Mental health in women experiencing intimate partner violence as the efficiency goal of social welfare functions

In this article, we propose that psychological goal functions, such as mental health, as well as income are important elements of social welfare. We examine the relationship between income, depression, social welfare (food stamps and Medicaid) and intimate partner violence, using a person-orientation in a sample from the United States. Data from four time points of a longitudinal study of intimate partner violence are analysed. Clusters of women are derived based on whether or not they received or did not receive food stamps and Medicaid at each of the four time periods. These clusters differ on income and intimate partner violence as well as the trajectory of depression. However, a series of linear models suggests that only intimate partner violence (not income and social welfare variables) predict the development and level of depression over time. The effects of the social welfare variables we examined seem to be domain specific and do not influence the mental health of women receiving these services.     

How to reveal people’s preferences: Comparing time consistency and predictive power of multiple price list risk elicitation methods

The question of how to measure and classify people’s risk preferences is of substantial importance in the field of economics. Inspired by the multitude of ways used to elicit risk preferences, we conduct a holistic investigation of the most prevalent method, the multiple price list (MPL) and its derivations. In our experiment, we find that revealed preferences differ under various versions of MPLs as well as yield unstable results within a 30-minute time frame. We determine the most stable elicitation method with the highest forecast accuracy by using multiple measures of within-method consistency and by using behavior in two economically relevant games as benchmarks. A derivation of the well-known method by Holt and Laury (American Economic Review 92(5):1644–1655, 2002), where the highest payoff is varied instead of probabilities, emerges as the best MPL method in both dimensions. As we pinpoint each MPL characteristic’s effect on the revealed preference and its consistency, our results have implications for preference elicitation procedures in general.     

OPTIMAL EXCHANGE RATES: A MARKET MICROSTRUCTURE APPROACH

Motivated by the observation that exchange‐rate management resembles market‐making, we use microstructure theory to conduct a welfare analysis of exchange‐rate management, including the “corner solutions” of a free float and a fixed peg. We show that a policy that smoothes out exchange‐rate fluctuations needs to trade off the welfare gain due to lower risk exposure of local producers against the trading losses that the policy would generate due to speculation. We identify the conditions under which exchange‐rate management can increase welfare and argue that these conditions are more likely to be satisfied in illiquid markets, mainly small economies and emerging markets. We also explore the role of a Tobin tax (assuming enforceability) in facilitating exchange‐rate management. (JEL: E58, F31, G14, O24)     

NORMS MAKE PREFERENCES SOCIAL

We explore the idea that prosocial behavior in experimental games is driven by social norms imported into the laboratory. Under this view, differences in behavior across subjects is driven by heterogeneity in sensitivity to social norms. We introduce an incentivized method of eliciting individual norm‐sensitivity, and we show how it relates to play in public goods, trust, dictator, and ultimatum games. We show how our observations can be rationalized in a stylized model of norm‐dependent preferences under reasonable assumptions about the nature of social norms. Then we directly elicit norms in these games to test the robustness of our interpretation.