of socio economic characteristics of households are included along with building characteristics our analysis covers information on more than 12 000 households in germany for the years 1998 and 2003 the analysis continues by investigating whether different kinds of households are affected differently by increases in energy prices households in owner occupied properties are less affected compared to those in rented accommodation this could be because owners are more likely to have installed energy efficient heating and hot water supply systems and landlords have less of an incentive to improve the conditions of their rented accommodations an energy policy targeting especially the latter group might benefit not only households in rented accommodation but might also increase energy efficiency and reduce greenhouse gas emissions as well

quality and price personalization under customer recognition a dynamic monopoly model with contrasting equilibria abstract we present a model of market hyper segmentation where a monopolist acquires within a short time all information about the preferences of consumers who purchase its vertically differentiated products the firm offers a new price quality schedule after each commitment period lower consumer types may have an incentive to delay their purchases until next period to obtain a better introductory offer the monopolist counters this incentive by offering higher informational rents considering the dynamic game played by the monopolist and its customers we find that there is always a markov perfect equilibrium mpe in which the firm immediately sells the good to all customers offering the mussa rosen static equilibrium schedule to first time customers and getting full commitment profits however if the commitment period between two offers is long enough there is another mpe with gradual market expansion contrary to the coasian result for a durable good monopoly we find that in both equilibria the profit of the monopolist increases and the aggregate consumers surplus decreases as the interval of commitment shrinks the model yields policy implications for regulations on collection and storage of customers information

a micro econometric analysis of determinants of unsustainable consumption in the netherlands recently much attention has been given to the notion of sustainable consumption whereas environmental economics traditionally has focused environmental policy analysis on producers this new notion broadens the perspective to include environmental policies aimed at directly influencing consumer decisions regarding buying using and recycling products this could suggest policies that link not only to price incentives but also and especially to persuasive instruments such as education and information provision these policies might take into account certain characteristics of households such as lifestyle and family size this article presents a first econometric analysis of consumption in the context of environmental sustainability relationships between different types of household expenditures and a range of household characteristics are assessed based on a large micro data set of households for the netherlands use is made of various demand models and econometric techniques to adequately address theoretical and technical issues involved the article ends with a discussion of the implications of the results for environmental policy directed at stimulating sustainable consumption

fair value accounting and managers hedging decisions real effect of fair value accounting we conduct two experiments with experienced accountants to investigate how fair value accounting affects managers real economic decisions in experiment 1 we find that participants are more likely to make suboptimal decisions e g forgo economically sound hedging opportunities when both the economic and fair value accounting impact information is presented than when only the economic impact information is presented or when both the economic and historical cost accounting impact information is presented this adverse effect of fair value accounting is more likely when the price volatility of the hedged asset is higher which is a situation where paradoxically hedging is more beneficial we find that the effect is mediated by participants relative considerations of economic factors versus accounting factors e g earnings volatility experiment 2 shows that enhancing salience of economic information or separately presenting net income not from fair value remeasurements reduces the adverse effect of fair value accounting our findings are informative to standard setters in their debate on the efficacy of fair value accounting

energy consumption for space heating a discrete continuous approach energy demand for space heating is estimated using a discrete continuous choice model which focuses on the relationship between the choice of heating equipment and energy consumption the model is estimated on norwegian micro data and the two stages of the model are estimated simultaneously the capital cost and the operating cost of the heating systems are both found to have a significant impact on the choice of heating system furthermore the results show that household characteristics are important variables in residential energy models energy price elasticities and income elasticities are also estimated

the intergenerational transmission of risk and trust attitudes recent theories endogenize the attitude endowments of individuals assuming that they are shaped by the attitudes of parents and other role models this paper tests empirically for the relevance of three aspects of the attitude transmission process highlighted in this theoretical literature 1 transmission of attitudes from parents to children 2 an impact of prevailing attitudes in the local environment on child attitudes and 3 positive assortative mating of parents which enhances the ability of a parent to pass on his or her attitudes to the child we focus on two fundamentally important attitudes willingness to take risks and willingness to trust others we find empirical support for all three aspects providing an empirical underpinning for the literature an investigation of underlying mechanisms shows that socialization is important in the transmission process various parental characteristics and aspects of family structure are found to strengthen the socialization process with implications for modeling the socialization production function and for policies focused on affecting children s non cognitive skills the paper also provides evidence that the transmission of risk and trust attitudes affects a wide variety of child outcomes implying a potentially large total effect on children s economic situation

procyclicality of u s bank leverage procyclicality of u s bank leverage in light of the current debate about the link between accounting and financial stability we investigate the determinants of procyclical book leverage for us commercial and savings banks we find that total asset growth and gdp growth are both positively related to book leverage growth our evidence is not consistent with the notion that fair value accounting contributes to procyclical leverage or that historical cost accounting reduces procyclicality overall the business model of banks is more important for procyclical leverage than accounting or regulatory risk weights this article is protected by copyright all rights reserved

