the great recession and the bulimia of us consumers deep causes and possible ways out this paper focuses on the apparent bulimia of us consumers and its role in the recent crisis we seek to show how various characteristics of american society and the us economy are related to this phenomenon we illustrate some structural features of the us economy and public policies that may have created a difference in terms of patterns of consumption and market participation between the usa and continental europe we then present some explanations of us hyperconsumerism put forward by psychologists and sociologists thus relating this phenomenon to the decline in subjective well being and social capital documented in the usa we also discuss how the negative endogenous growth paradigm may help to account for it finally we review the debate on the us policy agenda by underlining some weaknesses in the two politically more realistic options and by outlining a third policy strategy which is possibly preferable for people s long term well being

migration under uncertainty about quality of locations abstract this paper develops a search theoretic framework for analyzing migration decisions of workers who can only observe the quality of a location by migrating to the location after accepting a job there after learning the location quality the worker can stay at the current job search locally at the same location or search for a job at another location leading to repeat migration this paper develops the properties of optimal search migration and repeat migration decisions and finds how revealed location quality influences the tradeoffs between local search and repeat migration the effects of search costs and better job opportunities on the reservation levels of wages and revealed quality levels are also determined

social capital and institutional trust evidence from bolivia s popular participation decentralisation reforms this article uses bolivia s emblematic process of decentralisation popular participation to explore the elusive relationship between interpersonal and institutional trust as central components of social capital the evidence corroborates the notion that basic social interaction and more complex institutional settings are strongly co related such as the trust that individuals place in their governments and institutions the data also shows that social capital has a direct effect on civic activism and political behaviour at the individual level the notion of social capital is present throughout the analysis as this type of capital allows observing and measuring changes in social structures that affect more complex institutional arrangements

is social capital declining in the united states a multiple indicator assessment despite a great deal of interest in a possible decline of social capital in the united states scholars have not reached a consensus on the trend this article improves upon previous research by providing a model of social capital that has explicit links to theories of social capital and that analyzes multiple indicators of social capital over a 20 year period the results do not consistently support putnam s claim of a decline in social capital showing instead some decline in a general measure of social capital a decline in trust in individuals no general decline in trust in institutions and no decline in associations

socio economic status health and lifestyle abstract the role of lifestyle in mediating the relationship between socio economic characteristics and health has been discussed extensively in the epidemiological and economic literatures previous analyses have not considered a formal framework incorporating unobservable heterogeneity in this paper we develop a simple economic model in which health is determined partially by lifestyle which depends on preferences budget and time constraints and unobservable characteristics we estimate a recursive empirical specification consisting of a health production function and reduced forms for the lifestyle equations using maximum simulated likelihood msl for a multivariate probit mvp model with discrete indicators of lifestyle choices and self assessed health sah on british panel data from the 1984 and 1991 health and lifestyle survey hals we find that sleeping well exercising and not smoking in 1984 have dramatic positive effects on the probability of reporting excellent or good sah in 1991 and that these effects are much larger having accounted for endogeneity the failure of epidemiological analyses to account for unobserved heterogeneity can explain their low estimates of the relevance of lifestyle in the socio economic status health relationship indicators for prudent alcohol consumption and eating breakfast in 1984 are not found to be statistically significant determinants of sah in 1991

the quantity and quality of life and the evolution of world inequality gdp per capita is usually used to proxy for the quality of life of individuals living in different countries welfare is also affected by quantity of life however as represented by longevity this paper incorporates longevity into an overall assessment of the evolution of cross country inequality and shows that it is quantitatively important the absence of reduction in cross country inequality up to the 1990s documented in previous work is in stark contrast to the reduction in inequality after incorporating gains in longevity throughout the post world war ii period health contributed to reduce significantly welfare inequality across countries this paper derives valuation formulas for infra marginal changes in longevity and computes a full growth rate that incorporates the gains in health experienced by 96 countries for the period between 1960 and 2000 incorporating longevity gains changes traditional results countries starting with lower income tended to grow faster than countries starting with higher income we estimate an average yearly growth in full income of 4 1 percent for the poorest 50 percent of countries in 1960 of which 1 7 percentage points are due to health as opposed to a growth of 2 6 percent for the richest 50 percent of countries of which only 0 4 percentage points are due to health additionally we decompose changes in life expectancy into changes attributable to 13 broad groups of causes of death and three age groups we show that mortality from infectious respiratory and digestive diseases congenital perinatal and ill defined conditions mostly concentrated before age 20 and between ages 20 and 50 is responsible for most of the reduction in life expectancy inequality at the same time the recent effect of aids together with reductions in mortality after age 50 due to nervous system senses organs heart and circulatory diseases contributed to increase health inequality across countries

