Equity Premium with Habits, Wealth Inequality and Background Risk

In an exchange economy with endowment inequality, we investigate how preferences with external habits affect the equity risk premium. We show that the dynamics of external additive habits with wealth inequality are complex when a background risk is present. It is ambiguous whether wealth inequality will increase or decrease the equity premium even when the income uncertainty is low. This result extends literature by suggesting that wealth inequality has a small role in explaining asset pricing puzzles.

Generational Responsibility in Consumption as a Response to Global Economic Crises

The rise of Asian and the stagnation of Western middle classes over the last thirty years have resulted in gradual convergence of income of large parts of the world’s population. Recent global crises—the Great Recession and the COVID-19 pandemic—have led to a decline in income and increase in income uncertainty. Rise in consumption of lower quality goods of shorter durability and an overall decline in demand and economic activity resulted as challenges to the global economy. In this paper, we argue that generational responsibility in consumption can be an environmentally sustainable response to crises which enables the economies to overcome the crisis of confidence and reaffirms community ties. As an element of long-term orientation in consumption, generational responsibility is a cultural phenomenon dependent on solidarity within family and the wider community. It is characterized by consideration of consequences of consumption choices on the environment, and the abundance of savings and the usability of goods to be inherited by future generations. For companies, willing to revisit their traditional business models and incorporate principles of sustainability in their competitive strategies, promotion of generational responsibility can become a new source of competitive advantage and a driver of economic recovery.

Dynastic Precautionary Savings

This article documents that parents accumulate savings to insure their children against income risk. I refer to this behaviour as dynastic precautionary saving. Using a sample of matched parent–child pairs from the Panel Study of Income Dynamics, I test for dynastic precautionary savings by examining the response of parental consumption to the child’s permanent income uncertainty. I exploit variation in permanent income risk across age and industry–occupation groups to confirm that, all else equal, higher uncertainty in the child’s permanent income depresses parental consumption, indicating a precautionary saving motive across generations.

Perception and risk management strategies for ranchers and their determinants: a case study from Turkey

ABSTRACT: In this study, beef cattle farmers’ perceptions of risk and risk management strategies, and their determinants were analyzed using factor analysis and partial least squares regression analysis. The data set used in this study came from a survey conducted in Erzurum Province. The results demonstrated that variability in fodder price, insufficient farm income, uncertainty in government policies were perceived as the most important risks. Clean cattle shelter, off-farm income, monitoring and preventing livestock diseases were perceived as the most important risk management strategies. Results, also, demonstrated that some characteristics of farmers affected farmers’ perceptions. In this study, it was identified that the most important risk sources were economics-based. So, it was recommended that the government policy should be focused on preventing the fluctuations in input/output prices.

A Model of Relative Thinking

Fixed differences loom smaller when compared to large differences. We propose a model of relative thinking where a person weighs a given change along a consumption dimension by less when it is compared to bigger changes along that dimension. In deterministic settings, the model predicts context effects such as the attraction effect but predicts meaningful bounds on such effects driven by the intrinsic utility for the choices. In risky environments, a person is less likely to sacrifice utility on one dimension to gain utility on another that is made riskier. For example, a person is less likely to exert effort for a fixed monetary return if there is greater overall income uncertainty. We design and run experiments to test basic model predictions and find support for these predictions.

Sustainability of Mandatory Pension Insurance in the Circular Economy

The main characteristic of pension systems is financial stability. The authors will present some models of the pension system, economics models such as the theory of income uncertainty, overlapping generations' model. The authors will present the interrelation of employment, population, and circular economy, trying to improve the existing pension system in Serbia. The circular economy is a response to the growing needs of humanity. It is referred to as sustainable development in all the spheres of human life. The circular economies can also refer to the sustainability of the pension system, which is linked to the quality of life. The quality of life is part of sustainable development as its social component. The chapter provides an overview of the sustainability of the pension system by reducing the costs with employment increasing. As an example of good practice, the authors present Australia and Chile in a small analysis that indicates pension fund sustainability. This practice can serve as an example of the improvement of the pension system in Serbia and similar smaller countries.

