Giving in the face of risk

Decisions about how to share resources with others often need to be taken under uncertainty regarding its allocational consequences. Although risk preferences are likely important, existing research is silent about how social and risk preferences interact in such situations. In this paper we provide experimental evidence on this question. In a first experiment givers are not exposed to risk while beneficiaries’ final earnings may be larger or smaller than the allocation itself, depending on the realized state of the world. In a second experiment, risk affects the earnings of givers but not of beneficiaries. We find that individuals’ risk preferences are predictive for giving in both experiments. Increased risk exposure of beneficiaries tends to decrease giving whereas increased risk exposure of givers has no effect. We propose a simple non-linear generalization of a model allowing for other-regarding preferences, ex-post and ex-ante fairness, and risk aversion. We find some support for it in our data when risk is on the beneficiaries’ side but less so when risk is on the givers’ side. Our results point to the importance of the further development of models of social preferences that also incorporate risk preferences.     

An experimental investigation of risk sharing and adverse selection

Does adverse selection hamper the effectiveness of voluntary risk sharing? How do differences in risk profiles affect adverse selection? We experimentally investigate individuals’ willingness to share risks with others. Across treatments we vary how risk profiles differ between individuals. We find strong evidence for adverse selection if individuals’ risk profiles can be ranked according to first-order stochastic dominance and only little evidence for adverse selection if risk profiles can only be ranked according to mean-preserving spreads. We observe the same pattern also for anticipated adverse selection. These results suggest that the degree to which adverse selection erodes voluntary risk sharing arrangements crucially depends on the form of risk heterogeneity.     

Friends or foes? Migrants and sub-state nationalists in Europe

ABSTRACT

How do sub-state nationalists respond to the growing presence of cultural diversity in their ‘homelands’ resulting from migration? Sub-state nationalists in Europe, in ‘nations without states’ such as Catalonia and Scotland, have been challenging the traditional nation-state model for many decades. While the arguments in favour of autonomy or independence levelled by these movements have become more complex, sub-state nationalist movements remain grounded by their perceived national community that is distinct from the majority nation. Migration to the ‘homeland’ of a sub-state nation, then, presents a conundrum for sub-state elites that we label the ‘legitimation paradox’: too much internal diversity may undermine the claim to cultural distinctiveness. We engage with three common intervening variables thought to influence how sub-state nationalists confront the ‘legitimation paradox’: civic/ethnic nationalism, degree of political autonomy, and party competition. Our overarching argument is that none of these factors have a unidirectional or determinate effect on the sub-state nationalism-immigration nexus, which is why the nuanced case studies that comprise this Special Issue are worthwhile endeavours.     

The trinity of wage setting in EMU: A policy proposal

Diverging labor cost developments are often considered to be one of the most important factors that led to large current account imbalances in the euro area (EA) in the run-up to the global financial crisis. It has also been shown that wage growth differentials have significantly lowered the co-movement of EA countries’ business cycles – the most widely used meta-criterion for optimum currency areas. Against this background, this paper develops a wage-setting benchmark that aims to keep the economy in internal equilibrium and to maintain price stability, while it also exhibits the capacity to correct for external imbalances. The proposed wage benchmark is very simple and may serve as an anchor for the macroeconomic dialogue in Economic and Monetary Union. In order to demonstrate the potentially beneficial effects of such a wage benchmark we present some simulations showing how current account balances and labor costs would have developed across EA countries if the rule had served as a benchmark already in the run up to the crisis.     

Testing whether reduced cognitive performance in burnout can be reversed by a motivational intervention

It has been suggested that the motivation to spend effort is decreased in burnout patients, resulting in reduced cognitive performance. A question that remains is whether this decreased motivation can be reversed by motivational interventions. We investigated this by examining the effect of a motivational intervention on cognitive performance. We presented 40 burnout patients in The Netherlands and 40 matched healthy controls with a complex attention task. As expected, in a first block of trials the performance of the burnout patients was poorer than that of healthy controls. Subsequently, we provided the participants with fake positive feedback about their performance and announced that we would financially reward those who performed best in a subsequent block of trials. Contrary to the healthy controls, the burnout patients did not improve their performance and experienced more aversion to spend effort. The study demonstrated that impaired cognitive performance in burnout patients could not be reversed by motivational interventions, which is in line with contemporary theories on burnout that state that physiological changes in burnout may underlie a relatively long-term decrease in motivation. The implication of these results is that in practice employers and therapists might need to accept that there could be a reduction in cognitive performance in employees with burnout.     

