Net Disposable Income Research Articles

Consumption Modelling Using Categorisation-Enhanced Mental Accounting

Credibly representing category-of-goods mental accounting in an intertemporal optimisation framework is notoriously difficult, as this modelling approach imposes interrelations between the demand for different categories through first-order conditions. This breaks the principle of nonfungibility, contrary to the rationale of mental-accounting theory. Proofs that using intertemporal optimisation is futile in modelling this kind of behaviour are provided, and an alternative is developed: a procedural-behavioural merger of mental accounting and categorisation theories. The merger is necessary to enhance mental-accounting theory, which by itself does not inform about how mental budgets are formed, what they include and how money is spent from various accounts. A classification of six basic consumer types was devised, basing on the differences between their mental-accounting systems and variations of changes of expenditure in response to fluctuations of net disposable income and other possible stimuli. Representing the consumer problem as a behavioural procedure including spending on nondurable and frequently-bought durable goods as well as decisions whether or not to purchase very expensive durable goods, such as houses and flats, allows to model real-world features such as infrequent purchases and rare debt-taking. The devised working-life cycle models of consumer behaviour are consistent with microeconomic evidence on consumption, including those features that are not accounted for by various versions of the permanent income or buffer-stock models.

When is government debt accumulation optimal in a liquidity trap?

When the government issues long-term bonds, the optimal time-consistent fiscal and monetary policy is to consolidate debt in a liquidity trap by increasing labor taxes aggressively. This prescription is at odds with large debt-financed fiscal expansions undertaken in the US during previous liquidity trap episodes. In this article, I show that accumulating debt turns optimal in a medium-scale model with sticky wages and limited asset market participation. In my model, the net disposable income of Rule-of-Thumb households is sensitive to tax variations and constitutes an additional constraint to fiscal policy. For plausible calibration, the discretionary policy maker chooses to curtail its tax increase and to beef up its spending stimulus. In long simulations, the volatility of taxes falls below the one of government spending, in line with empirical evidence. The debt increase in the liquidity trap is also consistent across maturities, both under discretion and commitment.

Which Institutions Are More Relevant Than Others in Inequality Mitigation?

During the 1950s, 1960s and most of the 1970s inequality followed declining trends in the most developed and developing countries. However, the inequality trends have been reversed in most countries since the early 1980s. First, inequality started rising in the mid- to late- 1970s in the United States, United Kingdom, Australia and the New Zealand, which were the first among the OECD countries to adopt a neoliberal policy approach. In United Kingdom the increase in inequality was quite pronounced as the Gini coefficient of the distribution of net disposable income rose more than 30 percent between 1978 and 1991, which was twice as fast as that recorded in United States for the same period. The Scandinavian countries and the Netherlands were next to follow where inequality followed a U-shaped pattern. From 1970 to 80, Finland and France also experienced a halt in declining trends in inequality. In Italy inequality rose by 4 points between 1992 and 1995. In 1993 the Gini coefficient for Japan stood at 0.44, which is approximately the same as United States and far higher than the likes of Sweden and Denmark. Most of this increase in income inequality in these industrialised countries is explained by a rise in earnings inequality [Cornia, et al. (2004)]. Since 1989, inequality in the transition countries of Central Europe has also witnessed increasing trends but they remain modest when compared to former USSR and Southeastern Europe where the Gini coefficients rose on average by 10-20 points which is 304 times faster than the Gini in Central Europe. The rise in inequality in this region has been attributed to rise in returns to education following liberalisation [Rutkowski (1999)].

Comparison of the price level of the water and sewerage charge rates and macroeconomic indicators in the Czech Republic

This article focused on comparing the development of the price level of the water and sewerage charge rates in the regions of the Czech Republic to the development of macroeconomic indicators expressing the performance of the individual region. The following were selected as macroeconomic indicators: gross domestic product, gross domestic product per capita, net disposable income of households, net disposable income of households per capita and average gross wage. The Czech Republic is divided into 14 regions. In each region, a different price level of the water and sewerage charge rate was determined. At the same time, each region had a different performance which is represented by the above-mentioned macroeconomic indicators. It follows from the definition of Act No. 274/2001 Coll. on the water supply and sewerage systems operation is in the public interest. This raised the research question of whether regions with lower performance also have a lower price level of water and sewerage charge rates from the point of view of the purchasing power of the inhabitants of this region. Confirmation or rejection of this hypothesis was based on the creation of 91 matrix expressions. The input data for the creation of matrices contained 196 items of data on the price level of the water and sewerage charge rates and 1,176 items of data on macroeconomic indicators. The hypothesis was not confirmed as only one region met the condition (Olomouc Region), which had a lower price level of water and sewerage charge rates and lower efficiency.