Analisis Kelayakan Rencana Investasi Travel Baru Menggunakan Metode Hesitant Fuzzy Sets

<p>Transportation is a tool that supports the construction and economic development of a country. Because in this modern era, transportation provides easy access to the movement of goods and people from one place to another. This research was conducted at a company engaged in public transportation services. The main services provided are inter-city buses in the province, inter-city inter-provincial buses, tour buses and travel transportation. In 2018, the company has plans to add six travel vehicles and the capital owned is 500.000.000 Rupiah. While the remaining capital needed will be borrowed from Bank Antardaerah, so a business feasibility study is needed that can determine whether or not the investment plan is feasible. In addition, the Hesitant Fuzzy Sets method is used to model all forms of uncertainty that can cause losses. Hesitant Fuzzy Sets are an extension of the fuzzy set to handle inaccuracies where there are two or more sources of obscurity that appear simultaneously. Some basic methods used to determine the feasibility of investment plans are Payback Period (PP), Minimum Acceptable Rate of Return (MARR) and Internal Rate of Return (IRR). In addition, the Hesitant Fuzzy Sets method is used to model all forms of uncertainty that can cause losses. One example of such uncertainty is income uncertainty and expenditure uncertainty which are received by the company every year. The reason for using Hesitant Fuzzy Sets, because the method is an extension of the fuzzy set that can handle inaccuracies where there are two or more sources of obscurity that appear simultaneously.</p>

Strategi Petani Sutera dalam Memenuhi Kebutuhan Rumah Tangga di Kabupaten Soppeng Sulawesi Selatan

Usaha sutera alam pada aspek hulu menghasilkan produk berupa kokon ataupun benang. Produksi kokon ulat sutera petani sangat dipengaruhi oleh banyak faktor antar lain cuaca, ketersediaan pakan ulat sutera, bibit ulat sutera yang bermutu, tenaga kerja dan ruang budidaya yang memenuhi agar mampu menghasilkan kokon yang optimal. Beragamnya faktor pendukung berdampak pada ketidakpastian penghasilan dalam memenuhi kebutuhan rumah tangga sehingga diperlukan strategi dalam memenuhi kebutuhan hidup. Memberikan informasi mengenai strategi penghidupan petani sutera dalam memenuhi kebutuhan hidup yang bermanfaat dalam pengambilan kebijakan pengembangan persuteraan alam merupakan fokus dari tulisan ini. Penelitian dilakukan di Desa Sering, Kecamatan Donri-Donri Kabupaten Soppeng, Provinsi Sulawesi Selatan. Observasi dan wawancara dilakukan terhadap petani sutera untuk mengumpulkan informasi yang selanjutnya dianalisis secara deskriptif kualitatif. Melalui wawancara diperoleh informasi bahwa pendapatan petani sutera berasal dari penjualan kokon ataupun benang sutera. Pemenuhan kebutuhan pangan (makanan pokok dan air) dan non pangan (energi, air, pendidikan dan kesehatan) dilakukan melalui strategi on farm dan non farm serta mengoptimalkan bantuan dari pemerintah. Untuk itu, diperlukan kegiatan pemberdayaan masyarakat agar kesejahteraan petani sutera dapat lebih meningkat. Silk cultivation in the upstream aspect produces products in the form of cocoons or silk fiber. The production of silkworm cocoon farmers is highly influenced by many factors, including weather, availability of silkworm feed, quality silkworm seedlings, labor and cultivation space that meet the ability to produce an optimal cocoon. The variety of supporting factors has an impact on income uncertainty in meeting household needs so that a strategy is needed to fulfill life needs. This paper aims to provide information on the strategies for the livelihoods of silk farmers in fulfilling life needs that are useful in policy making for natural female development. The research was conducted in Sering Village, Donri-Donri Sub-District, Soppeng District, South Sulawesi Province. Observations and interviews were conducted on silk farmers to gather information which was then analyzed descriptively qualitatively. Through interviews, information was obtained that the income of silk farmers came from the sale of cocoons or silk thread. Fulfilling food (staple and water) and non-food needs (energy, water, education, and health) are carried out through on-farm and non-farm strategies and optimizing government assistance. For this reason, community empowerment activities are needed so that the welfare of silk farmers can be improved.