Discourses of savings

Katona (1975) established the importance of social perception variables in mediating the impact of economic conditions on financial decision making. There has been a tradition of work in economic psychology that has elaborated on this early work. However, clearly the economic and social circumstances for the contemporary consumer are vastly different to those studied by Katona. The present study uses a qualitative analysis of focus group material to investigate lay people's understanding of savings. Interpretation of extracts from the focus groups suggests a complex understanding of the relation between saving and social and economic change. There was a concern with uncertainty, regulation and the moral economy. The findings were interpreted in the light of theories of the risk society.     

Risky discounts: Do people prefer them on a per-item or per-purchase basis and why?

Risky discounts differ from other discount formats in that the actual discount level is determined by chance (e.g., “scratch & save” cards). Four studies investigated whether consumers prefer to receive risky discounts on a per-purchase or per-item basis. Although these options do not differ with regard to expected value, they entail multiple differences (e.g., savings distribution, amount of individual gains, excitement, and effort involved) that may lead to differential consumer perceptions and experiences. Controlling for expected value of savings, participants preferred per-item over per-purchase discounts. As hypothesized, the main reasons for this preference were a partly incorrect perception of the properties of the savings distribution, the adoption of a narrow mindset focusing on the best outcome in a series of discount gambles, and the greater excitement provided by multiple discount gambles.     

Financial management, coping and debt in households under financial strain

This study looks at how households cope financially with a budget under a certain financial strain (after the birth of a new baby), and particularly examines their financial management practices and debting behaviour. Other factors associated with debt status caused by financial strain — particularly psychological variables — are also examined. A number of indexes were calculated from questionnaire data and used to measure these variables. The results showed that being in debt was significantly associated with feelings of coping less well and with better financial management. Better coping was also significantly associated with being more ‘forwardlooking’ and having a more negative attitude towards debt. Better financial strategies were significantly associated with being less materialistic and having a more stable budget. The results confirm previous findings that psychological and behavioural variables have a considerable impact on being in or keeping out of debt, but also suggest that perceived poor coping and being in debt during a period of particular financial strain may actually lead to an improvement in financial management.     

Risk attitudes and risky behavior

In economic theory, risk aversion is a characteristic of the typical utility function of money. Observations of how people deal with risks in real life have cast some doubts on the prevalence of risk aversion. People buy insurance, but they also gamble and take investment risks. Many of the conclusions in the discussions of utility derive from experiments employing some kind of lottery choices. While the experiments have given interesting ideas for theory, there has been little testing of the extent to which the obtained measures of risk attitudes correlate with actual behavior. Data from the VSB panel were used to answer three questions: (1) Can hypothetical risky choice questions be meaningfully answered by ordinary survey respondents? (2) What are the relationships between different measures of risk attitudes and actual portfolio choices of risky assets? (3) What is the relationship between risk attitude and playing in lotteries, lotto, etc.?     

Multi-dimensional poverty in Australia and the barriers ill health imposes on the employment of the disadvantaged

A little over one million individuals in Australia between the ages of 24 and 64 years are in Freedom poverty – they have low family income, and have either poor health or an insufficient level of education. These individuals are some of the most disadvantaged in society due to their multiple capability restrictions. Current political rhetoric focused on reducing the number of individuals out of the labour force to improve their living standards may offer a means of improving the lives of these most disadvantaged individuals. Indeed, of those in Freedom poverty, 80% are not in employment. But these individuals also have poor health and/or a poor education and these capability limitations may act as barriers to their labour force participation. Indeed, 49% of individuals in freedom poverty who were out of the labour force cited ill health as the reason for this (39% cited their own ill health, and 10% cited another's ill health). Not only will these individual's ill health act as a barrier to their engaging in the labour force, but ill health will also contribute to reduced quality of life. Political promises to improve the lives of citizens should not focus narrowly upon increasing labour force participation rates, but should take a holistic view of the lives of individuals taking note in particular of how health may be restraining their quality of life.     

Job satisfaction and target earnings

The starting point of this paper is the idea that individuals are characterized by hierarchical behaviour. This idea, which is quite popular in other social sciences, implies that the individual sets priority targets which are ordered in terms of urgency or importance. The paper tests the hypothesis in the context of a utility-from-work framework. In particular, the paper uses data on a random sample of British workers who report levels of satisfaction from their work. The empirical results indicate the presence of hierarchical behaviour. In particular, workers earning below the target level get more satisfaction than those earning above the target level.     

