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The article aims to present the situation of the countries rich in resources, whose paradox is that they are spoiled of their natural gifts, and thus remaining increasingly poorer as for their standard of living, and level of the economic development. The aim of this research is to point out these aspects in order to contribute to the awareness of anyone would be interested in this important matter. As for the theoretical framework it is circumscribed to the development economics area. The concepts used to present the problems faced by these countries are: resources curse, Duch disease, and banana republic. The novelty element of this research is the problem of Romania in this matter. The goal of this trial is to bring into attention this topic, and to see what could be done in order to change to better the present situation. The means of proving these evidences are different, depending on the problems that the countries are facing, and their level of economic development. The results of our research stand in the pertinent conclusions that are in the final part of the study.

Portability of social benefits across professions and countries is an increasing concern for individuals and policy makers. Lacking or incomplete transfers of acquired social rights are feared to negatively impact individual labor market decisions as well as capacity to address social risks with consequences for economic and social outcomes. The paper gives a fresh and provocative look on the international perspective of the topic that has so far been dominated by social policy lawyers working within the framework of bilateral agreements; the input by economists has been very limited. It offers an analytical framework for portability analysis that suggests separating the risk pooling, (implicit or actual) pre-funding, and redistributive elements in the benefit design, and explores the proposed alternative approach for pensions and health care benefits. This promising approach may serve both as a substitute and complement to bi- and multilateral agreements. (JEL code: D690).

We survey 561 students from US medical schools shortly after they submit choice rankings over residencies to the National Resident Matching Program. We elicit (i) these choice rankings, (ii) anticipated subjective well-being (SWB) rankings, and (iii) expected features of the residencies (such as prestige). We find substantial differences between choice and anticipated-SWB rankings in the implied trade-offs between residency features. In our data, evaluative SWB measures (life satisfaction and Cantril's Ladder) imply trade-offs closer to choice than does affective happiness (even time-integrated), and as close as do multimeasure SWB indices. We discuss implications for using SWB data in applied work. (JEL D12, I31)

Character is commonly recognised as a crucial notion in Alfred Marshall’s thought, and more broadly in Victorian thought. However, this concept is never intrinsically defined. This paper offers an intellectual reconstruction of the notion of character in Marshall’s thought. While not denying that Marshall’s ideas evolve between his early writings and his later writings, this reconstruction focuses on the unchanged elements of his thought. This reconstruction is also an opportunity to re-examine Marshall’s conception of social ideal, on the basis of archives documents: Marshall conceives character as a complex of psychological, moral and cognitive faculties that – in a somewhat circular way – both makes sense in the light of his social ideal and serves his social ideal.

This paper exploits the richness and large sample size of the Gallup/Healthways US daily poll to illustrate significant differences in the dynamics of two key measures of subjective well-being: emotions and life evaluations. We find that there is no day-of-week effect for life evaluations, represented here by the Cantril Ladder, but significantly more happiness, enjoyment, and laughter, and significantly less worry, sadness, and anger on weekends (including public holidays) than on weekdays. We then find strong evidence of the importance of the social context, both at work and at home, in explaining the size and likely determinants of the weekend effects for emotions. Weekend effects are twice as large for full-time paid workers as for the rest of the population, and are much smaller for those whose work supervisor is considered a partner rather than a boss and who report trustable and open work environments. A large portion of the weekend effects is explained by differences in the amount of time spent with friends or family between weekends and weekdays (7.1 vs. 5.4 hours). The extra daily social time of 1.7 hours in weekends raises average happiness by about 2%.

This paper presents empirical evidence that allows us to understand how does the welfare level of beneficiary households of the conditional cash transfer program Oportunidades evolve, both in the short and in the medium term. Understanding this evolution is relevant in order to design efficient exit mechanisms for this type of programs—something that concerns at least 27 conditional cash transfer programs worldwide. Using administrative data of the universe of beneficiary households, we study changes in welfare levels of rural and urban households in the short and medium term. Furthermore, recognizing that the evolution of each household’s welfare level might be heterogeneous, we analyze the paths different types of households have followed over time. Our results confirm the existence of heterogeneity in the evolution of welfare levels among households. The data shows that poorer households have achieved greater improvements in their welfare level than (relatively) better off households.

