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textabstractWe analyze the redistributional (dis)advantages of a minimum wage over income taxation in competitive labor markets, without imposing assumptions on the (in)efficiency of labor rationing. Compared to a distributionally equivalent tax change, a minimum-wage increase raises involuntary unemployment, but also raises skill formation as some individuals avoid unemployment. A minimum wage is an appropriate instrument for redistribution if and only if the public revenue gains from additional skill formation outweigh both the public revenue losses from additional unemployment and the utility losses of inefficient labor rationing. We show that this critically depends on how labor rationing is distributed among workers. A necessary condition for the desirability of a minimum-wage increase is that the public revenue gains from higher skill formation outweigh the revenue losses from higher unemployment. We write this condition in terms of measurable sufficient statistics. Our empirical analysis suggests that a minimum-wage increase is undesirable in nearly all OECD countries. A reduction in the minimum wage, along with tax adjustments that keep net incomes constant, would yield a Pareto improvement.

Econometric analyses of European datasets suggest that income aspirations increase with current income. This finding is consistent with the adaptation hypothesis – the notion that individual aspirations adjust to reflect personal circumstances and living conditions. We add to these existing studies in two ways: we investigate the relationship between aspirations and living conditions within a developing country rather than a developed country context, thereby extending the analysis to individuals with considerably poorer living conditions; and we expand the analysis to look not only at income but also at educational and health aspirations. Like earlier studies we find that income aspirations increase with both the individual’s own actual income and the incomes of those around them. We also find a positive relationship between actual and aspired to education. However, with respect to health, we find that people aspire to more rather than less health when surrounded by others who are ill.

The paper contrasts early theories of the utility function (starting with Bentham and elaborated by Jevons) with the modern theory (laid down by Fisher and Samuelson). The former include in the utility function not only the sensation of current events but also the memory of past events and the anticipation of future events. The alternative hypotheses are tested by introducing both past and expected future income into the estimated subjective well-being function, using an appropriate data set for China. The tests favour the early theories. Implications are drawn.

This paper examines the redistributional function of queues. A system in which subsidies and queues are used to allocate goods may appear attractive to policy makers who are concerned about equity since the resource used in queuing (time) is generally allocated more equally than, say, human or physical capital. Thus a subsidy-queue mechanism performs a role similar to that performed by a tax-benefit system. Both mechanisms, however, bring with them efficiency losses, which the paper compares. It is shown that the subsidy-queue mechanism may appear superior if the trade-off between efficiency and equity is viewed in terms of consumption and the distribution of consumption. On the other hand, if the equity-efficiency trade-off is properly formulated in terms of utility and the distribution of utility the tax-based redistributional mechanism is superior.

We investigate the unexplored link between the risk of poverty and happiness in the context of a developing country. Using unique longitudinal data, we estimate workers’ vulnerability to income poverty and find a strong negative relationship between vulnerability and life satisfaction, over and above the positive income effect commonly documented in the literature. The result is robust and cannot be reduced to the effect of two-sided uncertainty. A matched behavioral experiment shows that respondents are significantly loss averse. We conclude that downside risk is an important determinant of happiness and of economic decisions under uncertainty. Policies that mitigate downward risk may thus have direct impacts on both well-being and efficiency.

The correct prediction of how alternative states of the world affect our lives is a cornerstone of economics. We study how accurate people are in predicting their future well-being after facing major life events. Based on individual panel data, we compare people's life satisfaction forecasts reported in the first interview after a major life event with their actual evaluations five years later on. This is done after the individuals experience widowhood, unemployment, disability, marriage, separation or divorce. We find systematic prediction errors that seem at least partly driven by unforeseen adaptation after the first four of these events.

Standard models of advertising-financed media assume consumers patronise a single-media platform, precluding effective competition for advertisers. Such competition ensues if consumers multi-home. The principle of incremental pricing implies that multi-homing consumers are less valuable to platforms. Then entry of new platforms decreases advertisement prices, while a merger increases them, and advertisement-financed platforms may suffer if a public broadcaster carries advertisements. Platforms may bias content against multi-homing consumers, especially if consumers highly value overlapping content and/or second impressions have low value.

