Future Wealth Research Articles

Wealth Taxation and Household Saving: Evidence from Assessment Discontinuities in Norway

Abstract Neither theory nor existing empirical evidence support the notion that wealth taxation reduces saving. Theoretically, the effect is ambiguous due to opposing income and substitution effects, and empirically, the effect may be masked by misreporting responses. Using geographic discontinuities in the Norwegian annual net-wealth tax and third-party-reported data on savings, I find that wealth taxation causes households to save more. Each additional NOK of wealth tax increases annual net financial saving by 3.76, implying that households increase saving enough to offset both current and future wealth taxes. This positive effect on saving is primarily financed by increases in labor earnings. These responses are the combination of small negative effects of increasing the marginal tax rates and larger positive effects of increasing average rates. My findings imply that income effects may dominate substitution effects in household responses to rate-of-return shocks, which has implications for both optimal taxation and macroeconomic modeling.

Attractive appearance, future wealth! How exposure to visual wealth on social media contributes to female self-objectification

Exposure to visual wealth on social media is a common phenomenon in daily life, but little research has been conducted to examine how this phenomenon affects individuals’ self-concept. By employing the social adaptation hypothesis of female self-objectification as a theoretical framework, the present research firstly investigated how visual wealth exposure on social media contributed to the self-objectification of women, and the downstream consequences linked to the self-objectification. To this end, three preregistered online studies were conducted. By adopting an online questionnaire survey, Study 1 found that there was a significantly positive relationship between visual wealth exposure and self-objectification, and economic inequality perception and competence perception played a chain-mediating role between them. By randomly assigning participants to the wealth-relevant image exposure condition or the natural scenery image exposure condition, Study 2 conceptually replicated the findings of Study 1. The following Study 3 further found that, participants exposed to wealth-relevant images displayed more preferences for an appearance-dominated job (working as a network entertainment-anchor) than those exposed to natural scenery images, and self-objectification mediated the effect of exposure condition on career choice. The current research provided additional empirical supports for the social adaptation hypothesis of female self-objectification, and also deepened our understanding of the relationship between social media use and the self-objectification of women.

How access to federal recovery credit assistance influences future wealth trajectories after a natural disaster: The case of Hurricane Harvey

Hurricane Harvey made landfall in Texas in August 2017. The Small Business Administration (SBA) provided direct-to-household loan aid for over $2.9 billion to assist recovery, twice as large as the Federal Emergency Management Agency's direct-to-household grant program to individuals impacted by the storm. The author examined the role of federal disaster home loan availability and wealth creation through changes in home values after Hurricane Harvey. The study linked SBA data to seasonally adjusted private market housing data. The author used a fixed-effect difference-in-difference regression with propensity score matching study design to estimate the effect of federal credit recovery assistance on log median home values over time. Communities receiving federal credit assistance saw a statistically significant 6.4 % faster increase in home values than communities receiving no federal credit assistance post-Harvey. In addition, communities with shorter (two weeks or less) wait times to receive SBA loans saw a 2 % faster rise in home value prices post-Harvey than communities with longer median wait times. While disaster damage influenced the receipt of assistance, pre-disaster wealth influenced the speed of the assistance received. Understanding at what points barriers to access arise within the delivery of aid, and the wealth outcomes of such inequities, point to clear ways policy changes may promote equitable recovery for all.

A Study to Assess the Knowledge of NICU Nurses Regarding the Care of Newborn Baby on Photo Therapy in Selected Hospitals of Pune City

All the parents have fruitful ambition to have healthy child. The child inherits their parent’s characters and they are the future wealth of nation. The early life of the new born is the precious period and it is the risk period in human life cycle. In human life cycle from birth to 28 days is known as the newborn period. Phototherapy as a treatment modality has become the backbone of unconjugated Hyperbilirubinemia in the neonate. It's noninvasive in nature and have fewer side effects as reported until now. The health personnel have the main role to protect the newborn from the adverse effects and ensure the effectiveness of the photo therapy. Among the health personal the nurses are main role to deliver the comprehensive care to the newborn some of the nurses’ roles are like eye shielding during the phototherapy, protecting the genitals, fluid maintance, regular monitoring of temperature, serum bilirubin, weight and other adverse such as loose greenstools, lethargy, dehydration, hypocalcemia

