Lindsay Jacobs, Elizabeth Llanes, Kevin B. Moore, Jeffrey Thompson, A. Volz
Defined benefit (DB) pensions and Social Security are important resources for financing retirement in the USA. However, these illiquid, nonmarket forms of wealth are typically excluded from measures of net worth. To the extent that these broadly held resources substitute for savings, measures of wealth inequality that do not account for DB pensions and Social Security may be overstated. This article develops an alternative, expanded wealth concept, augmenting net worth data from the Survey of Consumer Finances with estimates of DB pension and expected Social Security wealth. We explore the concentration of wealth among households ages 40–59 and find that (i) including DB pension and Social Security results in markedly lower measures of wealth concentration and (ii) trends toward higher wealth inequality over time, while moderated, are still present. Simulation exercises show that reductions in Social Security benefits significantly increase wealth concentration for the youngest birth-year cohorts.
{"title":"Wealth concentration in the USA using an expanded measure of net worth","authors":"Lindsay Jacobs, Elizabeth Llanes, Kevin B. Moore, Jeffrey Thompson, A. Volz","doi":"10.1093/oep/gpab054","DOIUrl":"https://doi.org/10.1093/oep/gpab054","url":null,"abstract":"\u0000 Defined benefit (DB) pensions and Social Security are important resources for financing retirement in the USA. However, these illiquid, nonmarket forms of wealth are typically excluded from measures of net worth. To the extent that these broadly held resources substitute for savings, measures of wealth inequality that do not account for DB pensions and Social Security may be overstated. This article develops an alternative, expanded wealth concept, augmenting net worth data from the Survey of Consumer Finances with estimates of DB pension and expected Social Security wealth. We explore the concentration of wealth among households ages 40–59 and find that (i) including DB pension and Social Security results in markedly lower measures of wealth concentration and (ii) trends toward higher wealth inequality over time, while moderated, are still present. Simulation exercises show that reductions in Social Security benefits significantly increase wealth concentration for the youngest birth-year cohorts.","PeriodicalId":48092,"journal":{"name":"Oxford Economic Papers-New Series","volume":" ","pages":""},"PeriodicalIF":1.2,"publicationDate":"2021-10-18","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"42027226","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}
This article investigates whether self-assessed states of unhappiness are persistent. To disentangle state dependence from unobserved heterogeneity in life satisfaction, it estimates a dynamic ordered Logit with correlated random effects on longitudinal data in France, the UK, Australia, and Germany. The persistence of life satisfaction is found to be heterogeneous; people already happy with their lives tend to remain happy while unhappiness sounds more transitory. Overall, there is no empirical evidence of unhappiness traps: rather, every individual faces the risk of experiencing some temporary spell of low subjective well-being in her life course.
{"title":"The persistence of unhappiness: trapped into despair?","authors":"L. Wilner","doi":"10.1093/oep/gpab055","DOIUrl":"https://doi.org/10.1093/oep/gpab055","url":null,"abstract":"\u0000 This article investigates whether self-assessed states of unhappiness are persistent. To disentangle state dependence from unobserved heterogeneity in life satisfaction, it estimates a dynamic ordered Logit with correlated random effects on longitudinal data in France, the UK, Australia, and Germany. The persistence of life satisfaction is found to be heterogeneous; people already happy with their lives tend to remain happy while unhappiness sounds more transitory. Overall, there is no empirical evidence of unhappiness traps: rather, every individual faces the risk of experiencing some temporary spell of low subjective well-being in her life course.","PeriodicalId":48092,"journal":{"name":"Oxford Economic Papers-New Series","volume":" ","pages":""},"PeriodicalIF":1.2,"publicationDate":"2021-10-09","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"45863359","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}
Previous research has shown that the course of income inequality of a US cohort in retirement depends on the inequality measure used. For example, the variance of logarithmic income, a bottom sensitive measure, displays a decidedly declining trend. This study examines the mechanisms that underlie these income inequality changes as a cohort enters their retirement years using longitudinal data over a 20-year period and a variety of methods. In particular, individual income trajectories and income instability just before and in retirement are investigated. The results show (i) the variance of logarithmic income falls as the cohort ages primarily due to a reduction in income instability; (ii) on average, the rich and poor get poorer as they age into retirement; and (iii) consistent with previous research, a person’s place in the retirement income distribution is largely determined before retirement.
