DOCSLIB.ORG

Research2014

Total Page：16

File Type：pdf, Size：1020Kb

Download full-text PDF Read full-text
Research2014 VIENNA YEARBOOK VIENNA With financial support from YEARBOOK of Population OF Research2014 POPULATION RESEARCH 2014 POPULATION e(0)≈60 (α≈14; ß≈60) e(0)≈86 (α≈17; ß≈70) Y* Y* A* Vienna Institute of Demography A* Austrian Academy of Sciences S* Welthandelsplatz 2 / Level 2 · 1020 Vienna · Austria S* Website: www.oeaw.ac.at/vid/yearbook/ 0 10 20 30 40 50 60 70 80 90 100 0 10 20 30 40 50 60 70 80 90 100 Reference age structures (with e0 ≈ 60 and 86, respectively) when Y* = 20% and S* = 20%, the proportions spent in young respectively senior condition (illustrative policy choices) Source: Gustavo De Santis, this volume Vol. 12 Vol. 9 783700 179481 Health, education and retirement over the prolonged life cycle Guest Editors: Michael Kuhn, Alexia Prskawetz and Uwe Sunde ISBN 978-3-7001-7948-1 • ISSN 1728-4414 VIENNA YEAR BOOK A COLLABORATION OF IIASA, VID/ÖAW, WU 14 A COLLABORATION OF IIASA, VID/ÖAW, WU Vienna Yearbook of Population Research 2014 Austrian Academy of Sciences, Vienna Special issue on Health, education, and retirement over the prolonged life cycle Guest editors: Michael Kuhn, Alexia Prskawetz and Uwe Sunde Vienna Yearbook of Population Research 2014 (Volume 12) Articles in this publication except the Introduction were subject to international peer review Internet address: www.oeaw.ac.at/vid/yearbook/ Editorial board Editor: Wolfgang Lutz Guest editors for this issue: Michael Kuhn, Alexia Prskawetz and Uwe Sunde Managing editor: Bilal Barakat Email: [email protected] Associate editors: Thomas Fent, Richard Gisser, Dimiter Philipov, Alexia Prskawetz and Sergai Scherbov Vienna Institute of Demography Austrian Academy of Sciences Wohllebengasse 12–14 1040 Vienna, Austria Fax: (+43 1) 515 81-7730 Website: www.oeaw.ac.at/vid/yearbook/ Publisher Verlag der Osterreichischen¨ Akademie der Wissenschaften Postfach 471, Postgasse 7 1011 Vienna, Austria Tel: (+43 1) 515 81-3401-3406 Fax: (+43 1) 515 81-81-400 Email: [email protected] Website: verlag.oeaw.ac.at Cover design: Christian Hogl¨ Copy editing: Werner Richter Editorial assistant: Barbara Maschat ISSN 1728-4414 ISBN 978-3-7001-7948-1 Authors for this volume Heather Booth, Associate Professor, Australian Demographic and Social Research Institute, Coombs Building #9, Australian National University, ACT 0200, Australia. Lucia Coppola, Italian National Institute of Statistics (ISTAT), Rome, Italy. Heather Crawford, Research Assistant, Australian Demographic and Social Research Institute, Australian National University, Australia. Gustavo De Santis, DiSIA – Department of Statistics, Informatics, Application, Viale Morgagni, 59, 50134 Firenze, Italy. Joshua R. Goldstein, University of California, Berkeley, CA, USA. Madelin Gomez-Le´ on,´ ESRC Centre for Population Change, Building 58, Room 2033, Faculty of Social and Human Science, University of Southampton, SO17 1BJ, UK. Linda Kridahl, Demography Unit, Department of Sociology, Stockholm University, S-106 91 Stockholm, Sweden. Michael Kuhn, Wittgenstein Centre (IIASA, VID/OAW,¨ WU), Vienna Institute of Demography, Welthandelsplatz 2, Level 2, 1020 Vienna, Austria. Ronald D. Lee, University of California, Berkeley, CA, USA. Pau Miret-Gamundi, Senior Researcher, Centre for Demographic Studies, Autonomous University of Barcelona, Spain. Alexia Prskawetz, Institute of Statistics and Mathematical Methods in Economics, TU Wien and Wittgenstein Centre (IIASA, VID/OAW,¨ WU), Vienna Institute of Demography, Vienna, Austria. Haodong Qi, Centre for Economic Demography, Knut Wicksell Centre for Financial Studies, and Department of Economic History, Lund University, P.O. Box 7083, SE-220 07 Lund, Sweden. Pilar Rioseco, Research Assistant, Australian Demographic and Social Research Institute, Australian National University, Australia. Daniele Spizzichino, Italian National Institute of Statistics (ISTAT), Viale Liegi 13, 00198, Rome, Italy. Uwe Sunde, Seminar for Population Economics, University of Munich, Munich, Germany. Contents Introduction Health, education, and retirement over the prolonged life cycle: a selective survey of recent research .................................... 1 Michael Kuhn, Alexia Prskawetz and Uwe Sunde Refereed Articles What can reverse causation tell us about demographic differences in the social network and social support determinants of self-rated health in later life? .......................................................... 