Economic Theory Commons^™

What Determines Public Pension Investment Risk-Taking Policy, Nancy Mohan, Ting Zhang

Economics and Finance Faculty Publications

State public pension plans, mostly defined benefit plans, cover pension benefits for 12.8 million active public employees and 5.9 million retirees and other annuitants. However, by the end of 2009, public pension plans had accumulated a total funding deficit of $697 billion (measured by the difference between actuarial pension assets and liabilities). On average, public pension funds cover 75 percent of their liabilities, but individual state results vary greatly.

The 2008 stock market crash strongly affected pension asset value in that equity allocation on average accounted for 56 percent of invested assets. The average 2009 pension asset beta of 0.63 …

Halos, Alibis And Community Development: A Cross National Comparison Of How Governments Spend Revenue From Gambling, Lynn Gidluck

Occasional Papers

This paper provides a cross-national comparison of how governments around the world distribute revenues from state-directed gambling and how these choices have been justified by proponents and vilified by critics. Case studies where governments have popularized gambling expansion by “earmarking” revenues for particular good causes and where the state has collaborated with the voluntary sector to deliver programs from this revenue stream are examined. Lessons learned from challenges of various approaches are considered.

(Review) A Short History Of Ethics And Economics: The Greeks, Spencer J. Pack

Economics Faculty Publications

No abstract provided.

Infidelity, Jealousy, And Wife Abuse Among Tsimane Forager-Farmers: Testing Evolutionary Hypotheses Of Marital Conflict, Jonathan Stieglitz, Michael Gurven, Hillard Kaplan, Jeffrey Winking

ESI Publications

What causes marital conflict, and which marital conflicts are more likely to result in men’s violence against their wives? It has long been argued that men’s jealousy over women’s infidelity is the strongest impetus to men’s lethal and non-lethal violence against female partners. Less is known about the extent to which women’s jealousy over men’s infidelity precipitates men’s violence against female partners. Husbands are more likely than wives to commit infidelity, and men and women report a similar frequency and intensity of jealous emotions during recalls of potential infidelity. If men are likely to use time and resources for pursuit …

Returns From Self-Employment: Using Human Capital Theory To Compare U.S. Natives And Immigrants, Nikola Popovic

Undergraduate Economic Review

The focus of this paper is to examine the economic returns from self-employment when comparing natives and immigrants. I hypothesize that returns from self-employment will increase with age and education, and that immigrants from China, India, and the Philippines will have higher returns while immigrants from Mexico will have lower returns than natives. I also hypothesize that immigrants with high levels of education will earn more than natives with the same amount of education. The OLS regressions show that human capital variables explain the differences in self-employed income between natives and immigrants, as the literature suggests.

A Critique Of The Neoclassical And A Revision Of The Keynesian Theories Of Employment, Yang Liu

Electronic Theses and Dissertations

The neoclassical theory of employment fails to apply to modern capitalism since it claims that unemployment is necessary all voluntary. Its problems are pointed out by Keynes. But, if we look at Keynes’s system, we find that an essential explanation about why modern capitalism suffers from weak demand is not provided. To answer this question an alternative consumption theory is needed. Levine’s consumption theory well explains the condition of under-consumption. Furthermore, a deep problem of capitalism reveals itself: the production format and the distribution pattern of capitalism result in a huge income discrepancy between the working-class and the capitalist-class and …

Managing A Duopolistic Water Market With Confirmed Proposals. An Experiment, Aurora García-Gallego, Nikolaos Georgantzís, Roberto Hérnan-Gonzalez, Praveen Kujal

Economics Faculty Articles and Research

We report results from experimental water markets in which owners of two different sources of water supply water to households and farmers. The final water quality consumed by each type of consumer is determined through mixing of qualities from two different resources. We compare the standard duopolistic market structure with an alternative market clearing mechanism inspired by games with confirmed strategies (which have been shown to yield collusive outcomes). As in the static case, complex dynamic markets operating under a confirmed proposals protocol yield less efficient outcomes because coordination among independent suppliers has the usual effects of restricting output and …

