Pub Date : 2021-04-27DOI: 10.1017/S147474722100010X
Joelle H. Fong, Jackie Li
Abstract This paper examines the impact of uncertainties in the future trends of mortality on annuity values in Singapore's compulsory purchase market. We document persistent population mortality improvement trends over the past few decades, which underscores the importance of longevity risk in this market. Using the money's worth framework, we find that the life annuities delivered expected payouts valued at 1.019–1.185 (0.973–1.170) per dollar of annuity premium for males (females). Even in a low mortality improvement scenario, the annuities provide an expected value exceeding 0.950. This suggests that participants in the national annuity pool have access to attractively priced annuities, regardless of sex, product, and premium invested.
{"title":"Mandatory annuitization and money's worth: evidence from Singapore","authors":"Joelle H. Fong, Jackie Li","doi":"10.1017/S147474722100010X","DOIUrl":"https://doi.org/10.1017/S147474722100010X","url":null,"abstract":"Abstract This paper examines the impact of uncertainties in the future trends of mortality on annuity values in Singapore's compulsory purchase market. We document persistent population mortality improvement trends over the past few decades, which underscores the importance of longevity risk in this market. Using the money's worth framework, we find that the life annuities delivered expected payouts valued at 1.019–1.185 (0.973–1.170) per dollar of annuity premium for males (females). Even in a low mortality improvement scenario, the annuities provide an expected value exceeding 0.950. This suggests that participants in the national annuity pool have access to attractively priced annuities, regardless of sex, product, and premium invested.","PeriodicalId":46635,"journal":{"name":"Journal of Pension Economics & Finance","volume":"21 1","pages":"405 - 424"},"PeriodicalIF":1.2,"publicationDate":"2021-04-27","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"https://sci-hub-pdf.com/10.1017/S147474722100010X","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"42717401","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":4,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2021-04-27DOI: 10.1017/S1474747221000214
Michio Yuda, Jinkook Lee
Abstract The Great East Japan Earthquake of March 2011 and it's massive tidal waves wreaked devastating damage on residences and communities along 400 km of the Pacific coast in Japan. Using the panel data from the Japanese Study of Aging and Retirement, we estimate the effects of this disaster on individual health, finding a significant negative impact on the health of those in the area. In addition, we exploit a discontinuous decrease in copayments for medical care at the age of 70 years and find that the reduction in copayment increased medical and long-term care utilization and significantly reduced health deterioration after the earthquake.
{"title":"Protective effects of health insurance against disasters: an insight from the Great East Japan Earthquake","authors":"Michio Yuda, Jinkook Lee","doi":"10.1017/S1474747221000214","DOIUrl":"https://doi.org/10.1017/S1474747221000214","url":null,"abstract":"Abstract The Great East Japan Earthquake of March 2011 and it's massive tidal waves wreaked devastating damage on residences and communities along 400 km of the Pacific coast in Japan. Using the panel data from the Japanese Study of Aging and Retirement, we estimate the effects of this disaster on individual health, finding a significant negative impact on the health of those in the area. In addition, we exploit a discontinuous decrease in copayments for medical care at the age of 70 years and find that the reduction in copayment increased medical and long-term care utilization and significantly reduced health deterioration after the earthquake.","PeriodicalId":46635,"journal":{"name":"Journal of Pension Economics & Finance","volume":"21 1","pages":"502 - 518"},"PeriodicalIF":1.2,"publicationDate":"2021-04-27","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"https://sci-hub-pdf.com/10.1017/S1474747221000214","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"41872635","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":4,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2021-04-23DOI: 10.1017/S1474747221000184
Andre Santos Campos, Zachariah Tailor
Mark Hyde and Rory Shand’s book is a remarkably original and interesting admixture of two fields of study that do not often intersect: retirement pension design and political theory. Their starting point is a solid commitment to liberal theory, and their objective is to trace the most appropriate foundations for justifying retirement pension schemes that are both fair and efficient. The result is an inquiry into liberal normative justifications for pension designs within public policy analysis. The book has five chapters, the first being the introduction, the last, the conclusion. After singling out the primacy of liberty in their analysis, the introduction outlines each chapter’s mechanical structure: libertarian and utilitarian interpretations of the principles under consideration are pooled under the wide umbrella of classical liberalism, whilst prioritarian and luck