This paper studies the heterogeneity of households’ present bias in a heterogeneous-agent model. Our model jointly matches the average marginal propensities to consume and the wealth distribution in the USA, even when all wealth is liquid. A fiscal stimulus targeting households in the bottom half of the wealth distribution improves the consumption response. A financial literacy campaign removing present bias gets naive households out of the debt trap but harms sophisticated households’ wealth accumulation due to a lower equilibrium interest rate. Finally, we show that a borrowing cost penalty and illiquidity both discipline excessive borrowing and are therefore potential remedies for present bias and naivete.

We study the effect of an immigration ban on the self-selection of immigrants along cultural traits, and the transmission of these traits to the second generation. We show theoretically that restricting immigration incentivizes to settle abroad individuals with higher attachment to their origin culture, who, under free mobility, would rather choose circular migration. Once abroad, these individuals tend to convey their cultural traits to their children. As a consequence, restrictive immigration policies can foster the diffusion of cultural traits across boundaries and generations. We focus on religiosity, which is one of the most persistent and distinctive cultural traits, and exploit the 1973 immigration ban in West Germany (Anwerbestopp) as a natural experiment. Through a diff-in-diff analysis, we find that second generations born to parents treated by the Anwerbestopp show higher religiosity.

This study investigates whether wording a promotional marketing message as originating from the US government vs. the US president impacts consumers’ responsiveness to the message. Using a discrete choice experiment, it examines consumer responsiveness to President Biden’s order promoting domestic production. Results indicate that consumers are willing to pay a premium for domestically produced tomatoes, with variations based on political affiliations and product attributes like organic labeling and farm employment practices. However, findings on the significance of information treatment effects are mixed, suggesting that consumer responsiveness is unaffected by wording the message as originating from a broad political body vs. a specific politician.

We measure crypto and financial literacy using microdata from the Bank of Canada’s Bitcoin Omnibus Survey. Our crypto literacy measure is based on three questions covering basic aspects of Bitcoin. The financial literacy measure we use is based on three questions covering basic aspects of conventional finance (the “Big Three”). We find that a significant share of Canadian Bitcoin owners have low crypto knowledge and low financial literacy. We also find gender differences in crypto literacy among Bitcoin owners, with female owners scoring lower in Bitcoin knowledge than male owners. We do not, however, find significant gender differences in financial literacy amongst Bitcoin owners. In contrast, non-owners show gender differences in both crypto and financial literacy.

Strengthening climate resilience requires farmers to select climate adaptation strategies like weather index insurance. Acknowledging that decision-making is not isolated, this study explores simultaneous peer imitation in climate adaptation choices consisting of index insurance, savings, and their interaction. We present results from a lab-in-the-field experiment that introduces innovative index insurance. Findings indicate significant and strong imitation attitudes. While the bigger peer surrounding seems relevant in the static perspective, the closer surrounding gains importance in the dynamic perspective. Additionally, credit, trust, and practical understanding stimulate adoption. Community-based extension interventions and credit-bundled products may increase index insurance diffusion and improve climate resilience.

The COVID-19 pandemic itself constitutes an environment for people to experience the potential loss of control and freedom due to social distancing measures and other government orders. Variety-seeking has been treated as a mechanism to regain a sense of self-control. Using Machine Learning model and household-level data with a focus on the wine market in the United States, this study showcases the changing variety-seeking behavior over the pandemic year of 2020, in which people’s perception of the status of restriction measures influences the degree of their use of variety-seeking behavior as a coping strategy. It is the shopping pattern and store environments that drive the behavioral responses in wine purchases to freedom-limited circumstances. Coupon use is associated with a lower variety-seeking tendency at the beginning of the stay-at-home order, but the variety level resumes when more time has passed in the restriction periods. Variety-seeking tendency increases with shopping frequency at the beginning of the social distancing measure but decreases to a level lower than all the non-restriction periods.

This paper develops a general equilibrium life-cycle model with endogenous retirement that focuses on the interplay between old-age pensions (OAP) and disability pensions (DP) in Germany. Germany has introduced a phased-in increase of the normal retirement age from age 65 to 67 (Reform 2007) and closed off other routes to early OAP retirement. This reform was followed by a phased-in expansion of future DP benefits (Reform 2018). Our simulation results indicate that the first reform will induce a shift toward DP retirement, while the Reform 2018 will even neutralize the financial and economic gains of the Reform 2007 if current DP eligibility and benefit rules remain unchanged. We therefore highlight the increased relevance of DP when reforming the retirement system and retirement incentives in an aging society. Securing the financial stability of public pensions requires activation and rehabilitation of sick elderly in the workforce and tight access to disability benefits.

