Greek Economists for Reform.com

This blog publishes articles by leading academic economists on issues relevant to economic policy and reforms in Greece. The crisis in Greece is also a time of opportunity: ambitious reforms can be undertaken that will not only stave off bankruptcy, but also modernize Greece’s economy and raise the productivity and incomes of Greek citizens on a sustainable basis. The articles in this blog aim to offer constructive proposals and impartial analysis of potential, proposed or implemented reforms that are based on the principles of modern economics and on lessons from recent cutting-edge research.

Screening for Chlamydia trachomatis: a systematic review of the economic evaluations and modelling

OBJECTIVE: To review systematically and critically, evidence used to derive estimates of costs and cost effectiveness of chlamydia screening. METHODS: Systematic review. A search of 11 electronic bibliographic databases from the earliest date available to August 2004 using keywords including chlamydia, pelvic inflammatory disease, economic evaluation, and cost. We included studies of chlamydia screening in males and/or females over 14 years, including studies of diagnostic tests, contact tracing, and treatment as part of a screening programme. Outcomes included cases of chlamydia identified and major outcomes averted. We assessed methodological quality and the modelling approach used. RESULTS: Of 713 identified papers we included 57 formal economic evaluations and two cost studies. Most studies found chlamydia screening to be cost effective, partner notification to be an effective adjunct, and testing with nucleic acid amplification tests, and treatment with azithromycin to be cost effective. Methodological problems limited the validity of these findings: most studies used static models that are inappropriate for infectious diseases; restricted outcomes were used as a basis for policy recommendations; and high estimates of the probability of chlamydia associated complications might have overestimated cost effectiveness. Two high quality dynamic modelling studies found opportunistic screening to be cost effective but poor reporting or uncertainty about complication rates make interpretation difficult. CONCLUSION: The inappropriate use of static models to study interventions to prevent a communicable disease means that uncertainty remains about whether chlamydia screening programmes are cost effective or not. The results of this review can be used by health service managers in the allocation of resources, and health economists and other researchers who are considering further research in this area.

The Career Satisfaction Scale in Context: A Test for Measurement Invariance Across Four Occupational Groups

This study analyzed the influence of the occupational context on the conceptualization of career satisfaction measured by the career satisfaction scale (CSS). In a large sample of N ¼ 729 highly educated professionals, a cross-occupational (i.e., physicians, economists, engineers, and teachers) measurement invariance analysis showed that the CSS was conceptualized according to occupational group membership, that is, 4 of the 5 items of the scale showed measurement noninvariance. More specifically, the relative importance, the response biases, and the reliabilities associated with different career satisfaction content domains measured by the CSS (i.e., achieved success, overall career goals, goals for advancement, goals for income, and goals for development of new skills) varied by occupational context. However, results of a comparison between manifest and latent mean differences between the occupational groups revealed that the observed measurement noninvariance did not affect the estimation of mean differences.

Does the Use of Mobile Devices (Tablets and Smartphones) Affect Stated Choice Behavior in Web Surveys? An Application to Environmental Valuation

Web surveys are becoming increasingly popular in survey research. Compared with face-to-face, telephone and mail surveys, web surveys may contain a different and new source of measurement error and bias: the type of device that respondents use to answer the survey questions. To the best of our knowledge, this is the first study that tests whether the use of mobile devices affects survey characteristics and stated preferences in a web-based choice experiment. The web survey was carried out in Germany with 3,400 respondents, of which 12 per cent used a mobile device (i.e. tablet or smartphone), and comprised a stated choice experiment on externalities of renewable energy production using wind, solar and biomass. Our main finding is that survey characteristics such as interview length and acquiescence tendency are affected by the device used. In contrast to what might be expected, we find that, compared with respondents using desktop computers and laptops, mobile device users spent more time to answer the survey and are less likely to be prone to acquiescence bias. In the choice experiment, mobile device users tended to be more consistent in their stated choices, and there are differences in willingness to pay between both subsamples.

The Use of New Technology and Occupational Mobility: An Event History Analysis of the Swiss Labor Market

The investigation of the consequences of new technologies has a long standing tradition within economics. Particularly, labor economists are wondering how the introduction of new technologies, e.g. Personal Computers, have shaped labor markets. Former research has concentrated on the question of whether on-the-job use of PCs creates a wage bonus for employees. In this paper, we investigate whether the use of PCs increases employees’ probability of an upward shift in their employment status and whether it reduces the risk of involuntary labor market exits. We do so by applying event history analysis to the Swiss Labor Market Survey, a random sample of 3028 respondents, and by analyzing a Panel sub-sample of 650 respondents conducted recently in Switzerland. Our results show that on-the-job use of PCs was beneficial for employees in the past by increasing their probability of an upward shift by approximately 50%. The analysis also suggests that PC use reduces the risk and duration of unemployment. However, these latter results fail to reach statistical significance.