Perceived importance of pandemic interventions for attending cultural events – findings from Germany

BackgroundDuring the first waves of the COVID-19 pandemic, many cultural and sporting events were held without spectators or had to be cancelled. Therefore, several containment strategies to provide requirements for safe events were developed and tested. Nonetheless, every second (50.7%) is afraid of becoming infected on an event. We therefore investigated which hygiene and containment measures are perceived to be important from the visitor’s point of view and thus might increase subjective sense of safety.MethodsThis online study was carried out in November 2020. A total of 1,004 persons, who regularly attended events before the pandemic, took part in the study. The importance of different hygiene and containment measures was evaluated using a 5-point Likert-scale (1 “unimportant” to 5 “extremely important”). Potential statistical differences in socio-demographical aspects (age, gender, net disposable income for leisure activities) and attendance on events were tested with analyses of variance.ResultsParticipants perceived the use of disinfectant (M = 4.10) as the most important element of containment strategies, followed by transparent information on the hygiene strategy (M = 4.00), reduced occupancy (M = 3.98), and optimized ventilation (M = 3.97). Body temperature measurement at the entrance (M = 3.27), a negative SARS-CoV-2 test (M = 3.11), completion of a health questionnaire (M = 3.05), and abandoning breaks and catering (M = 2.98) were considered as less important.Analyses of group differences in socio-demographical aspects found abandoning breaks and catering to be more important to men than to women. This strategy is also more important to people aged 66 and above than to younger age groups (e.g., age 20–40). For women, the use of disinfectant is considerably more important. No other significant differences exist.ConclusionCombining relevant measures appears to be important to provide a safe containment strategy. Measures aimed at positively influencing people’s sense of safety do not fully correspond to researched knowledge of effectiveness.There are also target group-specific differences in the rating of measures, which should be considered while preparing containment strategies. To describe the dynamic development of changes in subjective rating of containment strategies, continuing research is needed.

Physical activity and socio-economic status of single and married urban adults: a cross-sectional study.

BackgroundChanging family models have resulted in a large increase in the number of single-person households. This phenomenon has certain implications for society and the economy as single people often exhibit different behaviours, including their engagement in health-related physical activity, than those who are married and living with partners. However, the results of studies on determinants of physical activity in people of different marital status have been inconclusive. The aim of this study was to identify associations between physical activity and socioeconomic status in single and married urban adults.MethodsThe study material consisted of 4,460 persons (1,828 single and 2,632 married and living with partners). A cross-sectional study was conducted in Wroclaw (Poland). A diagnostic survey-direct interview method was used. Two research tools were applied: the International Physical Activity Questionnaire Short Form (IPAQ-SF) and the Socioeconomic Status Questionnaire (S-ESQ). The level of respondents’ physical activity was assessed following WHO recommendations. The descriptive statistics included the number and frequency of categories of dependent and independent variables as well as measures of association between them, i.e., crude and adjusted odds ratios.ResultsThe odds ratio of meeting the WHO physical activity recommendations was almost 70% higher in single than in married respondents (OR = 1.67; CI [1.46–2.19]), and slightly more than 40% higher after adjusting for sex, age and education (aOR = 1.42; CI [1.21–1.67]). In both groups socioeconomic the respondents’ status revealed a significant and slightly different association with their levels of physical activity. Occupational status and financial savings significantly affected the level of physical activity in single respondents, while net disposable income was a significant modifier of physical activity levels in respondents who were married or lived with their partners.ConclusionsAssessment of the levels and determinants of physical activity among people of different marital status should be continued and extended to other subpopulations. This will allow effective preventive and therapeutic measures to be taken for groups most at risk of hypokinesia. Programs aimed at improving physical activity accounting for the socioeconomic status and marital status of their beneficiaries are particularly important.

