consumption and debt response to unanticipated income shocks evidence from a natural experiment in singapore abstract this paper uses a unique panel dataset of consumer financial transactions to study how consumers respond to an exogenous unanticipated income shock consumption rose significantly after th

disability and poverty in vietnam disability is significantly correlated with poverty in vietnam according to data from the 2006 vietnam household living standards survey especially when the extra costs of living with a disability are taken into account this disability poverty link is also associated with lower educational attainment an important factor in determining poverty and productive economic activity in general both for household based businesses and wage employment not taking into account these associations and the extra costs of disability will make some poor disabled people invisible in poverty statistics and impede efforts to reduce poverty

universal coverage with supply side reform the impact on medical expenditure risk and utilization in thailand abstract we estimate the impact on out of pocket oop medical expenditure of a major reform in thailand that greatly extended health insurance coverage to achieve universality while implementing supply side measures intended to deliver cost effective care from an increased but modest public health budget difference in differences comparison of groups to whom coverage was extended or deepened with those whose coverage did not change indicates that the reform reduced oop expenditure by 28 on average and by 42 at the 95th percentile of the conditional distribution simulations suggest that exposure to medical expenditure risk was reduced by three fifths on average generating a social welfare gain equivalent to 80 200 of the approximate deadweight loss from financing the reform estimated effects on health care access suggest that the policy managed to reduce households medical expenses while also raising their utilization of both inpatient and ambulatory care

sickness and death economic consequences and coping strategies of the urban poor in bangladesh summary we investigate the economic consequences of sickness and death and the manner in which poor urban households in bangladesh respond to such events based on panel data we assess the effects of morbidity and mortality episodes on household income medical spending labor supply and consumption we find that despite maintaining household labor supply serious illness exerts a negative effect on income for the poor however the estimates do not reject consumption smoothing the most prominent responses to finance current needs are increasing household debt through borrowing and depleting productive assets both of which have detrimental effects on future consumption

moral hazard adverse selection and health expenditures a semiparametric analysis theoretical models predict asymmetric information in health insurance markets may generate inefficient outcomes due to adverse selection and moral hazard however previous empirical research has found it difficult to disentangle adverse selection from moral hazard in health care consumption we propose a two step semiparametric estimation strategy to identify and estimate a canonical model of asymmetric information in health care markets with this method we can estimate a structural model of demand for health care we illustrate this method using a claims level data set with confidential information from a large self insured employer we find significant evidence of moral hazard and adverse selection

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

financial risk protection from social health insurance this paper estimates the impact of social health insurance on financial risk by utilizing data from a natural experiment created by the phased roll out of a social health insurance program for the poor in india we estimate the distributional impact of insurance on of out of pocket costs and incorporate these results with a stylized expected utility model to compute associated welfare effects we adjust the standard model accounting for conditions of developing countries by incorporating consumption floors informal borrowing and asset selling which allow us to separate the value of financial risk reduction from consumption smoothing and asset protection results show that insurance reduces out of pocket costs particularly in higher quantiles of the distribution we find reductions in the frequency and amount of money borrowed for health reasons finally we find that the value of financial risk reduction outweighs total per household costs of the insurance program by two to five times

estimating households vulnerability to idiosyncratic and covariate shocks a novel method applied in madagascar households in developing countries are frequently hit by severe idiosyncratic and covariate shocks leading to high consumption volatility a household s currently observed poverty status might therefore not be a good indicator of the household s general vulnerability to poverty in the recent years there has been an emerging literature on the concept and empirical analysis of vulnerability but because of strong data requirements for vulnerability analysis and limited availability of panel and shock data for developing countries static poverty analysis still dominates empirical vulnerability studies in this paper we propose a simple method to empirically assess the impact of idiosyncratic and covariate shocks on households vulnerability which can be applied in a wide context as it relies on more commonly available cross sectional or short panel data we empirically illustrate our approach for madagascar we show that covariate shocks have a relatively higher impact on rural households whereas idiosyncratic shocks have a relatively higher impact on urban households vulnerability

strategic responses to resource management pressures in agriculture institutional gender and location effects sustainable management of natural resources by farmers is under increasing public scrutiny in australia the case of water unsustainably used and stored by agricultural businesses has gained attention with communities in catchments potentially deprived of water and placed at downstream risk yet sustainable water management institutional policy mechanisms remain disjointed around the country the study reported here applies a strategic response typology to a survey of 404 farmers in four different institutional environments in australia to explore their responses to institutional pressures findings demonstrate a convergence in typologies that relate to farmers organising each other and communities influencing and networking for the benefit of agricultural resource management thereby questioning the traditional continuum of resistance furthermore the mid range typology avoidance emerges as a highly problematic typology for sustainable water management policymakers especially those in weaker institutional environments where there is a need to develop policy instruments that retain farmer water management decision making power and encourage networks the paper also extends the strategic response typology to enable understanding of how gender and location affect strategic responses to institutional pressures findings provide insight for policy design in times of increasing catastrophic flood and drought conditions exacerbated by poor water management practice

consumption smoothing and the welfare consequences of social insurance in developing economies studies of risk in developing economies have focused on consumption fluctuations as a measure of the value of insurance a common view in the literature is that the welfare costs of risk and benefits of social insurance are small if income shocks do not cause large consumption fluctuations we present a simple model showing that this conclusion is incorrect if the consumption path is smooth because individuals are highly risk averse hence social safety nets could be valuable in low income economies even when consumption is not very sensitive to shocks