The Effects Of Political Institutions On Public Budgeting, Andrew Burnos

Political Science Theses and Capstones

Economics around the globe has been a growing issue of late due to the current economic crisis. This study focuses on political institutional factors that influence spending in a particular country. The variables used in this study include Gross Domestic Product (GDP), Tax Revenue as Percent of GDP, and current account balance to name a few. This research looks at the relationship between proportional representation compared to majoritarian systems as well as presidential compared to parliamentary systems and how these relate to public budgeting. This research updates the analysis of Persson and Tabellini in their book The Economic Effects of …

A Comparison Of Cardinal Tournaments And Piece Rate Contracts With Liquidity Constrained Agents, Kosmas Marinakis, Theofanis Tsoulouhas

Research Collection School Of Economics

Acelebrated result in the theory of tournaments is that relative performance evaluation (tournaments) is a superior compensation method to absolute performance evaluation (piece rate contracts) when the agents are risk-averse, the principal is risk-neutral or less risk-averse than the agents and production is subject to common shocks that are large relative to the idiosyncratic shocks. This is because tournaments get closer to the first best by filtering common uncertainty. This paper shows that, surprisingly, tournaments are superior even when agents are liquidity constrained so that transfers to them cannot fall short of a predetermined level. The rationale is that, by …

Economic Shocks, Trade And International Relations, Jack Barnes Thompson

Undergraduate Economic Review

In an interdependent world, trade has unavoidable game aspects. A model with two agents is used to determine the impact of trade and a military alliance between two major world players, North America and China, and an external non-actor, South Korea. The objective of this study is to investigate the impact of cooperative actions and outcomes by the two agents on a two-track policy for South Korea. We also study a variant to the game by considering a change in international relations. Welfare implications are also observed.

Upjohn Institute Policy Paper: Public Pension Crisis And Investment Risk Taking: Underfunding, Fiscal Constraints, Public Accounting, And Policy Implications, Nancy Mohan, Ting Zhang

Economics and Finance Faculty Publications

Public pension funds that cover retirement benefits for almost 20 million active or retired employees have been significantly underfunded. An important, though largely overlooked, issue related to pension underfunding is the excessive investment risk levels assumed by public plans. Our analysis suggests government accounting standards strongly affect public fund investment risk, as higher return assumptions (used to discount pension liabilities) are associated with higher investment risk.

Public funds undertake more risk if they are underfunded and have lower investment returns in previous years, consistent with the risk transfer hypothesis. Furthermore, pension funds in states facing fiscal constraints allocate more assets …

The Gettysburg Economic Review, Volume 6, Spring 2012

Gettysburg Economic Review

No abstract provided.

Age Effects And Heuristics In Decision Making, Tibor Besedeš, Cary Deck, Sudipta Sarangi, Mikhael Shor

Economics Faculty Articles and Research

Using controlled experiments, we examine how individuals make choices when faced with multiple options. Choice tasks are designed to mimic the selection of health insurance, prescription drug, or retirement savings plans. In our experiment, available options can be objectively ranked, allowing us to examine optimal decision making. First, the probability of a person selecting the optimal option declines as the number of options increases, with the decline being more pronounced for older subjects. Second, heuristics differ by age, with older subjects relying more on suboptimal decision rules. In a heuristics validation experiment, older subjects make worse decisions than younger subjects.

An Attempt To Reshape Capitalism’S Image, Ross A. Nichols

Gettysburg Economic Review

John Stuart Mill claimed to be a disciple of both Jeremy Bentham and David Ricardo. This was a strange proclamation because each man advocated a competing theory of value; Bentham’s utilitarianism laid the foundation for the utility theory of value and Ricardo developed the labor theory of value. Mill’s goal in attempting to unify these theories of value was to provide a solution for the growing class conflict that plagued capitalism. Class conflict arose as feudalism was phased out and industrial capitalism replaced merchant capitalism as the dominant economic system. The Corn Laws symbolized this competition between classes. Capitalists were …

Comment, Dean D. Croushore

Economics Faculty Publications

No abstract provided.