egalitarian perspectives represent the liberal egalitarian camp. The following three chapters each analyse a relevant standard of consideration for pension design: need (Chapter 2), desert (Chapter 3) and citizenship (Chapter 4). Need and desert correspond respectively to the first two traditional pillars of pension schemes, functioning as their underlying justifications. A general liberal understanding of citizenship is deployed to tie together this exploration. Hyde and Shand open Chapter 2 with a definition of need as “the ‘minimum threshold’ of resources and opportunities that are necessary for agents to function optimally in a social context” (pp. 27–28). Classical liberals, narrowed down to libertarians and utilitarians, view the satisfaction of need as a voluntary concern tied inextricably to the ability to exercise one’s freedom. Egalitarian liberals, on the other hand, endorse a considerable level of state support in satisfying need and hence improving the circumstances of liberty. Rawls and Dworkin (prioritarian and luck egalitarian, respectively) are inevitably introduced before appropriate pension designs are considered under the assessment criteria of access, adequacy and sustainability. Hyde and Shand conclude with a general endorsement of a universal citizen’s pension on account of being the most efficient available mechanism to provide for basic needs for all retirees, especially those closer to a minimum standard of living. Chapter 3 tackles economic desert. Contrasting positions within liberalism are acknowledged, and a split is considered between prioritarians and luck egalitarians on the topic of agent responsibility. Hyde and Shand endorse a broadly luck egalitarian stance when assessing various existing pension designs under the criteria of security, inclusiveness, and fittingness and then, accordingly, identify three priorities: neutralizing brute luck, optimizing option luck, and ensuring consistency of treatment. A defined benefit scheme is proposed, which could be complemented by state-provided remuneration along the lines of a contribution rate for unpai
{"title":"Retirement, Pensions and Justice: A Philosophical Analysis Palgrave Macmillan, 2017. By Mark Hyde and Rory Shand. €46. 148 pages.","authors":"Andre Santos Campos, Zachariah Tailor","doi":"10.1017/S1474747221000184","DOIUrl":"https://doi.org/10.1017/S1474747221000184","url":null,"abstract":"Mark Hyde and Rory Shand’s book is a remarkably original and interesting admixture of two fields of study that do not often intersect: retirement pension design and political theory. Their starting point is a solid commitment to liberal theory, and their objective is to trace the most appropriate foundations for justifying retirement pension schemes that are both fair and efficient. The result is an inquiry into liberal normative justifications for pension designs within public policy analysis. The book has five chapters, the first being the introduction, the last, the conclusion. After singling out the primacy of liberty in their analysis, the introduction outlines each chapter’s mechanical structure: libertarian and utilitarian interpretations of the principles under consideration are pooled under the wide umbrella of classical liberalism, whilst prioritarian and luck egalitarian perspectives represent the liberal egalitarian camp. The following three chapters each analyse a relevant standard of consideration for pension design: need (Chapter 2), desert (Chapter 3) and citizenship (Chapter 4). Need and desert correspond respectively to the first two traditional pillars of pension schemes, functioning as their underlying justifications. A general liberal understanding of citizenship is deployed to tie together this exploration. Hyde and Shand open Chapter 2 with a definition of need as “the ‘minimum threshold’ of resources and opportunities that are necessary for agents to function optimally in a social context” (pp. 27–28). Classical liberals, narrowed down to libertarians and utilitarians, view the satisfaction of need as a voluntary concern tied inextricably to the ability to exercise one’s freedom. Egalitarian liberals, on the other hand, endorse a considerable level of state support in satisfying need and hence improving the circumstances of liberty. Rawls and Dworkin (prioritarian and luck egalitarian, respectively) are inevitably introduced before appropriate pension designs are considered under the assessment criteria of access, adequacy and sustainability. Hyde and Shand conclude with a general endorsement of a universal citizen’s pension on account of being the most efficient available mechanism to provide for basic needs for all retirees, especially those closer to a minimum standard of living. Chapter 3 tackles economic desert. Contrasting positions within liberalism are acknowledged, and a split is considered between prioritarians and luck egalitarians on the topic of agent responsibility. Hyde and Shand endorse a broadly luck egalitarian stance when assessing various existing pension designs under the criteria of security, inclusiveness, and fittingness and then, accordingly, identify three priorities: neutralizing brute luck, optimizing option luck, and ensuring consistency of treatment. A defined benefit scheme is proposed, which could be complemented by state-provided remuneration along the lines of a contribution rate for unpai","PeriodicalId":46635,"journal":{"name":"Journal of Pension Economics & Finance","volume":"21 1","pages":"302 - 304"},"PeriodicalIF":1.2,"publicationDate":"2021-04-23","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"https://sci-hub-pdf.com/10.1017/S1474747221000184","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"45318967","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":4,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2021-04-14DOI: 10.1017/S1474747221000378
