FDI, terrorism and the availability heuristic for U.S. investors before and after 9/11

We record the existence of an availability heuristic that is reflected in disaster myopia of U.S. investors and exists prior to the attacks of 9/11. We argue that this is fueled by an aggregate experience hypothesis effect, resulting in a pronounced increase in the sensitivity of U.S. stock prices to terrorist attacks on foreign soil. After 9/11, stock prices react proportionally to the size of an attack and the share of FDI stock held in the region by the sector in which firms operate. This effect, non-existent prior to 2002, has become increasingly strong in recent years

Characterization of between-group inequality of longevity in European Union countries

Comparisons of differential survival by country are useful in many domains. In the area of public policy, they help policymakers and analysts assess how much various groups benefit from public programs, such as social security and health care. In financial markets and especially for actuaries, they are important for designing annuities and life insurance products. This paper presents a method for clustering information about differential mortality by country. The approach is then used to group mortality surfaces for European Union (EU) countries. The aim of this paper is to measure between-group inequality in mortality experience in EU countries through a range of mortality indicators. Additionally, the indicators permit the characterization of each group. It is important to take into account characteristics such as sex; therefore, this study differentiates between males and females in order to detect whether their patterns and characterizations are different. It is concluded that there are clear differences in mortality between the east and west of the EU that are more important than the traditional south-north division, with a significant disadvantage for Eastern Europe, and especially for males in Baltic countries. We find that the mortality indicators have evolved in all countries in such a way that the gap between groups has been maintained, both in terms of the differences in mortality levels and variability

Evolution of Threats in the Global Risk Network

With a steadily growing population and rapid advancements in technology, the global economy is increasing in size and complexity. This growth exacerbates global vulnerabilities and may lead to unforeseen consequences such as global pandemics fueled by air travel, cyberspace attacks, and cascading failures caused by the weakest link in a supply chain. Hence, a quantitative understanding of the mechanisms driving global network vulnerabilities is urgently needed. Developing methods for efficiently monitoring evolution of the global economy is essential to such understanding. Each year the World Economic Forum publishes an authoritative report on the state of the global economy and identifies risks that are likely to be active, impactful or contagious. Using a Cascading Alternating Renewal Process approach to model the dynamics of the global risk network, we are able to answer critical questions regarding the evolution of this network. To fully trace the evolution of the network we analyze the asymptotic state of risks (risk levels which would be reached in the long term if the risks were left unabated) given a snapshot in time, this elucidates the various challenges faced by the world community at each point in time. We also investigate the influence exerted by each risk on others. Results presented here are obtained through either quantitative analysis or computational simulations.Comment: 27 pages, 15 figure

What can we learn from functional clustering of mortality data? An application to HMD data

In most cases, mortality is analysed considering summary indicators (e.~g. $e_0$ or $e^{\dagger}_0$) that either focus on a specific mortality component or pool all component-specific information in one measure. This can be a limitation, when we are interested to analyse the global evolution of mortality patterns without loosing sight of specific components evolution. The paper analyses whether there are different patterns of mortality decline among developed countries, identifying the role played by all the mortality components. We implement a cluster analysis using a Functional Data Analysis (FDA) approach, which allows us to consider age-specific mortality rather than summary measures as it analyses curves rather than scalar data. Combined with a Functional Principal Component Analysis (PCA) method it can identify what part of the curves (mortality components) is responsible for assigning one country to a specific cluster. FDA clustering is applied to 32 countries of Human Mortality Database and years 1960--2010. The results show that the evolutions of developed countries follow the same pattern (with different timing): (1) a reduction of infant mortality, (2) an increase of premature mortality, (3) a shift and compression of deaths. Some countries are following this scheme and recovering the gap with precursors, others do not show signs of recovery. Eastern Europe countries are still at stage (2) and it is not clear if and when they will enter into phase (3). All the country differences relates the different timing with which countries undergo the stages identified by clusters. The cluster analysis based on FDA allows therefore a comprehensive understanding of the patterns of mortality decline for considered countries.Comment: 18 pages, 26 figure

An agent-based computational approach to explaining persistent spatial unemployment disparities

This paper explores possible reasons for persistent spatial unemployment disparities using agent-based computational methods. The method relies on observing the actions of thousands of individuals within an artificial society. The paper models the effect of unemployment insurance, wage disparities, region specific amenities and innate residential preferences on regional labour market interactions, accounting for both migration and commuting. An empirical example of Rogaland county in south-west Norway is given, where unemployment disparities have proved remarkably persistent for decades. The model provides non-trivial insight into the nature of spatial unemployment disparities as well as making a valuable contribution to the policy debate.Unemployment insurance; wage disparities; region specific amenities; innate residential preferences; regional labour market interactions

Welfare Regime and Social Class Variation in Poverty and Economic Vulnerability in Europe: An Analysis of EU-SILC

In this paper we address a set of interrelated issues. These comprise increasing concerns about reliance on nationally based income poverty measures in the context of EU-enlargement, the relative merits of one dimensional versus multidimensional approaches to poverty and social exclusion and the continuing relevance of class based explanations of life chances. Identifying economically vulnerable groups we find that, contrary to the situation with national income poverty measures, levels of vulnerability vary systematically across welfare regimes. The multidimensional profile of the economically vulnerable sharply differentiates them from the remainder of the population. While they are also characterised by distinctively higher levels of multiple deprivation, a substantial majority of the economically vulnerable are not exposed to such deprivation. Unlike the national relative income approach, the focus on economic vulnerability reveals a pattern of class differentiation that is not dominated by the contrast between the self-employed and all others. In contrast to a European-wide relative income approach, it also simultaneously captures the fact that absolute levels of vulnerability are distinctively higher among the lower social classes in the less comprehensive and generous welfare regimes while class relativities are significantly sharper at the other end of the spectrum.economic vulnerability, poverty, social exclusion, welfare regimes, social class, multiple deprivation

AIDS and income distribution in Africa. A micro-simulation study for Cˆote d’Ivoire

We develop a demo-economic micro-simulation model able to simulate over a fifteen years period the impact of AIDS on household and individual incomes. When focusing on the labor supply effects of over- mortality, the main effect of AIDS in Cˆote d’Ivoire is a shrinking of the size of the economy by around 6% after 15 years, leaving average income per capita, income inequality, and poverty roughly unchanged. The dependency ratio is not much modified by the epidemic. These conclusions do not seem to depend on the degree of heterogeneity and clustering of the HIV/AIDS-infections over the population.AIDS, labor supply, income distribution

Analysing Risk Preferences and Time Preferences with respect to Smoking Status and Smoking Intensity

Smoking is a leading cause of death worldwide, and thus the behavioural components need to be understood to mitigate the damage caused by the practice. The relationship between smoking and factors such as risk preferences and time preferences has been the subject of a growing body of literature. This paper evaluates experimental data from smokers and nonsmokers at the University of Cape Town collected in 2016 and 2017. Maximum likelihood estimation is used to estimate models of risk preferences and time preferences. The results highlight that smokers are less risk averse than non-smokers; that smokers discount more heavily than non-smokers; that greater smoking intensity is correlated with lower risk aversion; and that greater smoking intensity is not related to discounting behaviour. In some specifications the relationship between smoking intensity and risk aversion is parabolic, and as such moderate smokers are less risk averse than heavy smokers and light smokers. In conclusion, smokers tend to discount more heavily than non-smokers, and lower smoking intensity is associated with greater risk aversion than higher smoking intensity