Economic Theory Research Articles

Optimal consumption and annuity equivalent wealth with mortality model uncertainty

The classical Yaari (1965) lifecycle model (LCM) stands as a cornerstone in numerous modern retirement studies, especially in understanding the determinants of annuity demand. The LCM predicts a high annuity demand among individuals facing retirement, yet it is rarely the case in reality. This gap between economic theory and empirical reality, commonly referred to as the annuity puzzle, has spurred extensive research endeavors aimed at elucidating its economic and behavioral underpinnings.In this paper, we examine the cause of low annuity demand through the angle of mortality model uncertainty. To this end, we advance Yaari's LCM via integrating a mortality perturbation analysis within a recursive utility framework. Through this approach, we derive the robust optimal consumption strategy and the corresponding annuity equivalent wealth. By utilizing stochastic dominance theory, we establish a series of monotonicity results about the annuity equivalent wealth with respect to ambiguity aversion parameter and other key parameters, such as interest, discount, and mortality rates. Our findings suggest that, among decision-makers with elasticity of intertemporal substitution less than unity, the economic value of an annuity is diminished for those who place greater confidence in their subjective mortality table. In other words, retirees may underestimate the additional utility gained from annuitization if they do not adequately consider the potential uncertainty surrounding their subjective mortality estimates.

The Effectiveness of Group Identification on Women Economic Empowerment: A Case of the Project to Empower Women through Savings and Loan Associations (PEWOSA)

The purpose of the study was to investigate whether identification with a women's group had helped women achieve economic empowerment. The study was underpinned by the social identity and economic empowerment theories and adopted a mixed methods approach. The quantitative data was collected using 360 questionnaires that were given to women while qualitative data was collected from 21 key informants and 20 focus groups. The quantitative data analysis involved descriptive statistics and Structural Equation Modeling using SMART PLS Version 4 while qualitative data was analysed using NVIVO software. The study findings supported the tenets of social identity theory. In this, the constructs of group identity, that is, group centrality, in-group affect and in-group ties did positively influence economic empowerment. However, the association between centrality and financial autonomy, centrality and economic security, in-group ties and decision-making were not supported. It is recommended that Promoters of these groups promote transparent and fair leadership, group leaders adhere to principles of transparency, fairness, and inclusivity. Any form of perceived favouritism be managed in time to foster trust and positive emotional attachment within the group

Модернизация здравоохранения России и необходимые изменения институциональных основ регулирования медицинской деятельности

The discrepancy between healthcare and the optimal system of principles for organizing its activities is a press-ing problem for domestic healthcare, which entails the need to modernize healthcare. Modernization, aimed at bringing healthcare into line with the optimal system of principles for organizing activities, should be compre-hensive and begin with changes in the legislation regulating medical activities. The essence of ideas about the social value provided by healthcare is analyzed from the standpoint of economic theory and Russian legisla-tion. Some necessary changes to the legislation regulating medical activity are formulated. The proposed changes to the legislation will allow for such a modernization of Russian healthcare that will implement an op-timal system of principles for organizing healthcare activities and ensure the highest possible quality of health (and medical care) provided to the entire society and each citizen with the best use of the limited resources available to healthcare and its institutions.

Reconsidering agricultural productivity, comparative advantage and economic growth

ABSTRACT In this article, we reconsider the work of Matsuyama (Journal of Economic Theory, 58(2): 317–334, 1992). Matsuyama (1992) concluded that, for a small open economy, a negative relationship exists between agricultural productivity and economic growth. Our study questions Matsuyama’s (1992) conclusion. We aim to demonstrate a theoretical possibility in which Matsuyama’s (1992) conclusion for a small open economy does not always hold. We extend Matsuyama’s (1992) model by introducing government services that enhance household utility. Unlike Matsuyama’s (1992) model, our model implies that, even in a small open economy, under certain conditions, a positive relationship may exist between agricultural productivity and economic growth when a small country initially has a comparative advantage in agriculture.