How important is spatial identity in shifting preferences for redistribution? This paper takes advantage of within-country variability in the adoption of a single currency as an instrument to examine the impact of the rescaling of spatial identity in Europe. We draw upon data from the last three decades of waves of the European Values Survey and we examine the impact of joining the single currency on preferences for redistribution. Our instrumentation strategy relies on using the exogenous effect of joining a common currency, alongside a battery of robustness checks and alternative instruments. Our findings suggest that joining the euro has a boosting effect on European identity; an opposite and comparable effect is found for national pride. We find that European identity increases preferences for redistribution, and that national pride exerts an equivalent reduction in preferences for redistribution.

We develop and apply a consistent and comprehensive theoretical framework for assessing whether economic growth is compatible with sustaining wellbeing over time. Our approach differs from earlier approaches by concentrating on wealth rather than income. Sustainability is demonstrated by showing that a properly defined comprehensive measure of wealth is maintained through time. Our wealth measure is unusually comprehensive, capturing not only reproducible and human capital but also natural capital, health improvements and technological change. We apply the framework to five countries: the United States, China, Brazil, India and Venezuela. We show that the often-neglected contributors to wealth – technological change, natural capital and health capital – fundamentally affect the conclusions one draws about whether given nations are achieving sustainability. Indeed, even countries that display sustainability differ considerably in the kinds of capital that contribute to it.

In the paper relation between the unregistered employment and life satisfaction is investigated. Endogeneity of the employment status and income is described by the system of simultaneous equations with random individual effects. The system is estimated with maximum likelihood on the Russia Longitudinal Monitoring Survey of HSE (RLMS-HSE) data. The key result of the paper is that informal status does not necessary decrease the level of life satisfaction. For example, if income were fixed, men would be more satisfied with their lifes in the unregistered employements in comparison with the registered jobs, ceteris paribus. The same are for women, but only in the cases when earnings are unfixed (they are a bit higher in the unregistered unemployement).

The intense innovational activity typical of the financial sector in the last 30 years requires households to have increasingly comprehensive and complex financial knowledge. The main objective of our study, therefore, was to assess and evaluate risk management activity, which is an integral part of financial literacy, using the questionnaire survey focusing on households of the Central Great Plain and conducted by the Kossuth College of Lakitelek as basis. We have determined that the households examined are conservative with respect to their finances and strive to minimise risks as much as possible, which is commendable. Unfortunately, however, they lack the financial knowledge to make prudent decisions. In truth, risk management strategy based on inadequate knowledge, but thought to be sound is nothing more than a substitution of risk types, the significance of which households are unable to assess realistically as they lack necessary financial knowledge.

Lejos de cualquier punto de vista ideologico, nuestro objetivo en este trabajo es estudiar, dentro de un enfoque diferencial de la teoria de juegos, el modelo neoclasico de crecimiento economico. Nuestro modelo base viene de Kaitala y Pohjola (2009) sobre la base de las ideas originales de Lancaster (1973). Nos centramos en el calculo de las estrategias de informacion y el uso de las estrategias historico-dependientes, como las estrategias de gatillo en el que empezar por cooperar y colaborar se da siempre y cuando los rivales lo hacen, pero al observar una desercion de tal situacion implicara entrar de inmediato a un periodo de castigo a longitud especificada en donde todo el mundo juega de forma no-cooperativa. Se demuestra que las estrategias de gatillo son empleadas por ambos grupos, firmas y trabajadores, para mantener la cooperacion como un equilibrio. Entonces llegamos a la conclusion de que las estrategias con memoria de los jugadores son la clave para lograr el maximo crecimiento economico.

Cuando los hogares beneficiarios del programa Oportunidades son reencuestados puede ocurrir que: (i) mantengan su elegibilidad, (ii) pasen a un esquema con una menor transferencia monetaria o (iii) dejen de ser elegibles. Se utilizan registros administrativos de dicho programa para presentar evidencia con respecto a qué factores determinan que un hogar pase de un estado de elegibilidad a otro. Hogares muy pobres o que están en localidades muy marginadas tienen baja movilidad entre estados de elegibilidad. La educación del jefe y el número de niños en el hogar tienen el mayor peso en determinar elegibilidad en el corto plazo.

