Non-pecuniary Characteristics Research Articles

Forming ESG-Oriented Portfolios: A Popularity Approach

Key theories of financial economics seem to be at odds with one another and with observed personalized portfolios. The Popularity Asset Pricing Model serves as a unifying theory by allowing for both rational and irrational investors, individual risk and return expectations, a multitude of pecuniary and non-pecuniary characteristics to impact asset prices, and investors to derive utility from non-pecuniary characteristics. The authors develop a benchmark-relative fund-of-funds alpha-tracking error utility function that directly incorporates an investor’s non-pecuniary preferences, including environmental, social, and governance–oriented preferences. Maximizing the utility function leads to a personalized portfolio that tilt toward characteristics that the investor likes and away from characteristics the investor dislikes while maximizing alpha and minimizing tracking error.

Heterogeneity in farmers’ willingness to produce bioenergy crops in the Midwest USA

AbstractPrevious studies indicate that “hesitation” and “skepticism” are important barriers to the development of renewable energy industries in the United States. We examine whether key pecuniary and nonpecuniary characteristics of bioenergy crops underlie the hesitation argument. Based on a stated choice experiment, we find that Midwestern producers appreciate certain crop attributes that are found in switchgrass, but not in conventional crops. We also find that producers would be willing to grow switchgrass-like crops for net margins between $222/acre/year and $247/acre/year in marginal counties. We argue that farmers’ hesitation and skepticism toward bioenergy crops can be overcome.

Reference group inequality, positional goods, and their impact on subjective well-being: evidence from Turkey

ABSTRACT Using the 2013 Turkish Life Satisfaction Survey, we investigate two hypotheses that are novel to the happiness literature. The first of these hypotheses is that income dispersion/inequality within an individual’s reference group has a negative effect on happiness, ceteris paribus; we find evidence to support this hypothesis. The second hypothesis is that housing is a positional good that has a negative positional externality; we find evidence to support this hypothesis as well. Additionally, we explore the notion that non-pecuniary factors (like social life satisfaction) carry more weight in explaining happiness than do standard pecuniary factors (such as an individual’s own income). Our findings suggest that in large part, the path to a happy life is through gaining access to a wealth of non-pecuniary characteristics. In a broad sense, our study explores the significance that comparison effects in the pecuniary domain can have on individual happiness.

Investigation of Preferences in Working Environment of Radiological Technologists Using Conjoint Analysis.

The purpose of this study is to assess working environment preferences of radiological technologists using conjoint analysis. We carried a questionnaire survey on working environment preferences for 200 radiological technologists working in medical facilities in Japan. We defined eight characteristics for virtual medical facilities as follows: presence of colleagues who can be consulted, employment status, number of overtime work per month, academic meeting participation, number of hospital beds, presence of nuclear medicine imaging systems and radiation therapy systems, location of medical facilities, and change rate in annual income. A total of 18 virtual medical facilities were selected by an orthogonal array table using above-mentioned characteristics. The acquired data by the pairwise comparison method were analyzed by conjoint analysis. Marginal rates of substitution between income and non-pecuniary characteristics, which represent radiological technologists' preferences, were also calculated. The factors influenced on their preferences were the following: employment status is not part-time, medical facility is smaller in scale, nuclear medicine imaging systems and radiation therapy systems are set up, and the number of overtime work is less. It was suggested that radiological technologists have a tendency to avoid increase of workloads and select his/her working place with emphasis on own experiences.

The Strength of Weak Ties in MBA Job Search: A Within--Person Test

Whether and how social ties create value has inspired substantial research in organizational theory, sociology, and economics. Scholars generally believe that social ties impact labor market outcomes. Two explanatory mechanisms have been identified, emphasizing access to better job offers in pecuniary terms and the efficacy of non-redundant information. The evidence informing each theory, however, has been inconsistent and circumstantial. We test predictions from both models using a rich set of job search data collected from an MBA student population, including detailed information about search channels and characteristics of job offers. Importantly, we can compare offers made to the same student derived via different search channels while accounting for industry, function, and non-pecuniary characteristics. We find that contrary to conventional wisdom, search through social networks typically results in job offers with lower total compensation (-17 percent for referrals through strong ties and -16 percent for referrals via weak ties vs. formal search). However, our models also show that students are considerably more likely to accept offers derived via weak ties. They do so because they are perceived to have greater growth potential and other non-pecuniary value. On balance, our tests are consistent with Granovetter’s argument that networks provide value by facilitating access to information that is otherwise difficult to obtain, rather than providing greater pecuniary compensation.