We study if adaptive learning by a Central Bank (CB) in the Kydland and Prescott environment can steer the economy to the Pareto-optimal outcome. Our CB evaluates its potential strategies regarding the announced and the actual inflation rate through expectations of the performance of these strategies, formed thanks to its mental model of the economy. This model is forward looking and adaptive at the same time. As a starting point, we follow Arifovic et al. (2010) , and initially assume that there are two types of agents: Believers who set their inflation forecast equal to the announced inflation, and Non-believers who form static optimal forecast coupled with a forecast error correction mechanism. Our results show that the economy can reach near Ramsey outcomes most of the time. In the absence of Believers, the economies almost always converge to the Ramsey outcome. In their experiments with human subjects, Arifovic and Sargent (2003) showed that experimental economies reach and stay close to the Ramsey outcome most of the time, giving support to the ‘just do it’ policy recommendation. In light of the experimental findings, our model is of particular interest as it is the only agent-based or adaptive learning model that consistently selects the Ramsey outcome in this context.

The choice of transport infrastructure projects to include in the National Transport Infrastructure Plans in Sweden is often said to be motivated by the weighing of cost against social benefits. Examining the projects that are included in the Plans, it is clear, however, that not all projects have positive net present values, and are therefore more costly to build than the benefits they create. This paper studies alternative models that might explain the choice of projects. Two political economy models, the district demand and the swing voter with lobbying, are tested, and a model that accounts for the spatial distribution of the projects, as well as the possibility that priorities are based on welfare concerns, is estimated. No support is found for the political economy models. What explains investment volume is the existence of CBA results for a project, which may indicate that welfare benefits have an impact, as do the spatial spillovers from a project’s benefits and lobbying, especially by the municipalities concerned.

Is the Pareto optimality of matching mechanisms robust to the introduction of boundedly rational behavior? To address this question I define a restrictive and a permissive notion of Pareto optimality and consider the large set of hierarchical exchange mechanisms which contains serial dictatorship as well as Gale’s top trading cycles. Fix a housing problem with boundedly rational agents and a hierarchical exchange mechanism. Consider the set of matchings that arise with all possible assignments of agents to initial endowments in the given mechanism. I show that this set is nested between the sets of Pareto optima according to the restrictive and the permissive notion. These containment relations are generally strict, even when deviations from rationality are minimal. In a similar vein, minimal deviations from rationality suffice for the set of outcomes of Gale’s top trading cycles with all possible initial endowments to differ from the set of outcomes of serial dictatorship with all possible orders of agents as dictators. © 2016 The Author(s)

Charities often circulate widespread donation appeals, but who is most likely to donate and how do appeals impact the well-being of individual donors and non-donors, as well as the entire group exposed to the campaign? Here, we investigate three factors that may influence donations (recent winnings, the presence of another person, and matched earnings) in addition to the changes in affect reported by individuals who donate in response to a charitable opportunity and those who do not. Critically, we also investigate the change in affect reported by the entire sample to measure the net impact of the donation opportunity. Results reveal that people winning more money donate a smaller percentage to charity, and the presence of another person does not influence giving. In addition, large donors experience hedonic boosts from giving, and the substantial fraction of large donors translates to a net positive influence on well-being for the entire sample.

In this paper we consider one-to-many matching problems where the preferences of the agents involved are represented by monetary reward functions. We characterize Pareto optimal matchings by means of contractual exchange stability and matchings of maximum total reward by means of compensational exchange stability. To conclude, we show that in going from an initial matching to a matching of maximum total reward, one can always provide a compensation schedule that will be ex-post stable in the sense that there will be no subset of agents who can all by deviation obtain a higher reward. The proof of this result uses the fact that the core of an associated compensation matching game with constraints is nonempty.

© 2015 Elsevier B.V. The transfer paradox describes a situation in which a transfer of endowments between two agents results in a welfare decrease for the recipient and a welfare increase for the donor. It is known that in a two-agent regular exchange economy with an arbitrary number of goods, the transfer paradox occurs only if the price equilibrium is unstable. In this paper, we show that in the space of welfare weights, the set of stable equilibria and the set of no-transfer paradox equilibria coincide. As a corollary we also obtain that for two agents and an arbitrary number of goods, the index of an equilibrium in price space coincides with its index in welfare space. publisher: Elsevier articletitle: The transfer paradox in welfare space journaltitle: Journal of Mathematical Economics articlelink: http://dx.doi.org/10.1016/j.jmateco.2015.10.006 content_type: article copyright: Copyright © 2015 Elsevier B.V. All rights reserved. ispartof: Journal of Mathematical Economics vol:62 pages:1-4 status: published

This paper models a purely informational mechanism behind the incumbency advantage. In a two-period electoral campaign with two policy issues, an incumbent and a possibly more competent challenger compete for election by voters who are heterogeneously informed about the state of the world. Due to the asymmetries in government responsibility between candidates, the incumbent’s statement may convey information on the relevance of the issues to voters. In equilibrium, the incumbent sometimes strategically releases his statement early and thus signals the importance of his signature issue to the voters. We find that, since the incumbent’s positioning on the issue reveals private information which the challenger can use in later statements, the incumbent’s incentives to distort the campaign are decreasing in his quality, as previously documented by the empirical literature. The distortions arising in equilibrium are decreasing in the incumbent’s true competence; however, the distortions may be increasing in the incumbent’s expected competence on his signature issue.