The early labour-market returns to upper secondary qualifications track in England

We explore the early labour-market returns to following the academic track (such as A levels) rather than the vocational track (for example, NVQs) in upper secondary education in England. England is an interesting country case because students are ‘free to choose’ which upper secondary track they follow, unlike to many other European countries where standardised tests and teachers’ recommendations play a much larger role. We draw on data from the longitudinal survey Next Steps and register data from the National Pupil Database. We consider occupational social class and net disposable income at age 25 as early labour-market outcomes to explore to what extent the upper secondary qualification track has a net influence on them, controlling for pre-track measured ability, relevant socio-demographic characteristics and higher education participation. Our results show that following the academic track in upper secondary education is associated with higher chances of being employed in a service class occupation at age 25, compared to those with vocational upper secondary qualifications or no upper secondary qualifications at all. Subsequent participation in (prestigious) universities further improves the chances of service class membership. Interestingly, there does not seem to be a differentiated effect of following the academic rather than the vocational track by socio-economic status, except for those that did not subsequently attend university. Unlike access to service class occupations, we find no net effect of upper secondary track on disposable income at age 25 after controlling for prior attainment at GCSE and subsequent participation in higher education.

Pro-Environmental Forms of Transport in the Experience and Perception of Tourists Visiting Warsaw

The aim of this study was to explore the perception and use of pro-environmental forms of transport in Warsaw. The study involved an analysis of source materials and a survey conducted on a sample of 550 people. The survey was created on the Survio platform and shared on social media to reach people who visited Warsaw at least once. The forms of transport selected for the study included: city bikes, electric city scooters and cars available via Uber service and car sharing platforms BlaBlaCar and JadeZabiore. The research sought answers to the following questions: What is the actual level of use and interest in the analyzed forms of transport? What are the motives and barriers determining the use of these forms of transport? How do socio-demographic variables differentiate the use of the studied forms of transport? What are the benefits and threats to the development of the analyzed forms of transport? The research shows that the use and interest in the analyzed forms of transport varied. The respondents found city bikes and Uber most useful while scooters were considered the least needed. Variables like gender, age and size of household to a certain extent influenced the use of city bikes, Uber and scooters. The amount of net disposable income per person was not a differentiating variable. The analyzed forms of transport generate threats (e.g. regarding safety) but also benefits, such as reduction of costs and air pollution.

Nonparametric depth and quantile regression for functional data

We investigate nonparametric regression methods based on spatial depth and quantiles when the response and the covariate are both functions. As in classical quantile regression for finite dimensional data, regression techniques developed here provide insight into the influence of the functional covariate on different parts, like the center as well as the tails, of the conditional distribution of the functional response. Depth and quantile based nonparametric regression methods are useful to detect heteroscedasticity in functional regression. We derive the asymptotic behavior of the nonparametric depth and quantile regression estimates, which depend on the small ball probabilities in the covariate space. Our nonparametric regression procedures are used to analyze a dataset about the influence of per capita GDP on saving rates for 125 countries, and another dataset on the effects of per capita net disposable income on the sale of cigarettes in some states in the US.

The distributional effects of conventional monetary policy and quantitative easing: Evidence from an estimated DSGE model

Abstract This paper compares the distributional effects of conventional monetary policy and quantitative easing (QE) within an estimated open-economy DSGE model of the euro area. The model includes two groups of households: (i) wealthier households, who own financial assets and are able to smooth consumption over time, and (ii) poorer households, who only receive labor and transfer income and live `hand to mouth'. We use the model to compare the impact of policy shocks on constructed measures of income and wealth inequality (net disposable income, net asset position, and relative per-capita income). Except for the short term, expansionary conventional policy and QE shocks tend to mitigate income and wealth inequality between the two population groups. In light of the coarse dichotomy of households that abstracts from richer income and wealth dynamics at the individual level, the analysis emphasizes the functional distribution of income.

Measuring the Impact of Economic Crisis to the Greek Vehicle Market

The fallout of the global economic crisis has impacted Greece severely as the austerity measures that were implemented since 2009 have had a devastating effect on poverty and the level of living. The financial agreement of the Greek government with the International Monetary Fund (IMF) gave rise to a deep recession phase in the Greek market that started in early 2008. The automobile industry is among the sectors that have been severely affected by the economic crisis. Given that the demand for cars fell sharply and that the Greek car market is facing serious problems, mapping and understanding them can provide useful input to the Greek vehicle market. Regression analysis is being employed, and the interrelations of different variables, such as net disposable income, unemployment rate, fuel prices, the Greek crisis, loans directed to the vehicle market, as well as the inflation rate for the period of 2000–2016, are investigated. Analyzing the factors affecting car sales can provide policy-makers with knowledge in order to take legislative and economic measures, so as to boost sales of new environmental friendly vehicles not only in Greece, but in all EU states.