Bargaining for power and information : an experimental and theoretical analysis of the interaction between institutions, externalities and adverse selection

Bargaining is the building block of many economic interactions, ranging from bilateral to multilateral encounters and from situations in which the actors are individuals to negotiations between firms or countries. In all these settings, economists have been intrigued for a long time by the fact that some projects, trades or agreements are not realized even though they are mutually beneficial. On the one hand, this has been explained by incomplete information. A firm may not be willing to offer a wage that is acceptable to a qualified worker, because it knows that there are also unqualified workers and cannot distinguish between the two types. This phenomenon is known as adverse selection. On the other hand, it has been argued that even with complete information, the presence of externalities may impede efficient outcomes. To see this, consider the example of climate change. If a subset of countries agrees to curb emissions, non-participant regions benefit from the signatories’ efforts without incurring costs. These free riding opportunities give rise to incentives to strategically improve ones bargaining power that work against the formation of a global agreement. This thesis is concerned with extending our understanding of both factors, adverse selection and externalities. The findings are based on empirical evidence from original laboratory experiments as well as game theoretic modeling. On a very general note, it is demonstrated that the institutions through which agents interact matter to a large extent. Insights are provided about which institutions we should expect to perform better than others, at least in terms of aggregate welfare. Chapters 1 and 2 focus on the problem of adverse selection. Effective operation of markets and other institutions often depends on good information transmission properties. In terms of the example introduced above, a firm is only willing to offer high wages if it receives enough positive signals about the worker’s quality during the application and wage bargaining process. In Chapter 1, it will be shown that repeated interaction coupled with time costs facilitates information transmission. By making the wage bargaining process costly for the worker, the firm is able to obtain more accurate information about the worker’s type. The cost could be pure time cost from delaying agreement or cost of effort arising from a multi-step interviewing process. In Chapter 2, I abstract from time cost and show that communication can play a similar role. The simple fact that a worker states to be of high quality may be informative. In Chapter 3, the focus is on a different source of inefficiency. Agents strive for bargaining power and thus may be motivated by incentives that are at odds with the socially efficient outcome. I have already mentioned the example of climate change. Other examples are coalitions within committees that are formed to secure voting power to block outcomes or groups that commit to different technological standards although a single standard would be optimal (e.g. the format war between HD and BlueRay). It will be shown that such inefficiencies are directly linked to the presence of externalities and a certain degree of irreversibility in actions. I now discuss the three articles in more detail. In Chapter 1, Olivier Bochet and I study a simple bilateral bargaining institution that eliminates trade failures arising from incomplete information. In this setting, a buyer makes offers to a seller in order to acquire a good. Whenever an offer is rejected by the seller, the buyer may submit a further offer. Bargaining is costly, because both parties suffer a (small) time cost after any rejection. The difficulties arise, because the good can be of low or high quality and the quality of the good is only known to the seller. Indeed, without the possibility to make repeated offers, it is too risky for the buyer to offer prices that allow for trade of high quality goods. When allowing for repeated offers, however, at equilibrium both types of goods trade with probability one. We provide an experimental test of these predictions. Buyers gather information about sellers using specific price offers and rates of trade are high, much as the model’s qualitative predictions. We also observe a persistent over-delay before trade occurs, and this mitigates efficiency substantially. Possible channels for over-delay are identified in the form of two behavioral assumptions missing from the standard model, loss aversion (buyers) and haggling (sellers), which reconcile the data with the theoretical predictions. Chapter 2 also studies adverse selection, but interaction between buyers and sellers now takes place within a market rather than isolated pairs. Remarkably, in a market it suffices to let agents communicate in a very simple manner to mitigate trade failures. The key insight is that better informed agents (sellers) are willing to truthfully reveal their private information, because by doing so they are able to reduce search frictions and attract more buyers. Behavior observed in the experimental sessions closely follows the theoretical predictions. As a consequence, costless and non-binding communication (cheap talk) significantly raises rates of trade and welfare. Previous experiments have documented that cheap talk alleviates inefficiencies due to asymmetric information. These findings are explained by pro-social preferences and lie aversion. I use appropriate control treatments to show that such consideration play only a minor role in our market. Instead, the experiment highlights the ability to organize markets as a new channel through which communication can facilitate trade in the presence of private information. In Chapter 3, I theoretically explore coalition formation via multilateral bargaining under complete information. The environment studied is extremely rich in the sense that the model allows for all kinds of externalities. This is achieved by using so-called partition functions, which pin down a coalitional worth for each possible coalition in each possible coalition structure. It is found that although binding agreements can be written, efficiency is not guaranteed, because the negotiation process is inherently non-cooperative. The prospects of cooperation are shown to crucially depend on i) the degree to which players can renegotiate and gradually build up agreements and ii) the absence of a certain type of externalities that can loosely be described as incentives to free ride. Moreover, the willingness to concede bargaining power is identified as a novel reason for gradualism. Another key contribution of the study is that it identifies a strong connection between the Core, one of the most important concepts in cooperative game theory, and the set of environments for which efficiency is attained even without renegotiation.

Why do countries enter into preferential agreements on trade in Services? assessing the potential for negotiated regulatory convergence in asian Services markets

Presentation made by Pierre Sauvé and Anirudh Shingal at the Asian International Economists Network (AIEN) Workshop, Asian Development Bank, Manila.