Compliance with hygiene and other safety measures in the workplace was an important component of society's strategy for reducing infections at the onset of the COVID-19 pandemic, in particular before vaccinations were widely available. We report the results of a field trial of well-established behavioural interventions (social norms, pledging and messenger effects) we implemented to improve compliance with such measures in an occupational setting. We use daily reports of own and other's behaviour to assess the effects of these interventions and supplement these subjective (self-reported) measures with objective data on hand sanitiser usage. The behavioural interventions tested have statistically significant but quantitatively moderate effects on subjective compliance measures and minimal effects on hand sanitiser usage. All effects of our interventions are short-term in nature and dissipate shortly after implementation. Our findings thus provide at most weak support for the notion that typical behavioural interventions can help support compliance with infection prevention measures in the workplace.

Expert and peer reviews and popularity are freely available both on the Internet and in printed materials for a variety of food products. Using two experimental studies with non-hypothetical tastings and auctions, we explore the impact of peer tasting popularity, actual peer ratings, and expert ratings on demand for wines consumers can or have tasted. We find that higher own wine ratings are associated with higher willingness to pay (WTP). Morevoer, higher peer and expert rating scores increase consumer WTP for wine even after controlling for the impact of consumers’ own ratings. Observed peer popularity also increases WTP for preferred wines.

Consumer choice of differentiated products, such as wine, depends on the composition of the choice set consumers are choosing from. However, choice sets are often situationally defined through wine-tasting lists or displayed wines in a particular tasting and sales environment. In this paper, we use an experiment to explicitly modify the saliency of wine options available outside the tasting room choice set and the amount of sensory information available about the wines before wine tasting. We explicitly test whether consumer regret and fear of missing out on alternative options or consumer search costs are more likely to drive behavior around large choice sets. We find that increasing the saliency of outside options decreases one's propensity to taste the wines available for tasting and purchase immediately, while changing search costs through sensory descriptions does not affect tasting behavior. This provides support for the anticipated regret and fear of missing out motivations for behavior around large wine-tasting lists.

This study is a reconsideration of a theme, connecting The Theory of Moral Sentiments and The Wealth of Nations, namely the interplay between moral sentiments and self-interest. Two aspects of the theme are examined. The first consists of an interpretation of the so-called ‘das Adam Smith Problem’, an issue originally pointed out by nineteenth-century German scholars. The second, building on the insight of Smith on the association of shame and poverty, reports on recent research that seeks to examine how emotions impact the perception of economic interests and behaviour in marginalized groups.

This study is an attempt to determine whether the need to get hydropower project appraisals perfectly right during the pre-construction phase, so as to prevent significant overruns along with benefit shortfalls, should supersede the need to deliver projects at the earliest possible time so as to meet the needs of the people. To achieve the study objective, we test whether the Hiding Hand principle is predominantly benevolent or malevolent. We argue that if the Hiding Hand is benevolent, then project stakeholders are better off focusing on the quick delivery of power projects; however, if it is malevolent, then more attention should be given to perfecting project appraisals. It transpires from the statistical analysis that the Benevolent Hiding Hand dominates the Malevolent Hiding Hand in the selected World Bank-financed hydropower projects (33% v. 21%), and that ultimately, 75% of the projects were even more successful than anticipated—while 25% of the projects failed. Our findings further show that while a total loss of 2.335 billion USD in the sampled dams was caused by the Malevolent Hiding Hand, 11.259 billion USD was gained as a result of the Benevolent Hiding Hand. The predominance of the Benevolent Hiding Hand justifies placing some weight on proceeding with hydropower projects that show significant promise even if all the implantation risks are not fully quantified at the appraisal stage, especially in developing countries.

We study the impact of changing the existing terminology to describe the rules governing Social Security retirement benefits. We provided respondents from a nationally representative online panel with information pertinent to the decision of when to claim Social Security retirement benefits. The content of the information treatments was identical for all respondents, but some were randomly given an alternative set of terms to refer to the key claiming ages (the experimental treatment group), while others were given the current terms (the control group). Despite the minimal nature of the change, there were significant differences in outcomes. Those in the treatment group spent less time reading the information, but their understanding of the Social Security program improved more than the control group. In addition, the treatment delayed retirement claiming intentions by an average of about two and a half months and increased the recommended claiming age to vignette characters by a similar magnitude. The effects were particularly strong for those with low levels of financial literacy. The relative gains in knowledge persisted several months after the treatment.