Philip Armour, David Knapp
Delaying claiming of Social Security old-age benefits past the earliest eligibility age, age 62, raises the monthly benefit for a person's life. Despite arguments from both proponents and opponents of delayed claiming in academia and public discourse, little is known about whether claiming decisions lead to substantively different outcomes. We compare differences in outcomes between age-62 claimants and otherwise similar later claimants that are matched on health, employment, and financial characteristics at age 60. We find that age-62 claimers are substantially less likely to work after 62 and have persistently lower income into their 70s. Differences in assets emerged in the 70s, with early claimants having lower wealth, but we find no differences in mortality or self-reported financial hardship. The difference in wealth is driven primarily by a growth in wealth among later claimants rather than substantial decumulation by age-62 claimants.
{"title":"The Consequences of Claiming Social Security Benefits at Age 62","authors":"Philip Armour, David Knapp","doi":"10.1017/S1474747221000378","DOIUrl":"https://doi.org/10.1017/S1474747221000378","url":null,"abstract":"Delaying claiming of Social Security old-age benefits past the earliest eligibility age, age 62, raises the monthly benefit for a person's life. Despite arguments from both proponents and opponents of delayed claiming in academia and public discourse, little is known about whether claiming decisions lead to substantively different outcomes. We compare differences in outcomes between age-62 claimants and otherwise similar later claimants that are matched on health, employment, and financial characteristics at age 60. We find that age-62 claimers are substantially less likely to work after 62 and have persistently lower income into their 70s. Differences in assets emerged in the 70s, with early claimants having lower wealth, but we find no differences in mortality or self-reported financial hardship. The difference in wealth is driven primarily by a growth in wealth among later claimants rather than substantial decumulation by age-62 claimants.","PeriodicalId":46635,"journal":{"name":"Journal of Pension Economics & Finance","volume":" ","pages":""},"PeriodicalIF":1.2,"publicationDate":"2021-04-14","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"46668033","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":4,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2021-04-05DOI: 10.1017/S1474747221000159
C. Kumru
One of the biggest challenges many countries face is the ageing population. Low fertility rates accompanied by an increase in longevity make the ageing population one of the most important issues the humanity should deal with it. This book tackles one of the important matters regarding the ageing population which is providing enough retirement income for retirees. Yet, this is not a trivial matter. As a result of a decrease in fertility rate and an increase in longevity, Pay As You Go type publicly run retirement schemes are not enough to fund individuals’ retirement alone. As a result, the supplementary retirement schemes are needed. In theory, rational individuals should have enough private savings to smooth out consumptions over time. Yet, this does not work in practice and hence, in addition to the public pension, forced savings mechanisms make sure that individuals have enough retirement income. These schemes can be either defined benefit (DB) or defined contribution (DC). In the DB schemes, pension funds are responsible to provide certain guaranteed benefits, i.e., the retirees do not bear risks. In the DC schemes, the investment return risk falls on the retirees. Over time, in the US, and many other places, pension funds move from DB types to DC types at increasing rates. In a reasonably high capital market return environment, forced saving mechanisms provide reasonably well insurance against the longevity risk whether they are DB of DC types. Yet, for a long period of time, the global economy faces low capital market returns. As a result, DB pension funds face a hard time to meet their obligations while DC pension plan holders face inadequate income support in their retirements. Under these circumstances, professional fund managers, current working generation, and current retirees need to come up with strategies to cope with this relatively new phenomenon. We also need more research on financing retirement in the era of low return and high longevity. Possible remedies are increasing savings, consuming less in retirement, working more, retiring late, and investing better. Yet, all these suggestions are not