The Welfare Cost of Perceived Policy Uncertainty PDF Download
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Author: Erzo F. P. Luttmer
Publisher:
ISBN:
Category : Risk
Languages : en
Pages : 36
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Book Description
Policy uncertainty can reduce individual welfare when individuals have limited opportunities to mitigate or insure against consumption fluctuations induced by the policy uncertainty. For this reason, policy uncertainty surrounding future Social Security benefits may have important welfare costs. We field an original survey to measure the degree of policy uncertainty in Social Security and to estimate the impact of this uncertainty on individual welfare. On average, our survey respondents expect to receive only about 60 percent of the benefits they are supposed to get under current law. We document the wide variation around the expectation for most respondents and the heterogeneity in the perceived distributions of future benefits across respondents. This uncertainty has real costs. Our central estimates show that on average individuals would be willing to forego around 6 percent of the benefits they are supposed to get under current law to remove the policy uncertainty associated with their future benefits. This translates to a risk premium from policy uncertainty equal to 10 percent of expected benefits.
Author: Erzo F. P. Luttmer
Publisher:
ISBN:
Category : Risk
Languages : en
Pages : 36
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Book Description
Policy uncertainty can reduce individual welfare when individuals have limited opportunities to mitigate or insure against consumption fluctuations induced by the policy uncertainty. For this reason, policy uncertainty surrounding future Social Security benefits may have important welfare costs. We field an original survey to measure the degree of policy uncertainty in Social Security and to estimate the impact of this uncertainty on individual welfare. On average, our survey respondents expect to receive only about 60 percent of the benefits they are supposed to get under current law. We document the wide variation around the expectation for most respondents and the heterogeneity in the perceived distributions of future benefits across respondents. This uncertainty has real costs. Our central estimates show that on average individuals would be willing to forego around 6 percent of the benefits they are supposed to get under current law to remove the policy uncertainty associated with their future benefits. This translates to a risk premium from policy uncertainty equal to 10 percent of expected benefits.
Author: Joshua Aizenman
Publisher:
ISBN:
Category :
Languages : en
Pages : 34
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Book Description
This paper studies the effect of policy uncertainty on the formation of new activities in Romer's (1994) type of an economy, where productivity of labor increases with the number of capital goods. Adding a new capital good requires a capital specific set-up cost, invested prior to using the capital good. Agents are disappointment averse, putting greater utility weight on downside risk [as modeled by Gul (1991)]. Policy uncertainty is induced by the Disappointment aversion implies that investment, labor and capitalists' income drop at a rate proportional to the standard deviation of the tax rate. Hence, policy uncertainty induces first-order adverse effects, whereas policy uncertainty leads to second-order effects when consumers maximize the conventional expected utility. The adverse effects of policy uncertainty can be partially overcome by a proper investment policy. The paper interprets the tax concessions granted to multinationals as a commitment device that helps overcoming the adverse implications of policy uncertainty.
Author: Edward Schlee
Publisher:
ISBN:
Category : Environmental policy
Languages : en
Pages : 8
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Book Description
Abstract: This paper proposes a simple index of the welfare significance of uncertainty in the public goods resulting as policy outcomes. Our measure is the ex ante compensation an individual would require to accept an uncertain level of service compared to receiving the expected value of the distribution of possible values for that service. Our compensation measure is a function of the coefficient of relative risk aversion, the variance in the measure of environmental service associated with policy and relevant for the individual, and a set of conventional parameters that describe the properties of nonmarket benefit measures under conditions of certainty. We would expect that the inverse virtual price elasticity of the for the environmental service and the square of the coefficient of relative variation are the primary factors influencing the size of our compensation index
Author: Yonas Alem
Publisher:
ISBN:
Category :
Languages : en
Pages : 40
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Book Description
Author: Edward J. Bird
Publisher:
ISBN: 9783593348957
Category : Economic assistance, Domestic
Languages : en
Pages : 207
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Book Description
Author: Joshua Aizenman
Publisher:
ISBN:
Category :
Languages : es
Pages : 18
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Book Description
Author: Ruediger Bachmann
Publisher: Elsevier
ISBN: 0128234768
Category : Business & Economics
Languages : en
Pages : 876
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Book Description
Handbook of Economic Expectations discusses the state-of-the-art in the collection, study and use of expectations data in economics, including the modelling of expectations formation and updating, as well as open questions and directions for future research. The book spans a broad range of fields, approaches and applications using data on subjective expectations that allows us to make progress on fundamental questions around the formation and updating of expectations by economic agents and their information sets. The information included will help us study heterogeneity and potential biases in expectations and analyze impacts on behavior and decision-making under uncertainty. Combines information about the creation of economic expectations and their theories, applications and likely futures Provides a comprehensive summary of economics expectations literature Explores empirical and theoretical dimensions of expectations and their relevance to a wide array of subfields in economics
Author: Andrew Caplin
Publisher: World Scientific
ISBN: 9811262403
Category : Business & Economics
Languages : en
Pages : 407
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Book Description
That mistakes are made is clear. What is meant by that is not. Measuring whatever might be meant and scientifically studying it is therefore even more challenging.These lectures introduce an interdisciplinary science of mistakes to cut the Gordian knot. The key building blocks are model constructs drawn from the economic tradition, methods of measurement drawn from the psychometric tradition, and analytic methods drawn from economic theory.
Author: John F. May
Publisher: Springer Nature
ISBN: 3031020405
Category : Social Science
Languages : en
Pages : 863
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Book Description
This Handbook offers an array of internationally recognized experts’ essays that provide a current and comprehensive examination of all dimensions of international population policies. The book examines the theoretical foundations, the historical and empirical evidence for policy formation, the policy levers and modelling, as well as the new policy challenges. The section Theoretical Foundations reviews population issues today, population theories, the population policies’ framework as well as the linkages between population, development, health, food systems, and the environment. The next section Empirical Evidence discusses international approaches to design and implement population policies on a regional level. The section Policy Levers and Modelling reviews the tools and the policy levers that are available to design, implement, monitor, and measure the impact of population policies. Finally, the section New Policy Challenges examines the recurrent and emerging issues in population policies. This section also discusses prospects for demographic sustainability as well as future considerations for population policies. As such this Handbook provides an important and structured examination of contemporary population policies, their evolution, and their prospects.
Author: Lisa F. Berkman
Publisher: Oxford University Press
ISBN: 0197512062
Category :
Languages : en
Pages : 353
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Book Description
"Worldwide, aging populations are one of humanity's greatest accomplishments - and one of our greatest challenges. As longevity has risen and fertility has fallen, older adults make up a larger portion of populations. Without a doubt, societies can reap more benefits from older people's contributions than they did in previous generations. At the same time, this demographic transition changes everything - including how nations navigate work and retirement"--