{"title":"Longitudinal patterns in cohort income inequality, income instability, and income trajectories of a US cohort on the cusp of retirement","authors":"T. Hungerford","doi":"10.1093/oep/gpab041","DOIUrl":"https://doi.org/10.1093/oep/gpab041","url":null,"abstract":"\u0000 Previous research has shown that the course of income inequality of a US cohort in retirement depends on the inequality measure used. For example, the variance of logarithmic income, a bottom sensitive measure, displays a decidedly declining trend. This study examines the mechanisms that underlie these income inequality changes as a cohort enters their retirement years using longitudinal data over a 20-year period and a variety of methods. In particular, individual income trajectories and income instability just before and in retirement are investigated. The results show (i) the variance of logarithmic income falls as the cohort ages primarily due to a reduction in income instability; (ii) on average, the rich and poor get poorer as they age into retirement; and (iii) consistent with previous research, a person’s place in the retirement income distribution is largely determined before retirement.","PeriodicalId":48092,"journal":{"name":"Oxford Economic Papers-New Series","volume":" ","pages":""},"PeriodicalIF":1.2,"publicationDate":"2021-08-30","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"44240207","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}
This article discusses the role of macroprudential policy in a monetary union. It focuses on three main points. First, macroprudential policy has the objective of mitigating financial stability risks by preventing the build-up of vulnerabilities and increasing resilience. Second, many vulnerabilities reflect country-specific preferences and interact with national institutions. Monitoring and addressing financial stability risks at the national level are thus important. This holds particularly in a monetary union with economies that are highly integrated financially, but heterogeneous along important dimensions that can significantly affect financial stability risks. Third, cross-border externalities and spillovers call for the coordination of national macroprudential policies at the supranational level. This includes mechanisms to account for a potential inaction bias. Methodologically, the article draws on existing literature adding new empirical evidence on financial integration and adjustment to spillovers in the euro area.
{"title":"Why macroprudential policy matters in a monetary union","authors":"C. Buch, M. Buchholz, K. Knoll, Benjamin Weigert","doi":"10.1093/oep/gpab036","DOIUrl":"https://doi.org/10.1093/oep/gpab036","url":null,"abstract":"\u0000 This article discusses the role of macroprudential policy in a monetary union. It focuses on three main points. First, macroprudential policy has the objective of mitigating financial stability risks by preventing the build-up of vulnerabilities and increasing resilience. Second, many vulnerabilities reflect country-specific preferences and interact with national institutions. Monitoring and addressing financial stability risks at the national level are thus important. This holds particularly in a monetary union with economies that are highly integrated financially, but heterogeneous along important dimensions that can significantly affect financial stability risks. Third, cross-border externalities and spillovers call for the coordination of national macroprudential policies at the supranational level. This includes mechanisms to account for a potential inaction bias. Methodologically, the article draws on existing literature adding new empirical evidence on financial integration and adjustment to spillovers in the euro area.","PeriodicalId":48092,"journal":{"name":"Oxford Economic Papers-New Series","volume":" ","pages":""},"PeriodicalIF":1.2,"publicationDate":"2021-08-23","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"43818928","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}
We develop an empirical approach for quantifying the value judgements implicit in the relative treatment of demographic subgroups by an entire tax and transfer system. The new approach can be applied to household survey data, allowing us to evaluate the evolution of these value judgements using UK data reported at annual intervals between 1968 and 2018. The results provide the first quantitative evaluations of widely cited substantial improvements in tax and transfer treatment enjoyed by some population subgroups—particularly families with children and age pensioners—relative to the wider population.
{"title":"The evolution of tax implicit value judgements in the UK: 1968–2018","authors":"J. Ven, N. Hérault","doi":"10.1093/oep/gpab043","DOIUrl":"https://doi.org/10.1093/oep/gpab043","url":null,"abstract":"\u0000 We develop an empirical approach for quantifying the value judgements implicit in the relative treatment of demographic subgroups by an entire tax and transfer system. The new approach can be applied to household survey data, allowing us to evaluate the evolution of these value judgements using UK data reported at annual intervals between 1968 and 2018. The results provide the first quantitative evaluations of widely cited substantial improvements in tax and transfer treatment enjoyed by some population subgroups—particularly families with children and age pensioners—relative to the wider population.","PeriodicalId":48092,"journal":{"name":"Oxford Economic Papers-New Series","volume":" ","pages":""},"PeriodicalIF":1.2,"publicationDate":"2021-08-23","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"42689962","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}
Whether economic growth improves the human lot is a matter of conditions. We focus on Japan, a country which shifted in the 1990s from a pattern of rampant economic growth and stagnant well-being, to one of modest growth and increasing well-being. We discuss concurrent policy reforms and analyse the changes in well-being. In particular, we assess whether the correlates of the increase in well-being are consistent with those expected from the reforms. We apply Blinder–Oaxaca decomposition to World Values Survey data. Results show that improved conditions for the elderly, parents and women, that is the primary groups targeted by the reforms, correlate with well-being increases. This evidence is consistent with the hypothesis that social safety nets can make economic growth compatible with sustained increases in well-being.
