Essays on Misplanning Wealth and Health: A Behavioural Approach

The dissertation consists of three essays on misplanning wealth and health accumulation. The conventional economics assumes that individual's intertemporal preferences are exponential (exponential preferences, EP). Recent findings in behavioural economics have shown that, actually, people do discount near future relatively heavier than distant future. This implies hyperbolic intertemporal preferences (HP). Essays I and II concentrate especially on the effects of a delayed completion of tasks, a feature of behaviour that HP enables. Essay III uses current Finnish data to analyse the evolvement of the quality adjusted life years (QALYs) and inconsistencies in measuring that. Essay I studies the existence effects of a lucrative retirement savings program (SP) on the retirement savings of different individual types having HP. If the individual does not know that he will have HP also in the future, i.e. he is the naïve, for certain conditions, he delays the enrolment on SP until he abandons it. Very interesting finding is that the naïve retires then poorer in the presence than in the absence of SP. For the same conditions, the individual who knows that he will have HP also in the future, i.e. he is the sophisticated, gains from the existence of SP, and retires with greater retirement savings in the presence than in the absence of SP. Finally, capabilities to learn from past behaviour and about intertemporal preferences improve possibilities to gain from the existence but an adequate time to learn must be then guaranteed. Essay II studies delayed doctor's visits, theirs effects on the costs of a public health care system and government's attempts to control patient behaviour and fund the system. The controlling devices are a consultation fee and a deductible for that. The deductible is effective only for a patient whose diagnosis reveals a disease that would not get cured without the doctor's visit. The naives delay their visits the longest while EP-patients are the quickest visitors. To control the naives, the government should implement a low fee and a high deductible, while for the sophisticates the opposite is true. Finally, if all the types exist in an economy then using an incorrect conventional assumption that all individuals have EP leads to worse situation and requires higher tax rates than assuming incorrectly but unconventionally that only the naives exists. Essay III studies the development of QALYs in Finland 1995/96-2004. The essay concentrates on developing a consistent measure, i.e. independent of discounting, for measuring the age and gender specific QALY-changes and their incidences. For the given time interval, use of a relative change out of an attainable change seems to be almost intact to discounting and reveals that the greatest gains are for older age groups.

Tax Reform and Payout Policy:Do Shareholder Clienteles or Payout Policy Adjust?

Changes in taxation of corporate dividends offer excellent opportunities to study dividend clientele effects. We explore payout policies and ownership structures around a major tax reform that took place in Finland in 2004. Consistent with dividend clienteles affecting firms’ dividend policy decisions, we find that Finnish firms altered their dividend policies based on the changed tax incentives of their largest shareholders. While firms adjust their payout policies, our results also indicate that ownership structures of Finnish firms also changed around the 2004 reform, consistent with shareholder clienteles adjusting to the new tax system.

Tax havens and their impacts on the non-haven countries

Tax havens have attracted increasing attention from the authorities of non-haven countries. The financial crisis exacerbates the negative attitude to tax havens. Offshore zones are now under strong pressure from the international, both financial and political institutions. Thus, the thesis will focus on the current problem of the modern economy, namely tax havens and their impact on the non-haven countries. This thesis will be based on the several articles, in particular “Tax Competition With Parasitic Tax Havens” by Joel Slemrod and John D. Wilson (University of Michigan, 2009) and “Do Havens Divert Economic Activity” by James R. Hines Jr., C. Fritz Foley and Mihir A. Desai (Ross School of Business, 2005). This paper provides two completely different and contradictory viewpoints on the problem of coexisting tax havens and non-haven countries. There are two models, examined in this work, present two important researches. The first one will be concentrated on the positive effect from tax havens whereas the last model will be focused on the completely negative effect from offshore jurisdictions. The first model gives us a good explanation and proof of its statement why tax havens can positively influence on nearby high-tax countries. It describes that the existence of offshore jurisdictions can stimulate the growth of operations and facilitates economic activity in non-haven countries. In contrast to above mentioned, the model with quite opposite view was presented. This economic model and its analysis confirms the undesirability of the existence of offshore areas. Taking into consideration, that the jurisdictions choose their optimal policy, the elimination of offshores will have positive impact on the rest of countries. The model proofs the statement that full or partial elimination of tax havens raises the equilibrium level of the public good and increases country welfare. According to the following study, it can be concluded that both of the models provide telling arguments to prove their assertions. Thereby both of these points of view have their right to exist. Nevertheless, the ongoing debate concerning this issue still will raise a lot of questions.

Valikoiva muuttoliike Uudellamaalla

This thesis explores selective migration in Greater Helsinki region from the perspective of counterurbanisation. The aim of the study is to research whether the migration is selective by migrants age, education, income level or the rate of employment and to study any regional patterns formed by the selectivity. In the Helsinki region recent migratory developments have been shifting the areas of net migration gain away from the city of Helsinki to municipalities farther off on the former countryside. There has been discussion about Helsinki s decaying tax revenue base and whether the city s housing policy has contributed to the exodus of wealthier households. The central question of the discussion is one of selective migration: which municipalities succeed in capturing the most favourable migrants and which will lose in the competition. Selective migration means that region s in-migrants and out-migrants significantly differ from each other demographically, socially and economically. Sometimes selectivity is also understood as some individuals greater propensity to migrate than others but the proper notion for this would be differential migration. In Finnish parlance these two concepts have tended to get mixed up. The data of the study covers the total migration of the 34 municipalities of Uusimaa provinces during the years 2001 to 2003. The data was produced by Statistics Finland. Two new methods of representing the selectivity of migration as a whole were constructed during the study. Both methods look at the proportions of favourably selected migrants in regions inward and outward migrant flow. A large share in the inward flow and a small share in the outward flow is good for region s economy and demography. The first method calculates the differences of the proportions of favourably selected four migrant groups and sums the differences up. The other ranks the same proportions between regions giving value 1 to the largest proportion in inward flow and 34 to the smallest, and respectively in outward flow the smallest proportion gets value 1 and the largest 34. The total sum of the ranks or differences in proportions represents region s selectivity of migration. The results show that migration is indeed selective in the Greater Helsinki region. There also seems to be a spatial pattern centred around the Helsinki metropolitan region. The municipalities surrounding the four central communes are generally better of than those farther away. Not only these eight municipalities of the so called capital region benefit from the selective migration, but the favourable structure of migration extends to some of the small municipalities farther away. Some municipalities situated along the main northbound railway line are not coming through as well as other municipalities of the capital region. The selectivity of migration in Greater Helsinki region shows signs of counter-urbanisation. People look for suburban or small-town lifestyle no longer from Espoo or Vantaa, the neighbouring municipalities to Helsinki, but from the municipalities surrounding these two or even farther off. This kind of pattern in selective migration leads to unbalanced development in population structure and tax revenue base in the region. Migration to outskirts of the urban area also leads to urban sprawl and fragmentation of the urban structure: these issues have ecological implications. Selective migration should be studied more. Also the concept itself needs clearer definition and so do the methods to study the selectivity of migration.