Az elmúlt évtizedekben számos tanulmány mutatott rá, hogy némely helyzetben az önérdekkövetésnél jóval erősebb motivációt jelentenek a mások jólétét figyelembe vevő preferenciák. E preferenciák - például a méltányosság, altruizmus és reciprocitás - jó néhány kísérleti közgazdaságtani eszközöket alkalmazó kutatás témáját adták. Számos - a viselkedést befolyásoló - tényező állt e kutatások középpontjában, azonban az egyik legegyszerűbb emberi kapcsolat mégis kívül maradt e kutatások látókörén. Ez a kapcsolat a barátság. A szerző ezt a hiányt igyekszik pótolni két játék - a kísérleti gazdaságtanból ismert ultimátum- és diktátorjáték - alkalmazásával. Megállapítja, hogy a méltányos viselkedés nem puszta "egyenlőséget" jelent, hanem annál sokkal összetettebb normarendszeren alapul, amelyben meghatározó szerepet tölt be a személyek közti kapcsolat. Kísérleti eredmények alátámasztják azt a feltételezést, hogy az emberek a barátaikkal önzetlenebben osztozkodnak, mint idegenekkel, azaz a méltányos osztozkodás mást és mást jelent attól függően, hogy kivel történik. Emellett az eredmények azt mutatják, hogy a méltányosnak ítélt osztozkodás és a másokkal szembeni követelmények is kapcsolatban vannak egymással. Journal of Economics Literatrure (JEL) kód: C91, D63, D69., Several studies have pointed out in the last few decades that in some situations, preferences that regard others provide much stronger incentives than self-interest. These preferences - for example fairness, altruism and reciprocity - have been the topics of numerous research projects that use the tools of experimental economics. Although these studies focus on numerous behavioural factors, one of the simplest social relationships - friendship - has yet to be examined. The article tries to make up for this by using dictator and ultimatum games. Results show that fair behaviour does not mean "equality" per se. It is based on a much more complex set of norms, in which interpersonal relationships may have a crucial role. The experimental results support the assumption that people share more altruistically with their friends than with strangers, so "fair split" has a different meaning depending on who the goods are being split with. They also show a relation between splits perceived as fair and expectations of others perceptions of a fair split.

Cette etude, realisee a partir d’une enquete effectuee en 2006 pour la Dares sur un echantillon representatif de la population francaise, propose une analyse des determinants des perceptions subjectives des causes du chomage et de leurs solutions. Elle met en regard ces perceptions avec les enseignements des evaluations realisees sur les causes du chomage et l’efficacite des politiques d’emploi. Nous faisons l’hypothese qu’une meilleure connaissance des causes et consequences du chomage peut etre un facteur d’amelioration de l’efficacite de la politique de l’emploi. Les delocalisations, la faiblesse de la croissance et le niveau des cotisations a la charge des employeurs sont les principales causes imputees au chomage. La baisse des cotisations a la charge des employeurs et la relance de la consommation apparaissent les deux solutions privilegiees par les individus de l’echantillon. Ces perceptions sur les causes et consequences du chomage apparaissent globalement coherentes.L’analyse relative aux mesures plus specifiques de la politique d’emploi montre par ailleurs que les individus tendent a sur-interpreter les logiques d’incitation au travail du fait sans doute que celles-ci tendent a s’imposer comme normes dans le debat public. En outre, meme si une meilleure connaissance affirmee par les individus des dispositifs de la politique d’emploi va de pair avec un niveau de diplome et une position sociale plus eleves, la detention d’un haut niveau de diplome ne garantit pas une meilleure connaissance effective des mecanismes de la politique de l’emploi. Nous le verifions concernant certains des mecanismes d’indemnisation du chomage.

The Sarkozy Report is a study commissioned by the French President on better ways to measure the level and progress of societal well-being than conventional economic indicators such as GDP. Despite being prepared by prominent economists—the commission was led by Joseph Stiglitz, Amartya Sen, and Jean-Paul Fitoussi—the Report rejects reliance on “production-oriented” measures of progress in favor of a broader array of quality-of-life indicators, some of them subjective, and measures of the sustainability of well-being into the future. These multiple dimensions of well-being, it argues, should be used in policy decisions and welfare evaluations. The views expressed in the Report may portend a sea-change in the way economists think about the benefits of economic growth.

Inequality is the keyword to understand why Latin-America Left, restructured as democratic and dialogging, emerged after the sinking of communist bastions and their mutation, as the new Chinese "Market-based socialism". Latin-America history shows a strong and fighting Left, featuring the heroic deeds of Ernesto Guevara and Fidel Castro. But Monroe Doctrine and the Dependency promotion, by the foreign and inner enemies, thwarted that hope of the divers Lefts, now in the Government, now making opposition, now seeking for a weapon-based taking of power. Eventually the Right won and the Lefts got spread by the Region. Then the Leftist people understood that any Dictatorship would restrict freedom to most of citizens. They also learned from the capitalist game, that concentrated interests, specially in Latin-America make much more power, so they had need dialogue, consensus and negotiation toward to reach the power and govern. Nowadays, democratic Leftist Governments, try to make gradual changes, by mean of local, autonomous, heterogeneous and dynamic policies.