Money matters: An exploratory study of the socio-cultural context of consumption, saving, and investment patterns

This study focuses on 36 professional South Asian (Indian) families in a metropolitan city in Canada in order to understand motives for financial behavior. In accordance with the Hindu world view, Indians view wealth acquisition as necessary for the natural progression of an individual's life and take a long view of time when it comes to investment decisions. Their primary purpose is to invest money in order to provide for their children's education. Their cultural roots allow them to take a long-term view and makes them more risk tolerant. Although these families take economic criteria into account, such criteria alone do not fully explain their consumption, saving, and investment patterns. It would appear that their need for saving determines their consumption, not the other way around. To understand their financial behavior, one has to identify the cultural worlds in which Indians live. The study highlights the importance of understanding the socio-cultural context of decisions that may appear to be purely economic decisions at first sight.     

Domain specificity of fairness judgments in economic transactions

Two studies eliciting fairness judgments about hypothetical economic transactions examined whether fairness judgments were influenced by who was being judged. The first study replicated the results of Kahneman et al. (Am. Econom. Rev. 76 (1986a) 728–741; J. Business 59 (1986b) S285–S300) that people judge certain actions by firms as unfair, but it also demonstrated that people judge parallel actions by individuals as fair. The second study suggested that people apply different standards to individuals and firms because of presumed differences between them in wealth, power, and size. When firms were portrayed as no more powerful or wealthy than individuals, differences in fairness judgments were eliminated. Further, respondents were less inclined to judge the behavior of a firm harshly as perpetrator of an unfair act when the firm was identified with an individual than when it was large and anonymous, and they were more inclined to judge the behavior of an individual harshly as perpetrator of an unfair act when the action injured a firm with a clearly identified individual than when the firm was large and anonymous.     

Mental discounting and financial strategies

Subjective discount rates have been used as measures of time preference to explain saving behavior, with varying results. There is also a lack of agreement between different explanatory models of subjective discount rates. In this paper, it is argued that a better understanding of subjective discount rates can be reached by using groups with different financial strategies as domains. It is shown by PLS and regression analyses that the mental discounting process differs between groups practicing different financial strategies and that the explained variance of subjective discount rates and thus the understanding of such rates are improved by using financial strategy groups as domains.     

International trade, foreign direct investment, and transaction costs in languages

We examine the roles of major trade languages in international trade and foreign direct investment (FDI) flows. Empirical results confirm that speaking a common language increases trade and FDI flows, yet the effect of major languages is more substantial in FDI than in international trade. In addition, we find evidence of a hierarchy in transaction costs of major languages in both trade and FDI.     

Do other-regarding preferences change with age? Evidence from a gift exchange experiment

A series of laboratory experiments investigate potential differences in other-regarding behavior by age of participant. Specifically, a gift exchange experiment is conducted with eighth graders, high school seniors, undergraduates, and working adults, all with similar observable demographic characteristics. All groups exhibit significant levels of gift exchange. Eighth graders exhibit significantly less gift exchange than other groups whereas the responses of other groups do not appear to differ. The findings indicate that other-regarding behavior is present, but still developing in adolescents and undergraduate subjects in gift exchange experiments exhibit similar behavior to adults with similar observable characteristics.     

Socio-economic determinants of suicide in Japan

Japan has the highest suicide rates among the OECD countries and this public health problem seems to be accelerating in over the recent decades. Investigating and understanding the suicidal behaviour is of crucial importance to society and health policy makers. Such an investigation could provide with useful information for those responsible in formulating the national policies on suicide prevention. This study estimates dynamic econometric models for total, male and female suicides in Japan for the period of 1957–2009. Using the ARDL approach to cointegration, we find that the associations of suicide with sociological factors (divorce and fertility rates) were stronger than those with economic factors (per capita GDP and unemployment) for females.     

Undeclared work: A dark side of social trust?