{"title":"Are economic growth and well-being compatible? Welfare reform and life satisfaction in Japan","authors":"F. Sarracino, K. O’Connor, H. Ono","doi":"10.1093/oep/gpab038","DOIUrl":"https://doi.org/10.1093/oep/gpab038","url":null,"abstract":"\u0000 Whether economic growth improves the human lot is a matter of conditions. We focus on Japan, a country which shifted in the 1990s from a pattern of rampant economic growth and stagnant well-being, to one of modest growth and increasing well-being. We discuss concurrent policy reforms and analyse the changes in well-being. In particular, we assess whether the correlates of the increase in well-being are consistent with those expected from the reforms. We apply Blinder–Oaxaca decomposition to World Values Survey data. Results show that improved conditions for the elderly, parents and women, that is the primary groups targeted by the reforms, correlate with well-being increases. This evidence is consistent with the hypothesis that social safety nets can make economic growth compatible with sustained increases in well-being.","PeriodicalId":48092,"journal":{"name":"Oxford Economic Papers-New Series","volume":" ","pages":""},"PeriodicalIF":1.2,"publicationDate":"2021-08-23","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"44198512","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}
Binary categorizations refer to the behaviour for which a decision maker puts the alternatives from a menu into binary categories (authorization category and rejection category). For example, a judge approves/denies parole for inmates, a doctor administers/withholds treatment to patients, and a teacher passes/fails essays. Categorizations are observed to exhibit randomness in various contexts, but the stochasticity in categorizations has received little attention in economic studies. We consider stochastic categorizations using a logit categorization function, which expresses the probability of authorizing an alternative from a menu in a ‘logit-like’ form. We characterize the model from a simple condition on authorization frequencies. Furthermore, we derive an empirical version of our model, which not only provides insight into applications of the model, but also gives an intuitive interpretation of the stochasticity in categorizations. We use simple examples to show that our model can bring new insights and research possibilities in the economic studies.
{"title":"Logit function in stochastic categorizations","authors":"Kai Wang","doi":"10.1093/oep/gpab047","DOIUrl":"https://doi.org/10.1093/oep/gpab047","url":null,"abstract":"\u0000 Binary categorizations refer to the behaviour for which a decision maker puts the alternatives from a menu into binary categories (authorization category and rejection category). For example, a judge approves/denies parole for inmates, a doctor administers/withholds treatment to patients, and a teacher passes/fails essays. Categorizations are observed to exhibit randomness in various contexts, but the stochasticity in categorizations has received little attention in economic studies. We consider stochastic categorizations using a logit categorization function, which expresses the probability of authorizing an alternative from a menu in a ‘logit-like’ form. We characterize the model from a simple condition on authorization frequencies. Furthermore, we derive an empirical version of our model, which not only provides insight into applications of the model, but also gives an intuitive interpretation of the stochasticity in categorizations. We use simple examples to show that our model can bring new insights and research possibilities in the economic studies.","PeriodicalId":48092,"journal":{"name":"Oxford Economic Papers-New Series","volume":" ","pages":""},"PeriodicalIF":1.2,"publicationDate":"2021-08-23","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"44263060","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}
The conventional wisdom summarized in the adage ‘misery loves company’ suggests that suffering can be made easier to bear if it is also shared by others. Given increasing interest in subjective well-being and happiness as constituents of national wealth and priorities in policy-making and organizational management, we empirically investigate the validity of this phenomenon in order to explore whether it may be possible to mitigate decreases in subjective well-being simply by leveraging social comparison. We implement an experimental survey designed to gauge the suitability of this strategy on a representative sample of approximately 2,000 US residents. Our results indicate that, while this hypothesis is indeed borne out among certain populations within the sample, we find stronger and more widespread support for the opposite phenomenon, suggesting rather that ‘happiness hates company’. These novel findings can inform policy interventions aiming to enhance well-being and point to promising avenues for further work.
{"title":"Does misery love company? An experimental investigation","authors":"K. Farrow, G. Grolleau, L. Ibanez","doi":"10.1093/oep/gpab011","DOIUrl":"https://doi.org/10.1093/oep/gpab011","url":null,"abstract":"\u0000 The conventional wisdom summarized in the adage ‘misery loves company’ suggests that suffering can be made easier to bear if it is also shared by others. Given increasing interest in subjective well-being and happiness as constituents of national wealth and priorities in policy-making and organizational management, we empirically investigate the validity of this phenomenon in order to explore whether it may be possible to mitigate decreases in subjective well-being simply by leveraging social comparison. We implement an experimental survey designed to gauge the suitability of this strategy on a representative sample of approximately 2,000 US residents. Our results indicate that, while this hypothesis is indeed borne out among certain populations within the sample, we find stronger and more widespread support for the opposite phenomenon, suggesting rather that ‘happiness hates company’. These novel findings can inform policy interventions aiming to enhance well-being and point to promising avenues for further work.","PeriodicalId":48092,"journal":{"name":"Oxford Economic Papers-New Series","volume":" ","pages":""},"PeriodicalIF":1.2,"publicationDate":"2021-08-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"41765976","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}
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