O presente estudo analisa o impacto da criminalidade sobre o bem-estar individual e social. A perda de bem-estar é estimada pela disposição a pagar dos indivíduos relativamente a uma cesta de serviços de segurança, captada pelo Método de Avaliação Contingente e calculada com regressão logit. Os resultados das regressões sugerem que a segurança pública é um bem normal e comum. Pode-se inferir que o valor monetário da perda de bem-estar associado ao sentimento de insegurança justifica a adoção de políticas públicas de combate à criminalidade.

The Collapse of Capitalism (COC) Theory, usually supported by leftist people, is being denied by economic fundamentals facts and corporate profit data. Any constrictive or critical circumstance claimed as threatening the status quo has been efficiently redirected toward labour force exploitation. The way in which capitalist model can survive and improve is by mean of slow growth of wages and salaries (progressive decrease of their real purchasing power) and the labour rights removal, even inside richest countries, as the United States.

Work integration social enterprises are at a competitive disadvantage in the market due to their idiosyncratic nature. Social clauses and protected markets may provide a way of balancing this disadvantage. This article analyses the measures put in place by the Authorities to promote social and work integration processes. However, this analysis refers only to the measures that the Authorities can adopt in their role as a client or market for products or services, and to measures that are aimed particularly at work integration social enterprises: social clauses and protected markets. Both of these measures are rescaled into a single dimension labelled social clauses, quantifying their restrictive impact in the light of the problem of whether or not said clauses are used.

Work integration social enterprises are an emerging reality in the Spanish State, and both the number of such enterprises and the resources allocated to this area by the different regional Authorities are increasing exponentially. However, the studies carried out to date are largely descriptive or explanatory, and have hardly touched on aspects relating to the management of these enterprises. In this article we set out to identify the fundamental factors linked to the business success of work integration social enterprises as an evaluation of the efficiency of such projects. The proposed hypothesis links a set of factors taken from the literature, which are considered independent variables, with the dependent variable of success. The hypotheses have been proven by an empirical analysis based on a telephone survey.

Recent developments in the political, scientific and economic debate on the topic of the project proposal in Area 2: "The impact of ecological sustainability on growth and employment is investigated, as it will have important repercussions on econonmic policy and welfare, many of them not reflected in traditional GDP measures and in economic policy" suggest that it is of critical importance to develop and to use new approaches able to compare policy scenarios for their effectiveness, their efficiency, their enforceability and other dimensions. It is a urgent need for quantitative methodology able to assess the relative performance of different policy scenarios taking into account their long-term economic, social and environmental impacts. The methodology based on Data Envelopment Analysis (DEA) and Multi Criteria Analysis (MCA) provides a promising comparison framework. The objective of this part of research is not solely to discuss and comment on different scenario and policy outcomes provided by WP205, but to extract useful information from the phase where proposed and simulated policy scenarios are compared. In particular, we are interested in incorporating the economic, environmental and social dimensions of the positive and negative impacts of each policy scenario. As shown in the paper by Boseth-Buchner (2009) this methodology allows "to bridge the gap between the simulation phase, in which long-run efects of policies are mimicked, and the valuation phase, in which usually a coherent cost benefit analysis framework is adopted" (p. 1342). In difference to the standard application of DEA for the ex-post performance assessment in the proposed approach DEA can be used for ex-ante assessment of different policy scenarios. DEA models combined with MCA, in particular with Analytic Hierarchy Process (AHP) incorporating human judgements provides an useful instrument to analyse the impact of different policy preferences and strategies that appear to be crucial for the increasing well-being of the population. As a consequence, the proposed approach can provide a very beneficial contribution to the project as a whole and in particular to one of t

Social comparisons are important in the employment sphere. A “culture of unemployment” may evolve and prevail because it is optimal for an individual to remain unemployed when other unemployed individuals constitute his main reference group. We advance the idea that by making the receipt of unemployment benefits conditional on engagement in an incentive-enhancing activity (for example, work under state-sponsored employment schemes or participation in work-site-based training programs), a government can engineer a revision of the reference groups of an unemployed individual in order to induce him to seek work.

