Optimal Contracts, Adverse Selection, and Social Preferences: An Experiment

It has long been standard in agency theory to search for incentive-compatible mechanisms on the assumption that people care only about their own material wealth. However, this assumption is clearly refuted by numerous experiments, and we feel that it may be useful to consider nonpecuniary utility in mechanism design and contract theory. Accordingly, we devise an experiment to explore optimal contracts in an adverse-selection context. A principal proposes one of three contract menus, each of which offers a choice of two incentive-compatible contracts, to two agents whose types are unknown to the principal. The agents know the set of possible menus, and choose to either accept one of the two contracts offered in the proposed menu or to reject the menu altogether; a rejection by either agent leads to lower (and equal) reservation payoffs for all parties. While all three possible menus favor the principal, they do so to varying degrees. We observe numerous rejections of the more lopsided menus, and approach an equilibrium where one of the more equitable contract menus (which one depends on the reservation payoffs) is proposed and agents accept a contract, selecting actions according to their types. Behavior is largely consistent with all recent models of social preferences, strongly suggesting there is value in considering nonpecuniary utility in agency theory.

Social spending and demographics: The role of public policies in the intergenerational redistribution of income. Empirical evidence from Spain and Catalonia

The demographic shift underway in Southern Europe requires a revision of some of the fundamental principles of the traditional welfare state. We analyze the evolution of several aspects of welfare and social expenditure over the last two decades. We find that in the context of the present demographic changes and real estate boom current social and pension policy leads to a new distribution of benefits and burdens which is highly intergenerationally unequal. We argue for a revised definition of public policy based on Musgrave's proposition as a possible rule for an intergenerationally fair distribution.

Economia solidaria num país pequeno, insular e arquipelago

Esta pesquisa consiste num estudo sobre as organizações que desenvolvem a economia solidária em Cabo Verde, no âmbito dos empreendimentos económicos solidários, numa reacção contra os fenómenos de crescimento das desigualdades socio-económicas, na perspectiva de geração de emprego e rendimentos, com a finalidade de responder a relativa incapacidade do mercado de trabalho em criar empregos capazes de absorver a demanda. Procura-se compreender e analisar a dinâmica dos empreendimentos económicos solidários, com foco nas ilhas de Santiago e Fogo, como experiência de empreendimentos colectivos, a partir da observação empírica da sua estrutura organizacional. Uma vez que as grandes transformações económicas sentidas nas últimas décadas foram marcadas pela lógica excludente do capitalismo contemporâneo, com marcas profundas da degradação do aparelho do Estado a nível social, pelo aumento do desemprego e da precarização do trabalho, os empreendimentos solidários procuram, de certa forma, responder ao vazio criado e, em alguns casos, transformar-se numa alternativa económica e política, tomando um carácter emancipatório. A identificação de um conjunto de empreendimentos económicos como empreendimentos solidários é um fenómeno recente em Cabo Verde. Com efeito, essa denominação foi utilizada em meados do ano 2002, tendo como ponto de partida experiências surgidas nos meios populares urbanos e rurais, promovidas por organizações de base comunitária que buscam como opção, a geração de emprego e rendimento, como forma de debelar a exclusão socio-económica. Em Cabo Verde, há uma importante tradição cooperativa e associativa que se desenvolve desde o início da independência em 1975, conhecendo uma nova dinâmica nos anos 90. Pode-se afirmar que os empreendimentos económicos solidários são processos dinâmicos com espaços próprios, que os diferenciam das práticas cooperativas institucionalizadas no ano 1975. A pesquisa realizada em seis empreendimentos económicos solidários nas ilhas de Santiago e Fogo demonstra uma desigualdade em termos de motivação que levou as respectivas comunidades a enfrentar os problemas da sua subsistência na luta para a erradicação da pobreza, principalmente, na zona rural. No campo da presente pesquisa nota-se que o desenvolvimento comunitário está assente nos princípios de solidariedade, cooperação, ajuda-mútua e redes de parcerias nacionais e internacionais.

Generating Brand Equity through Corporate Social Responsibility to Key Stakeholders

In this paper we argue that socially responsible policies have a positive impact on a firm's brand equity in the short-term as well as in the long-term. Moreover, once we distinguish between different stakeholders, we posit that secondary stakeholders such as community are even more important than primary stakeholders (customers, shareholders, workers and suppliers) in generating brand equity. Policies aimed at satisfied community interests act as a mechanism to reinforce trust that gives further credibility to social responsible polices with other stakeholders. The result is a decrease in conflicts among stakeholders and greater stakeholder willingness to provide intangible resources that enhance brand equity. We provide support of our theoretical contentions making use of a panel data composed of 57 firms from 10 countries (the US, Japan, South Korea, France, the UK, Italy, Germany, Finland, Switzerland and the Netherlands) for the period 2002 to 2007. We use detailed information on brand equity obtained from Interbrand and on corporate social responsibility (CSR) provided by the SiRi Global Profile database, as compiled by the Sustainable Investment Research International Company (SiRi).