Scale-free growth in regional scientific capacity building explains long-term scientific dominance

The regional capability of performing front-running research and technological development has been identified as a necessary condition for future wealth creation. The quality and amount of scientific capabilities in specific fields vary dramatically across different world regions. Capabilities, knowledge, and skills are embodied by scientists working in research institutions or companies. The conditions for the emergence of a leading regional scientific environment – and the resulting early technological leadership – are poorly understood. The existence of a critical mass – the threshold above which a region can build comparably strong scientific capabilities – of scientists is often assumed. Using a unique dataset of global scientific activity and researcher mobility over several decades, we present empirical evidence in three scientific areas (semiconductor research, embryonic stem cells, and Internet research) that the process of scientific knowledge accumulation is remarkably general and applies to practically all regions. Regional knowledge accumulation data obtained from an analysis of scientists’ geolocated trajectories follow a preferential attachment mechanism characterized by a sub-linear kernel with a robust growth exponent. Scale-free growth patterns suggest that regions that move early into new technologies tend to dominate the corresponding scientific fields. We find no evidence that critical mass is required to achieve prolonged scientific dominance. We propose a simple preferential attachment model that explains the empirical data and allows us to understand deviations from the growth exponent as focused interventions to strategically attract scientists at regional level. We demonstrate this explicitly for China in the three scientific fields examined.

De-risking Decarbonization: Accelerating Fossil Fuel Retirement by Shifting Costs to Future Winners

AbstractFossil fuel–rich developing countries should be included in climate change mitigation. But they need money, above what rich countries have been willing to provide, to do so. I argue that existing approaches to international and intergenerational transfers have failed to bridge the gap between developing and developed countries’ interests. I present a new model in which the costs of present climate action are distributed not according to present or historical wealth but according to future wealth. I demonstrate the basic feasibility of this approach with an implementation I call income-adjusted guarantees. I argue that such an arrangement can help accelerate fossil fuel retirement in developing countries and break the deadlock over global climate financing.

Intergenerational wealth transmission in Great Britain

AbstractWe document the intergenerational wealth transmission between adult offspring and their parent's using the Wealth and Assets Survey for Great Britain. We estimate an intergenerational wealth elasticity of 0.4 and Rank‐Rank elasticity of 0.3 and find intergenerational wealth transmission for individuals in their 60s is lower than for those currently aged in their 30s and early 40s, though rank based estimates are stable. Our estimation results imply that the intergenerational wealth elasticity is 3.8 percentage points higher when comparing people with those the same age 6 years previously suggesting strong evidence of higher intergenerational wealth persistence in younger age cohorts. Taken together, the findings have important implications for future wealth inequalities and must be addressed.

Sharing the Wealth: Tax, Justice, Gender and Care

ABSTRACT Australia’s prosperity in the twentieth century relied on economic growth to lift incomes, and a tax and welfare state to share the wealth. Australians became rich, and social expenditures equalised wealth and income. This success also relied fundamentally on a gender-unequal care economy, primarily focused on care of children by women. Wage growth accrued to men, while women bore the economic cost of care. Since the 1960s, prosperity led to increased longevity and a population boom. Fertility gradually declined as women pursued education and work during second wave feminism, yet gender inequality in income and wealth persists. Today, in Australia’s long-lived and ageing population, economic growth has slowed, wages have stagnated and wealth inequality has increased. As demographic and economic conditions become increasingly unlike the conditions of the mid-twentieth century, tensions in the gendered distribution of wealth and care have come to the fore. This article explores Australia’s gendered wealth inequality and considers what should be done to re-orient policies to ensure a gender-equal and sustainable sharing of the wealth in future.