How important is spatial identity in shifting preferences for redistribution? This paper takes advantage of within-country variability in the adoption of a single currency as an instrument to examine the impact of the rescaling of spatial identity in Europe. We draw upon data from the last three decades of waves of the European Values Survey and we examine the impact of joining the single currency on preferences for redistribution. Our instrumentation strategy relies on using the exogenous effect of joining a common currency, alongside a battery of robustness checks and alternative instruments. Our findings suggest that joining the euro has a boosting effect on European identity; an opposite and comparable effect is found for national pride. We find that European identity increases preferences for redistribution, and that national pride exerts an equivalent reduction in preferences for redistribution.

While most studies on wealth inequality focus on the inequality between households, this paper examines the distribution of wealth within couples. For this purpose, we make use of unique individual level micro data from the German socio-economic panel study. In married and cohabiting couples men's net worth, on average, is 33,000 euros higher than women's. We look at five different sets of factors (demographics, income, labor market, inheritances, financial decision-making in the partnership) that might explain this wealth gap. We find that all factors contribute to the explanation of the wealth gap within partnerships, with inheritances and income being particularly relevant. Furthermore, we find that specific characteristics (e.g., self-employment, no migration background, inheritances, high income) that decrease the wealth gap for women increase it for men. For men the respective coefficients are even stronger in absolute terms. When examining intra-partnership financial decision-making, we find the gap to be significantly smaller when the female partner manages the money and larger if the male partner has the last word in financial decisions. The final publication is available at Springer via http://dx.doi.org/10.1007/s11150-013-9229-2

Multinational corporations can shift income into low-tax countries through transfer pricing and debt financing. While most developed countries use thin capitalization rules to limit the extent to which a subsidiary can be financed with internal debt, a number of developing countries do not. In this paper, we analyze the effect on FDI and host country welfare of thin capitalization rules when multinationals can also shift income via transfer prices. We show that while permissive thin capitalization limits may be needed in developing countries to attract FDI, the amount of debt financing allowed by the permissive limits facilitates more aggressive transfer pricing and results in lower host country welfare.

We introduce a two layer network model for social coordination incorporating two relevant ingredients: a) different networks of interaction to learn and to obtain a pay-off, and b) decision making processes based both on social and strategic motivations. Two populations of agents are distributed in two layers with intralayer learning processes and playing interlayer a coordination game. We find that the skepticism about the wisdom of crowd and the local connectivity are the driving forces to accomplish full coordination of the two populations, while polarized coordinated layers are only possible for all-to-all interactions. Local interactions also allow for full coordination in the socially efficient Pareto-dominant strategy in spite of being the riskier one., H. Lugo gratefully acknowledges the financial support from Spanish MICINN under project ECO2013-42710-P. M. San Miguel gratefully acknowledges the financial support from the Spanish MINECO and FEDER under project INTENSE@COSYP (FIS2012- 30634). Authors gratefully acknowledge the financial support by the EU Commission through the project LASAGNE (FP7-ICT-318132).

This paper examines the patterns of food consumption in Sri Lanka from 1985 to 2009 using the food disappearance data published by the Food and Agriculture Organization. Trends in per capita daily calorie, protein and fat supply have been examined. The study finds that grain food products are the main source of calories and protein, while fat-calories were mainly sourced from non-grain vegetable products and animal food products. Calories derived from protein were less than the recommended intake for Sri Lankans. During the period studied, there has been a shift away from roots and tubers, fruits and cereals, towards sugars, pulses, oils and animal products. The contributions from animal products were relatively low, being less than 8 per cent.

La distincion de Sen entre medios y fines al abordar la medicion de los niveles de vida es el punto de partida del presente trabajo. En el se propone la construccion del Indice Fisico de Calidad de Vida (IFCV) para los 17 municipios del estado de Tabasco a partir de variables demograficas y educativas, con una variante: la utilizacion del metodo de componentes principales. Los resultados del ejercicio sugieren la necesidad de tener una vision mas cautelosa de la relacion entre crecimiento economico, bienestar y distribucion de la renta en terminos espaciales y confirma la virtualidad de un enfoque del desarrollo economico de caracter normativo.

The model of public policy studied in this paper has heterogeneous citizens/voters and two public goods: one (roads) chosen directly by an elected policy-maker, and the other (pollution) stochastically dependent on the amount of roads. Both a one-country and a two-country version of the model are analyzed; the latter displays externalities across the countries which create incentives for free riding and strategic delegation. The welfare effects of providing the policy-maker with information about the relationship between roads and pollution are investigated, and it is shown that more information hurts some - sometimes even all - citizens. In particular, the opportunity not to create an institution for information gathering can serve as a commitment device for a country, although with the unfortunate effect of making the overall outcome even worse. Implications for the welfare effects of 'informational lobbying' are also discussed.