Trocas Económicas e Complexidade Social

Partindo das realidades empíricas de Cabo Verde e diásporas, este texto explora, até certo ponto, as limitações heurísticas de certas noções sugeridas pela mainstream do modelo neoliberal da economia sobre o «informal» em África. O texto debruça-se sobre diferentes dimensões, espaços e protagonistas de práticas de economia informal em rede. As repercussões identitárias das dinâmicas destas redes entre os cabo-verdianos, apreendidas através da observação de certas formas de sociabilidade dos actores sociais considerados, são igualmente exploradas.

O papel dos Portos no Desenvolvimento da Economia de Cabo Verde

Os Portos de Cabo Verde sempre tiveram um papel importante no desenvolvimento económico e social, isto porque facilitam a deslocação de pessoas e mercadorias entre as ilhas, de igual forma que contribuem para a minimização dos efeitos da descontinuidade territorial, facilitando a transferência de produtos e pessoas a um menor custo. É nesse contexto que o tema desenvolvido se justifica pelo impacto que a actividade portuária tem na economia de Cabo Verde. O Capítulo I faz uma abordagem sobre a Administração Portuária em Cabo Verde, onde se relata uma breve resenha histórica dos portos nacionais, o estilo da Autoridade Portuária e o papel do Estado no Sector Portuário, bem como os serviços prestados pelos Portos de Cabo Verde. O Capítulo II refere-se sobre o papel do Sector Portuário no desenvolvimento socioeconómico de Cabo Verde, no qual fez-se a caracterização desse Sector, o destaque da contribuição dos Portos no desenvolvimento do país e a ilustração do grau de importância do comércio externo na economia nacional. Ainda nesse Capítulo, fez-se referência à Segurança Portuária como sendo um elemento fundamental para o desenvolvimento económico dos Portos de Cabo Verde e destacou-se as Estratégias de Marketing que a Enapor vem adoptando como instrumento de Gestão para vender a imagem da Empresa. O 3º e último Capítulo enfatiza a relevância do Porto Grande, um dos portos principais que apresenta a melhor infra-estrutura portuária de Cabo Verde. Destacou-se o efeito económico provocado pela actividade portuária na economia regional, o estágio de desenvolvimento da cidade do Mindelo, como consequência da evolução do Porto Grande, e ainda salientou-se a localização geográfica do Porto Grande em relação aos portos dos países limítrofes. Por último, fez-se uma análise SWOT, tendo-se destacado os principais pontos fortes do Porto e realçando algumas perspectivas futuras, tendo em conta os desafios que a Administração do Porto, como entidade gestora, persegue.The Cape Verdean Ports have always had an important role in economic and social development as they facilitate the transfer of people and merchandise among the islands. The same way they reduce the effect of territorial discontinuity, facilitating the transfer of cargo and people at low costs. Thus the addressed theme is justified by the impel Port activities provide to the economy in Cape Verde. This work is divided into three chapters: Chapter one introduces the Ports Administration in Cape Verde and a short history overview is set up on the topic. The management method and or the role of the National Govern concerning the port sector as well the services offered by these Ports are also stated. Chapter two refers to the role of the Port Sector in the socio-economic developing process in Cape Verde and some characteristics concerning this Sector. Emphasis is put on the contribution the Ports provide to the development of the country and the great importance of the extern trade in national economy. In addition, this chapter deals with port security as an essential factor to economic development of the Cape Verdean Ports. Marketing strategies adopted by ENAPOR as managing instruments in order to put on the market a good image of the enterprise is also addressed. Chapter three brings in the relevance of Porto Grande, one of the main Ports in Cape Verde which in fact has the best infrastructures. The effect on regional economy by the activities of the Port and the development moment in Mindelo city is considered as consequence of Porto Grande progress. The geographic location of the harbour and other harbours in near countries is also studied. Finally, a SWOT analysis is introduced, the main strong points as well some future prospective considering challenges of the harbour are pointed out.

Canonical correspondence analysis in social science research

The use of simple and multiple correspondence analysis is well-established in socialscience research for understanding relationships between two or more categorical variables.By contrast, canonical correspondence analysis, which is a correspondence analysis with linearrestrictions on the solution, has become one of the most popular multivariate techniques inecological research. Multivariate ecological data typically consist of frequencies of observedspecies across a set of sampling locations, as well as a set of observed environmental variablesat the same locations. In this context the principal dimensions of the biological variables aresought in a space that is constrained to be related to the environmental variables. Thisrestricted form of correspondence analysis has many uses in social science research as well,as is demonstrated in this paper. We first illustrate the result that canonical correspondenceanalysis of an indicator matrix, restricted to be related an external categorical variable, reducesto a simple correspondence analysis of a set of concatenated (or stacked ) tables. Then weshow how canonical correspondence analysis can be used to focus on, or partial out, aparticular set of response categories in sample survey data. For example, the method can beused to partial out the influence of missing responses, which usually dominate the results of amultiple correspondence analysis.