trivial to handle. Although there are a lot of discussions on financing retirement in the low return era, I was not aware of a comprehensive work until I read ‘How Persistent Low Returns Will Shape Saving and Retirement edited by Olivia S. Mitchell, Robert Clark, and Raimond Maurer’. This book provides an excellent survey of the problems and possible solutions regarding saving and retirement when the persistent low returns are the reality. The book contains 12 independent chapters categorised under three parts except the first chapter. The first chapter provided a brief overview of the book. The first part consists of five chapters from chapters two to six. The second chapter provides an explanation of why the interest rates are low. It is mainly focused on the political economy explanation of the independence of the US Federal Reserve S
{"title":"“How Persistent Low Returns Will Shape Saving and Retirement” edited by Olivia S. Mitchell, Robert Clark, and Raimond Maurer","authors":"C. Kumru","doi":"10.1017/S1474747221000159","DOIUrl":"https://doi.org/10.1017/S1474747221000159","url":null,"abstract":"One of the biggest challenges many countries face is the ageing population. Low fertility rates accompanied by an increase in longevity make the ageing population one of the most important issues the humanity should deal with it. This book tackles one of the important matters regarding the ageing population which is providing enough retirement income for retirees. Yet, this is not a trivial matter. As a result of a decrease in fertility rate and an increase in longevity, Pay As You Go type publicly run retirement schemes are not enough to fund individuals’ retirement alone. As a result, the supplementary retirement schemes are needed. In theory, rational individuals should have enough private savings to smooth out consumptions over time. Yet, this does not work in practice and hence, in addition to the public pension, forced savings mechanisms make sure that individuals have enough retirement income. These schemes can be either defined benefit (DB) or defined contribution (DC). In the DB schemes, pension funds are responsible to provide certain guaranteed benefits, i.e., the retirees do not bear risks. In the DC schemes, the investment return risk falls on the retirees. Over time, in the US, and many other places, pension funds move from DB types to DC types at increasing rates. In a reasonably high capital market return environment, forced saving mechanisms provide reasonably well insurance against the longevity risk whether they are DB of DC types. Yet, for a long period of time, the global economy faces low capital market returns. As a result, DB pension funds face a hard time to meet their obligations while DC pension plan holders face inadequate income support in their retirements. Under these circumstances, professional fund managers, current working generation, and current retirees need to come up with strategies to cope with this relatively new phenomenon. We also need more research on financing retirement in the era of low return and high longevity. Possible remedies are increasing savings, consuming less in retirement, working more, retiring late, and investing better. Yet, all these suggestions are not trivial to handle. Although there are a lot of discussions on financing retirement in the low return era, I was not aware of a comprehensive work until I read ‘How Persistent Low Returns Will Shape Saving and Retirement edited by Olivia S. Mitchell, Robert Clark, and Raimond Maurer’. This book provides an excellent survey of the problems and possible solutions regarding saving and retirement when the persistent low returns are the reality. The book contains 12 independent chapters categorised under three parts except the first chapter. The first chapter provided a brief overview of the book. The first part consists of five chapters from chapters two to six. The second chapter provides an explanation of why the interest rates are low. It is mainly focused on the political economy explanation of the independence of the US Federal Reserve S","PeriodicalId":46635,"journal":{"name":"Journal of Pension Economics & Finance","volume":"21 1","pages":"140 - 141"},"PeriodicalIF":1.2,"publicationDate":"2021-04-05","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"https://sci-hub-pdf.com/10.1017/S1474747221000159","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"48075829","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":4,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2021-03-29DOI: 10.1017/S1474747221000135
Akshay Shanker