23 Heather Booth, Pilar Rioseco and Heather Crawford The effect of retirement on self-reported health: a gender comparison in Italy .............................................................. 53 Lucia Coppola and Daniele Spizzichino Real wages and labor supply in a quasi life-cycle framework: a macro compression by Swedish National Transfer Accounts (1985–2003)........ 83 Haodong Qi Working after age 50 in Spain. Is the trend towards early retirement reversing? .........................................................115 Madelin G´omez-Le´on and Pau Miret-Gamundi Retirement and leisure: a longitudinal study using Swedish data .........141 Linda Kridahl More with less: the almost ideal pension systems (AIPSs) ...............169 Gustavo De Santis How large are the effects of population aging on economic inequality? ....193 Joshua R. Goldstein and Ronald D. Lee Vienna Yearbook of Population Research 2014 (Vol. 12), pp. 1–22 Health, education, and retirement over the prolonged life cycle: a selective survey of recent research Michael Kuhn, Alexia Prskawetz and Uwe Sunde∗ 1 Introduction This issue of the Vienna Yearbook of Population Research contains a selection of papers that were presented at the conference ‘Health, Education, and Retirement over the Prolonged Life Cycle’, which was organised by the Vienna Institute of Demography of the Austrian Academy of Sciences and held in Vienna in November 2013. The conference was devoted to the socio-economic causes and consequences at both the individual and the societal level of the unprecedented increase in life expectancy over the past few decades. At the micro level, a better understanding is needed regarding the extent to which the increase in human life expectancy has been shaped by individual health behaviour, rather than by other socio-economic influences, and through which channels this happened. Conversely, it is important to understand better how the prolongation of the life cycle will shape individual behaviour. The conference focused on behaviour relating to health, education, and the supply of labour. Although generally perceived as a positive development, the increase in life expectancy also poses policy challenges for social security and the cohesion of society, given that different social groups benefit from rising longevity to varying degrees. Important questions have been raised about the macro consequences of the prolongation of the individual life cycle, not least because having an understanding of the underlying mechanisms will be crucial for assessing the extent to which retirement, health, and educational policies need to be reformed. The recognition that the design of reforms should be guided by an awareness of the potential effects ∗ Michael Kuhn (corresponding author), Wittgenstein Centre (IIASA, VID/OAW,¨ WU), Vienna Institute of Demography, Welthandelsplatz 2, Level 2, 1020 Vienna, Austria Email: [email protected] Alexia Prskawetz, Institute of Statistics and Mathematical Methods in Economics, TU Wien and Wittgenstein Centre (IIASA, VID/OAW,¨ WU), Vienna Institute of Demography, Vienna, Austria Uwe Sunde, Seminar for Population Economics, University of Munich, Munich, Germany DOI: 10.1553/populationyearbook2014s001 2 Health, education, and retirement over the prolonged life cycle of policies on individual life-cycle behaviour closes the circle of topics addressed in this volume. The remainder of this introduction sets the scene for the articles contained within this volume by presenting the editors’ (subjective and selective) take on the state of research regarding the link between longevity and individual life-cycle behaviour relating to health, education, and retirement. 2 Health, health behaviour, and the prolonged life cycle This sub-section presents a brief review of some of the recent debates on the role of health in the extension of the life course. After providing an overview of the debate on the extent to which reductions in mortality are accompanied by reductions in morbidity, we highlight the roles of health behaviours, education and social context in shaping health and longevity. 2.1 The debate on healthy life expectancy: demographic and economic perspectives Since the 1980s there has been a heated debate among demographers and epidemiologists about the relationship between life expectancy and morbidity, and the implications of this relationship for the quality of life experienced by ageing populations. Central to this debate are the following questions: Is increasing life expectancy accompanied by a compression of morbidity, and thus by a more than proportional increase in healthy life expectancy (Fries 1980)? Alternatively, is mortality accompanied by an expansion of morbidity (Gruenberg 1977)? Moreover, is it possible that morbidity and mortality are jointly determined by physiological processes that govern both the incidence and severity of disease (Manton 1982)? This debate is on-going (see, e.g. the survey by Crimmins and Beltran-Sanchez (2010)). While recent studies based on aggregated data provide evidence that healthy life expectancy has been increasing (e.g. Cai and Lubitz 2007), a much