a new method of estimating risk aversion i show existing evidence on labor supply behavior places an upper bound on risk aversion in the expected utility model i derive a formula for the coefficient of relative risk aversion in terms of the ratio of the income elasticity of labor supply to wage elasticity and degree of complementarity between consumption and labor i bound the degree of complementarity using data on consumption choices when labor supply varies across states using labor supply elasticity estimates i find a mean estimate of 1 then show generating 2 requires that wage increases cause sharper labor supply reductions jel d81 j22

pricing option contracts on the strategic petroleum reserve in this article we examine the pricing of option contracts on the strategic petroleum reserve spr and consider how these can be used by both the government and refiners we analyze the interaction between the call and put option contracts taking into account the underlying game in the infinite markov decision process with discounting explaining the relationship between the valuation of options on the spr by refiners and the valuation of financial options on a marker crude in financial markets we conclude that the values of both call and put options on the spr increase with oil prices and decrease with total inventory furthermore our analysis shows that a more active management of the spr creates higher social welfare although refiners profit less from inventories and larger volatility in inventory profits decreasing private investment in petroleum stocks

tax reform and automatic stabilization an income tax provides implicit insurance by dampening the variability of disposable income and consumption using an empirical framework derived from the consumption insurance literature and data from the panel study of income dynamics we examine the effect of federal income tax reforms of the 1980 s on automatic stabilization of consumption overall erta and tra86 reduced consumption stability by about 50 percent recently increased eitc generosity restored or enhanced consumption insurance the welfare cost of moving to the post tra86 system is sizable for relatively risk averse households facing large income risk but is much more modest for the typical household jel h21

impact of ethiopia s community based health insurance on household economic welfare in 2011 in an attempt to increase access to health care and reduce household vulnerability to out of pocket health expenditure the government of ethiopia launched a community based health insurance scheme cbhi this paper uses three rounds of household survey data collected before and after the introduction of the cbhi pilot to assess the impact of the scheme on household consumption income indebtedness and livestock holdings we find that enrollment leads to a 5 percentage point or 13 decline in the probability of borrowing and is associated with an increase in household income there is no evidence that enrolling in the scheme affects consumption or livestock holdings our results show that the scheme reduces reliance on potentially harmful coping responses such as borrowing this paper adds to the relatively small body of work that rigorously evaluates the impact of cbhi schemes on economic welfare

risk pooling between households and risk coping measures in developing countries evidence from rural bangladesh abstract using data from rural bangladesh i test whether income risks are pooled among villagers between neighboring households and between related households living in different villages i find evidence that risks to food consumption are pooled between neighboring households and between related households but not among villagers as for nonfood consumption i find little evidence of risk pooling except between unrelated neighboring households i also find that while households belonging to a neighborhood network do not take any special measures during an economic hardship those not belonging to any such network try to smooth consumption by selling off livestock and other assets and by getting interest free loans negative income shocks are found to have little effect on labor supply or private transfers

a model based on stochastic dynamic programming for determining china s optimal strategic petroleum reserve policy china s strategic petroleum reserve spr is currently being prepared but how large the optimal stockpile size for china should be what the best acquisition strategies are how to release the reserve if a disruption occurs and other related issues still need to be studied in detail in this paper we develop a stochastic dynamic programming model based on a total potential cost function of establishing sprs to evaluate the optimal spr policy for china using this model empirical results are presented for the optimal size of china s spr and the best acquisition and drawdown strategies for a few specific cases the results show that with comprehensive consideration the optimal spr size for china is around 320 million barrels this size is equivalent to about 90 days of net oil import amount in 2006 and should be reached in the year 2017 three years earlier than the national goal which implies that the need for china to fill the spr is probably more pressing the best stockpile release action in a disruption is related to the disruption levels and expected continuation probabilities the information provided by the results will be useful for decision makers

risk sharing networks and insurance against illness most risk sharing tests on developing country data are conducted at the level of the village generally the full risk sharing hypothesis is rejected this paper uses detailed data on all insurance networks within a village in tanzania networks are not clustered but largely overlapping we test whether full risk sharing occurs within these networks while village level full insurance cannot be rejected for food consumption we find evidence consistent with at least partial insurance of non food consumption via networks

the incidence of medicare abstract the medicare program transfers nearly 300 billion annually from taxpayers to beneficiaries this paper considers the incidence of such transfers in the context of a life cycle model with uncertainty about future health care expenditures we find the distributional consequences of the medicare program are roughly neutral in dollar terms households living in high income neighborhoods pay more in taxes but they also receive more in benefits these dollar flows however ignore the insurance value of the medicare system given the incomplete insurance coverage of lower income elderly households prior to the medicare program the money metric benefits to lower income groups exceed the dollar flows suggesting that medicare redistributes more than a simple accounting exercise would suggest

from the marketplace to the dinner plate the economy theology and factory farming factory farming is big business since the products of factoryfarming are living breathing sentient creatures particular ethical issues are raised in a market system based on efficiency productivity costs of production and profit this paper focuses on the question of weather food animals in the american market system are subjected to unnecessary pain and suffering before they make it to our dinner plates the single most important consideration then is an exploration of the extent to which economic considerations render factory farming not only lucrative but also necessary under present market conditions the concern for unnecessary suffering moves the paper into an exploration of the extent to which the practices and effects of factory farming raise spiritual concerns which believers ought to address

