Changes In Wealth Research Articles

Economic, land use, and ecosystem services impacts of Rwanda's Green Growth Strategy: An application of the IEEM+ESM platform

We develop and link the Integrated Economic-Environmental Modeling (IEEM) Platform to ecosystem services modeling (ESM). The IEEM+ESM Platform is an innovative decision-making framework for exploring complex public policy goals and elucidating synergies and trade-offs between alternative policy portfolios. The IEEM+ESM approach is powerful in its ability to shed light on (i) change in land use and ecosystem services driven by public policy and the supply and demand responses of businesses and households; and (ii) impacts on standard economic indicators of concern to Ministries of Finance such as gross domestic product and employment, as well as changes in wealth and ecosystem services. The IEEM+ESM approach is being adopted rapidly and by the end of 2020, IEEM+ESM Platforms will be implemented for about 25 countries. To demonstrate the insights generated by the IEEM+ESM approach, we apply it to the analysis of alternative green growth strategies in Rwanda, a country that has made strong progress in reducing poverty and enhancing economic growth in the last 15 years. The case of Rwanda is particularly compelling as it faces intense pressure on its natural capital base and ecosystem services, already with the highest population density in Africa, which is projected to double by 2050. In applying IEEM+ESM and comparing the outcomes of Rwanda's green growth policies, increasing fertilization of agricultural crops shows the largest economic gains but also trade-offs in environmental quality reflected through higher nutrient export and reduced water quality. Combining crop fertilization with forest plantations better balances critical ecosystem services and their role in underpinning economic development as Rwanda progresses toward its target of middle-income status by 2035. This application to Rwanda's green growth strategy demonstrates the value-added of the IEEM+ESM approach in generating results that speak to both economic outcomes and impacts on market and non-market ecosystem services.

An Experiment on Diversification and Path Dependence

In an experiment where subjects can allocate their wealth between cash and two risky assets, we analyze path-dependent portfolio choices. The experiment is designed to isolate cases where subjects have no prior experiences, and cases where subjects experience isolated changes in wealth or relative prices. We find that subjects tend to be less diversified after wealth or relative price changes, but that the result is much stronger for relative price changes. This erosion in portfolio diversification after relative price changes mainly stems from the choices of subjects with more diversified positions when there are no prior experiences.

What can we learn about household consumption expenditure from data on income and assets?

A major difficulty faced by researchers who want to study the consumption and savings behavior of households is the lack of reliable panel data on household expenditures. One possibility is to use surveys that follow the same households over time, but such data are rare and they typically have small sample sizes and face significant measurement issues. An alternative approach is to use the accounting identity that total household spending is equal to income plus capital gains minus the change in wealth over the period. The goal of this paper is to examine the advantages and difficulties of using this accounting identity to construct a population panel data with information on household expenditure. To derive such measures of consumption expenditure, we combine several data sources from Norway over the period 1994–2014. This allows us to link tax records on income and wealth to other administrative data with information on financial and real estate transactions. Using this data, we derive household expenditure from the accounting identity, before assessing the sensitivity of this measure of consumption expenditure to the assumptions made and the data used. We then compare our measures of household expenditure to those reported in expenditure surveys and to the aggregates from national accounts. We also illustrate the research opportunities arising from the derived measures of consumption expenditure through two applications: the first is an examination of how relative wage movements among birth cohorts and education groups affected the distribution of household expenditure, while the second is a study of the transmission of income shocks to household consumption.

Housing wealth change and disparity of indigenous villagers during urban village redevelopment: A comparative analysis of two resettled residential neighborhoods in Wuhan

Urban village redevelopment has become an attractive way to supply land for municipal governments in China. However, the subsequent process of housing resettlement can change the status of the housing wealth of indigenous villagers. Extant studies on urban village redevelopment tend to focus on informal housing development and its impact on the housing choices of low wage migrants. However, relatively little research pertains to the housing differentiation of villagers during redevelopment. This paper examined the change and disparity to the housing wealth of local villagers under redevelopment based on a comparative study on two typical cases in Wuhan, China: a case of government-led redevelopment with compensation baselines, and a case self-organized market-driven redevelopment. Empirical results confirmed that there were downward and upward trends in housing wealth with government-led redevelopment and self-organized redevelopment, respectively. Government-led resettlement baselines helped to alleviate housing disparity among villagers caused by informal development. However, this disparity was not exacerbated by self-organized redevelopment based on market forces. Overall, housing disparity was not alleviated by redevelopment. We conclude that adopting well-designed policies and suitable modes of redevelopment will help to mitigate the growing disparity among villagers caused by informal housing development, and to alleviate the housing wealth inequality within villages.