This study complements existing literature on the relationship between HIV/AIDS and human capital by introducing previously unexplored indicators and more robust empirical strategies. The overarching purpose is to assess whether previous findings on the relationship withstand empirical scrutiny when alternative indicators and methodologies are employed. Four main HIV/AIDS measurements are regressed on intelligence for a maximum of 195 cross-sectional averages over the past decade. The empirical evidence is based on OLS, IWLS and 2SLS. The following findings are established. First, human capital decreases HIV prevalence, with a higher magnitude on ‘Women's share of population aged 15 and above living with HIV’. This implies improving average human capital levels across communities may be more beneficial to girls above the age of 15 living with HIV. The relatively similar negative magnitudes across other dependent variables implies that increasing human capital decreases deaths from HIV/AIDS by almost the same rate at which it reduces infections to the disease. Moreover, the HIV infection rate in children between the ages of 0 and 14 does not significantly change with improvements in human capital. More policy implications are discussed.

Default contribution rates for 401(k) pension plans powerfully influence workers’ choices. Potential causes include opt-out costs, procrastination, inattention, and psychological anchoring. We examine the welfare implications of defaults under each of these theories. We show how the optimal default, the magnitude of the welfare effects, and the degree of normative ambiguity depend on the behavioral model, the scope of the choice domain deemed welfare-relevant, the use of penalties for passive choice, and other 401(k) plan features. Depending on which theory and welfare perspective one adopts, virtually any default contribution rate may be optimal. Still, our analysis provides reasonably robust justifications for setting the default either at the highest contribution rate matched by the employer or – contrary to common wisdom – at zero. We also identify the types of empirical evidence needed to determine which case is applicable.

We assess the quantitative importance of reclassification risk in the US health insurance market. Reclassification risk arises because the health conditions of individuals evolve over time, while a typical health insurance contract only lasts for one year. Thus, a change in the health status can lead to a significant change in the health insurance premium. We measure welfare gains from introducing explicit insurance against this risk in the form of guaranteed renewable health insurance contracts. We find that in the current institutional environment individuals are well-sheltered against reclassification risk and they only moderately gain from having access to these contracts. More specifically, we show that employer-sponsored health insurance and public means-tested transfers play an important role in providing implicit insurance against reclassification risk. If these institutions are removed, the average welfare gains from having access to guaranteed renewable contracts exceed 4% of the annual consumption., JEL Classification Codes: D52, D58, D91, G22, I11, The authors acknowledge financial support from the Research and Development Administration Office at the University of Macau., http://www.grips.ac.jp/list/jp/facultyinfo/porapakkarm-ponpoje/

We completely characterize the set of second-best optimal "menus" of student-loan contracts in a simple economy with risky labour-market outcomes, adverse selection, moral hazard and risk aversion. The model combines structured student loans and an elementary optimal income-tax problem à la Mirrlees. This combination can be called a graduate tax. There are two categories of second-best optima: the equal treatment and the separating allocations. The equal treatment case is obtained when the social weights of student types are close to their population frequencies; the expected utilities of different types are then equalized, conditional on the event of success on the labor market. But individuals are ex ante unequal because of differing probabilities of success, and ex post unequal, because the income tax trades off incentives and insurance (redistribution). In separating optima, the talented types bear more risk than the less-talented ones; they arise only if the social weight of the talented types is sufficiently high. The second-best optimal graduate tax provides incomplete insurance because of moral hazard; it typically involves cross-subsidies; generically, it cannot be decomposed as the sum of an optimal income tax depending only on earnings, and a loan repayment, depending only on education. Therefore, optimal loan repayments must be income-contingent.