Did the time frame associated with the implementation of the Patient Protection and Affordable Care Act noticeably impact consumer bankruptcy filings?

Purpose The purpose of this paper is to examine whether the timing associated with the implementation of the health insurance-related provisions of the Patient Protection and Affordable Care Act (ACA) altered the presence and distribution of medical/non-medical debts accumulated by different types of bankruptcy filers. Design/methodology/approach Data were drawn from the US Bankruptcy Court’s Eastern Washington District over the years 2009, 2011 and 2014 using interval random sampling. Binary probit and Tobit analyses were used to model the existence, and distribution, of medical debts and total debts, respectively, at the time of filing. The impact of the time frame associated with the ACA was operationalized via a Chow test for structural dynamic change. Findings Chapter 13 filers in 2014 (post-ACA-based health exchange implementation) were more likely to report medical debts than Chapter 7 filers in the pre-intervention period, and were also more likely to report a larger proportion of outstanding debts owed to a single creditor. Filers claiming health insurance premium expenses in 2011 were (at the 10 percent significance level) more likely to report a more skewed distribution of medical debts. Originality/value The time frame associated with the implementation of the ACA impacts the distribution of medical debts among filers who have sufficient net disposable income to fund a Chapter 13 plan. The polarization of outstanding medical debts may indicate coverage gaps in existing health insurance policies, whose costs would be disproportionately borne by patients operating on thin financial margins.

Zadłużenie gospodarstw domowych a dynamika wydatków konsumpcyjnych w krajach OECD po wybuchu kryzysu finansowego

The paper aims at empirical evaluation of the impact of household debt on the dynamics of consumption spending since the beginning of the global financial crisis. The research employed linear regression analysis of the rate of growth of household spending against the rate of growth of disposable income, the level of indebtedness and long-term interest rates in the OECD member states between 2008-2014. The results obtained indicate that household indebtedness was one of the factors influencing the dynamics of consumption demand and thus the processes of economic growth in the OECD states after the beginning of the global financial crisis. Variations in the relation of total debt to net disposable income and in the level of long-term interest rates were both negatively related to the changes in consumption spending. This impact turned out to be markedly stronger when total household debt of a given country was exceeding 85% of GDP, which is consistent with the results of previous investigations on the in&uence of the indebtedness of household sector on the dynamics of economic growth

Income disparities and convergence across regions of Central Europe

This paper deals with the analysis of regional income disparities of the net disposable income of households (in Euro per inhabitant) across the regions of Central Europe (Austria, Czech Republic, Slovakia, Poland, Hungary and Germany) during the period 2000-2013. The analysis deals with the 82 NUTS 2 (Nomenclature of Territorial Units for Statistics) regions and is based on the concept of sigma-convergence, beta-convergence and growth-volatility relationship. Preliminary analysis concentrating on mapping of the analysed indicators is followed by consideration of the region’s location supported by the results of spatial autocorrelation testing. The sigma-convergence analysis reveals the persistence of disparities in the net disposable income of households in the period 2000-2013 both at the national and subnational level. Although the results of spatial analysis have proved the existence of spatial dependence, following the classical approach, the beta-convergence concept is tested with the use of both non-spatial and spatial models. The potentially different convergence characteristics of Visegrad 4 countries’ (Czech Republic, Slovakia, Poland, Hungary) regions and regions of Austria and Germany as well as the examination of the possible relationship between the regional growth and volatility are also taken into account in the econometric convergence modelling.

On the decomposition by subpopulations of the point and synthetic Zenga (2007) inequality indexes

The Radaelli (Stat Appl V I(2):117–136, 2008) decomposition by k subpopulations of the Zenga (Stat Appl V(1):3–27, 2007) point index is based on the decomposition of the point uniformity measure. In this work we decompose, in a more direct way, the point inequality in a weighted mean of $$k \times k$$ relative differences between the upper mean of the subpopulation g and the corresponding lower mean of the subpopulation l; the weights are the product of their relative frequencies. From this decomposition, we obtain the decomposition of the point index into the within and the between components. The within component is given by the sum of k terms and the between component is the sum of $$k \times (k-1)$$ components. The decompositions proposed in this paper are applied to the net disposable income of the 8151 Italian households partitioned in three macroregions, supplied by the 2012 Bank of Italy sample survey on household income and wealth. This application shows that the values of the “relative frequencies” help in the interpretation of the $$3 \times 3$$ contributions.