optimal strategic petroleum reserve policies a steady state analysis a simple model is presented which allows us to determine the optimal size fillup and drawdown rates for a strategic petroleum reserve spr under a variety of supply and demand conditions the optimal policy variables are determined by minimizing an analytic expression which we derive for the expected insecurity cost rate to the u s due to uncertainty in supply of imported oil the oil market is modeled in terms of an elastic demand curve and two levels of supply which alternate according to a stationary continuous time markov process the spr policy is characterized by a fixed fillup rate up to the reserve s capacity when supply is at its normal level and a fixed drawdown rate during shortages the insecurity cost rate being minimized includes consumer welfare loss due to price hikes reserve holding cost and capital appreciation of the reserve base case results and sensitivity analysis are presented and compared to results obtained by previous approaches these comparisons suggest that the proposed model can reasonably approximate the more computationally demanding stochastic dynamic programming formulation the main advantage of the new approach is that it permits extensive sensitivity analysis which is important given the quality of the data

the collaborative enterprise instead of the currently prevailing competitive model a more collaborative strategy is needed to address the concerns related to the unsustainability of today s business this article aims to explore collaborative approaches where enterprises seek to build long term mutually beneficial relationships with all stakeholders and want to produce sustainable values for their whole business ecosystem cases here analyzed demonstrate that alternative ways of doing business are possible these enterprises share more democratic ownership structures more balanced and broader governance systems and a more comprehensive view of organizational goals and performance which goes beyond the narrow concept of financial bottom line and into a stronger and systematic care of the needs and requirements of the different stakeholder groups thanks to this evidence and different theoretical and empirical contributions we suggest that the strength and sustainability of enterprises come from their ability to fit into the environmental social and cultural context in which they operate by creating values for all stakeholders enterprises can involve them and gain deep support based on their commitment this may lead to superior performance from a multiple bottom line perspective

stockpile strategy for china s emergency oil reserve a dynamic programming approach abstract china is currently accelerating construction of its strategic petroleum reserves how should china fill the spr in a cost effective manner in the short run how might this affect world oil prices using a dynamic programming model to answer these questions the objective of this paper is to minimize the stockpiling costs including consumer surplus as well as crude acquisition and holding costs the crude oil acquisition price in the model is determined by global equilibrium between supply and demand demand in turn depends on world market conditions including china s stockpile filling rate our empirical study under different market conditions shows that china s optimal stockpile acquisition rate varies from 9 to 19 million barrels per month and the optimal stockpiling drives up the world oil price by 3 7 the endogenous price increase accounts for 52 of total stockpiling costs in the base case when the market is tighter or the demand function is more inelastic the stockpiling affects the market more significantly and pushes prices even higher alternatively in a disruption drawdown from the stockpile can effectively dampen soaring prices though the shortage is likely to leave the price higher than before the disruption

consumption and vulnerability among foragers and horticulturalists in the rainforest of honduras abstract it is often said that poor rural households in developing countries remain inadequately insured against shocks using panel data from tawahka amerindians in the honduran rainforest a horticultural foraging society we estimate the consumption smoothing ability and vulnerability to risks of 32 households in two villages with varying degrees of market openness the information was collected using cultural anthropology methods and key variables were estimated through direct observations and physical measures to reduce measurement errors results suggest that household consumption is directly affected by income shocks despite the practice of partial insurance and risk sharing within communities in a comparison between the villages we find evidence that households practice distinctly different consumption smoothing behaviors partly driven by their gap in economic development

the effect of prime age adult mortality on household composition and consumption in rural ethiopia abstract using panel data from ethiopia covering 1994 1997 we estimate the impact of prime age adult mortality on household composition household expenditures and dietary diversity we employed propensity score matching with a difference in difference estimator to control for endogeneity of mortality to the outcomes of interest households losing a productive adult did not replenish the lost labor regardless of economic status sex or status of the deceased adult with the exception of non poor households adult mortality resulted in increased dependency ratios but did not adversely affect households expenditure patterns total food and non food expenditures regardless of the sex and position of the deceased and the economic status of the households although food expenditures were protected a decline in dietary diversity especially among the poorest households reflected increased nutrition insecurity associated with adult mortality

optimal path for china s strategic petroleum reserve a dynamic programming analysis abstract this paper proposes a dynamic programming model to explore the optimal stockpiling path for china s strategic petroleum reserve before 2020 the optimal oil acquisition sizes in 2008 2020 under different scenarios are estimated the effects of oil price risks and elasticity value on inventory size are further investigated it is found that the optimal stockpile acquisition strategies are mainly determined by oil price and total inventory costs while oil supply disruption is not considered china s optimal stockpile acquisition rate increases from 19 2 to 52 million barrels from 2008 to 2020 if an oil supply disruption occurs the oil acquisition rate will be reduced significantly however it may not be a good strategy to interrupt oil reserve activities in order to minimize the total costs for the entire planning period

an empirical analysis of the dynamic programming model of stockpile acquisition strategies for china s strategic petroleum reserve abstract the world s future oil price is affected by many factors the challenge therefore is how to select optimal stockpile acquisition strategies to minimize the cost of maintaining a reserve this paper provides a new method for analyzing this problem using an uncertain dynamic programming model to analyze stockpile acquisition strategies for strategic petroleum reserve using this model we quantify the impact of uncertain world oil price on optimal stockpile acquisition strategies of china s strategic petroleum reserve for the period 2007 2010 and 2011 2020 our results show that the future stockpile acquisition is related to oil prices and their probability and if not considering the occurrence of oil supply shortage china should at least purchase 25 million barrels when world oil price is at an optimal level the optimal price of stockpile acquisition of every year has a stronger relationship with the probability of high price and the optimal expected price and size of stockpile acquisition is different in each year