Issuance of urban investment bonds and high-quality urban economic development

High-quality economic development is a significant issue in China's new era, wherein an active government plays a crucial role in the rational allocation of public resources. This study examines the impact of urban investment bond issuance on the high-quality development of urban economies using panel data from Chinese cities. It further explores the specific mechanisms and regional heterogeneity of this impact. By clarifying the fundamental attributes and channels of influence of urban investment bonds, this study incorporates regional debt elements as a unique factor into the spatial Durbin model to investigate their specific spatial spillover effects, aiming to broaden and enrich economic growth theory. The findings reveal that urban investment bond issuance significantly promotes high-quality urban economic development and has a positive spatial spillover effect. The primary mechanisms include alleviating fiscal pressure, enhancing research and development expenditure, and increasing educational spending. Heterogeneity analysis indicates that the promotion effect of urban investment bonds on high-quality urban economic development is not significant in central and western cities. This study provides theoretical and practical insights into accurately understanding the relationship between government-issued urban investment bonds and high-quality economic development and aids different regions and cities in identifying their unique positions to implement tailored debt issuance strategies.

Economic feasibility and cost modeling for horse training centers: a financial perspective from Brazil

This study aimed to develop a cost calculation model for equine training centers and assess their feasibility. It established critical parameters for such centers, including facilities, equipment, labor, and operational metrics. A Microsoft Excel-based model allocated costs into variable, fixed operating, and opportunity costs. Input prices and quantities were collected to calculate economic indicators like gross margin, net margin, profit, break-even point, total factor productivity, and rate of return. A five-year cash flow projection was developed, estimating financial indicators like net present value (NPV), rate of return, internal rate of return (IRR), and discounted payback. The project obtained an annual profit of $5,298,64, with gross and net margins of $51,630.35 and $23,852.72, respectively. In this scenario, the break-even point, which represents the minimum number of horses needed for costs to equal profits, was calculated to be nine horses. The rate of return for the project was 15%. Risk indicators demonstrated a high level of security (531.49% IRR and payback within the first year), and profitability indicators were positive, with an NPV of $87,005.78, a benefit-cost index (IBC) of 2.75, and a profitability rate of 1,261%. The project was found to be financially viable, and the cost model aligned with economic theory principles. This model offers a valuable tool for equine training center operators, investors, and stakeholders, enabling informed decision-making by providing a detailed economic and financial analysis of costs and profitability. It assists in optimizing resource management, improving pricing strategies, identifying areas of inefficiency to enhance profitability, and supporting long-term planning and sustainability in equine businesses.

Human-Centred Economics The Living Standards of Nations, 2024 Palgrave Macmillan, 356pp. Richard Samans

Human-Centred Economics: The Living Standards of Nations, by Richard Samans, is a bold and optimistic book. Its main message stems from recognizing the crisis facing the global economy. The book argues that the dominant economic theory of the neoliberal era needs urgent revision and proposes a path that draws on a tradition of liberal thinkers who went far beyond a perspective solely focused on GDP growth.

Economic Theory and Artificial Intelligence: A Cross-model Perspective on Labour Market Dynamics

Abstract This study examines the relationship between labour market changes and artificial intelligence, utilising Romer’s Endogenous growth theory, Schumpeter’s Creative destruction, Solow’s Growth model and Becker’s Human capital theory as theoretical frameworks. The purpose of this research is to clarify the multifaceted impacts of artificial intelligence on economic growth, workforce adjustment and the emergence of novel employment trends, focusing specifically on job losses and gains, wage inequalities, and changing skill requirements. Using a structured literature review methodology, the economic implications of artificial intelligence in the labour market were systematically analysed and synthesised. The results suggest that although artificial intelligence significantly enhances productivity and innovation, it has a complex effect on the labour market, causing employment gains in technologically sophisticated industries and losses in sectors prone to automation. The study emphasises strategic policy interventions and pedagogical reforms that maximise the economic benefits of AI while minimising its disruptive effects on employment. Proponents of such policies argue that by cultivating a workforce that is resilient and capable of adjusting to changes driven by artificial intelligence, they can effectively mitigate inequality and safeguard economic stability.

