Publikationen

In this paper we develop a model for the conditional inflated multivariate density of integer count variables with domain ℤn, n ∈ ℕ. Our modelling framework is based on a copula approach and can be used for a broad set of applications where the primary characteristics of the data are: (i) discrete domain; (ii) the tendency to cluster at certain outcome values; and (iii) contemporaneous dependence. These kinds of properties can be found for high- or ultra-high-frequency data describing the trading process on financial markets. We present a straightforward sampling method for such an inflated multivariate density through the application of an independence Metropolis–Hastings sampling algorithm. We demonstrate the power of our approach by modelling the conditional bivariate density of bid and ask quote changes in a high-frequency setup. We show how to derive the implied conditional discrete density of the bid–ask spread, taking quote clusterings (at multiples of 5 ticks) into account.

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dc.contributor.author: Beck, Klaus

Hindsight bias is a cognitive deficiency that leads people to overestimate ex post how predictable an event was. In this paper we develop a political-agency model in which voters are hindsight-biased and politicians differ in ability, defined as information concerning the optimal policy. When public information is not too accurate, low-ability politicians sometimes gamble on suboptimal policies: in an attempt to mimic the high-ability type, who has superior private information, they go against public information and choose a policy whose expected payoff to society is negative. We model hindsight bias as a memory imperfection that prevents voters from accessing their ex ante information about the state of the world. We show that the bias can act as a discipline device that reduces policy gambles and can therefore be welfare enhancing. Although it is well known that restrictions on information acquisition can be beneficial for a principal, our contribution is to show that a psychological bias can have such an effect.

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dc.contributor.author: Smolny, Werner

This is a comment on a recent paper by Bengt Liljas (Eur J Health Econ 11:5–13, 2010) in this Journal. The author’s analysis is flawed because he fails to take the envelope theorem into account. As a bottom line, we conclude that from a welfare theoretic point of view, future consumption and future labor hours should not be considered in a valid CEA.

Substantial changes in population size, age structure, and urbanization are expected in many parts of the world this century. Although such changes can affect energy use and greenhouse gas emissions, emissions scenario analyses have either left them out or treated them in a fragmentary or overly simplified manner. We carry out a comprehensive assessment of the implications of demographic change for global emissions of carbon dioxide. Using an energy-economic growth model that accounts for a range of demographic dynamics, we show that slowing population growth could provide 16-29% of the emissions reductions suggested to be necessary by 2050 to avoid dangerous climate change. We also find that aging and urbanization can substantially influence emissions in particular world regions.

This paper empirically analyzes whether large governments in Europe reflect efficient responses to a changing social and economic environment (‘welfare economic view’) as opposed to wasteful spending (‘public choice view’). To this end, the effect of government size on subjective well-being is estimated in a combined survey and country-level dataset covering 153,268 respondents from twelve EU countries over the 1990–2000 period. The first finding is an inversely U-shaped relationship between government size and well-being. In addition, the analysis suggests that given the high institutional quality as compared to other parts of the world there might be scope for a further enlargement of governments in the EU from a well-being perspective. However, one must acknowledge that the effect on well-being may be quite small and that democratic societies in Europe have no experience with even larger governments. The investigation also reveals that the impact of government size on well-being depends negatively on levels of corruption and positively on the extent of decentralization. Moreover, left-wing voters and low-income earners are the main beneficiaries of a large public sector. Finally, in all twelve EU countries included in the sample higher levels of well-being could have been achieved by allocating a higher share of public resources to education, while Finland and Germany could have given an additional boost to well-being by cutting expenditures on social protection.

Studies investigating the determinants of happiness show that unemployment causes high distress for most affected persons. Researchers conclude that the amount of this disutility demonstrates the involuntariness of unemployment. This paper applies the happiness research approach to German panel data in order to revive the underlying economic question of whether unemployment is voluntary or involuntary. Accordingly, the decline in life satisfaction associated with unemployment is related to the willingness to work. The results of the econometric investigation indicate a very strong connection between unemployment‐induced disutility and willingness to work, so that it is possible to divide unemployed individuals into certain categories, according to the potential voluntariness of unemployment. While there is a minority which can truly be regarded as voluntarily unemployed, most unemployed people actively search for work and suffer far more from unemployment than indicated by previous happiness research studies. A subsequent discussion includes a critical juxtaposition of the findings with policies such as the recent German labour market reforms.

This study investigates the role of parent-owned businesses on children's college success and post-college aspirations by using a unique data set from a private university in Turkey. The data set matches college students' administrative records with survey responses. The presence of self-employed parents and family businesses has a strong negative association with college success even after accounting for observed ability, parental background, and various individual characteristics. An explanation for the lower GPAs of the children of self-employed parents is that in the presence of parent-owned businesses students have a larger set of post-graduation options and are more likely to plan on becoming self-employed due to intergenerational transfer of self-employment. Hence, these students may not exert as much effort in acquiring the task-specific career-oriented human capital taught in college. In line with expectations, we find that the children of self-employed parents are more likely to have entrepreneurial intent and are less likely to plan to attend graduate school.

A crucial parameter for increasing the retirement age is the early-retirement discount of the public pension system. Critics of the present German system argue that the downward adjustment of the pension for early retirees is too small compared with a ‘fair’ system and thus encourages early retirement. We discuss several notions of ‘fairness’ of early-retirement provisions and propose a concept called ‘distributive neutrality’, which states that the ratio between total benefits and total contributions should not depend systematically on the individual's ability. By applying this concept to the German retirement benefit formula and taking empirically estimated relationships between annual income (as a proxy for ability), life expectancy and retirement age into account, we show that at the present discount rate of 3.6% per year there is redistribution from low to high earners, which, surprisingly, could be attenuated by raising the discount rate.

This paper allows for avoidance activities in the accident setting and analyzes how this affects the evaluation of uncertain due care standards and of different negligence conceptions from an efficiency perspective. Importantly, our analysis also shows that punitive damages, i.e., damages above the harm incurred, can be welfare-reducing if injurers can choose avoidance.