Load more

Recommended publications
  • A Quantitative Theory of Political Transitions∗
    A Quantitative Theory of Political Transitions∗ Lukas Buchheimy Robert Ulbrichtz August 28, 2019 Abstract We develop a quantitative theory of repeated political transitions driven by revolts and reforms. In the model, the beliefs of disenfranchised citizens play a key role in determining revolutionary pressure, which in interaction with preemptive reforms determine regime dynamics. We study the quantitative implications of the model by fitting it to data on the universe of political regimes existing between 1946 and 2010. The estimated model generates a process of political transitions that looks remarkably close to the data, replicating the empirical shape of transition hazards, the frequency of revolts relative to reforms, the distribution of newly established regime types after revolts and reforms, and the unconditional distribution over regime types. Keywords: Democratic reforms, quantitative political economy, regime dynamics, revolts, transition hazards. JEL Classification: D74, D78, P16. ∗This paper supersedes an earlier working paper titled \Dynamics of Political Systems." We would like to thank the managing editor, Mich`eleTertilt, four anonymous referees, Daron Acemoglu, Toke Aidt, Matthias Doepke, Christian Hellwig, Johannes Maier, Uwe Sunde, and various seminar and conference participants for valuable comments and suggestions. yLMU Munich, Schackstr 4/IV, 80539 Munich, Germany. E-mail: [email protected]. zBoston College, 140 Commonwealth Avenue, Chestnut Hill, MA 02467. E-mail: [email protected]. 1 Introduction This paper develops a quantitative theory of political transitions based on the evolution of beliefs regarding the regime's strength. Traditionally, the literature has focused on explaining specific patterns of regime changes, focusing on isolated transition episodes.1 In this paper, we shift the focus to a macro perspective, aiming to account for a number of stylized facts in a unified framework.
    [Show full text]
  • Patience and Comparative Development*
    Patience and Comparative Development* Thomas Dohmen Benjamin Enke Armin Falk David Huffman Uwe Sunde May 29, 2018 Abstract This paper studies the role of heterogeneity in patience for comparative devel- opment. The empirical analysis is based on a simple OLG model in which patience drives the accumulation of physical capital, human capital, productivity improve- ments, and hence income. Based on a globally representative dataset on patience in 76 countries, we study the implications of the model through a combination of reduced-form estimations and simulations. In the data, patience is strongly corre- lated with income levels, income growth, and the accumulation of physical capital, human capital, and productivity. These relationships hold across countries, sub- national regions, and individuals. In the reduced-form analyses, the quantitative magnitude of the relationship between patience and income strongly increases in the level of aggregation. A simple parameterized version of the model generates comparable aggregation effects as a result of production complementarities and equilibrium effects, and illustrates that variation in preference endowments can account for a considerable part of the observed variation in per capita income. JEL classification: D03, D90, O10, O30, O40. Keywords: Patience; comparative development; factor accumulation. *Armin Falk acknowledges financial support from the European Research Council through ERC # 209214. Dohmen, Falk: University of Bonn, Department of Economics; [email protected], [email protected]. Enke: Harvard University, Department of Economics; [email protected]. Huffman: University of Pittsburgh, Department of Economics; huff[email protected]. Sunde: University of Munich, Department of Economics; [email protected]. 1 Introduction A long stream of research in development accounting has documented that both pro- duction factors and productivity play an important role in explaining cross-country income differences (Hall and Jones, 1999; Caselli, 2005; Hsieh and Klenow, 2010).