Purpose – How do economic prosperity, health expenditure, savings, price-stability, demographic change, democracy, corruption control, press freedom, government effectiveness, human development, foreign aid, physical security, trade openness and financial liberalization play-out in the fight against health-worker crisis when existing emigration levels matter? Despite the acute concern of health-worker crisis in Africa owing to emigration, lack of relevant data has made the subject matter empirically void over the last decades. The paper aims to discuss these issues. Design/methodology/approach – A quantile regression approach is used to assess the determinants of health-worker emigration throughout the conditional distributions of health-worker emigration. This provides an assessment of the determinants when existing emigrations levels matter. Findings – Findings provide a broad range of tools for the fight against health-worker brain-drain. As a policy implication, blanket emigration-control policies are unlikely to succeed equally across countries with different levels of emigration. Thus to be effective, immigration policies should be contingent on the prevailing levels of the crisis and tailored differently across countries with the best and worst records on fighting health-worker emigration. Originality/value – This paper has examined the theoretical postulations of a World Health Organization report on determinants of health-worker migration.

We study unanimity bargaining among agents along a general river structure that is expressed by a geography matrix and who have access to limited local resources, cost functions that depend upon river inflow and own extraction, and quasi-linear preferences over water and money. Bargaining determines the water allocation and monetary transfers. We translate the legal principles of Absolute Territorial Sovereignty (ATS) and Unlimited Territorial Integrity (UTI) from International Water Law into our model. ATS and a strict interpretation of UTI result in disagreement outcomes that are feasible. And a second interpretation of UTI is translated into individual aspiration levels that are infeasible. For disagreement outcomes, we apply the asymmetric Nash bargaining solution. Common intuition that upstream and midstream countries always prefer the ATS principle to the strict UTI principle (while the opposite preference holds for the downstream country) is reversed for such countries with sufficient bargaining power. For individual aspiration levels, the agents have to compromise in order to agree and we apply the asymmetric Nash rationing solution. The participation constraints in the Nash rationing solution matter. In all cases the optimization problem is separable into two subproblems: the efficient water allocation that maximizes utilitarian welfare; and the determination of monetary transfers.

The well-being of a person is reflected in the language used. Building on 1,400 letters written by three famous music composers, I obtain well-being indices that span their lifetime. The validity of this methodology is shown by linking the indices with biographical information and through estimation of the determinants of well-being. I find, consistent with the literature, that work-related engagements and accomplishments are positively related with well-being, while poor health or death of a relative is detrimental. I then exploit the data and provide quantitative evidence on the existence of a causal impact of negative emotions on outstanding creativity, an association hypothesized across several disciplines since the Antiquity; however, not yet convincingly established for the case of extraordinary achievers.

Social information 'nudges' concerning how others perform typically boost individual performances in experiments with one group reference point. However, in many natural settings, sometimes due to policy, there are several such group reference points. We address the complications that such multiple group social information might introduce through an experiment. The boost to average performance is significant and comparable to the one group case. Between-group inequality does not change. Individual inequality falls, however, because the boost is largest among the pre-‘nudge’ very poor performers. Finally, the boost to average performance is highest when individuals freely choose their group affiliations.

Empirical models of retrospective voting primarily employ standard monetary and financial indicators to proxy for voters’ utility and to explain voters’ behavior. We show that subjective well-being explains variation in voting intention that goes beyond what is captured by these monetary and financial indicators. For example, individuals who are satisfied with their life are 1.6% more likely to support the incumbent; by contrast, a 10% increase in family income leads to a 0.18% increase in an individual’s support of the incumbent. We use difference-in-differences analysis to identify how voter intention is affected by a negative shock to well-being: the death of a spouse. Individuals who experience the death of a spouse are around 10% less likely than those in the control group to support the incumbent. The results hold even if elected officials’ policies (health care, social welfare) cannot reasonably be blamed for the death.

The evolution over time of subjective well-being (SWB) in transition countries exhibit some peculiarities: greater variations which are more strongly correlated with the trends of GDP relative to other countries. What is the possible role of social trust in predicting such variations? We compare the capacity of the trends of GDP and of social trust to predict the trends of SWB. We find that the strength of the relationship between social trust and SWB over the medium-term is comparable to that of GDP. Our conclusion is that in the medium-term, even in countries considered as an extreme case of relevance of material concerns for well-being, social trust is a powerful predictor of the evolution over time of SWB. However, in the short run the relationship between social trust and SWB does not hold and GDP stands out as the only significant correlate of SWB.