Job preferences of students and new graduates in nursing

This article investigates the preferences of student and newly graduated nurses for pecuniary and nonpecuniary aspects of nursing jobs. It is the first study applying methods based on discrete choice experiments to a developed country nursing workforce. It is also the first to focus on the transition through university training and into work. This is particularly important as junior nurses have the lowest retention levels in the profession. We sample 526 individuals from nursing programmes in two Australian universities. Flexible and newly developed models combining heteroscedasticity with unobserved heterogeneity in scale and preference weights are estimated. Overall, salary remains the most important feature in increasing the probability that a job will be selected. ‘Supportive management/staff’ and ‘quality of care’ follow as the most important attributes from a list of 11 nonpecuniary characteristics. However, the subset of new graduates rank ‘supportive management/staff’ above salary increases, emphasizing the importance of a supportive workplace in the transition from university to the workplace. We find substantial preference heterogeneity and some attributes, such as the opportunity for clinical rotations, are found to be attractive to some nurses while seen as negative by others. Nursing retention could be improved by designing different employment packages to appeal to these different tastes.

Pest Management in Food Systems: An Economic Perspective

Population and income growth in the coming half century will lead to a tremendous rise in the demand for food. To meet this projected growth without massive extensification of farmland, agricultural yields must increase significantly. Crop yields depend heavily on the pest pressures farmers face and on the pest control treatments available. Pest control, however, inevitably has a multitude of unintended effects on the environment, public and worker health, and the productivity of neighboring farms. The magnitudes of these effects differ widely across pest control technologies and the situations in which they are used. Optimal pest management balances the quantifiable benefits of yield improvement and risk reduction against these external costs, taking into account nonpecuniary characteristics that impact farmers' decisions and welfare. Such analysis should be the basis of government regulation of pest management.

Are Interregional Wage Differentials in Russia Compensative?

Interregional differentials in nominal wages in the Russian Federation are huge compared to other countries. Using the NOBUS micro-data and a methodology based on the estimation of the wage equation augmented by aggregate regional characteristics, we show that these differentials have a compensative nature. Russian workers receive wage compensations for living in regions with a higher price level and worse non-pecuniary characteristics, such as a relatively low life expectancy, a high level of air pollution, poor medical services and a colder climate. After adjusting for these regional characteristics, the relative ranking of regions in terms of average wages changes considerably. Moreover, regional nominal wages become positively correlated with interregional migration flows. According to our estimates, half of the interregional wage variation between workers with similar productive characteristics should be considered to be compensative. These results support the view that the best policy reaction to the current high interregional wage differentials should be the removal of migration barriers and a reduction in migration costs. In general, our results show that wage compensations for regional disamenities along with differences in employment composition are able to account for about three fourths of the observed interregional variation in wages.

A New Test of Compensating Differences: Evidence on the Importance of Unobserved Heterogeneity

Previous evidence on the validity of the compensating differences theory has been ambiguous. This is mainly attributed to that, in most contexts, important components of worker skills are unobserved, leading to biased estimates of compensating differences. This article uses data on professional basketball players, which contain rich measures of worker ability, measures of employer nonpecuniary characteristics, and location amenities, to produce a new test of the theory. Empirical results strongly support the theory’s predictions in this context. Using this data, we also find that when important measures of player skills are omitted from the specification, there is only limited evidence in support of compensating differences. Our findings indicate that in the presence of unobserved heterogeneity, the quality of the empirical results is distorted and inference on the validity of the theory is misleading.

On comparing heterogeneous populations: Is there really a conflict between welfarism and a concern for greater equality in living standards?