Are individuals more sensitive to losses than gains in macroeconomic growth? Using subjective well-being measures across three large data sets, we observe an asymmetry in the way positive and negative economic growth are experienced, with losses having more than twice as much impact on individual happiness as compared to equivalent gains. We use Gallup World Poll data drawn from 151 countries, BRFSS data taken from a representative sample of 2.5 million US respondents, and Eurobarometer data that cover multiple business cycles over four decades. This research provides a new perspective on the welfare cost of business cycles with implications for growth policy and our understanding of the long-run relationship between GDP and subjective well-being.

What shapes the size of a personal network of family and friends? We concentrates here on the effect of retirement from the work force. Retirement provides time to develop personal relationships; but it deprives from a potential supply of colleague friends. We draw evidence from a new question on the number of confidants in the 4th wave of the Survey of Health, Ageing and Retirement in Europe. The survey allows to take into account many potential determinants of personal relations. A first result is that being retired decreases friendship ties, while it increases family ties. Economic resources influence the number of confidants. We estimate that the negative effect of being retired on the number of friends is reduced by one half when we control for permanent income. The differences among countries and cohorts in retirement age regulation provide an instrument to get closer to a retirement effect. We find that the retirement decision can be endogenous. The result from the IV strategy is that the negative effect of retirement on the number of friends is erased for men, not for retired women who do have less friends than employed women, cet. par. . Finally the size of the personal network is found to have a positive but small impact on life satisfaction. Family ties are more important than friends for women and both types of ties seem equally important for men.

In this paper we assume that for some commodities individuals may wish to adjust their levels of consumption from their normal Marshallian levels so as to match the consumption levels of a group of other individuals, in order to signal that they conform to the consumption norms of that group. Unlike Veblen’s concept of conspicuous consumption this can mean that some individuals may reduce their consumption of the relevant commodities. We model this as a three-stage game in which individuals first decide whether or not they wish to adhere to a norm, then decide which norm they wish to adhere to, and finally decide their actual consumption. We present a number of examples of the resulting equilibria, and then discuss the potential policy implications of this model.

Trust in strangers is key for economic development. Social capital theory posits that participation in associations is essential to propagate trust in society, because membership instils trust both towards other members and generalised others. We provide an experimental test for this thesis. We measure members' trust and trustworthiness when interacting with fellow members or with people from the general population, who are not association members. We find that members trust and reward trust more than non- members, and do not discriminate between members and the general population. However, we find no correlation between the intensity of associational participation and increased pro-sociality.Length: 17

This paper explores the role of housing in households’ increasing financial activities. First, I build on quantitative work on the growth of housing related debt across Europe carried out under WP5 by presenting data on rates of homeownership, levels and types of mortgage debt, and house prices (and, by implication, housing wealth). I find that, although there is a general tendency for all to increase, differences in the structures of housing provision across countries lead to significant variation in both the data, and what can be drawn from it, across countries. Second, I consider accounts of households’ growing financial activities that attribute a central role to housing, including Lapavitsas and Dos Santos’s ‘financial expropriation’ thesis, and a growing body of literature that sees Europe as moving towards a housing asset-based welfare model. I argue that both, in different ways, are insufficiently attentive to the way in which housing provision, the role of finance within it, and the relationship of both to the reproduction of labour power more generally, are all uniquely and distinctly structured in different countries. I also show that even in the UK, where the role of finance in housing and welfare provision is thought to be most advanced, the restructuring of housing and welfare in favour of finance remains limited and contradictory. Finally, I outline some preliminary findings on the impact that a growing tendency to treat one’s home as an asset has had on well-being.

The hypothesis of non-satiation of rational choice theory is very seldom posed under scrutiny, maybe because it is taken as an anthropologic reality. Looking closer to that, we discover that it is taken for granted only in economic theory, and that it has become a reality as a result of a cultural process. This paper makes a brief story of this axiom, and looks at how it recently shifted into a modification of the original concept of adaptation. Using theoretical research in psychology, we find out that non-satiation is indeed not a natural feature of human beings, but a challenge to their happiness and a potentially pathological sign. The distinction between needs and requirements provides a new and solid ground on which we can discuss the quality of human needs, which is, according to Keynes, a key concept to define what the ‘economic problem’ is.