Incarceration risk, asset pricing, and black‐white wealth inequality

AbstractIntroductionHistorically, black Americans have been disproportionately at the bottom quantiles of the wealth distribution. As the choice of making any investment that can increase future wealth requires equating an asset's price to its return adjusted by a stochastic discount factor, this article considers if black‐white differences in the risk of incarceration, which can reduce the intertemporal marginal rate of substitution in consumption, matters for black‐white differences in wealth.MethodsWith repeated cross‐section data from the U.S. General Social Survey, we estimate the parameters of ordinal regression treatment specifications of individual wealth levels to measure the effects of incarceration risk on wealth.ResultsParameter estimates reveal that individual wealth levels vary inversely with incarceration risk. As black Americans have relatively higher incarceration risks, this suggests that at least part of the black‐white wealth gap can be explained by racial differences in incarceration risk.ConclusionCriminal justice reforms that reduce black‐white disparities in incarceration rates could also reduce black‐white disparities in wealth.

Housing Expenditure and Income Inequality

Abstract The trend of rising income inequality in Germany since the mid-1990s is strongly amplified when considering income after housing expenditure. The income share of housing expenditure rose disproportionally for the bottom income quintile and fell for the top quintile. Factors contributing to these trends include declining relative costs of homeownership versus renting, changes in household structure, declining real incomes for low-income households and residential mobility towards larger cities. Younger cohorts spend more on housing and save less than older cohorts did at the same age, which will affect future wealth accumulation, particularly at the bottom of the income distribution.

Implementation of the International Convention on the Rights of the Child in the South Urals in the 1990s

The relevance of the studied problem is determined by the subject of the study, namely the policy of the Russian Federation towards children. Children are the future of the state. The younger generation determines the future technological, intellectual, political, economic, demographic, and ecological wealth of the country. The objective of the article is to study the degree of implementation of the International Convention on the Rights of the Child in one of the largest regions of Russia – the South Urals in the 1990s. Research methods: synchronous, systemic-structural, historical-comparative, historical-genetic. As a result of the study, the authors draw conclusions and offer practical recommendations on the improvement of the state policy in the field of educating the younger generation in modern Russia. The practical significance of the conducted study is that the authors of the article investigated the first steps of implementation of the International Convention on the Rights of the Child in Russia. At the same time the authors explored unresolved issues in the field of children’s rights and public policy mistakes to prevent them from happening in the future.

Glowing cities and the future of manufacturing in the US and Europe: How digitalization will impact metropolitan areas depending on sectoral dominances and regional skill distribution

ABSTRACT Since digitalization and Industry 4.0 have been recognized as a key issue for future economic development, prosperity and wealth distribution, several studies have emerged on the potential threats of new technology on workforce development. The consensus is that jobs may fall away, while some new jobs will be created, with a different skills profile and a new set of qualifications that are required. This paper examines the effects of three main indicators: the impact of skills, industrial sector dominance and product complexity on workforce reduction. Based on metropolitan data from the US (Census) and Europe (Eurostat), the author develops a metropolitan typology based on industrial sectors in each metro and analyses the systematic relationship between regional variations of automation, local skills and economic sector variations, finding that automation exposure in Europe is significantly lower than in the US and that medium-skilled manufacturing jobs in the US are increasingly threatened and low-skill service jobs remain relatively safe from automation – leading to a decreasing middle class. This also shows how metropolitan areas are at risk of developing polarized effects: some facing economic upturn and continuous prosperity, and a majority of others either stagnant or with extreme downturn and high unemployment rates.