post disaster informal risk sharing against illness summary using original household survey data collected in rural fiji this paper demonstrates how informal risk sharing institutions upon which poor people heavily rely in times of illness are vulnerable to natural disasters household private cash and inkind transfers do not serve as insurance against illness in the relief phase they do so only after pooled resources are recovered in the reconstruction phase i e resource effect risk sharing arrangements are dependent on the history of labor time transfers corresponding to housing damage i e reciprocity effect only disaster non victims are insured against illness because victims have already received labor help for their rehabilitation from non victims

oil stockpiles and import reductions a dynamic programming approach this paper analyzes oil stockpiling policies using models in which u s policy choices are restricted to just two instruments stockpiles and disruption tariffs the model considers the influence of u s and in general oecd import demands upon the opec price for oil and the duration and severity of oil disruptions induced by disturbances among the opec nations our development is based upon a probabilistic view of disruptions analyzed by applying dynamic programming

the economic lives of the poor in what turned out to be a rhetorical master move the 1990 world development report from the world bank defined the extremely poor people of the world as those who are currently living on no more than 1 per day per person measured at the 1985 purchasing power parity ppp exchange rate in 1993 the poverty line was updated to 1 08 per person per day at the 1993 ppp exchange rate which is the line we use in this paper poverty lines have always existed indeed 1 per day was chosen in part because of its proximity to the poverty lines used by many poor countries 1 however the 1 a day poverty line has come to dominate the conversations about poverty to a remarkable extent

extended families and child well being studies of household behavior have established the distribution of resources among household members predicts spending and savings patterns however there is a paucity of evidence on the relationship between the well being of individual family members and the distribution of resources within an extended family including non co resident family members given the central role the family plays in many models of economic behavior this is an important gap in the literature using rich longitudinal survey data from the indonesia family life survey ifls evidence is presented on the relationship between three measures of health and education related human capital of children and the distribution of resources among extended family members ifls is ideally suited for this research since the survey collects detailed information about income and wealth from both coresident and non co resident family members the empirical model is founded on a natural extension of the collective model of household decision making chiappori 1988 1992 to the extended family the model is particularly appealing in this context because it places few restrictions on preferences of individual family members and does not specify a specific bargaining mechanism that underlies negotiations the collective model yields empirical tests of whether the behavior of family members is pareto efficient a special case of the model allows all family members to be completely altruistic which is observationally equivalent to a unitary model of family behavior that special case is rejected by the data however the restrictions of the efficient model are not rejected indicating that non co resident family members are able to co ordinate allocation decisions with respect to child human capital investments in such a way as to make no family member better off without another member being worse off

a dynamic programming model of china s strategic petroleum reserve general strategy and the effect of emergencies abstract to protect the security of energy supply china is building national strategic petroleum reserve spr we present a dynamic programming model to determine the optimal stockpiling and drawdown strategies for china s spr under various scenarios focusing on minimizing the total cost of reserves in contrast to previous research the oil price given in our model is exogenous on a monthly instead of annual basis with a view to more realistic simulation of optimal strategies each year our model results show that in the case where stockpiling affects oil prices a given spr size will be achieved earlier than when stockpiling does not affect oil prices in different emergency conditions the optimal stockpiling and drawdown strategies of china s spr are very different when an emergency occurs the shock of stockpiling on the oil price per barrel could range 0 49 6 35 while the impact of drawdown on the oil price per barrel could range 6 22 to 0 48

wage and labor supply effects of illness in cote d ivoire and ghana instrumental variable estimates for days disabled abstract sickness should make individuals less productive but there are problems in measuring this effect first how is adult morbidity measured in a household survey second how is the impact or morbidity on productivity inferred if earning is partly used to improve health self reported functional activity limitation due to illness is considered an indicator of morbidity for wage earners and self employed people to deal with both the measurement and joint determination problems an instrumental variable estimation approach is used where local food prices and health services instrument for disability days that reduce wages by at least 10 and hours by 3 or more

arsenic mitigation in bangladesh a household labor market approach rural families in bangladesh one of the poorest countries in the world face financial risks from major illness both from the cost of medical care and from the loss of income associated with reduced labor supply and productivity chronic exposure to arsenic in drinking water has often been associated with the development of skin cancers and internal cancers especially of the bladder liver and lungs and a wide variety of other health conditions such as diabetes respiratory problems cardiovascular diseases hyperpigmentation hypopigmentation and keratosis a condition in which painful nodules grow on the palms of the hands and soles of the feet most of the economic work on arsenic contamination in bangladesh has had an epidemiological focus that has tried to effectively monetize a dose response relation using either a cost of illness or a willingness to pay approach

child income appropriations as a disease coping mechanism consequences for the health education relationship this paper analyses the relationships between hiv aids and education taking into account the appropriative nature of child income using a theoretical model we show that considering remittances from one s child as an insurance asset can reverse the usual negative relationship between disease prevalence and educational investment this prediction confirms the results of an empirical study conducted on data compiled from the demographic and health survey dhs database for 12 sub sahara african countries for children aged between 7 and 22 years old using regional hiv prevalence as a measure of health risk we find that the sign of the slope between health risk and the enrolment of children is not constant splitting the data based on expected remittance patterns for example rural versus urban we obtain that the effect is most likely driven by household characteristics related to child income appropriation