migrant information job search and the remigration decision labor force migration poses two important questions for the economist the first concerns the nature magnitude and direction of labor force response to perceived earnings differentials over space the latter and more complex question concerns the effectiveness or efficiency of this response namely migration and other market mechanisms in reducing these earnings differentials over time both questions are addressed in this paper by examining relationships among 1 quality of information obtained prior to a move 2 search duration at the migration destination and 3 the likelihood of subsequent perhaps corrective remigration these relationships are analyzed using the human capital model of migration remigration and data from the 1970 u s census excerpt

structural transformation and the deterioration of european labor market outcomes this paper examines hours worked in continental europe and the united states from 1956 to 2003 the empirical work establishes two results first hours worked in europe decline by almost 45 percent compared to the united states over this period second this decline is almost entirely accounted for by the fact that europe develops a much smaller market service sector than the united states a simple model of time allocation is used to understand these patterns i find that relative increases in taxes and technological catch up can account for most of the differences between the european and american time allocations over this period

endogenous growth decline in social capital and expansion of market activities abstract we model in an endogenous growth set up the hypotheses that the expansion of market activities weakens social capital formation and that firms can invest in formal mechanisms of control and enforcement to substitute for social capital trust work ethics honesty the model shows that the economy tends to grow faster when it is relatively poorer in social capital and that perpetual growth can be consistent with the progressive erosion of social capital these results may help to reconcile putnam s claim that social capital has declined in the u s with the satisfactory growth performance of the u s over the same period

environmental and social degradation as the engine of economic growth abstract in this paper a commonly owned resource an environmental or social asset and a private good are substitutes in consumption the households can buy the private good on the market while the resource is available for free the resource is renewable but its ability to regenerate declines with the level of aggregate production each single firm producing the private good has only a negligible impact on the resource but the impact caused by the entire population of firms is considerable in the face of a decrease in the stock of the resource households are induced to increase their participation in market activities in order to raise their income and buy more private goods hence each household contributes to a further increase in aggregate production thus causing additional damage to the resource s ability to regenerate and feeding the growth process given the presence of negative externalities multiple equilibrium paths are possible in this situation social conventions may guide individuals to coordinate expectations and behavior toward a particular steady state one can speculate that the dominance of cultural values favorable to a lifestyle based on a mix of high consumption and hard work leads the economy to converge on a pareto inferior steady state

identity and the economics of organizations on plebes first day at west point called r day they strip down to their underwear their hair is cut off they are put in uniform they then must address an older cadet with the proper salute and with the statement sir new cadet doe reports to the cadet in the red sash for the first time as ordered plebes must stand and salute and repeat and stand and salute and repeat until they get it exactly right all the while being reprimanded for every tiny mistake in the summary of david lipsky 2003 pp 145 154 who spent four years tracking a company of cadets at west point on r day you surrender your old self in stages but r day is just the beginning of the training and personal re engineering that is to come so that west point graduates emerge four years later as loyal officers in the u s army lipsky shows that despite some failure this tough program is remarkably successful in creating officers with the will to lead in battle economists current picture of organizations and work incentives has no place for the west point program and the motivations it seeks to inculcate in recruits in a standard economic model an individual s preferences are fixed and utility depends only on pecuniary variables the army s aim at west point is to change cadets preferences they wish to inculcate non economic motives in the cadets so that they have the same goals as the u s army alternatively stated the goal of west point is to change the identity of the cadets so they will think of themselves above all else as officers in the u s army they will feel bad about themselves they will lose utility if they fall short of the ideals of such an officer this change in identity

job search with belated information and wage signalling the paper uses multi armed bandit methods to characterize the optimal policy of the job search problem with belated information that is if the non pecuniary aspect of the job is discerned only after the job has been tested for one period there is given a sufficient condition such that the reservation wage property of the optimal search policy remains preserved even if a job searcher believes in a positive resp negative correlation between the wage rate pecuniary aspect and the job quality non pecuniary aspect offered by a firm

a sequential study of migration and job search this paper designs a multiarmed bandit mab sequential model for the analysis of the migration job search process the implications either are compatible with well known migration behavior or when novel are also plausible for example regions with large wage variability attract migrants and regions with large nonpecuniary returns increase both in migration and out migration a major advantage of this approach is the relative ease with which martingale estimators can be derived from the martingale structure of the model these martingale methods are exemplified for the return migration phenomenon

consumer search with uncertain product quality this paper presents a unified model of consumer search when both prices and qualities are uncertain it is assumed that price can be observed prior to purchase but that quality can be observed only after purchase and experience this two stage decision problem is of particular interest since in practice there is usually some connection between quality and price of the many interesting implications of this dependence explored in this paper is the result that the usual reservation price rule may no longer be optimal indeed the optimal stopping set may take one of several alternative and more realistic forms