Ethics And Critical Thinking, Jonathan B. Wight

Economics Faculty Publications

This chapter seeks to demonstrate that investigations in positive economics rely on ethical perspectives and practices, and further, that critical thinking requires a wider ethical viewpoint than normative economics generally permits. Positive economics generally relies, for example, on the unsung virtues of the investigator who demonstrates honesty and transparency in the search for truth. Ethical failures in this regard are not uncommon (DeMartino, 2011). But another unstated ethical perspective appears in the worldview from which a researcher sets out to model behavior. Modelers almost always assume that rationality requires that an economic actor undertake an action in pursuit of a …

The Impact Of Institutional Arrangements On Educational Efficiency, Trevor Collier

Economics and Finance Faculty Publications

Per-pupil expenditures on education in the United States have grown immensely in recent decades, yet student achievement has been stagnant. An abundance of research has sought to solve this enigma, much of it centered on the incentive structure facing administrators. Some recent papers use TIMSS data to analyze the relationship between institutional arrangements—that typically do not vary within a single country—and student achievement. Similarly, we utilize TIMSS 1999 to determine if there is an indirect relationship between institutional arrangements and student achievement, via a relationship with school efficiency. Our results show that the specified link between institutional arrangements and student …

Loose Notes On Marx, Interest Rates, Anwar Shaikh Phd

Archives of Anwar Shaikh

This collection includes:

• Shaikh, A. (n.d.). Notes on natural deposit rate and travel itinerary to Thessaloniki (Handwritten notes) (22-32_Loos... p. 2).
• Shaikh, A. (n.d.). Notes on gold lending, bank markups, and interest rate theories (Handwritten notes) (22-32_Loos... p. 3).
• Lutz, F. A. (1968). The theory of interest. D. Reidel Publishing Company (22-32_Loos... p. 3).
• Shaikh, A. (2012). Notes on interest rates (Unpublished manuscript) (22-32_Loos... p. 14)

Finance Capital And Profits, Anwar Shaikh Phd

Archives of Anwar Shaikh

This collection includes:

• Theories of profit and capital by Anwar Shaikh (Unpublished manuscript, March 5, 2012)
• Finance capital and profits by Anwar Shaikh (Unpublished manuscript, January 31, 2012)
• Shaikh, A. (2012). Ape II (Unpublished handwritten notes). Anwar Shaikh, PhD
• Age-related pension incentives and retirement behavior (Unpublished manuscript fragment, unknown year)
• Lapavitsas, C., & Levina, I. (2011). Financial profit: Profit from production and profit upon alienation. Research on Money and Finance Discussion Paper Series (No. 24). Department of Economics, School of Oriental and African Studies, University of London.
• Skarstein, R. (2011). Overaccumulation of productive capital or of finance capital? A view …

Talks, Anwar Shaikh Phd

Archives of Anwar Shaikh

This collection includes:

• Department of Economics, University of Trento. (2012, May 23). A symposium in honour of anwar shaikh: surrogates, humbugs and other pseudo-production functions on the 50th anniversary of 'the surrogate production function' (Conference program) (23-4_Talks... p. 2). University of Trento.
• Velupillai, K. V. (2012, May 23). Welcome address (Conference presentation) (23-4_Talks... p. 2). University of Trento.
• Shaikh, A. (1964). Laws of production and laws of algebra: the humbug production function. Review of Economics and Statistics, 56(1) (23-4_Talks... p. 2). MIT Press.
• Swan, T. (1956). Economic record, vol. 32, 1956, pp. 334-361. Economic Record, 32, …