Структура экономического роста стран Евразийского союза

The purpose of the study is to determine the existing growth models of the countries of the Eurasian Union by GDP expenditures and sectors (manufacturing, transactional raw materials). The research methodology is a macroeconomic analysis of the dynamics of the main indicator of economic development — gross domestic product. The research method is a structural analysis that allows you to get a structural formula for calculating the contribution of each component of GDP to the growth rate, as well as a comparative analysis of the dynamics models of the countries in question — Armenia, Belarus, Kazakhstan, Kyrgyzstan, Russia. The result of the study is the obtained structural relationships that make it possible to measure the influence of the investment structure on the growth rate, the criteria describing economic growth with a corresponding change in the country's national wealth, as well as the identification of models of economic dynamics by the countries of the Eurasian Union. It is indicative that the transaction sector dominates in Kazakhstan and Russia, while in other countries a mixed model is found, or industrial growth as in Belarus. According to the components of GDP and expenditures of the country, either a mixed or a consumer model is found (Kyrgyzstan, Russia), however, the contribution of government spending to the growth rate is provided only in Kazakhstan. It was also revealed that the reaction to the crisis of 2009 and 2015 was fundamentally different for the countries of the Eurasian Union. The search for the factor conditions of such a prevailing dynamics, as well as the influence of union economic relations on the formation of a growth model in each country, requires an expansion of research and an analytical perspective

Changing Wealth Accumulation Patterns: Evidence and Determinants

The patterns and determinants of household wealth accumulation have long been of interest to economists. Using the 1989 and 2016 Surveys of Consumer Finance, we examine the determinants of changes in mean and median wealth of households of given ages across different birth cohorts. While the Great Recession reduced wealth in all age groups, longer-term trends show that wealth of older age groups has increased while the wealth of younger age groups has declined. We show that a substantial share of these changes, in both directions, can be explained by the evolution of household demographic and economic characteristics.

Wealth and Consumption in Australia

AbstractWe revisit the evidence on the effect of changes in household wealth on consumption using a panel of Australian states. We find that a one per cent increase in the value of housing wealth increases consumption by about 0.16 per cent in the long‐run, with half of the response occurring within two quarters. The size of this response has been stable over time and largely reflects changes in spending on motor vehicles, durable goods and other discretionary items. We then run counterfactual scenarios using the Reserve Bank of Australia's macroeconometric model, MARTIN, to assess the macroeconomic effects of changes in household wealth. We show that increases in household wealth supported household spending between 2013 and 2017, when growth in disposable income was weak.

Terrorist attacks and investor risk preference: Evidence from mutual fund flows

Using a comprehensive list of terrorist attacks over three decades, we find that aggregate investor risk aversion inversely relates to terrorist activity in the United States. A one standard deviation increase in the number of attacks each month leads to a $75.09 million drop in aggregate flows to equity funds and a $56.81 million increase to government bond funds. Tests on alternative channels further suggest that the shift in aggregate risk aversion is driven mainly by an emotional shock rather than changes in wealth or the outside environment. We also investigate possible alternate explanations for reduced flows to risky assets. Our evidence is consistent with a fear-induced increase in aggregate risk aversion.

Do Accounting and Finance Master’s Students Apply Prospect Theory?

This study aims to question the assumptions of prospect theory using a sample of students enrolled in a master’s course on accounting and finance at a Portuguese polytechnic institution. Such theory has stood out among others developed in the field of Behavioural Finance due to the debate and investigation it has generated. To achieve this aim, we applied a questionnaire four consecutive years (2012–2015). The instrument included a set of alternative response questions that seek to unveil respondents’ preferences regarding the situations they were presented with. Bibliographic and descriptive research was carried out and the results were compared with those obtained by other authors but they were not always consistent. Thus, the isolation effect was confirmed; the reflection effect was almost always confirmed; and the certainty effect was not always confirmed. Regarding attitude toward risk, the assumptions of risk aversion, and importance given to changes in wealth (at the expense of wealth states), our results are in line with those obtained by said authors. Hence, this study contributes to support prospect theory with its results and the confirmation of the isolation effect.

Too poor or too far? Partitioning the variability of hospital-based childbirth by poverty and travel time in Kenya, Malawi, Nigeria and Tanzania