informal risk sharing in an infinite horizon experiment author s charness gary b genicot garance abstract this paper presents the first laboratory study of risk sharing without commitment our experiment captures the main features of a simple model of voluntary insurance between two agents in the model two individuals interact over a potential infinite horizon and suffer random income shocks risk averse individuals have incentives to smooth consumption by making transfers to each other these transfers being voluntary only self enforcing risk sharing arrangements are possible transfers can never be so large as to tempt individuals to renege on them this constraint when binding has strong implications for the shape of the constrained optimal risk sharing arrangement in our experiment participants are matched in pairs each period one of them randomly drawn receives a given amount in addition to its regular income after observing both incomes each person in a pair chooses a non negative transfer to make to the other person two features of the experimental design are crucial first it is common information that all pairs will be dissolved at the end of each period with a given probability participants are informed when this occurs and randomly re matched this replicates the effect of infinite horizon and discounting in the model second at the end of the experiment a single period is randomly drawn to count for cash payment this feature is essential for individuals to care about the utility outcome of each period we find evidence generally consistent with risk sharing with most transfers coming from individuals who received h in the period moreover in support of the theory transfers are much higher with a higher continuation probability and they also are highly correlated with the individual s degree of risk aversion however while the model predicts an increase in transfers with ex ante inequality we observe the opposite effect this may reflect considerations of identity or group membership

developing a market based approach to managing the us strategic petroleum reserve abstract the strategic petroleum reserve has not been used effectively to manage the consequences of oil shocks in the united states the main reason is that political decision makers tend to hoard the reserves during crises and bureaucratic processes delay the sale of the reserves also the enabling legislation focused on ameliorating shortages whereas disruptions result price spikes rather than shortages we develop a markov game of the buildup and drawdown of the reserve in which a public player aims to maximize consumer welfare at the same time private holders of inventory maximize their profit the methodological contribution in this paper is the development of financial options to implement the public player s optimal policy we use the solution of this game to calculate the number and value of options necessary for the private marketplace to trigger the optimal buildup and drawdown of the reserve

a stochastic dynamic nash game analysis of policies for managing the strategic petroleum reserves of consuming nations in this paper we present a nash dynamic game model of interactions among oil inventory and tariff policies for oil importing countries the inventory policies consist of the rates for building up and drawing down strategic oil reserves while the tariff policies consist of setting tariffs as a function of the state of the world oil market the model represents a stochastic game in which countries are grouped into two players where each player in the game chooses its individual policies to maximize expected social welfare we use the model to present empirical results about the sizes of the stockpiles as a function of disruption probabilities tariff policies and cooperation versus noncooperation between nations in addition to results regarding the build up and draw down rates as a function of the amount of disruption or probability of future disruption our central conclusion is that build up and drawdown policies are essentially the same with or without international cooperation due to the current inventory limits on u s and foreign strategic petroleum reserves

china s optimal stockpiling policies in the context of new oil price trend abstract optimizing the size of oil stockpiling plays a fundamental role in the process of making national strategic petroleum reserve spr policies there have been extensive studies on the operating strategies of spr however previous literatures have paid more attention to a booming or stable international oil market while few studies analyzed the impact of a long term low oil price on spr policy as a supplement this paper extends a static model to study china s optimal stockpiling policy under different oil price trends and in response to different current oil prices a new variable fc which demonstrates the appreciation and depreciation of the reserved oil economic value has been taken into account to assess the optimal size of spr in this paper a more multi perspective of view is provided to consider the policies of china s spr especially under the different trend of international oil price fluctuations

consumption insurance an evaluation of risk bearing systems in low income economies the hypothesis of full risk sharing can be taken to data from low income countries and evaluate formal and informal financial systems in many contexts idiosyncratic risks are high so credit insurance arrangements could be beneficial statistical tests reveal that households in southern india take advantage of these possibilities villages in cote d ivoire and countries in thailand do not do as well the paper includes an empirical description of the devices used to smooth consumption and a theoretical discussion of private information and incentives on ideal operating systems the full information and mechanism design frameworks provide benchmarks for policy analysis

measuring the effect of disability on labor force participation this paper estimates the effect of disability on labor force participation by using symptoms or diseases as instruments in a simultaneous equations model of endogenous reported disability and labor force participation the results show that each measure of disability explains a significant amount of variation in labor force participation though the two are not perfect substitutes there is only weak evidence of endogeneity of the disability variables for cases where there is evidence of endogeneity the bias it causes has the opposite effect of that hypothesized in the literatute i e stress causes health to deteriorate with labor force participation furthermore it has only insignificant effects on the coefficients for other variables

a dynamic nash game model of oil market disruptions and strategic stockpiling in this paper we present and analyze a nash dynamic game model for investigating public and private sector oil inventory policies in unstable world oil markets conceptual results about the model include simple verifiable conditions for uniqueness and stability of solutions along with characterizations of optimal policies we also present results and discuss computational issues that arise in determining subgame perfect infinite horizon equilibria using a steady state policy iteration approach

causal effects of health shocks on consumption and debt quasi experimental evidence from bus accident injuries abstract endogeneity between health and wealth presents a challenge for estimating causal effects of health shocks using a quasi experimental design comprising exogenous shocks sustained as bus accident injuries in india with controls drawn from travelers on the same bus routes one year later i present new evidence of causal effects on consumption and debt using primary household survey data i find that households faced with shock related expenditures are able to smooth consumption on food housing and festivals with small reductions in educational spending debt was the principal mitigating mechanism households used leading to significantly larger levels of indebtedness