    [Show full text]
  • Did We Overestimate the Role of Social Preferences? the Case of Self-Selected Student Samples
    Did we overestimate the role of social preferences? The case of self-selected student samples Armin Falk,∗ Stephan Meier,y and Christian Zehnderz July 13, 2010 Abstract Social preference research has fundamentally changed the way economists think about many important economic and social phenomena. However, the em- pirical foundation of social preferences is largely based on laboratory experiments with self-selected students as participants. This is potentially problematic as students participating in experiments may behave systematically different than non-participating students or non-students. In this paper we empirically inves- tigate whether laboratory experiments with student samples misrepresent the importance of social preferences. Our first study shows that students who ex- hibit stronger prosocial inclinations in an unrelated field donation are not more likely to participate in experiments. This suggests that self-selection of more prosocial students into experiments is not a major issue. Our second study com- pares behavior of students and the general population in a trust experiment. We find very similar behavioral patterns for the two groups. If anything, the level of reciprocation seems higher among non-students implying an even greater importance of social preferences than assumed from student samples. Keywords: methodology, selection, experiments, prosocial behavior JEL: C90, D03 ∗University of Bonn, Department of Economics, Adenauerallee 24-42, D-53113 Bonn; [email protected]. yColumbia University, Graduate School of Business, 710 Uris Hall, 3022 Broadway, New York, NY 10027; [email protected]. zUniversity of Lausanne, Faculty of Business and Economics, Quartier UNIL-Dorigny, Internef 612, CH-1015 Lausanne; [email protected]. 1 1 Introduction Social preferences such as trust and reciprocity play an increasingly important role in economics.
    [Show full text]
  • Econ 0040: Behavioural Economics Fall 2020
    Econ 0040: Behavioural Economics Fall 2020 Lecturer information Dr. Zeynep Gurguc E-mail: [email protected] Student feedback hours (online): Thursdays 13:15-14:15 during first term or by appointment & later by appointment. What will you learn about? The purpose of this course is to provide students an overview of research in Behavioural Economics, a field of economics that draws on knowledge in psychology to capture important aspects of human behaviour and social interactions that standard economic models cannot explain. The topics we will cover include: Heuristics and Biases, Decision Making under Uncertainty, Prospect Theory, Reference Dependence, Intertemporal Choice, Social Preferences, Bounded Rationality, Nudge as well as Heterogeneity and Malleability of Preferences. Throughout this course, we will link theory to practice and discuss empirical applications in areas and topics such as consumer choice, saving behaviour, procrastination, education, labour supply, finance and policy making. How will you learn? We will use a mixture of online asynchronous and synchronous content. Each Monday by 11:45 am you will get access to the core materials for the week as well as the tasks. In addition, both your lecturer and your teaching assistant will have regular student support and feedback hours where you can drop in to discuss any issues around this module. Weekly Live Sessions with Dr Gurguc: Wednesdays 11AM-12:30PM. The lectures will be on zoom except for weeks 6, 7, 12 and 14 (i.e. October 7, October 14, November 18 and December 2) when the live lecture will be held face-to-face (F2F). F2F lectures will take place in Wilkins Building (main building), Jeremy Bentham Room.
    [Show full text]
  • David Huffman 416 N
    DAVID HUFFMAN 416 N. Chester Rd., Apt. 2 Swarthmore, PA 19081 E-mail: [email protected] Webpage: http://www.swarthmore.edu/x28019.xml PERSONAL Birth Date: April 4th, 1974 Citizenship: USA EMPLOYMENT SINCE PH.D. Associate Professor (with tenure), Swarthmore College February 2012 – Present Assistant Professor, Swarthmore College January 2008 – February 2013 IZA Senior Research Associate 2006 – 2007 Deputy Director, Behavioral and Personnel Economics Program Area IZA Laboratory Coordinator IZA Research Associate 2003 – 2006 EDITORIAL POSITIONS Associate Editor for Management Science January 2013 – present EDUCATION University of California, Berkeley Ph.D. Economics 2003 Primary Fields: Behavioral economics, labor economics, applied microeconomics. Dissertation Advisor: Professor George Akerlof Oberlin College, Oberlin Ohio B.A., magna cum laude in Economics 1996 PUBLICATIONS “Implicit Contracts, Unemployment, and Market Segmentation” IZA Discussion Paper, No. 5001 (with Steffen Altmann, Armin Falk, and Andreas Grunewald), forthcoming in Review of Economic Studies. “When a Nudge isn’t Enough: A Field Test of the Power of Defaults to Influence Savings of Low- Income Tax Filers”, NBER Working Paper, No. 16887 (with Erin Bronchetti, Thomas Dee, and Ellen Magenheim), forthcoming in National Tax Journal. “Validating an Ultra-Short Survey Measure of Impatience”, forthcoming in Economics Letters (with Thomas Dohment, Armin Falk, Jürgen Schupp, Uwe Sunde, Thomas Vischer, and Gert Wagner). “Competition Between Organizational Groups: Its Impact on Altruistic and Antisocial Motivations”, Management Science, 2012, 58(5), 948–960 (with Lorenz Goette, Stephan Meier, and Matthias Sutter). “The Impact of Social Ties on Group Interactions: Evidence from Minimal Groups and Randomly Assigned Real Groups”, American Economic Journal: Microeconomics, 2012, 4(1), 101–115 (with Lorenz Goette and Stephan Meier).