The year 2012 was the 30th anniversary of William H. Riker’s modern classic Liberalism against populism (1982) and is marked by the present special issue. In this introduction, we seek to identify some core elements and evaluate the current status of the Rikerian research program and its empirical applications. Special attention is given to three phenomena and their possible empirical manifestations: The instability of social choice in the form of (1) the possibility of majority cycles, (2) the non-robustness of social choices given alternative voting methods, and (3) the possibility of various forms of manipulation of the decisions (heresthetics). These topics are then connected to the contributions to the current special issue.

The authors of the article point out that the theory of economics has failed to yield a solid theoretical background in such critical situations of the current financial and economic crisis. Theorists cannot look to controversial mathematical modelling for help, especially in regulatory projects. The challenge for today’s theoretical economists is to find a new concept for today’s global era in the sense of behavioural and empiric attitudes. The criticism of fair insurance premium is included.

The cross-country correlation between social trust and income equality is well documented, but few studies examine the direction of causality. We show theoretically that by facilitating cooperation, trust may increase efficiency and lead to more equal outcomes, while the feedback from inequality to trust is ambiguous. Using a structural equations model estimated on a large country sample, we find that trust has a positive effect on both market and net income equality. Larger welfare states lead to higher net equality but neither net income equality nor welfare state size seems to have a causal effect on trust. We conclude that while trust facilitates welfare state policies that may reduce net inequality, this decrease in inequality does not increase trust.

Inequalities created by relating gauge (distance) functions and their dual support functions have been used in economics and operations research/management science to measure efficiency and productivity. The most familiar example is the Farrell (1957) measure of cost efficiency and its decomposition into technical and allocative components, which can be shown to be an application of the Mahler (1939) inequalities, although Farrell was probably unaware of the connection. In this short paper we add to this literature by providing explicit relationships between distance functions and support functions to form five different inequalities. These inequalities are derived from three support functions: the cost function, the revenue function and the profit function, and three gauge (distance) functions: the input distance function, the output distance function and the directional (technology) distance function.

We investigate the effect of punishment in a trust game with endowment heterogeneity in which the investor may punish the allocator at a cost. Our results indicate that the effect of the punishment crucially depends on the investor’s capacity of punishment, that is measured in our experiment by the proportion of the allocator’s payoffs that the investor can destroy. We find that punishment fosters trust when the capacity of punishment is high (i.e., when the cost of punishing is relatively low). Otherwise, punishment fails to promote trusting behavior, crowding out intrinsic motivation to trust. Trustworthiness is higher with punishment than without punishment, except if investors have a high capacity of punishment

Este documento analiza a la luz de una situación monopólica, el efecto sobre el bienestar de los consumidores derivado de cambios en la magnitud de la elasticidad precio de la demanda. En el artículo se asume una función de demanda con elasticidad precio de la demanda constante y rendimientos constantes a escala asociados a la firma productora del bien o servicio. Se encuentra que entre más elástico sea el mercado, mayor será la porción de excedente del consumidor que es tomado por la firma, en términos relativos al excedente del consumidor en una situación perfectamente competitiva. This document analyzes since a monopolistic situation the effect in terms of consumer welfare derived of changes in the price elasticity of demand. The paper assumes a constant price elasticity of demand function and constant return of scale associated with the seller of the service of good firm. It is found that a greater level of elasticity, greater the level of profits of the monopolistic firm in relative terms to the consumer surplus in perfect competition.

While most studies on wealth inequality focus on the inequality between households, this paper examines the distribution of wealth within couples. For this purpose, we make use of unique individual level micro data from the German Socio-Economic Panel (SOEP). In married and cohabiting couples, men have, on average, 33,000 Euro more net worth than women. We look at five different sets of factors (demographics, income, labor market, inheritances, financial decision making in the partnership) that might explain this wealth gap. We find that all factors contribute to the explanation of the wealth gap within partnerships, with inheritances and income being particularly relevant. Furthermore, we find that specific characteristics (e.g. self-employment, no migration background, inheritances, high income) that decrease the wealth gap for women increase it for men. For men the respective coefficients are even stronger in absolute terms. When examining intra-partnership financial decision making, we find the gap to be significantly smaller when the female manages the money and larger if the male partner has the last word in financial decisions.

