Fertility waves,aggregate savings and the rate of interest

During the last fifty years there have in many countries been large movements in the growth of labor productivity, real wage rates, the rate of interest, and the household savings ratio. In this paper we use an overlapping generations model to study if demographic shocks, like the baby boom, can generate the kind of movements observed. Simulations show this is indeed the case. We also study the interactions between a pay-as-you-go pension system and demographic disturbances.We are grateful to Laurence Ball, Alex Cukierman and two anonymous referees for helpful comments.     

Self-Protection and Averting Behavior,Values of Statistical Lives,and Benefit Cost Analysis of Environmental Policy

Situations in which risk is at least partly a matter of choice provide opportunities to analyze behavior and estimate the willingness to pay for small changes in mortality risks. Individuals engage in household production of health and safety as long as the value of the gain in risk reduction is worth the money, time, and any disutility necessary to produce the reduction in risk. This paper reviews values of statistical life inferred from choices about highway speeds, traveler use of protective equipment, crashworthiness of motor vehicles, and housing location near Superfund sites. The best estimates, close to $4 million in year 2000 dollars, are valuable complements to estimates from labor and constructed markets. Interestingly some evidence suggests that values for children and seniors are not less than middle-aged adults. Issues of risk perception and other challenges related to estimation are discussed.     

Whitewater: Decentralization of river basin water resource management

This paper focuses on empirically assessing determinants of river basin management decentralization, which is growing in popularity among water resource managers world wide. Measuring decentralization as a shift of decision-making responsibility to water users or governments at the river basin level or below, the analysis sheds light on the decentralization reform process and its success, using primary data from 83 river basins world wide. Contrary to common perception that primarily emergency situations trigger reform, persistent water scarcity is found to be a major stimulus to reform. Similarly, financially well-endowed or -developed basins do not necessarily outperform poor and underdeveloped basins. Conditions improving decentralization performance include: existence of dispute resolution mechanisms; greater financial responsibility of users; and as opposed to traditional thinking, government financial support to basin budget.     

Nonparametric Estimation with Nonlinear Budget Sets

Choice models with nonlinear budget sets provide a precise way of accounting for the nonlinear tax structures present in many applications. In this paper we propose a nonparametric approach to estimation of these models. The basic idea is to think of the choice, in our case hours of labor supply, as being a function of the entire budget set. Then we can do nonparametric regression where the variable in the regression is the budget set. We reduce the dimensionality of this problem by exploiting structure implied by utility maximization with piecewise linear convex budget sets. This structure leads to estimators where the number of segments can differ across observations and does not affect accuracy. We give consistency and asymptotic normality results for these estimators. The usefulness of the estimator is demonstrated in an empirical example, where we find it has a large impact on estimated effects of the Swedish tax reform.     

Calibrating Hypothetical Willingness to Pay Responses

Experimental data comparing hypothetical and real dichotomous choice responses for two different goods were used to estimate a statistical bias function to calibrate the hypothetical yes responses. The probability that a hypothetical yes response would be a real yes response was estimated as a function of the individual's self-assessed certainty of the hypothetical yes response (assessed on a 0–10 scale) and a variable representing the price level. Without calibration the hypothetical yes responses significantly exceeded the proportion of real yes responses, but after calibration the null hypothesis of no difference between hypothetical and real responses could not be rejected in any of the experiments.     

Motorist use of safety equipment: Expected benefits or risk incompetence?

Seat belts, child safety seats, and motorcycle helmets are not used all the time by all drivers, parents, or riders when they travel. Since the safety advantages of these types of equipment are well established, nonuse could be due to risk incompetence. This article starts instead with risk competence to see to what extent use can be attributed to the net benefits expected by individual motorists. Logit analysis of microdata from the Nationwide Personal Transportation Study shows that use is more likely with larger perceived net benefits for all three types of motorists. They are therefore risk competent enough to respond to changes in net benefits in ways and degrees that are qualitatively and ordinally correct.This research was supported in part by the Urban Institute and the Federal Highway Administration under contract DTFH-61-85-C-00107. Ted Miller, Urban Institute, was instrumental in facilitating the work, and Charles Calhoun, Urban Institute, ran the logits for child safety-seat use and motorcycle helmet use at the Bureau of Census. My colleagues Dan Black and John Garen helped estimate wages. For comments I am grateful to Alan Dillingham, John Graham, Richard Jensen, Kip Viscusi, an anonymous referee, and participants in the Applied Microeconomics Workshop at the University of Kentucky. Appreciation aside, none of the people or organizations mentioned are responsible for the results and views in this article. That responsibility falls on the author.