Economic well‐being of low‐income single‐mother families following welfare reform in the USA

This study explored changes in net disposable income for low‐income single‐mother families before and after the 1996 welfare reform in the USA. Although many studies on welfare reform have focused on employment or total family income as a way to measure low‐income single‐mother families’ economic well‐being, little is known about their net income after expenses related to entering the workforce. This study analyzed net disposable income after tax deductions and childcare costs to provide a more accurate understanding of income changes using data from the Survey of Income and Program Participation conducted by the US Census Bureau. The results revealed that while low‐income single mothers were working more after welfare reform, their net disposable income decreased during this time because their earnings were low and offset by an increase in childcare costs and a decline in means‐tested benefits, including Temporary Assistance for Needy Families benefits.Key Practitioner Message: ● To understand effects of the 1996 welfare reform on low‐income families’ economic well‐being; ● To understand comprehensive income sources and work related expenses of low‐income families; ● To provide policy suggestions for comprehensive childcare subsidies to support low‐income single mothers’ employment.

Identification of the Differences between the Regions of the Czech Republic based on the Economic Characteristics

The breakdown of the Czech Republic into individual regions causes the existence of territorial units with their specific characteristics. The economic level, living conditions or status of households represent the properties which allow us to characterize the differences between regions that are common for today's market economy and significantly related to the areas of public finances. The paper theoretically defines the selected indicators (gross domestic product, net disposable income, incomes in terms of their structure, taxes on personal income, health and social insurance) characterizing the income situation of households in each region and then identifies similarities and differences.The aim of this paper is to identify similar or identical characteristics of each region using mathematical and statistical methods by means of indicators relating to the income situation of Czech households and highlight dependencies between the examined indicators. Similarities of the regions will be expressed using clusters into which they are divided.The undertaken description followed by synthesis will contribute to understanding of the potential differences between regions and can provide relevant information to stakeholders of public finances.

A Time Series Analysis of Macroeconomic Determinants of Household Spending in the Era of Cross-cultural Dynamics: Czech Republic as a Case Study

The paper investigates selected macroeconomic variables where are seemingly influencing household spending in the Czech Republic in the present era of evolving cross-cultural interactions from 1993–2012. Based on the estimated regression model, it is plausible to state that net disposable income, cross-cultural dynamics, inflation rate, and saving rate as a proportion of disposable household income impact significantly on household spending. Moreover, the Granger causality analysis provides evidence of a feedback relationship between household spending and social globalization index. The results equally indicate bidirectional causality between saving rate and household spending as well as between the inflation rate and household spending.

The economic performance of regions in the Czech Republic

Regional development in the Czech Republic contributed to the fact that at present none of the regions is significant backward compared to other. Individual regions have shown among themselves certain differences. This applies in particular to the economic performance of regions. This paper introduce results of our research. Main aim of the work was to indentify economic performace affecting factors of regions NUTS 3 in Czech Republic. It was necessary to define quantity of economic performance to meet this goal. We used them to create method of valuating economic performance of regions. We weighed quantities (e.g. GDP, unemployment rate, net disposable income) according to their importance. This procedure was applied to individual regions. We determined the level of economic performance of Czech regions. We present overview of factors and using statistical methods we test their importance to the economic performance of Czech regions.

Household Indebtedness and Economic Growth (Empirical Analysis)

One important aspect of the resulting indebtedness in full-fledged market economies is the mutual influence between different economic sectors. Therefore, alongside the government indebtedness, one must take into account also the debts of private agents, especially of households and non-financial corporations. In this paper our effort is concentrated on the household sector, especially the impacts on economic growth. We have gathered data for the time period 1995-2010 for the sample of 17 European OECD countries. The main descriptive statistics reveal high and still increasing indebtedness (ratio on the net disposable income) especially in Denmark, The Netherlands, Norway and Sweden and still low indebtedness in postsocialist countries. In panel regressions (fixed effects) we add loans as another explanatory variable into growth equation and examine the impacts on the growth rate of real GDP. The main result shows that a 10 percentage point increase in the ratio of household loans to the net disposable income is associated with about 30 basis point reduction in lagged economic growth. More profound looks give the study of both cross-specific and period-specific coefficients. Last but not least we have examined more homogenous panel of 13 countries putting aside 4 postsocialist countries.