This paper outlines the standard neoclassical model (SNM) of the impact of immigration on the incomes of the resident (pre-immigration) population. We augment the SNM to allow for foreign ownership of and government equity in the capital stock. Using the expanded model, four back-of-the-envelope (BOTE) calculations are made. The calculations reveal that the size of the Berry-Soligo welfare triangle is small and is dominated by the effects of foreign ownership of capital and government equity in capital. In our preferred scenario, the BOTE calculation indicates that the 1991-92 Australian immigrant intake reduced residents' income. We believe the results of the BOTE calculations justify a more comprehensive study incorporating a range of other influential factors determining the impact of immigration on residents' income. We suggest a list of such factors and report on work done in these specific areas. Essential to a comprehensive study are the integration of results from studies in specific areas, and the devotion of resources to the tasks of further data collection and model development.

Using data for 28 European countries for the period 2008 to 2012, we examine whether employed individuals are affected by the economic crisis. We provide robust evidence that unfavourable macroeconomic conditions are negatively associated with the life satisfaction of employees. In addition, we find that higher levels of regional unemployment and inflation are predominantly associated with lower levels of life satisfaction for employees who are in a bad financial situation or who expect that their future financial situation will be worse. By contrast, employed people who do well financially and who have good prospects are not affected by the crisis. http://www.tandfonline.com/doi/full/10.1080/13504851.2014.931916 http://dx.doi.org/10.1080/13504851.2014.931916

Previous research studies suggest a lower degree of positional concerns among people from poor countries. Yet the evidence is limited and most often builds on the assumption that people's reference groups are the same across all individuals. We conduct a survey experiment in urban Ethiopia that is modified to include multiplicity of reference groups. We estimate positional concerns considering various reference groups to test whether the low positional concerns found in the literature are due to misspecification of the reference groups. The results show a low degree of positional concern, which is highly stable across different reference groups.

This paper aims to analyze the evolution of the private consumption structure in Romania in the last twenty years surprising three main periods that influenced the composition of economic welfare of romanian citizens: the transition period to the market economy after the fall of communist regime, the period of economic stabilization and sustained growth and the period of financial and economic crisis. The analysis reveals the modifications in the structure of private consumption throughout the three main phases surprised in the Romanian economy and shows the influence of these changes on the economic welfare of the population.

We introduce an ordinal model of efficiency measurement. Our primitive is a notion of efficiency that is comparative, but not cardinal or absolute. In this framework, we postulate axioms that an ordinal efficiency measure should satisfy. Primary among these are choice consistency and planning consistency, which guide the measurement of efficiency in a firm with access to multiple technologies. Other axioms include scale invariance, strong monotonicity, and a continuity condition. These axioms characterize a family of path-based measures. By replacing the continuity condition with symmetry, we obtain the coefficient of resource utilization. (JEL D24, D60)

Under a deadweight loss of tax and transfer, there is tension between the optimal policy choices of a Rawlsian social planner and a utilitarian social planner. However, when with a weight greater than a certain critical value the individuals' utility functions incorporate distaste for low relative income, a utilitarian will select exactly the same income distribution as a Rawlsian.

A considerable part of the poverty that is measured in a single period is transitory rather than persistent. In most countries, only a portion of people who are currently poor are persistently poor. People who are persistently poor or who cycle into and out of poverty should be the main focus of anti-poverty policies. Understanding the characteristics of the persistently poor, and the circumstances and mechanisms associated with entry into and exit from poverty, can help to inform governments about options to reduce persistent poverty. Differences in poverty persistence across countries can shed additional light on possible sources of poverty persistence.