The standard solution in classical welfare analysis to deal with non-pecuniary characteristics relevant for a normative judgement of income distributions, such as household composition or handicaps, is to adjust first household income via equivalence scales. The resulting equivalent income is then assigned to each household member. Finally, a social evaluation tool is applied to the resulting distribution of individual equivalent incomes (as if all individuals were homogeneous). However, the welfarist approach of the final step risks to be at odds with a concern for greater equality in equivalent incomes (see [Ebert, U., 1997. Social welfare when needs differ: an axiomatic approach. Economica 64, 233–244; Ebert, U., Moyes, P., 2003. Equivalence scales reconsidered. Econometrica 71, 319–343; Shorrocks, A.F., 2004. Inequality and welfare evaluation of heterogeneous income distributions. Journal of Economic Inequality 2, 193–218]). We pinpoint two families of welfarist rankings and show how and why these rules can resolve the tension between the between type Pigou–Dalton transfer principle, a notion of concern for greater equality, and the Pareto indifference criterion, the quintessence of welfarism. We then characterize these families of welfare rankings. This completes the fragmentary picture in the literature of welfarist rankings which can reconcile both principles, limited basically to the maximin and leximin rule.

Social Networks and Labour Market Outcomes: The Non-Monetary Benefits of Social Capital

We contrast Granovetter's hypothesis (Granovetter, M. (1973). American Journal of Sociology, 78, 1360-1380; Granovetter, M. (1974). Getting a Job: A Study of Contacts and Careers. University of Chicago Press; Granovetter, M. (1995). Getting a Job: A Study of Contacts and Careers. University of Chicago Press) that social networks help individuals to find better-paid jobs with a new model, which predicts that networks are helpful with respect to non-pecuniary job characteristics but not concerning the monetary pay-offs. Following Montgomery (Montgomery, J. D. (1992) American Sociological Review, 57, 586-596), our model is a combination of classical job-search theory and the network hypothesis. First, concerning the monetary consequences, we test our hypotheses empirically by analysing the 2001 International Social Survey Programme on social relations and support systems. We show that using social ties is a common job-search strategy in all countries. However, using social networks does not increase the monetary pay-off. Second, we use a sample of 8,000 Swiss university graduates who recently entered the labour market to show that informal job-search channels are beneficial with respect to important non-monetary job characteristics. Thus, graduates who received their jobs through social contacts tended to get jobs that are linked to their educational degree and offer better career perspectives. Furthermore, using personal networks is related to lower search costs. Therefore, the results suggest overall that networks improve the non-pecuniary characteristics but not the monetary pay-offs.

THE PRICING OF JOB CHARACTERISTICS WHEN MARKETS DO NOT CLEAR: THEORY AND POLICY IMPLICATIONS*

This article examines nonsequential search when jobs vary with respect to nonpecuniary characteristics. In the presence of frictions in the labor market, the equilibrium job distribution need not show evidence of compensating wage differentials. The model also generates several pervasive features of labor markets: unemployment and vacancies, apparent discrimination, and market segmentation. When workers are homogeneous, restrictions on the range of job offers decrease welfare and cannot reduce unemployment. However, when workers have heterogeneous preferences, such restrictions may lower unemployment, and can even lead to a Pareto improvement in welfare. We consider the impact of policies banning discrimination and regulating working conditions.

Eliciting GPs’ preferences for pecuniary and non-pecuniary job characteristics

This study examines General Practitioners’ preferences for pecuniary and non-pecuniary job characteristics in the context of choosing a general practice in which to work. A discrete choice experiment is used to test hypotheses about the nature of the utility function. Marginal rates of substitution between income and non-pecuniary characteristics are calculated. The results suggest that policies aimed at influencing General Practitioners’ location choices should take account of both non-pecuniary and pecuniary factors, particularly out of hours work commitments.