BackgroundIn sub-Saharan Africa, women are most likely to receive skilled and adequate childbirth care in hospital settings, yet the use of hospital for childbirth is low and inequitable. The poorest and those living furthest away from a hospital are most affected. But the relative contribution of poverty and travel time is convoluted, since hospitals are often located in wealthier urban places and are scarcer in poorer remote area. This study aims to partition the variability in hospital-based childbirth by poverty and travel time in four sub-Saharan African countries.MethodsWe used data from the most recent Demographic and Health Survey in Kenya, Malawi, Nigeria and Tanzania. For each country, geographic coordinates of survey clusters, the master list of hospital locations and a high-resolution map of land surface friction were used to estimate travel time from each DHS cluster to the nearest hospital with a shortest-path algorithm. We quantified and compared the predicted probabilities of hospital-based childbirth resulting from one standard deviation (SD) change around the mean for different model predictors.ResultsThe mean travel time to the nearest hospital, in minutes, was 27 (Kenya), 31 (Malawi), 25 (Nigeria) and 62 (Tanzania). In Kenya, a change of 1SD in wealth led to a 33.2 percentage points change in the probability of hospital birth, whereas a 1SD change in travel time led to a change of 16.6 percentage points. The marginal effect of 1SD change in wealth was weaker than that of travel time in Malawi (13.1 vs. 34.0 percentage points) and Tanzania (20.4 vs. 33.7 percentage points). In Nigeria, the two were similar (22.3 vs. 24.8 percentage points) but their additive effect was twice stronger (44.6 percentage points) than the separate effects. Random effects from survey clusters also explained substantial variability in hospital-based childbirth in all countries, indicating other unobserved local factors at play.ConclusionsBoth poverty and long travel time are important determinants of hospital birth, although they vary in the extent to which they influence whether women give birth in a hospital within and across countries. This suggests that different strategies are needed to effectively enable poor women and women living in remote areas to gain access to skilled and adequate care for childbirth.

Income and Wealth Effects on Consumer Packaged Goods Purchases

When economic cycles cause changes in household income and wealth, consumers change their budget allocations across store formats, product categories, and brands. Using Nielsen Homescan data for the years 2004 to 2014, we investigate the impact of income and wealth changes on households' budget allocations to (i) alternative store formats; (ii) food and non-food categories; and (iii) private labels and national brands. Since budgets can be reallocated across formats, categories and brands simultaneously, we measure the causal effects on the joint'' (e.g., grocery store - food - national brand budget shares) budget allocations of households. This allows us to decompose income and wealth effects on the marginal'' (e.g., grocery store) shares, which previous literature has focused on, into those on its joint components (e.g., grocery - food - national brand, grocery - food - private label, etc.). This joint analysis reveals situations in which managers of a specific brand-type in a particular store format may be misled by relying on the marginal (instead of joint) effects of income and wealth changes. For example, the wealth effect on the joint warehouse club-food-private label share is positive whereas the wealth effect on private labels overall, is negative.

Reducing cross-wave variability in survey measures of household wealth.

Survey measures of household wealth often incorporate measurement error. The resulting excess variability in the first difference in wealth makes meaningful statistical inference difficult on changes in household-level wealth. We study the effects of two methods intended to reduce this problem: Asset verification confronts respondents with large discrepancies between wealth reports from the current wave and from the previous wave. Cross-wave imputation uses adjacent wave information in the imputation procedures for missing data. In the U.S. Health and Retirement Study, the corrections from asset verification substantially reduced wave-to-wave changes in wealth. The cross-wave imputations also reduced variation, but to a lesser extent.

The Future of Financial Fraud

Is financial fraud becoming a bigger or smaller problem over time? Current empirical approaches to this question generate mixed inferences. As an alternative, I use two theoretical constructs that isolate several factors that motivate fraud, and use them to consider the impact of technological and wealth changes over time. Some changes, such as an increase in anonymity in some financial transactions, facilitate new fraud innovations and increase the possibility of fraud. The COVID-19 pandemic and resulting economic shutdown has fostered major disruptions in relative demands and organizational capital that also increase the likelihood of fraud over the next few years. Viewed over a longer time scale, however, the majority of technological and wealth changes seem likely to increase the use and effectiveness of reputational capital, third-party enforcement, and ethical motivations as fraud deterrents. I predict that, on net, these changes will drive a long-term decrease in the incidence of fraud.

Managing Knowledge to Counter Climate Change

The purpose of this paper is to apply existing knowledge to counter climate change. The contribution to knowledge is to ground institutional analysis, individual behaviour, political science, economics, management and the management of global sustainability in the practices and science of governance found in nature. This is achieved by using bytes as the unit of analysis to explain how nature governs complexity on a more reliable and comprehensive basis than achieved by humans. Tax incentives could encourage organisations to adopt elements of ecological governance found in nature and in social organisations identified by Ostrom and the author. Ecological governance can provide benefits for all stakeholders as desired by CEO’s of the US Business Round Table. Corporations then become a common good to allow them to promote global common goods like countering climate change, pollution and inequalities in power, wealth and income. Democracy is enriched bottom-up.