Due to an ageing population, a larger and larger share of individuals in Europe and across the developed world will come to depend on retirement income, placing significant pressure on publicly funded pensions. As a result, discussion of retirement policy now includes not only public pensions, but private and occupational pensions and housing as forms of retirement saving and sources of retirement income. However, little is known about how public pensions (both publicly funded and contributory pensions), occupational and private pensions and housing interact. Retirement policy outcomes, in terms of income adequacy, equity and fiscal sustainability, will depend on the economic and behavioural relationships between these three potential sources of retirement income and the diverse policy and institutional contexts within countries. This book provides insight into the policy and institutional context across Europe by collecting eight papers, six of which are country case studies of Germany, Hungary, Ireland, Italy, the Netherlands and the United Kingdom (UK). The book is structured in four parts. Part I consists of two papers and overviews pensions and homeownership across Europe. Part II focuses on case-studies of countries with high homeownership and well-developed private and/or occupational pension markets (Ireland, the Netherlands and the UK), part III collects case-studies on countries with high-home ownership rates yet under-developed private and occupational pension systems (Hungary and Italy) and part IV gives a case study of Germany, with low home-ownership and an under-developed private and occupational pension system. Each case study details the historical trends and policy and institutional state of play regarding public pensions, occupational and private pensions and the housing and mortgage market. The first paper in part I by Eckardt summarizes data on household asset allocation, and it is striking to see the high levels of housing assets as a proportion of household wealth, with housing assets accounting for approximately 80% of household wealth across Europe. While housing as a share of household assets is consistent across Europe, there is diversity in the proportion of people owning a house, participation rates in mortgages and the age profile of homeownership, suggesting how differences in policies and social context may shape the distribution of housing and mortgaging behaviour. The high levels of housing assets in household balance sheets along with the dual role that housing can play – a form of shelter and a store of wealth for retirement – points to why housing is an important consideration for retirement policy making. However, Eckardt argues that little is known about the economic interaction between housing and pensions. In particular, whether housing substitutes or complements pension saving remains a question open to further research. In the second paper of part I, Megyeri analyses the relationship between old age pove
{"title":"Old-Age Provision and Homeownership – Fiscal Incentives and Other Public Policy Options M. Eckardt, J. Dötsch, & S. Okruch (eds) Springer International Publishing, 2018","authors":"Akshay Shanker","doi":"10.1017/S1474747221000135","DOIUrl":"https://doi.org/10.1017/S1474747221000135","url":null,"abstract":"Due to an ageing population, a larger and larger share of individuals in Europe and across the developed world will come to depend on retirement income, placing significant pressure on publicly funded pensions. As a result, discussion of retirement policy now includes not only public pensions, but private and occupational pensions and housing as forms of retirement saving and sources of retirement income. However, little is known about how public pensions (both publicly funded and contributory pensions), occupational and private pensions and housing interact. Retirement policy outcomes, in terms of income adequacy, equity and fiscal sustainability, will depend on the economic and behavioural relationships between these three potential sources of retirement income and the diverse policy and institutional contexts within countries. This book provides insight into the policy and institutional context across Europe by collecting eight papers, six of which are country case studies of Germany, Hungary, Ireland, Italy, the Netherlands and the United Kingdom (UK). The book is structured in four parts. Part I consists of two papers and overviews pensions and homeownership across Europe. Part II focuses on case-studies of countries with high homeownership and well-developed private and/or occupational pension markets (Ireland, the Netherlands and the UK), part III collects case-studies on countries with high-home ownership rates yet under-developed private and occupational pension systems (Hungary and Italy) and part IV gives a case study of Germany, with low home-ownership and an under-developed private and occupational pension system. Each case study details the historical trends and policy and institutional state of play regarding public pensions, occupational and private pensions and the housing and mortgage market. The first paper in part I by Eckardt summarizes data on household asset allocation, and it is striking to see the high levels of housing assets as a proportion of household wealth, with housing assets accounting for approximately 80% of household wealth across Europe. While housing as a share of household assets is consistent across Europe, there is diversity in the proportion of people owning a house, participation rates in mortgages and the age profile of homeownership, suggesting how differences in policies and social context may shape the distribution of housing and mortgaging behaviour. The high levels of housing assets in household balance sheets along with the dual role that housing can play – a form of shelter and a store of wealth for retirement – points to why housing is an important consideration for retirement