    [Show full text]
  • 1 Property Rights and Economic Development: Taking Stock, Looking Ahead. Carmine Guerriero University of Bologna* Abstract
    Property Rights and Economic Development: Taking Stock, Looking Ahead. Carmine Guerriero University of Bologna ∗ Abstract: Although property rights are crucial to economic development, our understanding of their origins remains limited. A recent strand of research, however, has made a major advance by documenting that the ex post misallocation—driven by the mix of strongly protected property rights and large transaction costs—explains the distribution of property rights significantly better than does the disincentive effect of predation by the state and powerful elites. This conclusion leads to several key questions on the impact of the protection of property rights on the extent of private expropriation, the scope of firms, the size of markets and, ultimately, economic development. In this essay, I illustrate the challenges involved in answering these questions, and I highlight potential policy implications. Keywords: Property Rights; Transaction Costs; Contracts; Markets; Economic Development. JEL classification: D23; D40; D82; K11; L11; P14; Z10. ∗ Department of Economics, University of Bologna, Strada Maggiore 45, 40125 Bologna, Italy. E- mail: [email protected]. I would like to thank Raffaella Paduano, Claude Menard, and Mary Shirley for insightful comments on how to present more incisively the material covered by this essay. 1 “The New Institutional Economics [NIE] is the little engine that could. Its best days lie ahead” [Williamson 2001, p. 611]. 1. Introduction The Coase theorem, the cornerstone of the New Institutional Economics [Williamson 2001, p. 598], claims that alternative property rights assignments internalize conflicts and externalities in equivalently efficient manners when the obstacles to bargaining are limited.1 Poorly defined property rights and large transaction costs, however, prevent contracting,2 and thus the initial legal entitlements shape the efficiency of the final allocation (Coase, 1960).
    [Show full text]
  • Why Do Business Losses Cause Conflict?
    November 18, 2019 Why do business losses cause conflict? Abstract Evidence suggests that conflicts between contracting parties are more prone to occur when a party has suffered a significant loss. It is argued that the phenomenon is difficult to understand within conventional contract theory, which assumes full rationality, while behavioral theories based on the concepts of motivated reasoning and reciprocity provide interesting explanations. Thus, losses can trigger motivated, self-serving perceptions and beliefs, which in turn are likely to induce negative reciprocity as well as counter-productive acts aimed at bolstering self-image. These explanations are demonstrated to be well supported by experiments. 1. Introduction Contract managers claim that parties are more likely to become involved in conflict, i.e. to enter into a period of less than efficient cooperation, after having suffered 1 economic losses. For example, in an interview concerning a large construction project1 an experienced contract manager2 claimed that contractors often ´attempt to recuperate losses by raising more unwarranted claims´. Unwarranted claims may then undermine the client’s trust and so lead to a deterioration of the relationship and sometimes to litigation. That losses can engender lack of cooperation and conflicts is an element of several case studies and surveys (e.g. Kadefors, (2005) and Zhang et. al (2019)), and has also been confirmed in experiments (e.g. Feldman, Schurr, & Teichman (2013), and Fehr, Hart and Zehnder (2011)). Hence, this article proceeds from the understanding that losses can indeed lead to conflict, and inquires what might explain this conflict-after- loss phenomenon. Specifically, the article inquires whether it can be explained within conventional contract theory or whether behavioral theories are needed.