the evolution of medical spending risk how has the economic risk of health spending changed over time for u s households we describe trends in aggregate health spending in the united states and how private insurance markets and public insurance programs have changed over time we then present evidence from consumer expenditure survey microdata on how the distribution of household spending on health that is out of pocket payments for medical care plus the household s share of health insurance premiums has changed over time this distribution has shifted up over time households spend more on medical care and insurance than they used to but for the purposes of measuring change in risk it is not the mean but the dispersion of this distribution that is of interest we consider two measures of dispersion that serve as proxies for household risk the standard deviation of the distribution of household health spending and the ratio of the 90th percentile of spending to the median the so called 90 50 gap we find surprisingly that neither has increased despite the rapid rise in aggregate health spending this conclusion holds true for broad subgroups of the population for example the nonelderly as a group but not for some narrowly defined subgroups for example low income families with children we next consider how much risk households should face from the perspective of economic efficiency household risk may not have changed much over the past several decades but do we have any evidence that this level represents either too much or too little risk finally we discuss implications for public policy in particular for current debates over expanding health insurance coverage to the uninsured

household composition labor markets and labor demand testing for separation in agricultural household models this paper tests the separation of farm labor supply and labor demand decisions using the observation that household composition is an important determinant of farm labor use with nonseparation after assessing the conditions under which the test has power against several alternatives an empirical model is developed to test the proposition that farm employment is independent of family composition the model is estimated on a data set from rural java the null hypothesis that farm labor allocation decisions are independent of household structure is not rejected the results are robust to different specifications of the labor demand function copyright 1992 by the econometric society

moral development of the economic actor abstract in this article we argue that the changes in moral content in economics can be explained as an evolution in accordance with the maturing process presented in kohlberg s stages of moral development firstly we describe and discuss the three levels of moral progress pre conventional conventional and post conventional as presented in kohlberg s theory secondly we draw a distinction between classical economics neoclassical economics and ecological economics and discuss to what extent the differences in ethics within the three theories can be explained by referring to the ethical development characterizing kohlberg s moral stages thirdly we discuss some of the hallmarks characterizing economics based upon what kohlberg termed universal principles at the highest stage in the development of moral reasoning to exemplify the evolution of moral reasoning in different economic theories we describe the changes that take place in the image of man over the last 2 300 years the human being in economics has been discussed in this journal with reference to three different relations to himself community and nature we have used the metaphors economic man social man and ecological man to characterize the ethical content of the three first stages at the first stage economic man interpreted as an egocentric individual seeking personal gain characterizes classical economics at the second stage social man seeks the best for a group of people within the perspective of neoclassical economics at the third stage ecological man is aware of the interrelatedness between economy and nature within ecological economics the agent is termed ecological man to indicate the interconnectedness between economy and the ecosystems while being aware of the weakness in predictive power inherent in these kinds of stage theories we find it stimulating to conclude with a description of economics based upon the ideas characterizing the highest level stage 7 in kohlberg s theory we put forward a hypothesis concerning a fourth stage in the development of economics termed neo ecological economics we describe the economic actor as cosmic man cosmic man has an extended self and incorporates all the other images of man

full insurance in the presence of aggregate uncertainty this paper tests implications of full consumption insurance the object is to determine how much mileage can be obtained from a model with complete markets with such features as private information or liquidity constraints omitted the implication exploited is that individual consumption responds to aggregate risk but not to idiosyncratic risk the test involves regressing the change in household consumption onto the change in aggregate consumption and other right hand side variables such as the change in household income and change in employment status all variables other than the change in aggregate consumption are predicted to be insignificant in explaining the change in household consumption with observations on consumption and income for 10 695 households from the consumer expenditure survey the results are mixed the results for one specification exponential utility are mostly consistent with full consumption insurance the results for the other specification power utility are not

a coevolutionary model for promoting agricultural sustainability abstract this article presents a coevolutionary model of agricultural development that is based on observations from the environmental history of agriculture and the need for addressing development processes toward sustainability it asserts that the challenge of agricultural sustainability can be fruitfully addressed within an analytical framework that consciously and explicitly considers agricultural development as consisting of processes of coevolution involving agriculture and the surrounding ecological and socioeconomic systems widening the processes to include strong interconnectedness with national and global systems with respect to off farm resources and farm outputs has led to various agro ecological problems strengthening local interaction and interconnectedness in a rural urban context is found to be essential for developing a system of sustainable agriculture such development requires influencing many subsystems and implementing changes in production methods and land use as short term responses to the problem and technological development resource allocation and changes in values as long term responses it also requires some sustainability principles and indicators in order to direct actions and to facilitate communications which can be derived from the model applying the model on swedish agricultural sustainability during the twentieth century reveals some probably important findings for building sustainable agriculture and lends support to the usefulness of the model

shared wealth or nobody s land the worth of natural capital and ecosystem services the prerequisite for a sustainable and equitable use of common resources the so called commons must be the proper evaluation of their role within the complex network of relationships that ensure ecosystems functioning resilience and evolutionary dynamics it is crucial to ascertain to what extent the common wealth is used for the common benefit money based schemes for valuing the commons such as the so called willingness to pay provide a user side evaluation perspective based on the idea that value only stems from utilization by humans as a complement to such a point of view we present and discuss in this paper a donor side evaluation method emergy synthesis based on the idea that a proper measure of value can be achieved by also accounting for the work done by the biosphere in generating services and resources it should not be disregarded that such resources and services also provide support to other species in the web of life emergy a scientific measure of such environmental support is suggested as a tool capable to assess quantity and quality of shared resources thus providing a basis for their environmentally sound management