Interplay of immersion, absorption, and flow in virtual reality: Based on experience economy theory and flow theory

ABSTRACT This paper investigates whether immersive experiences (escapism and esthetic experiences) precede and influence absorptive experiences (educational and entertainment experiences) in a VR tourism setting. In addition, we examine the mediating role of flow – characterized by enjoyment, concentration, and time distortion – in the relationship between immersion and absorption. An empirical investigation was conducted using a survey of 350 participants who took part in VR tours. Partial least squares structural equation model (PLS-SEM) was used to test the hypotheses. The results reveal that immersive experiences positively influence absorptive experiences when both experiences share the same level of participation, whether active or passive. Additionally, our study confirms that flow mediates the relationship between immersion and absorption, no matter the level of participation. This study is the first to explore a reverse causal relationship between absorption and immersion, challenging the existing literature. Additionally, it makes a valuable contribution by examining the mediating effect of flow within the framework of experiential economic theory in the context of VR tourism.

Stratification economics: historical origins and theoretical foundations

Abstract Stratification economics (SE) investigates how economies are organized around group inequalities, especially by race and gender but also by ethnicity, national origin, religion, sexual orientation, etc. Its historical origins and theoretical foundations have both a structural strand that addresses how and a social behavioural strand. SE’s structural strand goes back to Ricardo and Marx regarding the relationship between growth and distribution, and then draws on recent economic theory of noncompeting groups and dual economy models of labour market segmentation. SE’s structural strand produces an inequality-based understanding of economics’ standard goods taxonomy. The social behavioural strand builds on Du Bois’s psychological wage concept, Veblen’s social ladders theory of emulation, Blumer’s theory of prejudice and stereotyping, and current social identity theory. SE’s social behavioural strand makes it possible to explain how discrimination selectively stigmatizes people’s social identities in order to reinforce existing intergroup inequalities.

China environmental economics: A political authority approach and neo-marxist perspective in the emission trading system (ETS) implementation

The study focuses on the implementation of the Emissions Trading System (ETS) in China and its impact on the economy, using an environmental economic theory framework reinforced by the theory of political authority and neo-Marxist perspectives. The research find that The ETS policy has a long-term positive impact on the economy and the amount of carbon intensity. The Chinese government influence is very powerful and can ensure that all entities follow the rules of emissions trading, which facilitates policy enforcement. Emissions trading also provides an opportunity for the business world to invest and generate new ideas, which will produce better products in the future. The research argue that China is striving to align itself with global governance in order to secure its economic interests, employing a political authority approach as a component of the Marxist perspective. The study examines the decision-making process in choosing between the short-term and long-term impact on the Chinese economy following the implementation of the Emissions Trading System (ETS). The study uses qualitative research methodology, using secondary data from previous research.

A Critique of Contemporary Economic Justice and Sharia Economic Law on The Tompangan Tradition

The tradition of tompangan, which was originally a form of social solidarity between residents, has shifted into an informal debt system, with returns exceeding the initial amount given, thus causing injustice and economic inequality. This study discusses the critique of contemporary economic justice and the relevance of Sharia Economic Law to the shift in the tradition of Topangan in Madura. This study uses a qualitative approach with data obtained through interviews and observations. The results of the study indicate that social change and modernization have shifted the traditional value of tompangan, which was originally a grant, into a qardh (debt) contract that tends to be capitalistic. Based on the perspective of Sharia economic law, returns that exceed the amount of the loan can be categorized as usury which is prohibited in Islamic law. This study also found that the community still considers this practice socially legitimate despite the uncertainty and injustice in the return of tompangan goods. Therefore, combining insights from the tompangan tradition with contemporary economic justice theory can open up new perspectives for economic policies that are fairer and more responsive to the needs of local communities and in line with the principles of Sharia economic law.