Differences in Differentiation: Rising Variety and Markups in Retail Food Stores

In this paper I show that consumers in food stores and supermarkets/hypermarkets became significantly less price sensitive between 2006 and 2017. At the median, across thousands of stores and products in nine large categories, estimated own-price elasticities have declined by 25% over this period. I argue that these changes are likely due in part to improved supply chain management, which has led stores to offer a larger variety of goods which better match consumers’ individual preferences. I show that newer products are indeed more “niche” in this sense, and that other potential sources of rising differentiation including increases in quality and changes in consumer wealth play a smaller role. Markups implied by a monopolistic pricing rule suggest that the observed rise in differentiation was large enough to generate significant increases in firms’ markups absent any changes in pricing behavior or competition.

Financial volatility and the evolution of wealth inequality in Europe

The study of wealth inequality poses some unique challenges that do not present themselves when studying income inequality. The main challenge is that the value of wealth is in constant flux and the net positive or negative variations across the different segments of the wealth distribution will have an impact on both wealth inequality and the welfare of households. While the volatility in financial markets is well known, its implications on wealth inequality deserve to be analyzed in greater detail. The objective of this study is to determine the consequences of financial volatility on both wealth inequality and household welfare in selected European countries. In order to properly grasp the impact of financial volatility on the distribution of wealth, we propose a typology of wealth inequality scenarios that incorporates changes in both relative wealth inequality and the absolute welfare of households. The scenario approach offers a synthetic way of understanding how the distribution of wealth changes over a given time period.

Available capital, utilized capital, and shadow prices in inclusive wealth accounting

Previously, accounting for comprehensive or inclusive wealth has focused on the supply side of capital assets. However, human well-being created by capital assets inherently depends on the demand side as well. In particular, if capital is not utilized at its full capacity, then realized or actual human well-being may be less affected by available capital than by effective or utilized capital. In principle, this notion is embodied in a shadow price, which is defined as the marginal contribution of capital assets to social well-being. The shadow price becomes higher if the underlying resource allocation mechanism improves. In practice, one can account for such underutilization by adjusting shadow prices to reflect only the utilized quantity of the capital in question. Furthermore, capital utilization has different, nuanced implications for produced, human, and natural capital, and its implications even vary across some classes of natural capital. Within this line of theoretical thought, we provide empirical estimates of the changes in inclusive wealth and sustainability of selected developing countries in recent years by comparing available and utilized capital assets. We find that sustainability assessments may be revised based on utilized capital, due to, among others, human capital underemployment and non-renewable natural capital accessibility.

Accounting for Sustainable Development over the Long-Run: Lessons from Germany

AbstractWe construct long-run sustainability indicators based on changes in Comprehensive Wealth - which we refer to as Genuine Savings (GS) - for Germany over the period 1850-2000. We find that German sustainability indicators are positive for the most part, although they are negative during and after the two World Wars and also the Great Depression. We also test the relationship between these wealth changes and a number of measures of well-being over the long-run: changes in consumption as well as changes in average height and infant mortality rates. We find a positive relationship between GS and our well-being indicators over different time horizons, however, the relationship breaks down during WWII. We also test if the GS/Comprehensive Wealth framework is able to cope with massive disinvestment at the end of the Second World War due to war-related destructions and dismantlement. We find that negative rates of GS were by and large avoided due to the accumulation of technology and growth-friendly institutions. We demonstrate the importance of broader measures of capital, including measures of technological progress, and its role in the process of economic development; and the limits of conventional measures of investment to understand why future German consumption did not collapse.

Migrants, Migration Policies, and International Business Research: Current Trends and New Directions

Migrant and migration policy (MMP) issues have often influenced important international business (IB) research questions, but the last 20 years have seen the emergence of new or “renewed” MMP issues tied to changes in migrant demographics, wealth, skills, home-country provenance, host-country attitudes, and international governance. Articles in the inaugural special issue of the Journal of International Business Policy address those issues, connect them to classic IB research questions, and then develop theory and evidence to inform current IB scholarly debates and guide IB executives, investors, and the public policy-makers overseeing those business activities. Our introductory article provides an overview of new and renewed MMP issues addressed in the special issue. It defines foundational MMP concepts and trends, compares classic IB and current MMP research questions, summarizes the eight articles included in the special issue, and offers suggestions for advancing research in both fields.

Health Care Investment: The Case of Multiple Sources of Risk

This paper analyses the effect of a bivariate risk on the optimal expenses in health care and gives conditions under which any change in the bivariate risk with respect to the left( {s_{1} ,s_{2} } right) -increasing concave order decreases the expenses in health care. Increasing risk increases the demand for health care for risk-averse and prudent individuals in the multivariate sense. Positive (negative) dependence increases (decreases) expenses in health care. Increasing the correlation produces the same results. Furthermore, the uncertainty surrounding the effectiveness of medical treatments amplifies the effect of any change in wealth and health risks. We also present some policy implications.