Az ország fejlettségi szintjéhez képest a magyarok kirívóan elégedetlenek az életükkel. Eközben Ausztria, mellyel sok a kulturális és történelmi hasonlóság, az elégedettségi listák élmezőnyéhez tartozik. Magyar és osztrák háztartási szintű adatokon becsülve a szubjektív jóllétet meghatározó tényezők hatását, megállapítottuk, hogy a magyarok szubjektív jóllétét leginkább a rossz egészségi állapot rontja. Magyarországon a szakmunkásvégzettség egyáltalán nem növeli a szubjektív jóllétet, csak a felsőfokú végzettségnek van markáns hatása. Ausztriában viszont már a szakmunkásvégzettség is növeli az elégedettséget. Ott erősebb a pár-, a rokoni és a baráti kapcsolatok ilyen irányú hatása is. A munkanélküliség a jövedelemhatáson túl is rontja a szubjektív jóllétet, és ez a hatás, Ausztriával ellentétben, továbbterjed a családtagokra. Ennek oka lehet az, hogy meginoghat a lakhatás biztonsága, ami Ausztriában részben a nagyobb bérlakásszektor miatt nem következik be. A magyar vállalkozók átlagosnál nagyobb elégedettsége nagy valószínűséggel az eltitkolt jövedelem következménye. Journal of Economic Literature (JEL) kód: I31, I14, C25, D60, O57., Compared with the country s GDP, Hungarians are strikingly dissatisfied with their lives, whereas Austria, with many cultural and historical similarities to Hungary, is in the forefront of the satisfaction lists. By estimating the effect of the factors that influence subjective well-being on Hungarian and Austrian household-level data, the authors found that bad health status was the most important factor depressing Hungarian satisfaction. Vocational training in Hungary does not enhance satisfaction at all, while higher education has a very strong effect. In Austria, on the other hand, even vocational training enhances satisfaction. Also much stronger in Austria is the satisfaction-enhancing effect of personal social ties (with partners, relatives or friends). Unemployment decreases satisfaction, even filtering out the income effect, and this decrease in Hungary, in contrast to Austria, spreads to family members, due mainly to insecurity over housing, which is offset in Austria by its bigger non-private residential tenancy sector. The higher-than-average satisfaction level among Hungarian entrepreneurs most probably results from concealed income.

The study of happiness and economics indicates a paradox: rising income has not led to increases in long term levels of life satisfaction. Evidence shows that citizens adapt to the growth of GDP, but an important difference among certain countries in connection with life satisfaction and the deviation from trend growth has been found: Spain, Italy, Portugal and Greece adapt to the trend growth of their economies; other European countries, however, do not. This suggests that some characteristics of their welfare state, such as the inability to create sufficient equity might leave their citizens more dependent on economic variables such as rising income. Only in boom times can the young, uneducated or the elderly find access to the otherwise restricted labor market and have a chance to escape the poverty trap. In this regard the paper places special emphasis on the issue of global competition by linking the subject with the current state of the European Union.

Recent studies indicate a paradox: rising income has not led to increases in long-term levels of life satisfaction. Therefore, the hypothesis that citizens adapt to the growth of GDP is tested. This paper analyses empirically the relationship between a deviation in the trend of seasonally adjusted GDP growth and life satisfaction in Euro zone member countries based on data from the European Commission’s Eurobarometer report. This approach is new to the literature and it enables us to detect medium-term adaptation effects on growth rates. This adds a new way of tackling the question of why economic prosperity has had little or no influence on life satisfaction levels.We found that country-wide differences in the relationship of trend GDP growth and life satisfaction exist. Portugal, Italy, Greece, and Spain showed a significantly positive relationship. For other euro member countries, the hypothesis does not hold. This suggests that two different groups exist and if everything else is held constant, economic growth strategies should vary.

Appreciation of the importance of the human factor, its major contribution to meeting the requirements of social life, is directly linked to the full extent of its functional potential, to the capacity for work in productive activity. To this end, it should be specified and analyzed independently and in correlation factors that determine the quality of the human factor. One of the main indicators of analysis is labor productivity, whose manifestations were analyzed in this article, through a theoretical study of literature.

The paper tries to clarify the status of the market in Social Choice and Individual Values. It shows how Arrow at first intended to propose a third theorem of welfare economics (Feldman [1991]), which would show that the market achieves not only Pareto-optimality, but also equitable social allocations. The impossibility theorem proves this is impossible. Arrow’s solution to impossibility is interpreted here as a further limitation of the market’s objectives. At the end of the book, the market is presented as a technical mechanism that guarantees economic efficiency, if it doesn’t take individual values into consideration.

ACL-2; International audience; The paper shows that, when dealing with social justice, it is necessary but not sufficient to consider the social evaluator as placed behind a veil of ignorance. Then, her judgements are conform to the moral principle of universalisation and thus are impartial. But the way such judgements should be modelled depends on the interpretation, whether utilitarian or Kantian, given to the universalisation principle. The article compares the utilitarian model of the impartial observer from Harsanyi with the Kantian model of the ignorant observer from Gajdos and Kandil. It defends the latter, which shows that, differently to what Rawls claimed, the maximin is not the unique rule of decision under ignorance. Classification JEL : B41, D60, D63

The partial privatization of the Russian energy industry with retained state regulation has made it impossible to produce targeted market models. In the paper the paths of the 2001 and 2008 reforms in the electricity and gas industries and in the associated petroleum gas market are discussed. Successes and failures of the reforms are evaluated in terms of the public interest. It has been shown that the reforms in all the three industries have not yet been completed and require further development.