technological progress and sustainable development what about the rebound effect abstract sustainability concepts that rest on the idea of resource or energy efficiency improvements due to technological progress tend to overestimate the potential saving effects because they frequently ignore the behavioral responses evoked by technological improvements efficiency improvements also affect the demand for resources and energy and often an increase in efficiency by 1 will cause a reduction in resource use that is far below 1 or sometimes it can even cause an increase in resource use this phenomenon is commonly labeled the rebound effect which is well known among energy economists but never attracted much attention in ecological economics the paper starts with the traditional neoclassical analysis of the rebound effect in a partial equilibrium framework that concentrates on the demand of one particular energy service such as mobility or room temperature it also provides an overview of some of the main empirical studies based on this model that mostly confirm the existence of the rebound effect but are controversial about its actual importance however we have to go beyond the neoclassical single service model in order to take care of the variety of possible feedback affecting energy use the paper presents two important expansions of the single service model in order to show the potential relevance of the rebound effect to ecological economics first it is shown that in a multi services model it proves to be difficult to make general statements about the relevance of the rebound effect in this case the overall effect of an increase in energy efficiency on total energy use depends on the on the assumptions about the substitutability between the services considered and the direction of the income effect second the paper also tries to take care of the fact that changes in resource use or energy use are frequently just side effects of other forms of technological progress especially technological change of a time saving nature can have a large influence on energy use as many time saving devices for example faster modes of transport require an increase in energy consumption that is frequently reinforced by a rebound effect with respect to time this effect will be especially strong when wages are high and at the same time energy prices are low as is currently the case in most industrialized countries consequently the paper also provides a strong argument for the introduction of energy taxes

demand for space heating in apartment blocks measuring effects of policy measures aiming at reducing energy consumption abstract panel data covering the period 1984 1995 on energy consumption and technical characteristics of apartment blocks from denmark are analysed in order to measure effects of policy measures aimed at reducing the consumption of energy for space heating results indicate that building regulations have been important in reducing energy consumption in new buildings furthermore conditional price responses are estimated to be relatively small or non existent indicating small short run effects of fuel taxes on energy consumption in apartment blocks finally a consultancy scheme implemented with the purpose of improving knowledge about the potential for energy savings is found to have had moderate effects

the role of risk and trust attitudes in explaining residential energy demand evidence from the united kingdom recent research into the determinants of household energy consumption has aimed to incorporate findings from economics sociology and psychology in order to obtain a more comprehensive understanding of the factors determining energy demand the current paper contributes to this nascent stream of literature by studying the relationship between risk attitudes trust propensity and energy consumption at the household level drawing on the british household panel survey a well known data set in the context of energy studies i show that trust is negatively correlated with household energy demand while higher risk tolerance leads to increases in residential energy use potential explanations for these findings are investigated suggesting that risk preferences may be related with overall appliance stock and the size of the rebound effect

environmental regulation of households an empirical review of economic and psychological factors abstract the literature on sustainable consumption and environmental regulation of household behavior is dominated by conceptual and normative approaches as a result many suggestions lack a firm empirical basis to overcome this deficiency econometric studies in three areas of environmentally relevant activities of households are reviewed residential use of energy generation of solid waste and recycling and residential use of water next to price and income elasticities attention is devoted to individual socio economic features and psychological factors such as attitudes knowledge perceptions and values potential psychological determinants and related insights are further examined by discussing a range of representative and illustrative statistical psychological studies of environmental behavior one important general finding is that there are very few empirical studies that systematically combine socio economic and psychological determinants a range of insights for environmental policy is derived and research recommendations are offered

does fair value accounting exacerbate the procyclicality of bank lending this study investigates whether fair value accounting contributes to the procyclicality of bank lending using banks approval denial decisions on residential mortgage applications to capture banks supply of credit i find no evidence that fair value accounting has procyclical effects on bank lending over the past two business cycles i further identify two reasons for this result first the main accounting item distinguishing fair value accounting from historical cost accounting unrealized gains and losses on available for sale securities does not affect lending decisions second unrealized gains and losses on available for sale securities are not procyclical as the risk free interest rate rises during some expansionary periods resulting in unrealized losses while the risk free interest rate and sometimes the default spread falls during some recessionary periods resulting in unrealized gains

who rebounds most estimating direct and indirect rebound effects for different uk socioeconomic groups this study estimates the combined direct and indirect rebound effects from various types of energy efficiency improvement and behavioural change by uk households and explores how these effects vary with total expenditure the methodology is based upon estimates of the expenditure elasticity and ghg intensity of 16 categories of goods and services and allows for the capital cost and embodied emissions of the energy efficiency measures themselves the study finds that rebound effects in ghg terms are modest 0 32 for measures affecting domestic energy use larger 25 65 for measures affecting vehicle fuel use and very large 66 106 for measures that reduce food waste furthermore measures undertaken by low income households are associated with the largest rebound effects with direct emissions forming a larger proportion of the total rebound effect for those households measures that are subsidised or affect highly taxed energy commodities may be less effective in reducing aggregate emissions these findings highlight the importance of allowing for rebound effects within policy appraisals as well as reinforcing the case for economy wide carbon pricing

an empirical analysis of risk aversion and income growth risk aversion enters many theoretical models of human capital investment but attitudes toward risk have not been incorporated in empirical models of human capital investment this article develops a model of the joint investment in financial wealth and human wealth to show that human capital investment is an inverse function of the degree of relative risk aversion using data from the survey of consumer finances i find that wage growth is positively correlated with preferences for risk taking more educated individuals are also more likely to be risk takers thus risk taking explains a portion of the returns to education

did risk based capital allocate bank credit and cause a credit crunch in the united states this paper examines the reallocation of bank credit from loans to securities in the early 1990s using data on virtually all u s banks from 1979 to 1992 the authors investigate implementation of risk based capital and other regulatory and nonregulatory changes as possible causes of a supply driven credit crunch the main empirical implication of these credit crunch hypotheses that the reallocation of credit would be most associated with low capital high risk banks generally is not consistent with the data much of the reallocation is associated with demand side factors but it is difficult to differentiate cleanly among these factors copyright 1994 by ohio state university press