    [Show full text]
  • Longevity and Patience
    A Service of Leibniz-Informationszentrum econstor Wirtschaft Leibniz Information Centre Make Your Publications Visible. zbw for Economics Falk, Armin; Hermle, Johannes; Sunde, Uwe Working Paper Longevity and patience Discussion Paper, No. 201 Provided in Cooperation with: University of Munich (LMU) and Humboldt University Berlin, Collaborative Research Center Transregio 190: Rationality and Competition Suggested Citation: Falk, Armin; Hermle, Johannes; Sunde, Uwe (2019) : Longevity and patience, Discussion Paper, No. 201, Ludwig-Maximilians-Universität München und Humboldt- Universität zu Berlin, Collaborative Research Center Transregio 190 - Rationality and Competition, München und Berlin This Version is available at: http://hdl.handle.net/10419/222098 Standard-Nutzungsbedingungen: Terms of use: Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Documents in EconStor may be saved and copied for your Zwecken und zum Privatgebrauch gespeichert und kopiert werden. personal and scholarly purposes. Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle You are not to copy documents for public or commercial Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich purposes, to exhibit the documents publicly, to make them machen, vertreiben oder anderweitig nutzen. publicly available on the internet, or to distribute or otherwise use the documents in public. Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, If the documents have been made available under an Open gelten abweichend von diesen Nutzungsbedingungen die in der dort Content Licence (especially Creative Commons Licences), you genannten Lizenz gewährten Nutzungsrechte. may exercise further usage rights as specified in the indicated licence. www.econstor.eu Longevity and Patience Armin Falk (University of Bonn) Johannes Hermle (UC Berkley) Uwe Sunde (LMU Munich) Discussion Paper No.
    [Show full text]
  • Screening, Competition, and Job Design:* Economic Origins of Good Jobs
    Screening, Competition, and Job Design:* Economic Origins of Good Jobs a) b) c) Björn Bartling , Ernst Fehr and Klaus M. Schmidt This version: November 17, 2009 Abstract: In recent decades many firms offered more discretion to their employees, which can increase the productivity of effort but also provides more shirking opportunities. This development is difficult to understand in terms of standard moral hazard models. Here we show experimentally that complementarities between high effort discretion, rent-sharing, screening opportunities, and competition may be important driving forces behind these new forms of work organization. We document, in particular, the endogenous emergence of two fundamentally distinct types of jobs. Employers either implement a control strategy, which consists of limited effort discretion, low wages, low effort requests, and little or no rent-sharing, or they implement a trust strategy, which stipulates high effort discretion, high wages, high effort requests, and substantial rent-sharing. If employers cannot screen employees the control strategy prevails. The possibility of screening causes a substantial increase in the prevalence of the trust strategy. The introduction of competition further fosters the trust strategy and induces a substantial increase in welfare such that both employers and employees are better off. Keywords: contract design, job characteristics, screening, reputation, competition, trust, control, high-performance work systems, social preferences, complementarities JEL: C91, D86 *) A previous
    [Show full text]
  • Aspirations and the Persistence of Poverty and Inequalities
    DISSERTATION zur Erlangung des Doktorgrades der Wirtschaftswissenschaften (Dr. rer. pol.) Aspirations and the persistence of poverty and inequalities vorgelegt von Svenja Flechtner am 22.06.2016 an der Europa-Universität Flensburg Internationales Institut für Management und ökonomische Bildung Erster Gutachter: Zweiter Gutachter: Prof. Dr. Stephan Panther Prof. Dr. Carlo D’Ippoliti Europa-Universität Flensburg Sapienza University of Rome Contents Page Acknowledgements . .7 List of Figures . .9 List of Tables . 12 Introduction 13 I Aspirations: contouring a concept 23 1 Understanding human development: what can aspirations contribute? 25 1.1 Why does poverty persist? . 27 1.2 What can aspirations contribute? . 31 2 Models 39 2.1 Reference point models . 41 2.2 Debraj Ray: aspiration windows and aspiration gaps . 43 2.3 Aspirations, inequality and growth in a formal model . 48 2.4 Psychological aspiration traps . 55 2.5 Other models with applications to specific contexts . 60 3 How do aspirations develop? Insights from behavioural economics 65 3.1 Aspirations and ‘non-standard’ preferences . 66 3.1.1 Social learning and cultural transmission . 67 3.1.2 Adaptive processes . 72 3.2 Aspirations and ‘non-standard’ beliefs . 76 3.2.1 Cognitive dissonance . 79 3 3.2.2 Self-views, self-biases and attribution errors . 83 3.2.3 Selective awareness and mental short-cuts . 85 3.2.4 Mental models and cognitive frames . 88 4 Broadening the view: aspirations and different notions of rationality 93 4.1 The approach of mainstream behavioural economics . 94 4.2 Aspirations and alternative conceptions of rationality . 98 4.3 Rational aspirations in the light of identities .