testing substitution between private and public storage in the u s oil market a study on the u s strategic petroleum reserve abstract the u s strategic petroleum reserve spr was established in 1975 to mitigate major oil supply disruptions and to deter the use of energy as a geopolitical weapon however policies towards the utilization of strategic oil stocks have varied under different presidencies and the spr has often not been used in sufficient quantity or soon enough to avoid the negative economic consequences that can follow oil supply outages economic theory suggests that the existence of public stockpiles of commodities will alter inventory management practices of private market participants this paper models private crude oil storage in the united states and estimates the private storage response to presidential announcements regarding the spr we investigate the incidence of different kinds of announcement events including releases and test sales from the spr announced changes in fill rates and changes of presidency and how these events impact private land based storage in the united states by region padd as well floating storage we find significant substitution between private and public stocks for crude oil and find that announcement events are associated with observable changes in private inventory levels with implications for public policy choices and geopolitical strategies

energy security coping with multiple supply risks this study starts from the observation that today s western trading nations are exposed to multiple risks of energy supplies eg simultaneous shortage of oil and gas supplies to cope with these risks both oil and gas can be stockpiled adopting the viewpoint of a policy maker who aims at minimizing the expected cost of security of supply optimal simultaneous adjustments of oil and gas stocks to exogenous changes such as an increase in the probability of supply disruption are derived against this benchmark one dimensional rules such as oil reserves for 90 days turn out to be not only suboptimal but also to suggest adjustments exacerbating suboptimality

inferring informal risk sharing regimes evidence from rural tanzania abstract this paper studies informal risk sharing regimes in a unified framework by examining households intertemporal consumption behavior we exploit a theoretically consistent link between interest rates and cross sectional consumption moments to test alternative risk sharing models without requiring data on interest rates or assuming a restriction to eliminate the need for such data which are often unavailable in developing economies we specify tests that allow us to distinguish among models even with temporal dependence in income shocks using data from rural tanzania we find that the consumption pattern is consistent with the self insurance regime and that risk aversion varies substantially across districts imposing a strict condition on interest rates as often done in prior literature misses their intertemporal heterogeneity and biases the estimation of risk aversion

a simple test of consumption insurance are consumers effectively insured against idiosyncratic shocks to income or wealth either by formal institutions such as charities private insurance and government programs or by informal mechanisms such as gifts and loans from relatives friends and neighbors under full insurance consumption growth should be cross sectionally independent of idiosyncratic variables that are exogenous to consumers this proposition is tested by cross sectional regressions of consumption growth on a variety of exogenous variables full insurance is rejected for long illness and involuntary job loss but not for spells of unemployment loss of work due to strike and an involuntary move

health shocks and consumption smoothing evidence from indonesia abstractepisodes of uninsured illness can seriously compromise a household s well being this article provides further evidence on the consequences of illness episodes on earnings and consumption in indonesia we exploit a rich panel data set that allows us to combine fixed effects and instrumental variables to address biases associated with the endogeneity of illness using deteriorations in physical functioning to measure illness for a sample of prime age individuals we find that earnings are significantly reduced however the effects on consumption are relatively small and statistically insignificant in addition we explore informal mechanisms that households may be using to smooth out the consequences of these episodes in particular we study whether households deplete liquid assets or receive transfers from noncoresident kin transfers are responsive to illness but there is no evidence of asset depletions overall our findings suggest some ability to smooth the income effects of illness on aver

group formation in risk sharing arrangements we study informal insurance within communities explicitly recognizing the possibility that subgroups of individuals may destabilize insurance arrangements among the larger group we therefore consider self enforcing risk sharing agreements that are robust not only to single person deviations but also to potential deviations by subgroups however such deviations must be credible in the sense that the subgroup must pass exactly the same test that we apply to the entire group it must itself employ some self enforcing risk sharing agreement we observe that the stability of subgroups is inimical to the stability of the group as a whole two surprising consequences of this analysis are that stable groups have uniformly bounded size a result in sharp contrast to the individual deviation problem and that the degree of risk sharing in a community is generally non monotonic in the level of uncertainty or need for insurance in the community

income productivity in china on the role of health this study provides empirical evidence regarding the income productivity of health human capital in china we appeal to concepts from human capital theory to support a basic model that treats health as a form of human capital in the income production process our model examines the economic return at the household level from the health of its individual members we estimate this with a longitudinal sample drawn from the china health and nutrition survey chns allowing us to exploit within variation in health and income to address possible unobservables biasing estimates of the impact of health on income in the simple cross sectional setting household income is strongly influenced by the health of its members particularly in rural areas these findings could have important implications for health and economic policy making aimed at reducing the long standing urban rural economic gap and more comprehensively insuring the rural population against health and economic risk

using stockpile delegation to improve china s strategic oil policy a multi dimension stochastic dynamic programming approach abstract there has been much attention paid to oil security in china in recent years although china has begun to establish its own strategic petroleum reserve spr to prevent potential losses caused by oil supply interruptions the system aiming to ensure china s oil security is still incomplete this paper describes and provides evidence for the benefits of an auxiliary strategic oil policy choice which aims to strengthen china s oil supply security and offer a solution for strategic oil operations with different holding costs in this paper we develop a multi dimension stochastic dynamic programming model to analyze the oil stockpile delegation policy which is an intermediate policy between public and private oil stockpiles and is appropriate for the chinese immature private oil stockpile sector the model examines the effects of the oil stockpile delegation policy in the context of several distinct situations including normal world oil market conditions slight oil supply interruption and serious oil supply interruption operating strategies that respond to different oil supply situations for both the spr and the delegated oil stockpile were obtained different time horizons interruption times and holding costs of delegated oil stockpiles were examined the construction process of china s spr was also taken into account