The economic arguments for and against a wealth tax

AbstractThis paper asks when a wealth tax would, in principle, be a desirable part of the tax system, setting aside the practicalities and politics that would be crucial in reality. The case for a one‐off wealth tax is simple. If it were unexpected and credibly one‐off – a major challenge in practice – this would be an efficient way to raise revenue and could be used to address existing wealth inequality. Whether such a tax is desirable hinges on whether it is considered fair, about which reasonable people will differ. Making the case for an annual wealth tax, which would affect future wealth accumulation as well as existing wealth, is less straightforward. It requires explaining why it is better to tax the same wealth every year – penalising those who save – rather than raising the same revenue by taxing all sources of wealth once when they are received (and/or when they are spent). Such a case can be made based on subtle arguments for why taxing wealth might help to ease the trade‐off between redistribution and work incentives; and a wealth tax might also be justified if holding on to wealth, rather than spending it, benefits the holder or harms others. These theoretical arguments probably justify some taxation of wealth in principle, though we have little basis for judging the appropriate level, so only part of the theoretical benefit could be attained. It is questionable whether the achievable benefits outweigh the costs of an imperfect wealth tax in practice.There are strong reasons to radically reform how we currently tax the sources/uses of wealth; this includes reforming capital income taxes in order to properly tax high returns. An annual wealth tax would be a poor substitute for doing that. But to the extent that taxes remain imperfect and that responses to a wealth tax would not affect revenue from other taxes (such as on income, expenditure and bequests), there may be a benefit to adding a wealth tax in order to diversify sources of revenue and prevent any one tax getting too high – though that must be weighed against the extra administrative burdens of having another tax.

When a gain becomes a loss: The effect of wealth predictions on financial decisions

When people make financial decisions, they need not only think about their current financial situation, but also about changes in future wealth. This work investigates people's beliefs about their future wealth and how these beliefs impact financial decisions. Using a joint experimental and computational cognitive modeling approach, we show that people's future beliefs serve as reference points when making investment decisions. These results are further supported by data from a large-scale cross-sectional survey (n = 4606) showing that people's beliefs about the future value of their assets are related to investment decisions between risky (i.e., stock market index) and safe (i.e., bond earning a fixed amount per year) options. In both the experiments and survey, we hypothesize that outcomes that are nominally stated as sure gains can become coded as losses due to belief-based reference points. This pattern leads to an increase in riskier choices across positive outcomes for individuals with optimistic beliefs about their future wealth.

Practical Applications of Buy-and-Hold and Constant-Mix May Be Better Allocation Strategies Than You Think

In <b>Buy-and-Hold and Constant-Mix May Be Better Allocation Strategies Than You Think</b>, in the June 2020 Multi-Asset Special Issue of <b><i>The Journal of Portfolio Management</i>, Thomas J. O’Brien</b> of the <b>University of Connecticut</b> discusses the relative practicality and utility of various basic multiperiod allocation strategies. Applying a three-period binomial model, O’Brien calculates how much anticipated future wealth investors might forgo from following simpler portfolio-management strategies such as buy-and-hold or constant-mix, instead of a more complex optimal reallocation plan. He also determines which fixed-income vehicles would better suit which investors. By making assumptions about equities and interest rates in his analyses, O’Brien derives conclusions about the best allocation and fixed-income strategies for investors with differing risk thresholds. He finds that in an environment where equity mean-reversion and interest-rate uncertainty prevail, investors can pursue either buy-and-hold or constant-mix portfolio strategies without incurring much economic cost. Investors’ preferred allocation strategies and fixed-income approaches should be guided by their risk tolerance. The more risk averse would opt for a constant-mix allocation strategy paired with horizon-maturity fixed-income instruments. More-risk-accepting investors would apply a buy-and-hold allocation strategy coupled with a sequenced series of shorter-term bills. <b>TOPICS:</b>Portfolio management/multi-asset allocation, portfolio theory, portfolio construction

Economic Inequality, the Digital Divide, and Remote Learning During COVID-19.