This article is a response to a piece in this journal, by David Bartram, which questions the validity of a vast literature establishing consistently a U-shaped relationship between age and happiness. There are 618 published studies that find U-shapes in that relationship in 145 countries, and only a handful that do not. Of the 30 countries that Bartram (2023, National Institute Economic Review, 1–15) examines, he finds U-shapes in 18. We show compelling evidence of U-shapes in the remaining dozen countries. Supporting evidence of a U-shape is found in objective measures including deaths of despair, depression, stress and pain that are worst in midlife.

The increase in pension eligibility ages in Australia, as elsewhere, throws into relief the consequences of gender inequality in employment. Because of career histories in lower paid and more insecure employment, a higher percentage of women than men are dependent on the age pension rather than on superannuation or savings and investments, and so will be disproportionately affected by deferred access. Yet, fewer women than men hold the types of ‘good jobs’ that will sustain them into an older age. Women are more likely to be sequestered in precarious employment, with reduced job quality and a greater potential for premature workforce exit. This article counterposes macro-level data drawn from national cross-sectional labour force statistics and the longitudinal Household Income and Labour Dynamics Australia survey, with case study analysis, based on interviews with 38 women in midlife insecure jobs, in order to identify the types of life course and labour market barriers that contribute to women’s reliance on the pension and the systemic disadvantage that will render them particularly vulnerable to any further erosion of this safety net. The analysis moves between this empirical evidence and a discussion, drawing on the theoretical literature, of the failure in equal opportunity endeavours over recent decades and what this means for later life workforce participation for women.

The current approach to the study of property cannot distinguish the causes of human action from the consequences of human action. It also cordons off morality thereby opening a hole in how property rights work. The scientific difficulty is that our analysis must constantly shift between the individual, their local community, and the larger polity in which both are embedded, in order to explain simultaneously different levels of consequences with different kinds of causes. The difficulty is made worse when we construct mental models without the human mind. My framework leaves the human mind in. Since Armen Alchian and Harold Demsetz, the study of property rights has had a decidedly external stance: the institution imposes itself on the individual from the outside. The problem of property rights, however, also calls for inquiry from the inside out of human agency, because in the study of property, ideas are primary.

This analysis introduces a conceptual framework for economic enfranchisement and studies its effect on an individual’s likelihood to set strong financial goals. A conceptual and empirical model is developed to investigate how economic enfranchisement influences an individual’s likelihood to set a goal and the strength of that goal. The empirical analysis employs an ordered probit to account for the two-stage goal-setting and goal strength decision process. Results show that economic enfranchisement has a significant effect on an individual’s likelihood to set financial goals where more enfranchised individuals are more likely to set strong goals than their disenfranchised counterparts.

A property right, the standard view maintains, is a proper subset of the most complete and comprehensive set of incidents for full ownership of a thing. The subsidiary assumption is that the pieces that are property rights compose the whole that is ownership or property, i.e., that property rights explain property. In reversing the standard view I argue that (1) a custom of intelligent and meaningful human action explains property and that (2) as a custom, property is a historical process of selecting actions conditional on the context. My task is to explain how a physical world of human bodies with minds that feel, think, know, and want gives rise to a custom of property with meaning and purpose. Property is primary because ideas are primary.

We analyze how taxes affect the choice between a life-long annuity and a one-off lump sum payment, the so-called annuitization decision. Using administrative data from a large Swiss pension fund, we impute taxes for the lump sum and the life-long annuity option. We show that taxes can explain a significant part of the variation in annuity rates. Exploiting kinks in the tax schedule of the one-off lump sum, we further find evidence for tax optimization strategies. Our findings suggest that individuals react strongly to tax incentives when making retirement choices.

I develop a dynamic model of consumption variety in status goods by introducing a realistic aspect that is new in the existing literature—that a good will not carry status appeal unless it is advertised. As advertisements will divert resources from new product research, growth in new products will be reduced. However, status-good advertisements also enhance distinctiveness of a good and increase a firm’s profit. This will motivate more researches. With the two effects offsetting each other, the original market bias in a standard product-development model—insufficient research due to a general knowledge spillover—cannot be overcome. While introducing advertising into models of this kind does not reverse the original welfare implication of suboptimal growth, this makes available a new and better intervention option—taxing advertisements. This tax is superior to consumption tax, the conventional solution to inefficient status competition, as consumption tax is found to be ineffective in the present model. It is also superior to research subsidies, the conventional solution to suboptimal growth, as subsidies must be financed and is not a self-sufficient policy.