Economics and psychology in the twenty-first century

This paper begins by exploring four different possible forms of relationship between economics and psychology, which have different connotations in terms of the relative status of the two disciplines. It then focuses on the future for one of these, psychological economics. After setting out the hardcore axioms and positive and negative heuristics of a research programme in psychological economics, it explores institutional and psychological barriers to the success of such a research programme in the context of both research and teaching.

Consumption habit and international stock returns

We use the consumption-based asset pricing model with habit formation to study the predictability and cross-section of returns from the international equity markets. We find that the predictability of returns from many developed countries' equity markets is explained in part by changing prices of risks associated with consumption relative to habit at the world as well as local levels. We also provide an exploratory investigation of the cross-sectional implications of the model under the complete world market integration hypothesis and find that the model performs mildly better than the traditional consumption-based model. the unconditional and conditional world CAPMs and a three-factor international asset pricing model. (C) 2004 Elsevier B.V. All rights reserved.

The consumption of alcohol by Australian adolescents: A comparison of revenue and expenditure

Aims: To estimate (i) Australian government taxation revenue collected from the consumption of alcohol by adolescents and (ii) the amount spent by the government on interventions aimed at educating adolescents about the potential dangers of alcohol use. Design: Secondary data analysis. Setting: Australia. Findings: Australian adolescents (aged between 12 and 17 years, inclusive) spent approximately $217 million on alcoholic beverages in 2002, netting the Australian government approximately $112 million in tax revenue. This resulted in an average of $195 earned in tax per adolescent drinker. It is estimated that the Government spent approximately $17 million on adolescent drinking interventions in 2002, equating to an expenditure of about $10.51 per adolescent on the delivery of alcohol interventions. For every dollar spent on alcohol interventions aimed at adolescents, it is estimated that the government receives around $7 in alcohol tax revenue. Conclusions: A substantial disparity exists between the amount of tax revenue received by the Australian Government from adolescent drinkers and the overall amount spent in attempting to prevent and relieve some of the problems associated with adolescent problem drinking. (c) 2006 Elsevier Ltd. All rights reserved.

The wealth effect of housing on aggregate consumption

This study Measures the effect of changes in net housing and financial wealth oil household consumption using Australian data over the period Q2:1988-Q1:2003. It is found a permanent one dollar rise in housing wealth leads to a six cent increase in consumption, three times the effect of financial wealth. The result speaks strongly against the notion of assets fungibility.. and Suggests that a sharp movement in house prices is potentially more disruptive than a corresponding movement ill financial asset prices.

Energy consumption, economic growth and prices: A reassessment using panel VECM for developed and developing countries

This paper reinvestigates the energy consumption-GDP growth nexus in a panel error correction model using data on 20 net energy importers and exporters from 1971 to 2002. Among the energy exporters, there was bidirectional causality between economic growth and energy consumption in the developed countries in both the short and long run, while in the developing countries energy consumption stimulates growth only in the short run. The former result is also found for energy importers and the latter result exists only for the developed countries within this category. In addition, compared to the developing countries, the developed countries' elasticity response in terms of economic growth from an increase in energy consumption is larger although its income elasticity is lower and less than unitary. Lastly. the implications for energy policy calling for a more holistic approach are discussed. (c) 2006 Elsevier Ltd. All rights reserved.