Wealth and education establish a cycle of intergenerational inequality. Wealthier households can provide more educational opportunities for their children, who then will have more chances to build wealth for themselves. The digital divide may have emerged as a key reinforcing mechanism of education through wealth and of future wealth through education during the pandemic. The intergenerational transmission of racial wealth inequality likely played out at rapid speed during the pandemic. We analyze the link between wealth, reliable internet and electronic device availability, remote learning time, race, and ethnicity, using the U.S. Census Bureau's Household Pulse Survey. We conclude that Black and Hispanic/Latinx households have less reliable internet and devices available. This goes along with fewer hours children spend on remote learning. The lack of internet and devices correlates with less wealth, as reflected in lower homeownership rates and greater housing instability. Black and Hispanic/Latinx households, in particular, are more likely to be renters and face housing instability.

Reversing the Gains of the Civil Rights and Women’s Movements: How Housing Strain and Market Exclusion Led to Wealth Depletion During the Great Recession

Objective: We use feminist standpoint theory to investigate how the intersection of identity influenced wealth loss following the Great Recession among older single adults who benefitted from the social movements and legislative gains of the 1960s and 1970s. Looking back on more than a decade of recession and recovery, this study explores how intersections of race, class, and gender produced different wealth outcomes for the early baby boomer EBB cohort. Method: A sample of older baby boomers from the University of Michigan Health and Retirement Study was selected at two waves, 2004 and 2016. We used a generalized estimation equation with interaction effects to test changes in wealth over time for different race and gender groups. Results: Controlling for income and health, we found that both single Black and white women lost wealth at significantly higher rates than single white men. Poor health was associated with wealth shocks, or substantial wealth loss, for single white women, whereas the intersection of race and gender was associated with wealth loss for single Black women. Black women in this cohort ended the Great Recession with $85,000 less than their peers based on the overlapping identities of race and gender independent of health trouble. Conclusions: The policy history of women’s credit and lending access, as well as predatory targeting during the subprime lending crisis, contextualizes our findings. We discuss policy approaches to prevent future wealth erosion in households headed by Black women.

Five Things Family Businesses are Reckoning With Now

Family businesses everywhere are responding to Covid-19 in profound ways, balancing the need to preserve cherished family traditions and social capital against the mandate to control costs at a time of economic peril. In this video, also available here as a podcast, professors Mat Hughes and Alfredo De Massis talk about how the pandemic is forcing reckonings in five realms -- including succession, internal and external relationships, financial health versus social health, long-term orientation versus the need to adapt, and balancing future wealth against the need for more liquidity. De Massis also shares insights from his study of a resilient family that weathered four different catastrophes and emerged stronger from each one.

Reweighted Price Relative Tracking System for Automatic Portfolio Optimization

In this paper, we propose a novel reweighted price relative tracking (RPRT) system for automatic portfolio optimization (APO). In the price prediction stage, it automatically assigns separate weights to the price relative predictions according to each asset’s performance, and these weights will also be automatically updated. In the portfolio optimizing stage, a novel tracking system with a generalized increasing factor is proposed to maximize the future wealth of next period. Besides, an efficient algorithm is designed to solve the portfolio optimization objective, which is applicable to large-scale and time-limited situations. Extensive experiments on six benchmark datasets from real financial markets with diverse assets and different time spans are conducted. RPRT outperforms other state-of-the-art systems in cumulative wealth, mean excess return, annual percentage yield, and some typical risk metrics. Moreover, it can withstand considerable transaction costs and runs fast. It indicates that RPRT is an effective and efficient APO system.

The management of sustainable development: A longitudinal analysis of the effects of environmental performance on economic performance

AbstractThe literature on sustainable development has largely focused on investigating the relationship between companies' environmental and economic performance. However, many aspects remain unexplored, and empirical studies are far from reaching a consensus due to the heterogeneity of the environmental and economic measures and methodologies used. This study contributes to the literature on sustainable development by considering a panel of 998 US companies observed over the period 2003–2017 using both traditional panel data methods and an unconditional quantile regression technique. The empirical evidence confirms that environmental performance, measured in terms of environmental orientation and environmental innovation, positively affects returns on assets and equity. It also demonstrates that these returns change across quantiles and depend on the capacity of green companies to generate the same streams of income as nongreen companies but with less capital. In other words, green firms tend to be more efficient in generating future wealth.