Analysis Method of the Coupling Relationship Between Big Data Sports Industry Development and Economy

This paper studies the dynamic interaction between sports industry and urbanization process. Based on grey system theory and agglomeration economy theory, this paper studies the correlation and coupling between sports industry and urbanization in Shanghai and establishes the correlation and evolution relationship between them. Sports industry has played a key role in urban infrastructure construction, spatial layout optimization and industrial structure transformation. Research shows that e-sports industry is closely related to urbanization, and it is the product of technological innovation, industrial integration and capital flow. Industrial development and urbanization show a “U” curve, especially in 2014-2017. Coupling theory extends from the field of physics to the field of sociology, which provides a framework for evaluating the degree of interaction between multiple systems. By investigating the coupling between urbanization and sports industry, this study aims to reveal the intricate relationship between urbanization and sports industry.

Taxing Dividends in the Nordics: Norway, an Oddity?

Abstract The Norwegian dividend tax regime is uniquely characterized by the so-called shielding allowance, which implies that the shareholders are entitled to receive a nearly risk-free yield of the investment without tax, unlike the rest of the dividend. This article attempts to evaluate the arguments behind these rules. These arguments are embedded in economic theory on neutrality; in particular, the issue is to what extent the dividend tax increases the financial costs of a company. The Norwegian and international debates among economists show that the central issue today is to what extent the company’s financial cost is decided on international or domestic financial markets. In the former case, the Norwegian dividend tax does not affect the company’s financial cost. Arguments against the shielding allowance regime are also evaluated. The article ends with a brief discussion of a recent proposal to extend the shielding allowance regime to all types of capital income or to some of them.

Discovering the Hidden Work of Commodified Care: The Case of Early Childhood Educators

The COVID-19 pandemic has drawn attention to the care economy, including commodified early childhood education and care (ECEC). While there is some literature about the low paid, invisible, and undervalued skills among the predominantly female workforce in the ECEC sector, there is little research into what these educators do in their working day and how this contributes to quality education and care for young children. This article provides a detailed examination of ten defined domains of ECEC work tasks, derived from data generated by educators’ use of ‘intensive hour’ time-diary methodology. The results reveal that the outstanding characteristics of this occupation are multi-tasking and the rapid switching of tasks as educators manage diverse expectations arising from work with groups of very young children, families, other staff, and meeting legislated responsibilities. Drawing on William J. Baumol’s economic theory, we consider the implications for productivity and cost tensions in ECEC.

Application and Development of Behavioural Economics in Consumer Decision Making

Behavioural economics, as an interdisciplinary field integrating psychology and economics, offers new perspectives for understanding consumer decision-making. This paper provides an overview of the core theories of behavioural economics, its applications in consumer decision making, and its developments and challenges in market practice and policy making. First, behavioural economics challenges traditional economic assumptions about rational decision-making by revealing core concepts such as limited rationality, prospect theory and behavioural biases, providing a deeper understanding of consumer behaviour. Second, the paper explores the effectiveness of behavioural economics in practical applications, such as improving firms' market performance and policy implementation by optimising marketing strategies, utilising personalised recommendations and developing behavioural intervention policies. However, behavioural economics still faces challenges in terms of theoretical universality, cross-cultural applicability and dynamic adaptation. Future research directions include theoretical integration, cross-cultural validation, adaptation to technological developments, optimisation of policy practices and intersection studies with psychology. The review in this paper aims to provide reference for academic research and practical application, to promote the further development of behavioural economics, and to provide theoretical support for policy making and market strategies.