    [Show full text]
  • Economic Perspectives
    The Journal of The Journal of Economic Perspectives Economic Perspectives The Journal of Spring 2018, Volume 32, Number 2 Economic Perspectives Symposia Does the US Really Gain from Trade? Arnaud Costinot and Andrés Rodríguez-Clare, “The US Gains From Trade: Valuation Using the Demand for Foreign Factor Services” Robert C. Feenstra, “Alternative Sources of the Gains from International Trade: Variety, Creative Destruction, and Markups” Teresa C. Fort, Justin R. Pierce, and Peter K. Schott, “New Perspectives on the Decline of US Manufacturing Employment” Dani Rodrik, “What Do Trade Agreements Really Do?” A journal of the Risk in Economics and Psychology American Economic Association Ted O’Donoghue and Jason Somerville, “Modeling Risk Aversion in Economics” Thomas Dohmen, Armin Falk, David Huffman, and Uwe Sunde, “On the Relationship 32, Number 2 Spring 2018 Volume between Cognitive Ability and Risk Preference” Hannah Schildberg-Hörisch, “Are Risk Preferences Stable?” Rui Mata, Renato Frey, David Richter, Jürgen Schupp, and Ralph Hertwig, “Risk Preference: A View from Psychology” Articles Matthew Weinzierl, “Space, the Final Economic Frontier” Daron Acemoglu, “Dave Donaldson: Winner of the 2017 Clark Medal” Features Bruce Elmslie, “Retrospectives: Adam Smith’s Discovery of Trade Gravity” Recommendations for Further Reading Spring 2018 The American Economic Association The Journal of Correspondence relating to advertising, busi- Founded in 1885 ness matters, permission to quote, or change Economic Perspectives of address should be sent to the AEA business EXECUTIVE COMMITTEE office: [email protected]. Street ad- Elected Officers and Members dress: American Economic Association, 2014 A journal of the American Economic Association President Broadway, Suite 305, Nashville, TN 37203.
    [Show full text]
  • Democracy Does Cause Growth∗
    Democracy Does Cause Growth∗ Daron Acemoglu Suresh Naidu Pascual Restrepo James A. Robinson MIT Columbia MIT Harvard November, 2016. Abstract We provide evidence that democracy has a significant and robust positive effect on GDP per capita. Our empirical strategy controls for country fixed effects and the rich dynamics of GDP, which otherwise confound the effect of democracy on economic growth. To reduce measurement error, we introduce a new dichotomous measure of democracy that consolidates the information from several sources. Our baseline results use a dynamic panel model for GDP, and show that democratizations increase GDP per capita by about 20% in the long run. We find similar effects of democratizations on annual GDP when we control for the estimated propensity of a country to democratize based on past GDP dynamics. We obtain comparable estimates when we instrument democracy using regional waves of democratizations and reversals. Our results suggest that democ- racy increases GDP by encouraging investment, increasing schooling, inducing economic reforms, improving the provision of public goods, and reducing social unrest. We find little support for the view that democracy is a constraint on economic growth for less developed economies. Keywords: Democracy, Growth, Political Development. JEL Classification: P16, O10. ∗ We thank Isaiah Andrews, Joshua Angrist, Jushan Bai, Harald Uhlig, two referees, and seminar participants at AEA 2015, NYU-Abu Dhabi, Boston University and Harvard for very useful comments. Acemoglu gratefully acknowledges support from the Bradley Foundation and ARO MURI Award No. W911NF-12-1-0509. 1 Introduction With the spectacular economic growth under nondemocracy in China, the eclipse of the Arab Spring, and the recent rise of populist politics in Europe and the United States, the view that democratic institutions are at best irrelevant and at worst a hindrance for economic growth has become increasingly popular both in academia and policy discourse.
    [Show full text]