policy making. However, Eckardt argues that little is known about the economic interaction between housing and pensions. In particular, whether housing substitutes or complements pension saving remains a question open to further research. In the second paper of part I, Megyeri analyses the relationship between old age pove","PeriodicalId":46635,"journal":{"name":"Journal of Pension Economics & Finance","volume":"21 1","pages":"298 - 300"},"PeriodicalIF":1.2,"publicationDate":"2021-03-29","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"https://sci-hub-pdf.com/10.1017/S1474747221000135","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"43515454","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":4,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2021-03-15DOI: 10.1017/S1474747221000147
Ariel BenYishay
During this isolated COVID-19 existence, many of us long for the chance to socialize. But there’s one social experience that many economists might not miss: finding oneself in an argument with a non-economist acquaintance about some public policy measure or predictions about where the economy is headed. Why does this happen so frequently? Why do surveys show that economists are quite unpopular and that the general public often strongly disagrees with economists’ views – even on topics where economists offer extensive evidence in support of their theories? The new book by Abhijit Banerjee and Esther Duflo, Good Economics for Hard Times, starts from the premise that there is something amiss when economists are so unpopular and distrusted, and when their perspectives diverge from so many other people’s views (and lived experiences). At the heart of the book is a basic question aimed at economists themselves: Where have we gone wrong? One major clue is that most theory begins from models with few transition costs; most assume people can seamlessly move across sectors and geographies to find their most rewarding opportunities and acquire the new skills needed for these opportunities. From the book’s outset, Banerjee and Duflo point out that this does not fit the facts: for example, if anything, migration is far too rare given the relatively large differences in real wages. The factors of production – particularly human labor – are far more ‘sticky’ than we think they are (or ought to be). The authors go on to argue that this is not simply a matter of a missing term in a theory that would better fit the data. Very few economics studies consider dignity, autonomy, or a sense of purpose explicitly as a goal or outcome for human choices – nor the frustration and disillusionment that result without these. Incorporating such concepts might lead much of economics to quite different conclusions. As Banerjee and Duflo argue, ‘restoring human dignity to its central place... sets off a profound rethinking of economic priorities and the ways in which societies care for their members, particularly when they are in need’. In this spirit, Banerjee and Duflo follow in the footsteps of another Nobel-winning development economist, Amartya Sen, who broadened our understanding of poverty and growth to incorporate human capabilities. The book is organized into two sections: in the first, the authors present widely held opinions of the general public that contrast the evidence-based consensus among economists. For example, popular views of immigration are heavily distorted by racist alarmism and overreliance on a simplistic interpretation of labor demand that wrongly suggests immigration hurts natives’ economic prospects. In contrast, evidence from economics studies in settings as diverse as lava-engulfed Icelandic islands, the lifting of the Soviet restrictions on migration to Israel, and the Mariel boatlift of Cubans to Miami has shown little in the way of negative impac
{"title":"Good Economics for Hard Times By Esther Duflo and Abhijit V. Banerjee","authors":"Ariel BenYishay","doi":"10.1017/S1474747221000147","DOIUrl":"https://doi.org/10.1017/S1474747221000147","url":null,"abstract":"During this isolated COVID-19 existence, many of us long for the chance to socialize. But there’s one social experience that many economists might not miss: finding oneself in an argument with a non-economist acquaintance about some public policy measure or predictions about where the economy is headed. Why does this happen so frequently? Why do surveys show that economists are quite unpopular and that the general public often strongly disagrees with economists’ views – even on topics where economists offer extensive evidence in support of their theories? The new book by Abhijit Banerjee and Esther Duflo, Good Economics for Hard Times, starts from the premise that there is something amiss when economists are so unpopular and distrusted, and when their perspectives diverge from so many other people’s views (and lived experiences). At the heart of the book is a basic question aimed at economists themselves: Where have we gone wrong? One major clue is that most theory begins from models with few transition costs; most assume people can seamlessly move across sectors and geographies to find their most rewarding opportunities and acquire the new skills needed for these opportunities. From the book’s outset, Banerjee and Duflo point out