Making policy choices is unavoidable. The standard economic approach to guiding policy consists of two steps: estimate policy effects on individuals’ utility, and then use a social choice rule that aggregates across individuals to generate a policy recommendation. Traditionally, the policy-effect estimates come from market data. However, market data are insufficient in some contexts involving externalities, public goods, and non-market goods, and may not reliably reveal preferences in contexts where people are uninformed or make systematic mistakes. For these reasons, economists have increasingly been exploring survey-based approaches to estimating policy effects on utility. For our purposes, such surveys have two key features: they are unincentivized, and they generally work best for eliciting local preferences at the status quo (because respondents find it harder to introspect about how they would feel in counterfactual, unfamiliar situations). In this paper, we propose a social choice rule for aggregating local ordinal preferences elicited from surveys into a local policy improvement, while reducing the incentive for survey respondents to misreport their preferences. We have in mind three examples of survey-based preference measurement to which our method could be applied. First, contingent valuation surveys often elicit respondents’ marginal rates of substitution between different policies or between a policy and money (i.e., willingness to pay). Second, much research on subjective well-being (SWB) treats the response to a SWB survey question, typically regarding happiness or life satisfaction, as a proxy for utility and estimates how policies affect it. Unlike contingent valuation or policy referendums, this approach sidesteps respondents’ policy misconceptions or lack of information; and relative to traditional market-based indicators such as GDP, SWB data may capture a broader range of aspects of well-being (e.g., Stiglitz, Sen, and Fitoussi, 2009). However, evidence indicates that people make choices that systematically deviate from what they believe would maximize their responses to commonly-used SWB measures (Benjamin, Heffetz, Kimball, and Rees-Jones, 2012, 2013), suggesting that a single-question SWB measure is inadequate as a utility proxy. The primary application we have in mind is estimating the effects of policy on responses to a range of SWB questions that capture distinct aspects of well-being, including, for example, own and family happiness, health, security, and freedoms. The effect of policy on utility can be estimated as a weighted average of the effect of policy on these responses, with the weights derived from a separate survey that elicits individuals’ marginal rates of substitution across aspects of well-being.1 The theory and methods for combining responses to multiple SWB questions into a utility proxy are developed in a companion paper (Benjamin, Heffetz, Kimball, and Szembrot, 2012).

Amartya Sen’s approach to Welfare Economics argues evaluation of individual advantage should occur in the informational space of the freedom of choice individuals have in achieving valuable human functionings, that is in the space of capabilities. Furthermore, the identification of what is valuable involves taking into account ethical reasoning in the explanation of actual human behaviour, that is agency freedom, as well as the variety of human values. Despite of the recognition of such contribution to Economic Theory, unavailability of appropriate data and indicators challenges empirical investigations. This paper aims at overcoming such shortcoming through an assessment of the validity of an indicator measuring agency freedom as empowered autonomous choice. The empirical investigation is conducted on a random sample of 136 women in a rural patriarchal village in Uttar Pradesh, India, through a multi-topic survey instrument. Results indicate agency freedom differs across domains. In particular, individuals ranking high in the domain of resources simultaneously rank lower in the domain of empowerment. Furthermore, empirical evidence suggests a phenomenon of social exclusion of those more autonomous. Therefore, policy prescriptions at the community level identify enhancing collective capabilities as a viable strategy to accommodate the simultaneous coexistence of empowerment and social inclusion as well as the enhancement of principles of social justice rooted in a freedom-related metric.

The authors analyze changes resulting from impacts of the globalization process and the crisis on the financial markets, particularly on the conservative insurance sector, which is forced to accelerate the dynamics of structural changes. The adequacy of the current regulatory measures for the financial/banking markets, and the insurance sector in particular, is discussed, together with the consequences of implementing measures aimed at consumer protection/anti-discrimination measures, including the search for balance between higher internal stability and client safety on the one side, and efficiency of insurance for clients and effectiveness of the activity itself on the other side. Furthermore, the article addresses current internal problems of the sector. An opinion is expressed in conclusion that the insurance sector has potential to remain a stable sector, in spite of the outlined problems.

This paper proposes foundations and a methodology for survey-based tracking of well-being. First, we develop a theory in which utility depends on “fundamental aspects” of well-being, measurable with surveys. Second, drawing from psychologists, philosophers, and economists, we compile a comprehensive list of such aspects. Third, we demonstrate our proposed method for estimating the aspects' relative marginal utilities—a necessary input for constructing an individual-level well-being index—by asking ∼4,600 US survey respondents to state their preference between pairs of aspect bundles. We estimate high relative marginal utilities for aspects related to family, health, security, values, freedom, happiness, and life satisfaction. (JEL C43, C83, D12, I31)