Occupational Earnings, Compensating Differentials, and Human Capital: An Empirical Study

This paper examines the empirical significance of the principle of compensating differentials for the occupational distribution of earnings in Canada. The estimated earnings equation relates differentials in earnings to differences in human capital investments of workers, training requirements, and other non-pecuniary characteristics of occupational employments. The evidence suggests that wage differentials are primarily 'equalizing differentials': workers receive higher pay in compensation for their higher schooling and work experience and for undertaking jobs that are risky, insecure, and require higher levels of general educational development and specific vocational preparation. The evidence also confirms the findings of hedonic wage equations that returns to schooling and experience may be biased when occupational requirements are not controlled. Salaires dans diverses occupations, diffrrentiels compensatoires, et capital humain: une etude empirique. Ce memoire examine la signification empirique du principe des diff6rentiels compensatoires pour expliquer l'eventail des salaires selon les occupations au Canada. Une equation des gains estimes etablit la relation entre les salaires et les differences dans les investissements en capital humain des travailleurs, la longueur de la periode d'apprentissage necessaire, et les autres avantages non-pecuniers attaches 'a une occupation. Les resultats suggerent que les differentiels de salaire sont d'abord et avant tout des diff6rentiels qui vont dans le sens de l'egalisation: les travailleurs reqoivent un salaire plus eleve en compensation pour le niveau d'experience et d'6education plus eleve qui est necessaire, et pour des travaux plus dangereux, moins stables et requerant des niveaux eleves d'instruction et une preparation particuliere. Les resultats confirment aussi les resultats derives d'equations de salaire de type hedonique indiquant que les rendements sur l'investissement en instruction et en experience peuvent etre fausses si on ne standardise pas les exigences des differentes occupations. The principle of compensating differentials outlined by Adam Smith in The Wealth of Nations is one of the many ideas of classical economists that have become a 'common place of economics. '1 The idea that differences in pecuniary wages are required to The authors wish to thank Steve Kaliski, Mike Abbott, and the Editor and anonymous referees for their helpful comments and suggestions. The financial assistance from Labour Canada on the initial phases of this study is gratefully acknowledged. 1 See Rees (1975) and McNulty (1980). According to Rees, 'Of the many ideas of Adam Smith that have stood the test of time, few have weathered better or are still more relevant than the idea of compensating wage differentials ... it would be hard to imagine a theory of relative wages that did not Canadian Journal of Economics / Revue canadienne d'Economique, XV, No. 3 August / aoet 1982. Printed in Canada / Imprimd au Canada 0008-4085 / 82 / 0000-0442 $01.50 (? 1982 Canadian Economics Association This content downloaded from 157.55.39.27 on Wed, 07 Sep 2016 06:38:18 UTC All use subject to http://about.jstor.org/terms Occupational earnings, compensating differentials / 443 compensate for the non-pecuniary advantages and disadvantages of different employments has remained in its original form for over two hundred years as an established analytical framework for the analysis of wage differentials. In recent years the principle of compensating differentials has sparked considerable theoretical and empirical interest in earnings distributions and their relationship with worker and job attributes. On the theoretical side the compensating principle has inspired the development of two major applied and policy-oriented economic models, the human capital theory and the recent hedonic wage function approach; while the human capital model emphasizes the significance of individual investment behaviour in the heterogeneity of labour incomes and singles out the length of training-formal schooling and informal training or work experience-as the principal compensating wage differential, the hedonic approach focuses on 'quality' variations in both worker and job attributes as an explanation for wage differences. Both models provide empirical conceptualization of the compensating differentials principle and have contributed significantly to a better understanding of labour market behaviour and wage determination processes. On the empirical side the availability of large data sets, incorporating information on both individual worker traits and job characteristics and requirements, and high-speed computers has helped in overcoming difficulties of measurement, thus facilitating empirical estimates of 'compensation' for non-wage characteristics. Consequently, in the past few years there has been a long line of empirical research in the United States relating wage differences to differences in worker and job characteristics.2 These studies have found considerable evidence of compensating wage differentials for jobs requiring additional years of training, together with positive average rates of return on the individual worker's human capital investments. The evidence on the direction and magnitude of compensating differentials for other characteristics, however, is so far inconclusive. Empirical work on these problems is practically non-existent in Canada, largely owing to the absence of appropriate data