The mathematics of Benford’s law: a primer

This article provides a concise overview of the main mathematical theory of Benford’s law in a form accessible to scientists and students who have had first courses in calculus and probability. In particular, one of the main objectives here is to aid researchers who are interested in applying Benford’s law, and need to understand general principles clarifying when to expect the appearance of Benford’s law in real-life data and when not to expect it. A second main target audience is students of statistics or mathematics, at all levels, who are curious about the mathematics underlying this surprising and robust phenomenon, and may wish to delve more deeply into the subject. This survey of the fundamental principles behind Benford’s law includes many basic examples and theorems, but does not include the proofs or the most general statements of the theorems; rather it provides precise references where both may be found.

     

To see ourselves as others see us: identity and attitudes towards immigration amongst civic nationalists

ABSTRACT

This article examines how different conceptions of national identity can be linked to attitudes towards cultural pluralism. The tensions between more culturally pluralistic societies and sustained support for nationalism represent an important political issue in modern western European politics. Such tensions are of particular relevance for stateless nationalist and regionalist parties (SNRPs) for whom national/regional identity is a major political driver. This article empirically tests the relationship between different conceptions of national identity and attitudes towards cultural pluralism in two SNRPs—the Scottish National Party and the Frisian National Party. The article draws upon evidence from two unique full party membership studies and is supported with evidence from documentary analysis. A key finding is that the manner in which members conceptualise national identity has significant implications for their attitudes towards cultural pluralism, which has the potential of becoming a source of tension within SNRPs. A key implication of the article is that there is evidence that attitudes of general members and officially stated party positions and narratives diverge on issues relating to cultural pluralism and national identity. These tensions could potentially be harmful for the party's overall civic image.     

How to Spend Public Money Efficiently: A Cost-Effectiveness Model Illustrated Using the EU’s “Youth”-Program

Since it is crucial for public entities to spend the taxpayer’s money effectively and efficiently, we have analyzed the methods used to check for the two criteria in the European Union’s “Youth”-program. We find that the currently applied method is not theoretically sound and hardly politically justifiable. Therefore, we present a new approach which includes the important aspects that a public organization needs to respect. It is theoretically correct and fulfills economic standards; it is valid in political standards; it is feasible; and it is easily understandable for a large public. We singled out two factors which are readily observable and a good proxy for the decision if a project is worthy to be supported by public funds: the number of people reached and the quality of the program proposed.     

A hazard model analysis examining inferential evidence of migration from the Port-city of Viana do Castelo,Minho, 1834–1931

This paper is an attempt to analyse the determinants of out-migration of the elite from the Portuguese city of Viana do Castelo. The data used are derived from a reconstruction of this electorate using record linkage methods. Indirect evidence of emigration is available from passport books, and evidence of death is available with cemetery lists. The paper discusses methodological issues in the estimation of hazard models of duration spent under observation in the elite. The analysis suggests that, while out-migration was not significantly dependant on age, or marital status, there were large occupational differentials, and significant period effects.Cet article cherche à analyser les déterminants de l'émigration de l'élite d'une ville portugaise, Viana do Castelo. Les données sont issues d'une reconstruction de la population de cet électorat utilisant un appariement de divers fichiers. Elle fournit une information indirecte sur l'émigration (registres de passeports) et une information directe sur les décès (registres des décès). L'article discute les problèmes méthodologiques posés par l'estimation de modèles à risques proportionnels portant sur la durée d'observation des individus dans l'élite. L'analyse suggère que l'émigration ne dépendait pas significativement de l'âge, ou du statut matrimonial, mais qu'il y avait d'importantes différences liées à la profession et un effect significatif de la période d'émigration.

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The research was carried out while the author was a Skandia Research Fellow at the Dept. of Social Statistics, University of Southampton.