that this does not fit the facts: for example, if anything, migration is far too rare given the relatively large differences in real wages. The factors of production – particularly human labor – are far more ‘sticky’ than we think they are (or ought to be). The authors go on to argue that this is not simply a matter of a missing term in a theory that would better fit the data. Very few economics studies consider dignity, autonomy, or a sense of purpose explicitly as a goal or outcome for human choices – nor the frustration and disillusionment that result without these. Incorporating such concepts might lead much of economics to quite different conclusions. As Banerjee and Duflo argue, ‘restoring human dignity to its central place... sets off a profound rethinking of economic priorities and the ways in which societies care for their members, particularly when they are in need’. In this spirit, Banerjee and Duflo follow in the footsteps of another Nobel-winning development economist, Amartya Sen, who broadened our understanding of poverty and growth to incorporate human capabilities. The book is organized into two sections: in the first, the authors present widely held opinions of the general public that contrast the evidence-based consensus among economists. For example, popular views of immigration are heavily distorted by racist alarmism and overreliance on a simplistic interpretation of labor demand that wrongly suggests immigration hurts natives’ economic prospects. In contrast, evidence from economics studies in settings as diverse as lava-engulfed Icelandic islands, the lifting of the Soviet restrictions on migration to Israel, and the Mariel boatlift of Cubans to Miami has shown little in the way of negative impac","PeriodicalId":46635,"journal":{"name":"Journal of Pension Economics & Finance","volume":"21 1","pages":"296 - 297"},"PeriodicalIF":1.2,"publicationDate":"2021-03-15","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"https://sci-hub-pdf.com/10.1017/S1474747221000147","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"45356228","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":4,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2021-03-12DOI: 10.1017/S1474747221000160
A. Mason
Goodhart and Pradhan have offered us an ambitious and provocative book about the economic impact of demographic change in countries around the world. Two important demographic changes are at hand in high-income and many upper-middle-income countries – an increase in the share of the population at older ages and a decline of the rate of growth in the working-age population. In many countries in East Asia and in Eastern and Southern Europe, the changes will be particularly sharp with very old populations and declining working-age populations. Japan and Germany are at the forefront of these demographic changes but other countries will follow down similar paths – China being a notable case. Prior to these new changes in population, many countries had populations concentrated at the working-ages and they were experiencing historically high rates of growth in their working-age population. An important part of the book is its emphasis on the complementarity between growth in the working-age population and globalization. The authors emphasize that both Eastern Europe and China integrated into the global economy, but most of their story is about China. Not only did China become part of the global economy, dramatic reforms within China led to rapid growth in the manufacturing labor force that competed around the world. That successful economic transition in China has largely been completed and in combination with the shift to a new demographic regime, major economic changes are coming. The ambitious nature of the book is apparent when we consider the many economic outcomes that they address: economic growth, inflation, interest rates, inequality, and the tradeoff between unemployment and inflation. Not to limit themselves, they also assess likely trends in populism, the public sector, dementia, employment among women and seniors, and saving rates. In some cases, the authors conclusions are mainstream but, in some instances, not at all. In particular, predictions by the authors of a sharp increase in real interest rates and inflation and a decline in inequality are likely to be challenged. The ambition of this book is a strength but it is also a weakness. Inevitably, important topics could have been examined with greater depth and with greater attention to the literature. For example, their discussion of the impact of fertility on saving emphasizes the timing of fertility, about which little is known, and ignores the level of fertility, about which a great deal has been written. The role of human capital is a neglected issue and very important to understanding economic developments in East Asia. As Becker and Murphy among others have noted, there is a strong tradeoff between fertility and human capital investment. In low fertility, aging societies, seniors must rely on fewer workers (taxpayers) but those taxpayers will be more educated, more productive, and better able to provide old-age support. The challenges of investigating such complex issues as addres
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