The global economic crisis and the subsequent weaker growth are putting under pressure welfare states in the EU. This paper aims at discussing the effects of the crisis at the social level and at identifying whether the classic European welfare state models (Nordic, Continental, Anglo-Saxon and Mediterranean) are still valid in today’s economy. An answer will be tried using the mathematical tool of principal components analysis. The results will be observed in graphs where the states taken into consideration respect the classical welfare models or they regroup themselves into new circumstances’ adapted models. Even though the classical welfare models are generally still checked up with the analyzed indicators, our analysis reveals the need to theoretically redefining the European welfare state in the aftermath of the crisis and to have a unifying social policy concept. Besides calling into question the financial viability of the current social programmes, the crisis could be also a new opportunity to reconfigure and re-legitimize social policy., peer-reviewed

This paper compares two alternative answers to the question, 'Who is the addressee of welfare economics?' These answers correspond with different understandings of the status of the normative conclusions of welfare economics, and have different implications for how welfare economics should be adapted in the light of the findings of behavioural economics. The conventional welfarist answer is that welfare economics is addressed to a 'social planner' whose objective is to maximise the overall well-being of society; the planner is imagined as a benevolent despot, receptive to the economist's advice. The alternative contractarian answer is that welfare economics is addressed to individuals who are seeking mutually beneficial agreements; a contractarian recommendation has the form 'It is in the interests of each of you separately that all of you together agree to do x'. Each of these answers should be understood as a literary convention which uses a highly-simplified model of politics. I defend the contractarian approach and show that it is less supportive of 'soft paternalism' than is the welfarist approach.

We consider Rubinstein’s two-person alternating-offer bargaining model with two-sided incomplete information. We investigate the effects of one party having relative concerns about the bargaining outcome and the delay in reaching an agreement. We find that facing an opponent with stronger relative concerns only hurts the bargainer when she is stronger than her opponent. In addition, we show that an increase of one party’s relative concerns will decrease the maximum delay in reaching an agreement.

This paper analyses the relation between air quality and subjective well-being in Germany. Life Satisfaction (LS) data from the German Socio-Economic Panel Study (SOEP) is connected with daily county pollution in terms of carbon monoxide (CO), nitrogen dioxide (NO2) and ozone (O3) from 1998 to 2008. The assumed microeconometric happiness function is estimated considering individual time invariant effects. It is observed that O3 has a significant negative impact on life satisfaction. The estimated influence of current CO as well as NO2 is not significant. Moreover, I found that LS of people with environmental worries is more affected by ozone pollution. This was not the case for people with a bad health status. Using the marginal rate of substitution between income and air pollution, it is calculated that an increase of one µg/m3 in daily average county O3 has to be compensated by an increase of €11.33 in monthly net household income to hold an average individual's LS constant.

This paper suggests a cause of low density in urban development or urban sprawl that has not been given much attention in the literature. There have been a number of arguments put forward for market failures that may account for urban sprawl, including incomplete pricing of infrastructure, environmental externalities, and unpriced congestion. The problem analyzed here is that urban growth creates benefits for an entire urban area, but the costs of growth are borne by individual neighborhoods. An externality problem arises because existing residents perceive the costs associated with the new residents locating in their neighborhoods, but not the full benefits of new entrants which accrue to the city as a whole. The result is that existing residents have an incentive to block new residents to their neighborhoods, resulting in cities that are less dense than is optimal, or too sprawling. The paper models several different types of urban growth, and examines the optimal and local choice outcomes under each type. In the first model, population growth is endogenous and the physical limits of the city are fixed. The second model examines the case in which population growth in the region is given, but the city boundary is allowed to vary. We show that in both cases the city will tend to be larger and less dense than is optimal. In each, we examine the sensitivity of the model to the number of neighborhoods and to the size of infrastructure and transportation costs. Finally, we examine optimal subsidies and see how they compare to current policies such as impact fees on new development.

The worrying decline of social capital (Putnam, 2000) and the disappointing trends of subjective well-being (Easterlin, 1974) raise urgent questions for modern societies: is the erosion of social capital a general feature of western societies or is it rather a characteristic aspect of the American one? Is there a relationship between the trends of social capital and subjective well-being? The available evidence suggests that two of the richest countries in the world, US and Great Britain, are following negative and considerably different trends of social capital and subjective well-being than other western societies. Present work provides further evidence focusing on Luxembourg. This country is characterized by peculiar economic and social conditions: it is the country with the highest GDP per capita in the world, more than 40% of its population is composed by immigrants and about 50% of its labor force is composed by cross-borders. All these elements raise strives and tensions which are common to many European countries making Luxembourg an interesting case of study. Main results of the present research are the following: 1. the erosion of social capital is not a legacy of the richest countries in the world; 2. between 1999 and 2008, people in Luxembourg experienced a substantial increase in almost every proxy of social capital; 3. both endowments and trends of social capital and subjective well-being differ significantly within the population. Migrants participate less in social relationships and report lower levels of well-being; 4. the positive relationship between trends of subjective well-being and social capital found in previous literature is confirmed.