A Eurobarometer survey from 2007 reports that most undeclared work in the EU 27 takes place in the three most high-trusting and non-corrupt countries—Denmark, Sweden and the Netherlands. This is somewhat surprising since social trust is normally associated with economic outcomes that are beneficial to society. The aim of this paper is to test whether undeclared work is a dark side of social trust. Since the Eurobarometer data may contain inaccurate self-reports on undeclared work and social trust may affect the willingness to provide truthful answers, we use more appropriate data in our test. Specifically, we use data from one single country (Danish Values Studies, 1999/2008) and undeclared work morale as an indicator of actual undeclared work—where undeclared work morale is the degree to which a person thinks undeclared work is wrong. We find a significant negative relationship between social trust and undeclared work morale after adjusting for a number of important controls. Thus, the evidence is in line with the bivariate picture of the Eurobarometer survey and suggests a dark side of social trust. We provide some initial explanations.     

Moderation, contentment, work, and alms—A Buddhist household theory

The paper deals with household theory from the angle of Buddhist thought. We build on the Buddhist terms of tanha versus chanda to express Buddhist preferences and Buddhist household theory in terms of textbook microeconomic terms. We find that preferences of Buddhist (enlightened) people may differ from those of non-Buddhist people in a systematic manner. Among other hypotheses, we deduce that Buddhists work harder than non-Buddhists if we control for meditation time. We argue that any full-grown Buddhist economics (if it is to exist) needs to build on Buddhist preference and household theory, either as presented here or in a different form.     

The willingness to pay–willingness to accept gap revisited: The role of emotions and moral satisfaction

While many earlier studies have found that people’s maximum willingness to pay for having a good is often substantially lower than their minimum willingness to accept not having it, more recent experimental evidence suggests that this discrepancy vanishes for standard consumption goods when an incentive-compatible design without misconceptions is used. This paper hypothesises that there is nevertheless a discrepancy for goods with a perceived moral character, such as contributions to a good cause, and moreover that the reason for this discrepancy can largely be explained by differences in emotions and moral perceptions. The results from a real-money dichotomous-choice experiment, combined with measurements of emotions and morality, are consistent with these hypotheses.     

An exploration of the robustness of alternative laboratory methodologies: Matching funds and the provision of public goods

The voluntary provision of a pure public good is studied in the presence of an anonymous external donor. New data generated using experimental procedures employing both extra-credit and cash incentives, as well as asynchronous access to real-time decision rounds lasting several days, are compared to previous data generated using traditional cash-only, synchronous-access laboratory procedures. The effect on resource allocations to the public good of introducing external matching funds is examined in two different settings, lump-sum matching and one-to-one matching. The new data confirm the robustness of results previously reported in Baker et al. (2009) to the change in laboratory procedures and incentives. The new data are then used to extend the parameter space in which the two matching mechanisms are studied, including: varying within-round information regarding the current level of public-good allocations and varying group size from four to twenty group members. Allocations in lump-sum matching are no worse, and sometimes better, than one-to-one matching in these new treatments.     

Social trust and human development

A series of studies connect social trust to economic growth. In this paper, we explore the connection between trust and a broader measure of development, the UN Human Development Index. We find that trust is significantly associated with faster human development in the 1980–2005 period. The impact of trust occurs mainly in less democratic countries.     

Demographic change, macroeconomic conditions, and the murder rate: The case of the United States, 1934–2006

Fluctuations in aggregate crime rates contrary to recent shifts in the age distribution of the U.S. population have cast doubt on the predictive power of the age–crime hypothesis. By examining a longer time horizon, back to the early 1930s, we show that the percentage of the young population is a robust predictor of the observed large swings in the U.S. murder rate over time. However, changes in the misery index—the sum of the inflation and unemployment rates—significantly contribute to explaining changes in the murder rate. This applies, in particular, to those changes that are at odds with the long-run trend of the U.S. age distribution, such as the decline in the murder rate in the latter part of the 1970s or its increase starting around the middle of the 1980s.     

Birth order effects on young students’ academic achievement

We examine birth order effects on academic achievement for ten-year-old students using data for the entire population of fifth graders in Norway 2007/2008. The analysis thus adds to a thin empirical literature focusing on birth order effects among young children. We find that being firstborn confers a significant advantage in families with two, three and four children. The analysis makes two other contributions. First, we provide evidence that unless mother's age at childbirth is included among the control variables, only small and imprecise birth order effects are revealed in families with low socioeconomic status. Second, we provide some evidence that the birth order effects differ across families with highly educated and less educated mothers, which lend support to the resource dilution model over the confluence model.