collaborative enterprise and sustainability the case of slow food the current and prevailing paradigm of intensive agricultural production is a straightforward example of the mainstream way of doing business mainstream enterprises are based on a negativistic view of human nature that leads to counter productive and unsustainable behaviours producing negative impact for society and the natural environment if we want to change the course then different players are needed which can flourish thanks to their capacity to serve others and creating values for all the participants in the network in which they are embedded in the article through the analysis of the slow food movement and the use of recent theoretical and empirical contributions in behavioural sciences and psychology we support the collaborative enterprise model as an alternative to the still prevailing mainstream business models evidence shows that caring and responsible efforts of economic agents are acknowledged and reciprocated even in highly competitive markets

liquidity risk economic development and the effects of monetary policy abstract empirical evidence indicates that monetary policy is not super neutral in many countries in particular in high inflation economies inflation is negatively related to economic activity by comparison inflation may be positively correlated with output in low inflation countries we present a neoclassical growth model with money in which the incidence of liquidity risk is inversely related to aggregate capital formation interestingly there may be multiple monetary steady states where the effects of monetary policy vary in poor economies the financial system is highly distorted and higher rates of money growth are associated with less capital formation in contrast in advanced economies a tobin effect is observed since inflation exacerbates distortions from a coordination failure in the low capital steady state individuals become much more exposed to liquidity risk consequently optimal monetary policy depends on the level of development

insuring consumption against illness one of the most sizable and least predictable shocks to economic opportunities in developing countries is major illness we investigate the extent to which families are able to insure consumption against major illness using a unique panel data set from indonesia that combines excellent measures of health status with consumption information we find that there are significant economic costs associated with major illness and that there is very imperfect insurance of consumption over illness episodes these estimates suggest that public disability insurance or subsidies for medical care may improve welfare by providing consumption insurance

when faced with income and asset shocks do poor rural households in vietnam smooth food consumption or assets abstractvietnamese rural households are exposed to severe covariate and idiosyncratic shocks however these households are remarkably resilient and have steadily increased real income and consumption over the survey period 2006 to 2012 to explain household strategies to cope with shocks we test three theoretical models the permanent income hypothesis pih complete market hypothesis cmh and asset smoothing theory ast there is support for ast as households smooth productive assets rather than consumption and for cmh as households smooth consumption against idiosyncratic but not covariate shocks there is no support for pih

what do household surveys really tell us about risk shocks and risk management in the developing world the authors report on a project to explore empirical patterns in risk shocks and risk management using recent household surveys with risk modules from 16 different developing countries natural disasters health shocks economic shocks and asset loss are the most commonly reported types of shocks and especially for the poor often result in bad coping responses that may perpetuate vulnerability the information culled from these survey modules falls short of expectations in several ways

the social value of health insurance results from ghana this paper uses the roll out of the national health insurance in ghana to assess the cushioning effect of coverage on the financial consequences of health shocks and resulting changes in coping behaviors the analysis finds a strong reduction in medical expenditures preventing households from cutting non food consumption and causing a decrease in the volume of received remittances as well as the labor supply of healthy adult household members moreover the paper presents evidence that the insurance scheme reduced the likelihood that households experiencing a health shock pulled their children out of school to put them to work avoidance of such costly coping mechanisms is potentially an important part of the social value of formal health insurance

are rainfed agricultural households insured evidence from five villages in vidarbha india there are several studies on risk and insurance in village economies in the developing world however there is a lack of evidence for recent decades in spite of profound changes including structural transformation and widespread market liberalization in most regions in this paper i use primary panel data from five rainfed villages in a high risk region of india and find evidence of considerable exposure as well as vulnerability to idiosyncratic and covariate risks further there is significant wealth differentiated heterogeneity in vulnerability the findings help identify the scope of public policy in improving risk management in rainfed agriculture

can immigrants insure against shocks as well as the native born we examine the impact of job displacement and serious health problems on multiple measures of individual and household well being using longitudinal data we extend the previous literature by exami

health shocks and consumption smoothing in rural households does microcredit have a role to play abstract this paper estimates using a large panel data set from rural bangladesh the effects of health shocks on household consumption and how access to microcredit affects households response to such shocks households appear to be fairly well insured against health shocks our results suggest that households sell livestock in response to health shocks and short term insurance is therefore attained at a significant long term cost however microcredit has a significant mitigating effect households that have access to microcredit do not need to sell livestock in order to insure consumption microcredit organizations and microcredit therefore have an insurance role to play an aspect that has not been analyzed previously

resilience mobility in uganda a dynamic analysis abstract household resilience to food insecurity can be considered as the capacity that ensures stressors and shocks do not have long lasting adverse development consequences it is nowadays one of the key words in the policy debate on development measuring resilience capacity and how it varies over time is extremely significant for policy makers and people living in risk prone environments more specifically there is a gap of empirical evidence about what drives changes in resilience capacity status i e moving from a low resilience profile to a high one and viceversa this paper applies econometric techniques for estimating household resilience and adopts transition matrices to estimate how it changes over time finally multinomial logit and bivariate probit models are estimated to identify the main drivers of change our study finds that female headed households are less likely to become the most resilient also this paper demonstrates that education and participation to household enterprises are positively associated with increased resilience capacity this paper innovates the resilience literature by providing an evidence based analysis of the main drivers of resilience it brings this evidence in the uganda s context focusing the attention of the policy makers on sub sample of population which are worse off more generally our study suggests that resilience enhancing policies can bridge humanitarian and development interventions by demonstrating how long term perspectives i e those investing in education can lead to an immediate increase of resilience