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

why do europeans work so little market work per person is roughly 10 higher in the united states than in sweden however if we include the work carried out in home production the total amount of work only differs by 1 i set up a model and show that differences in policy mainly taxes can account for the discrepancy in both labor supply and home production between sweden and the united states these results are independent of the elasticity of labor supply

prevention against equality common sense supports prevention policies aimed at improving survival prospects among the population it is also widely acknowledged that an early death is a serious disadvantage and that attention should be paid to the compensation of short lived individuals this paper re examines the compatibility of those two concerns prevention against early death and compensation for early death we show that under mild conditions no social ordering on allocations can satisfy a concern for prevention and a concern for compensation the reason is that if it is socially desirable to raise the number of survivors through prevention it must also be under costly prevention desirable to deteriorate the living standards of the short lived we then explore two approaches to the prevention compensation dilemma and study the associated optimal allocation of resources

stressed out on four continents time crunch or yuppie kvetch social commentators have pointed to the problems of citizens of industrialized countries especially working women who face time stress an absence of sufficient time to accomplish all their tasks an economic theory views time stress as an increasing function of the shadow price of time and suggests it will be more prevalent in households with higher incomes and whose members work longer in the market or on required homework evidence from microeconomic data sets for australia germany korea and the united states corroborates this view adults in higher income households perceive more time stress in the united states a move from the 25 th to the 75 th percentile of the income distribution raises time stress by half as much as an interquartile change in weekly market work the relative effects of increased income compared to increased market work are larger in germany smaller in australia and roughly the same in korea time stress is part time crunch but much is also part yuppie kvetch

systematic search belated information and the gittins index abstract this paper uses multi armed bandit methods to characterize the optimal solution of a rather complicated search problem the job search is conducted systematically and there is belated information that is some aspect of the job is discerned only after the job has been tested for one period

home economic conditions and the decision to migrate new evidence for the u s labor force labor force response to differential economic conditions across space has received considerable attention within the economic literature on labor mobility and migration based upon research on this topic described within survey articles by greenwood 6 ritchey 20 and shaw 23 a consensus has developed namely that the level and propensity of labor force out migration from an area are unaffected by economic conditions within that area on the other hand demographic characteristics of the resident population and economic conditions outside the area are commonly believed to have significant influence on both the magnitude and direction of this outflow this apparent economic paradox was supported by early work of perloff et al 19 lowry 14 and lansing and mueller 10 although a significant exception appeared in a later study by miller 17 recent econometric studies have in general reconfirmed this paradox for instance graves 5 234 found results for origin economic conditions that run counter to the usual expectations levy and wadycki 12 present origin economic variables that are either insignificant or of wrong sign finally in one of the most recent and comprehensive studies of place to place migration fields 3 27 concludes that in

economics and identity this paper considers how identity a person s sense of self affects economic outcomes we incorporate the psychology and sociology of identity into an economic model of behavior in the utility function we propose identity is associated with different social categories and how people in these categories should behave we then construct a simple game theoretic model showing how identity can affect individual interactions the paper adapts these models to gender discrimination in the workplace the economics of poverty and social exclusion and the household division of labor in each case the inclusion of identity substantively changes conclusions of previous economic analysis

household migration and the local public sector evidence from sweden 1981 1984 westerlund o and wyzan m l 1995 household migration and the local public sector evidence from sweden 1981 1984 reg studies 29 145 157 in this paper the relationship between public sector attributes and household characteristics and swedish household migration 1981 4 is studied we report results separately for metropolitan and non metropolitan areas because the per capita levels of the tax base and intergovernmental grants are theoretically important migration determinants where population is sparse whilst the tax rate may be more important where population is dense because fiscal influences are likely to be stronger for short distance migration we apply multinomial logit to a three way choice set staying and migrating short and long distances empirical results support our fiscal hypotheses and are consistent with previous findings on household characteristics westerlund o et wyzan m l 1995 la migration des menages et le secteur public local des preuves provenant de la suede de

immigrant self employment the family as social capital and the value of human capital we examine how self employment among asian and hispanic immigrants is affected by family composition and human capital class resources because of collective interests and strong personal ties the family facilitates the pooling of labor power and financial resources enterprising immigrants draw on these resources when establishing and operating small businesses our findings also show the importance of human capital class resources in accounting for immigrant self employment although foreign earned human capital is usually not highly valued in the host labor market immigrants successfully use this human capital to achieve business ownership interethnic variation in personal human capital and family composition accounts for a substantial portion of the observed interethnic variation in self employment the data are drawn from the 1980 five percent pums for greater new york city and los angeles excerpt