Job satisfaction and life satisfaction: Analysis of a reciprocal model with social demographic moderators

The general objective of the study was to empirically test a reciprocal model of job satisfaction and life satisfaction while controlling for some social demographic variables. 827 employees working in 34 car dealerships in Northern Quebec (56% responses rate) were surveyed. The multiple item questionnaires were analysed using correlation analysis, chi square and ANOVAs. Results show interesting patterns emerging for the relationships between job and life satisfaction of which 49.2% of all individuals have spillover, 43.5% compensation, and 7.3% segmentation type of relationships. Results, nonetheless, are far richer and the model becomes much more refined when social demographic indicators are taken into account. Globally, social demographic variables demonstrate some effects on each satisfaction individually but also on the interrelation (nature of the relations) between life and work satisfaction.

The significance of distributive effects in social assessment of health care

In this paper we address the importance of distributive effects in the social valuation of QALY's. We propose a social welfarefunction that generalises the functions traditionally used in the health economic literature. The novelty is that, depending on the individual health gains, our function can representeither preferences for concentrating or preferences for spreading total gain or both together, an issue which has notbeen addressed until now. Based on an experiment, we observe that this generalisation provides a suitable approximation tothe sampled social preferences.

Construyendo las bases para una comparación fiable: la Encuesta Social Europea

Surveys are a valuable instrument to find out about the social and politicalreality of our context. However, the work of researchers is often limitedby a number of handicaps that are mainly two. On one hand, the samples areusually low technical quality ones and the fieldwork is not carried out inthe finest conditions. On the other hand, many surveys are not especiallydesigned to allow their comparison, a precisely appreciated operation inpolitical research. The article presents the European Social Survey andjustifies its methodological bases. The survey, promoted by the EuropeanScience Foundation and the European Commission, is born from the collectiveeffort of the scientific community with the explicit aim to establishcertain quality standards in the sample design and in the carrying out ofthe fieldwork so as to guarantee the quality of the data and allow eachcomparison between countries.

Social capital, government expenditures, and growth

Countries with greater social capital have higher economic growth. We show that socialcapital is also highly positively correlated across countries with government expenditureon education. We develop an infinite-horizon model of public spending and endogenousstochastic growth that explains both facts through frictions in political agency whenvoters have imperfect information. In our model, the government provides servicesthat yield immediate utility, and investment that raises future productivity. Voters aremore likely to observe public services, so politicians have electoral incentives to underprovidepublic investment. Social capital increases voters' awareness of all governmentactivity. As a consequence, both politicians' incentives and their selection improve.In the dynamic equilibrium, both the amount and the efficiency of public investmentincrease, permanently raising the growth rate.

Austerity and anarchy: Budget cuts and social unrest in Europe, 1919-2008

Does fiscal consolidation lead to social unrest? Using cross-country evidencefor the period 1919 to 2008, we examine the extent to which societies becomeunstable after budget cuts. The results show a clear correlation between fiscalretrenchment and instability. Expenditure cuts are particularly potent infueling protests; tax rises have only small and insignificant effects. We test ifthe relationship simply reflects economic downturns, using a recently-developedIMF dataset on exogenous expenditure shocks, and conclude that this is not thecase. While autocracies and democracies show broadly similar responses to budgetcuts, countries with more constraints on the executive are less likely to seeunrest after austerity measures. Growing media penetration does not strengthenthe effect of cut-backs on the level of unrest. We also find that austerity episodesthat result in unrest lead to quick reversals of fiscal policy.

Transfers, social safety nets and economic growth

The role of social safety nets in the form of redistributional transfersand wage subsidies is analyzed using a simple model of criminal behavior. Itis argued that public welfare programs act as a crime--preventing ordisruption--preventing devices because they tend to increase the opportunitycost of engaging in crime or disruptive activities. It is shown that, in thepresence of a leisure choice, wage subsidies may be better than pure transfers. Using a simple growth model, it is shown that it is not optimal for the governmentto try to fully eliminate crime. The optimal size of the public welfare programis found and it is argued that public welfare should be financed with income(not lump--sum) taxes, despite the fact that income taxes are distortionary.The intuition for this result is that income taxes act as a user fee oncongested public goods and transfers can be thought of as {\it productive}public goods {\it subject to congestion}. Finally, using a cross-section of 75 countries, the partial correlation betweentransfers and growth is shown to be significantly positive.

Bowling for fascism: Social capital and the rise of the Nazi Party in Weimar Germany, 1919-33

Social capital a dense network of associations facilitating cooperation within a community typically leads to positive political and economic outcomes, as demonstrated by a large literature following Putnam. A growing literature emphasizes the potentially "dark side" of social capital. This paper examines the role of social capital in the downfall of democracy in interwar Germany by analyzing Nazi party entry rates in a cross-section of towns and cities. Before the Nazi Party's triumphs at the ballot box, it built an extensive organizational structure, becoming a mass movement with nearly a million members by early 1933. We show that dense networks of civic associations such as bowling clubs, animal breeder associations, or choirs facilitated the rise of the Nazi Party. The effects are large: Towns with one standard deviation higher association density saw at least one-third faster growth in the strength of the Nazi Party. IV results based on 19th century measures of social capital reinforce our conclusions. In addition, all types of associations veteran associations and non-military clubs, "bridging" and "bonding" associations positively predict NS party entry. These results suggest that social capital in Weimar Germany aided the rise of the Nazi movement that ultimately destroyed Germany's first democracy.