Industrial Basic Capacity Research: Theory and Measurement

This paper establishes a theoretical framework for understanding the connotations of industrial basic capacity. It employs models from economic growth theory to derive indices for assessing industrial basic capacity and exploring the economic correlations among its influencing factors. Additionally, it measures the industrial basic capacity indices of 17 subsectors across 9 major industrial countries from 2000 to 2020 using OECD data. The findings reveal that from 2000 to 2020, the Chinese manufacturing industry has surpassed the United States, becoming the global leader. Specifically, within the 17 subsectors, 9 are globally ranked first, with 7 nearing advanced levels, and only 1 facing relative backwardness. Chinese manufacturing industry’s enhanced basic capacity is attributed to advantages in cost competitiveness and scale. However, significant disparities persist in technological input and industrial linkages with advanced nations. The decline in basic capacity among developed countries stems primarily from diminished value chain profitability due to inadequate investment. Sustainable improvement in industry basic capacity necessitates concurrent advancements in value chain profitability, fixed asset investment, technological levels, industrial linkages, and market scale. Overreliance on cost advantages or advanced technology poses substitution risks. Moreover, this paper underscores the limitations of exclusively relying on current data to assess global industrial basic capacity, advocating for a greater historical perspective. To strengthen the Chinese manufacturing industrial basic capacity within the global value chain, the Chinese manufacturing industry must enhance technological inputs, reduce the operational costs of enterprises, and elevate the degree of openness.

Navigating the financial fog: The impact of pandemic priming on economic decisions and future valuations

The COVID-19 pandemic drastically impacted financial decision-making by introducing significant uncertainty and an influx of often conflicting information about future outcomes. Our study investigates the effects of priming on financial decision-making during the pandemic, focusing on how priming influences time and risk preferences. Using a sizable and diverse sample, we demonstrate that even short-term exposure to specific stimuli through priming can significantly shape individuals’ perceptions and decisions in a globally unstable economic context. Our findings reveal a substantial effect of negative priming on these preferences, highlighting the critical role of external information in influencing financial decisions during uncertain times. This study has significant implications for economic theory and practical applications, as it enhances the understanding of financial decision making processes under the pressure of a global crisis.

An Analysis of the Relationship Between Theoretical Economics and Applied Economics

With the increasing enhancement of China's economic strength, various theoretical aspects related to economics have garnered widespread attention from all sectors of society. Clarifying the concepts of theoretical economics and applied economics, and understanding the relationship between the two, has become a primary focus in numerous developmental fields today. Comparatively, any theoretical research requires consideration of practical outcomes. However, during the study of economic theories, deviations inevitably arise due to multiple influencing factors, and the content related to theoretical economics has not been highly emphasized, ultimately leading to problems in economic activities. Therefore, mastering the relationship between theoretical economics and applied economics to promote orderly economic activities has become an important direction for economic endeavors. This paper delves into the relationship between theoretical economics and applied economics, analyzes their significance within the field of economics, identifies current issues, and proposes effective strategies to promote the balanced development of both, aiming to provide valuable references for economic research and practice.

Value Added Tax Collection Efficiency and Economic Activity

Objective: Revenue enhancement through improving the tax efficiency generates more income for the government without increasing the tax burden, and sustain economic growth. The objective of this study is to investigate the relationship between value added tax collection efficiency and growth. Theoretical Framework: Endogenous economic growth model allows for investigating the effects of fiscal policy on growth. In tax literature, indirect taxes are considered close to growth because they do not discourage saving and investment. The study decomposes the VAT revenues and use the VAT C efficiency to estimate the impact on growth. Method: The methodology adopted for this research is based on structural vector autoregressive SVAR. SVAR allows us to impose structural restrictions according to economic theory and to analyze the impact that an individual shock has on other variables included in the model. Results and Discussion: The study found that value added C -efficiency has a small and positive impact on growth, only in the short term. The maximum effect is in the third quarter, when one percentage point improvement in collection efficiency, increase the real per capita GDP, about 0.3 percent. Further improvements in collection efficiency are needed to generate more tax revenues and sustain growth. The study also found that total tax to GDP has a positive impact on growth, that is significant only in the short time. Government expenses have supported economic growth. An increase in government expenses as a percentage of GDP, is followed by an improvement in real per capita GDP with about 1.05 percent, average impact. Research Implications: The present research uses four fiscal variables, and only inflation rate based on GDP deflator as a control variable. Further research could be extended by including other control variables. Originality/Value: This study contributes to the tax literature in developing countries by estimating the impact of VAT on growth using C -efficiency ratio.