Suchergebnisse

Traditional economic theories assume that individuals are endowed with certain risk preferences that are unaltered by experiences. However, recent evidence indicates that macroeconomic shocks do have an effect on an individual's willingness to take financial risks. In the context of investment decisions, we examine empirically whether an individual's risk preferences are affected by other types of traumatic life experiences. Using a unique proprietary data set, we investigate whether personal traumatic experiences—such as the combat experiences of veterans—have long‐term effects on financial risk‐taking behavior. We find that having experienced combat decreases the probability of investing in risky assets. Key policy implications are noted. (JEL G11, D14)

AbstractA conceptual framework is advanced that determines world biodiesel prices, the policy parameters in the country establishing the price, and the binding mandate or tax exemption. The effect of a tax credit differs with international trade compared to traditional closed economy analysis. The U.S. "splash & dash" program, with its $1/gallon tax credit, had minimal impacts on European Union (EU) biodiesel producer profits. Reduced world oil prices and EU tax exemptions, as well as increased rapeseed oil prices, are shown to have reduced the profitability of EU biodiesel production. EU imports from the United States can be beneficial for EU taxpayers, fuel consumers, and U.S. biodiesel producers.

Abstract.  State‐sponsored lotteries are a lucrative source of revenue. Despite their low payout rates, lotteries are extremely popular, particularly among low‐income citizens. State officials laud the benefits of lottery proceeds and promote the fun and excitement of participation. This entertainment value is one explanation for lottery demand by the poor: individuals with lower incomes substitute lottery play for other entertainment. Alternatively, low‐income consumers may view lotteries as a convenient and otherwise rare opportunity for radically improving their standard of living. Bad times may cause desperation, and the desperate may turn to lotteries in an effort to escape hardship. This study tests these competing explanations. We examine lottery sales data from 39 states over 10 years and find a strong and positive relationship between sales and poverty rates. In contrast, we find no relationship between movie ticket sales, another inexpensive form of entertainment, and poverty rates.

AbstractAgricultural and other fields of economics have always co‐evolved and benefitted from each other's insights. Over time, a general convergence of all social sciences began, and various fields of psychology, sociology, anthropology, and political science started to overlap with general and agricultural economics. Within economics, it was especially the rise of behavioral economics, that has steered the field toward the other social sciences. It departs from the assumption of perfectly rational expected utility maximizers and allows for greater diversity in decision‐makers' objectives and constraints. Agricultural economics has been early to recognize the need to make economic choice models more realistic. This can be explained by the particularities of agricultural economics and agriculture. Agricultural economists are tasked with solving specific, practical problems, and thus behavioral deviations from model predictions have always been salient and relevant to policy recommendations. Then, farmers—and to some extent also consumers—make choices in particularly complex and uncertain environments and must use all strategic tools at their disposal to deal with their "bounded rationality". These include the reliance on culture and other heuristics. Agricultural economics continues to synergize economic theory and practice with insights from other disciplines and real‐world experiences and is an important driver towards further unification of all social sciences.