Influence of Centrality Indices of Urban Railway Stations: Social Network Analysis of Transit Ridership and Travel Distance

This empirical study calculated the network centralities of urban railway stations in Seoul using Social Network Analysis (SNA) and analyzed the effect of this value on the number of passengers and average travel distance at each station. Network centrality can be calculated using various methodologies. In this study, reach, betweenness, and closeness were used as network centrality indicators. A regression model was used with the characteristics of building use in the station catchment areas as control variables. This methodology was compared to previous studies’ methods for obtaining stations’ topology values. The adjusted R2 values increased by 0.272 and 0.220 for the respective models, explaining the number of passengers and the average travel distance, respectively; the number of significant variables also increased in both models. These results indicate that defining the network centrality obtained through SNA as the station’s topology could improve explanations of the number of passengers and the average travel distance by 27.2% and 22.0%, respectively, compared to previous studies. While this methodology is not new, this study demonstrated the advantages of using SNA to determine the centrality indices of urban railway stations

Influence of Centrality Indices of Urban Railway Stations: Social Network Analysis of Transit Ridership and Travel Distance

This empirical study calculated the network centralities of urban railway stations in Seoul using Social Network Analysis (SNA) and analyzed the effect of this value on the number of passengers and average travel distance at each station. Network centrality can be calculated using various methodologies. In this study, reach, betweenness, and closeness were used as network centrality indicators. A regression model was used with the characteristics of building use in the station catchment areas as control variables. This methodology was compared to previous studies’ methods for obtaining stations’ topology values. The adjusted R2 values increased by 0.272 and 0.220 for the respective models, explaining the number of passengers and the average travel distance, respectively; the number of significant variables also increased in both models. These results indicate that defining the network centrality obtained through SNA as the station’s topology could improve explanations of the number of passengers and the average travel distance by 27.2% and 22.0%, respectively, compared to previous studies. While this methodology is not new, this study demonstrated the advantages of using SNA to determine the centrality indices of urban railway stations

CREDIT, DEFAULT, AND OPTIMAL HEALTH INSURANCE

How do credit and default affect optimal health insurance? I answer this question, using a lifecycle model of health investment with a strategic default option on emergency room (ER) bills and financial debts. I calibrate the model to the U.S. economy and compare the optimal policy for Medicaid according to whether the strategic default option and access to credit are available. I find that the strategic default option induces the optimal policy to be more redistributive. With the strategic default option, the optimal policy expands Medicaid for households whose income is below 44 percent of the average income. Without the strategic default option, the optimal policy provides Medicaid to households whose income is below 25 percent of the average income. Through the strategic default option, more redistributive reforms can improve welfare by reducing the dependence on this implicit health insurance and changing young and low-income households’ medical spending behaviors to be more preventative. In these findings, the interaction between strategic default and preventative medical spending is important. When the preventative medical spending channel is shut down, the optimal policy in the case with the strategic default option is not to expand Medicaid

Time-Consistent Taxation with Heterogeneous Agents

I study optimal taxes and transfers along transition paths in an incomplete markets model with uninsurable risk, wherein individuals play a dynamic game with successive governments that lack the ability to commit to future policies. I characterize and solve for Markov-perfect equilibria in this dynamic game. I find that the government balances two types of externalities: income redistribution externalities through transfers and pecuniary externalities caused by changes in the factor composition of income. Commitment affects how the government balances the two types of externalities along the transition path. Quantitative analysis with a calibrated economy shows that the government with commitment substantially increases taxes and transfers early in the transition and maintains them thereafter. By doing so, the government attains front-loaded positive externalities from reduced income inequality and favorable factor price changes for low-income individuals while placing negative externalities from stagnant income redistribution and unfavorable factor price changes for low-income individuals in the long run. Without commitment, this equilibrium is not credible because the government disregards the upfront welfare gains and balances the two types of externalities in a forward-looking manner in each period

Democracy or Optimal Policy: Income Tax Decisions without Commitment

How do differences in the government’s political and commitment structure affect the aggregate economy, inequality, and welfare? I analyze this question, using a calibrated Aiyagari’s (1994) economy with wealth effects of labor supply wherein a flat tax rate and transfers are endogenously determined according to its political and commitment structure. I compare four economies: a baseline economy, an economy with the optimal tax with commitment in all steady states, an economy with the optimal tax without commitment, and a political economy with sequential voting. I obtain two main findings. First, the commitment structure shifts the government’s weighting between redistribution and efficiency. A lack of commitment leads the government to pursue a more redistributive policy at the expense of efficiency. Second, given a lack of commitment, the political economy with voting yields greater welfare than the economy with the time-consistent optimal policy. In the latter case, a lack of commitment hinders the government from implementing a more frugal policy desirable in the long run; instead, it cares more for low-income and wealth households, resulting in a substantial efficient loss. However, in the political economy with voting, the government considers only the interests of the median voter, who is middle class and reluctant to bear larger distortions from a higher tax rate and larger transfers. These findings imply that in terms of welfare, policies targeting the middle class would possibly be better than those exquisitely designed for the general public

On the Time Consistency of Universal Basic Income

I study how government commitment shapes optimal Universal Basic Income (UBI) by characterizing the equilibria of a dynamic game between heterogeneous individuals and a benevolent government. I find that commitment, throughout the transition, influences how the government balances income redistribution through taxes and UBI with pecuniary externalities from changes in factor income composition. In a calibrated economy, commitment substantially improves welfare by implementing considerable UBI that incurs long-run welfare losses but drives front-loaded welfare gains through income redistribution facilitated by reduced precautionary savings. Without commitment, the government obtains smaller welfare improvements, overlooking the impacts of long-run UBI on the short-run economy

On the Time Consistency of Universal Basic Income

I examine the effects of government commitment on the optimal provision of Universal Basic Income (UBI) in an incomplete-markets model by characterizing a dynamic game between individuals and a benevolent government according to its commitment technologies. I find that, throughout the transition, commitment determines how the government balances \textit{income redistribution} through taxes and UBI with \textit{pecuniary externalities} from changes in the factor income composition. In a calibrated economy, commitment leads to significant welfare improvements by counterbalancing these forces over the entire time horizon. Commitment enables a substantial long-run UBI provision by increasing taxes, which generates long-run welfare losses from stagnant income redistribution and unfavorable factor price changes for low-income individuals. However, this long-run UBI provision induces front-loaded welfare gains from factor price changes favoring low-income individuals and income redistribution facilitated by reduced precautionary savings. Without commitment, this time-lagged strategy is not credible because the government balances the two economic forces every period in a forward-looking manner, disregarding the long-run UBI impacts on the short-run economy. This time-consistent strategy results in smaller welfare improvements

Credit, Default, and Optimal Health Insurance

How do defaults and bankruptcies affect optimal health insurance policy? I answer this question using a life-cycle model of health investment with the option to default on emergency room (ER) bills and financial debts. I calibrate the model for the U.S. economy and compare the optimal health insurance in the baseline economy with that in an economy with no option to default. With no option to default, the optimal health insurance is similar to the health insurance system in the baseline economy. In contrast, with the option to default, the optimal health insurance system (i) expands the eligibility of Medicaid to 22 percent of the working-age population, (ii) replaces 72 percent of employer-based health insurance with a private individual health insurance plus a progressive subsidy, and (iii) reforms the private individual health insurance market by improving coverage rates and preventing price discrimination against people with pre-existing conditions. This result implies that with the option to default, households rely on bankruptcies and defaults on ER bills as implicit health insurance. More redistributive healthcare reforms can improve welfare by reducing the dependence on this implicit health insurance and changing households’ medical spending behavior to be more preventative