fair retirement under risky lifetime a premature death unexpectedly brings a life and a career to their end leading to substantial welfare losses we study the retirement decision in an economy with risky lifetime and compare the laissez faire with egalitarian social optima we consider two social objectives 1 the maximin on expected lifetime welfare allowing for a compensation for unequal life expectancies and 2 the maximin on realized lifetime welfare allowing for a compensation for unequal lifetimes the latter optimum involves in general decreasing lifetime consumption profiles as well as raising the retirement age this result is robust to the introduction of unequal life expectancies and unequal productivities

mortality lifestyle and socio economic status this paper uses the british health and lifestyle survey 1984 1985 data and the longitudinal follow up of may 2003 to investigate the determinants of premature mortality in great britain and the contribution of lifestyle choices to socio economic inequality in mortality a behavioural model which relates premature mortality to a set of observable and unobservable factors is considered a maximum simulated likelihood msl approach for a multivariate probit mvp is used to estimate a recursive system of equations for mortality morbidity and lifestyles health inequality is explored using the gini coefficient and a decomposition technique the decomposition analysis for predicted mortality shows that after allowing for endogeneity lifestyles contribute strongly to inequality in mortality reducing the direct role of socio economic status this contradicts the view which is widely held in epidemiology that lifestyles make a relatively minor contribution to observed socio economic gradients in health

job matching and occupational choice this paper presents a model of job matching the generalizes the existing literature by allowing for different jobs types or occupations such differences affect the value of job specific experience inducing a career profile where certain types are sampled before others more specifically the analysis shows that it is optimal for the young and inexperienced to gravitate toward jobs exhibiting a certain kind of risk then after deriving the equilibrium job turnover rate for an economy in which people do not switch occupations panel data are used to estimate its underlying parameters the hypothesis that people do not switch occupations is rejected against the alternative that they do thus providing empirical support for the theoretical extension undertaken here

employment unemployment and problem drinking the misuse of alcohol is estimated to result in enormous economic costs composed largely of reduced labor market productivity however there has been debate on this issue the purpose of this paper is to help to resolve this debate by presenting sound structural estimates of the relationship between measures of problem drinking and of employment and unemployment the analysis is based on the 1988 alcohol supplement of the national health interview survey we find that for both men and women problem drinking results in reduced employment and increased unemployment

emulation inequality and work hours was thorsten veblen right we investigate the manner in which a desire to emulate the rich influences individuals allocation of time between labour and leisure greater inequality inducing longer work hours as a result data on work hours in ten countries over the period 1963 98 show that greater inequality is indeed associated longer work hours these veblen effects are large and the estimates are robust using country fixed effects and other specifications because consumption inequality is a public bad a social welfare optimum cannot be implemented by a flat tax on consumption but may be accomplished by more complicated progressive consumption taxes at the close of the nineteenth century thorsten veblen proposed what he termed pecuniary emulation as the foundation of a theory of consumption spending he maintained is driven by relative status considerations that is by the desire to be a particular type of person as much as bythedesire to enjoytheconsumer goodsper se the joneses with whom one had to keep up were not the neighbours but the rich theirleveloflivingbecamethenever attainableobjectiveinaconsumptionarmsrace among the less well to do in the theory of the leisure class he wrote the motive is emulation the stimulus of an invidious comparison especially in any community in which class distinctions are quite vague all canons and reputability and decency and all standards of consumption are traced back by insensible gradations to the usages and thoughts of the highest social and pecuniary class the wealthy leisure class 1934 p 81 while valued by some economists as capturing common sense aspects of consumption as a form of status seeking veblen s view of social preferences was soon eclipsed by the simpler and more tractable neoclassical theory of the consumer relegated to the underworld of economics veblen s ideas have nonetheless resonated over the ensuing years in the writing of duesenberry 1949 leibenstein 1950 and galbraith 1958 at the middle of the past century and schor 1998

employment status and the decision to migrate the purpose of this paper is to examine the demographic and socioeconomic determinants of migration for both the employed and unemployed hypotheses concerning the effects of age education and public services are developed and tested using data on interstate migration of the u s labor force from 1965 to 1970 for individuals at risk to either primary or repeat migration the age and education selectivity of migration were in general confirmed however for unemployed potential primary migrants education selectivity was not observed it was also found that the provision of welfare services have little or no impact on the migration decision of the unemployed however unemployment was shown to significantly affect the role played by educational quality and training accessibility within the migration decision excerpt