The article looks at the demographic evolution of Belgian companies in the period from 2001 to 2012. The analysis concerns only those companies which, due to their legal structure, are obliged to file annual accounts with the Central Balance Sheet Office. These are Belgian companies in which the liability of shareholders or partners is limited to their investment. This approach makes it possible to obtain a clear picture of the evolution of both SMEs and large companies, excluding the impact of self-employed persons. First, the study looks at the trends in the total number of establishments, bankruptcies, dissolutions and liquidations between 2001 and 2012. These data are then compared to the total number of active companies in order to establish the actual evolution. This also makes it possible to gain an impression of business dynamics and of the development phase of the economy in a particular period. In addition, it provides an overview of the net number of establishments and bankruptcies and the influence of the economic cycle on demographic developments. This is followed by a geographical analysis of the establishments, bankruptcies, dissolutions and liquidations, in order to chart the process of economic development and dynamics in a certain region. The study is carried out at local, provincial and district levels, chiefly in order to establish the regions in which business dynamics are concentrated and to identify whether significant shifts have occurred during the past ten years. Lastly, the article considers whether the year of establishment has an effect on the average survival rate of companies. A regional and sector-based analysis should make it possible to see whether the survival rate is higher in some regions or sectors than in others, and an age-related check explores whether companies of a certain age are more likely to go bankrupt than younger or older companies.

In this note, we use a two-stage game to examine the domination of uniform price by third-degree price discrimination in a -firm, two-market model. Not surprisingly, when , a monopoly case results. Accordingly, the price, output, profit, and welfare effects under third-degree price discrimination in an oligopoly with symmetric linear demands and constant marginal costs are the same as the results obtained in monopoly price discrimination.

Subjective well-being (SWB) is a major topic of research across the social sciences. Twin and family studies have found that genetic factors may account for as much as 30–40% of the variance in SWB. Here, we study genetic contributions to SWB in a pooled sample of ≈11,500 unrelated, comprehensively-genotyped Swedish and Dutch individuals. We apply a recently developed method to estimate “common narrow heritability”: the fraction of variance in SWB that can be explained by the cumulative additive effects of genetic polymorphisms that are common in the population. Our estimates are 5–10% for single-question survey measures of SWB, and 12–18% after correction for measurement error in the SWB measures. Our results suggest guarded optimism about the prospects of using genetic data in SWB research because, although the common narrow heritability is not large, the polymorphisms that contribute to it could feasibly be discovered with a sufficiently large sample of individuals.

While Jevons is well known for his analysis on pure economics his contributions to a broader conception of welfare including a social aspect has attracted less attention. However, from a history of economic thought perspective, these contributions have a twofold benefit: on the one hand, they reflect the adhesion of Jevons to the utilitarian philosophy; on the other hand, they bear the marks of nascent welfare economics. Jevons has indeed a particular way of dealing with social welfare as he identifies two levels of utility, “economic” and what we call “global”, the latter being a broader concept and showing clearly that these two might contradict. In this paper, our objective is to reconstruct the overall architecture of Jevons’s position on “social reform”. For this purpose, we will first present the “narrow” approach that the economist should adopt according to Jevons and highlight the links that he establishes between economics and ethics through the utilitarian calculus of Bentham (§.1). Then, we will show that Jevons considers that such a point of view should be abandoned in the field of legislation in favour of a method similar to the cost/benefit analysis and which mobilises different sciences to anticipate the outcomes of reforms. After having defined this method (§.2), we will focus on the consequences of such an analysis, which lead Jevons, as an economist, to amend a number of assumptions that he made in the context of pure economics (§.3).

The conditions and effects of government market regulations ARE The subject of discussion in this article. The first part of the study covers the discussion of the different interpretations of market failure and the consequent doubts about the application of this criterion as a condition for adjustment. The second part of the article attempts to make the hypothesis about inconsistent state market regulations plausible, based on a case study OF cigarette market in Poland.