Risk and time preferences: saver types

In an extended variant of the life-cycle hypothesis, saving behaviour is shown to depend crucially on the interaction between two preference parameters : γ, which represents risk attitudes (aversion, prudence...), and δ, the rate of time depreciation. Hence, the predictions of four specific accumulation regimes : the Armchair investors (high γ, low δ) ; the Entreprising (low γ, low δ) ; the Hotheads (low γ, high δ) ; and the Short-sighted prudent (high γ, high δ). The Insee "Patrimoine 1997" survey allows to obtain global relative measures of the two preference parameters. An econometric analysis of the amount and composition of wealth shows then that this savers' typology has sizeable explanatory power, with effects as predicted. Ceteris paribus, "armchair investors" accumulate more wealth than other households. Hotheads own less homes and Pep (insurance saving products), short-sighted prudent less (often) stocks, and these two types of savers invest less in long-term saving (whether for housing or retirement) than the other categories.risk aversion ; time preference ; wealth ; portfolio choice

The effect of ambipolar diffusion on low-density molecular ISM filaments

The filamentary structure of the molecular interstellar medium and the potential link of this morphology to star formation have been brought into focus recently by high resolution observational surveys. An especially puzzling matter is that local interstellar filaments appear to have the same thickness, independent of their column density. This requires a theoretical understanding of their formation process and the physics that governs their evolution. In this work we explore a scenario in which filaments are dissipative structures of the large-scale interstellar turbulence cascade and ion-neutral friction (also called ambipolar diffusion) is affecting their sizes by preventing small-scale compressions. We employ high-resolution, 3D MHD simulations, performed with the grid code RAMSES, to investigate non-ideal MHD turbulence as a filament formation mechanism. We focus the analysis on the mass and thickness distributions of the resulting filamentary structures. Simulations of both driven and decaying MHD turbulence show that the morphologies of the density and the magnetic field are different when ambipolar diffusion is included in the models. In particular, the densest structures are broader and more massive as an effect of ion-neutral friction and the power spectra of both the velocity and the density steepen at a smaller wavenumber. The comparison between ideal and non-ideal MHD simulations shows that ambipolar diffusion causes a shift of the filament thickness distribution towards higher values. However, none of the distributions exhibit the pronounced peak found in the observed local filaments. Limitations in dynamical range and the absence of self-gravity in these numerical experiments do not allow us to conclude at this time whether this is due to the different filament selection or due to the physics inherent of the filament formation.Comment: A&A accepte

Measuring savers' preferences how and why?

Measuring individual preferences of savers have two main motivations: to reduce the share of non-observed heterogeneity in explaining households' wealth behaviors, and to construct more accurate tests of the theories of savings and portfolio choices. For France, we have constructed a unique data set, the PAT€R surveys (PATrimony and Preferences vis-à-vis Time and Risk), with the first survey made in 1998 by interview with Insee, and the following surveys conducted by Tns-Sofres via postal questionnaires: PAT€R-2002 focused on the transmission of preferences between parents and children; the three subsequent waves, PAT€R-2007-2009-2011, were conducted in May 2007 (before the crisis), June 2009 and November 2011, on more than 3600 households representative of the French population, with an important panel dimension - about 2000 households were interviewed at least twice, and nearly 1100 households were present in all three waves. Almost each survey replicates direct measures of risk attitudes as well as time preference found in the literature, such as the hypothetical lottery on income of Barsky et al. (1997), selfreported 0-to-10 scales concerning the willingness to take risks in various contexts (Dohmen et al., 2011), or even experimental measures. Yet these measures, based upon a limited number of questions, suffer from serious drawbacks that are analyzed in the paper. This is why we have developed an alternative method of scoring in order to measure three types of preferences, towards risk, time, and offspring (altruism) : synthetic and ordinal scores of preferences are derived from the responses given to a large number of (mainly) simple real-life questions covering different life domains of life (consumption, leisure, health, investments, work, retirement, family). No single question is satisfactory by itself, but the idea is that if a number of questions possess a common dimension, towards risk for instance, this dimension will be isolated by aggregating the replies, beyond framing effects, measurement errors, etc.: the score obtained will then show enough internal consistency, as measured by psychometric tests. Ultimately, the data will thus determine how many indicators - if any - should be introduced for each type of preference. On the five surveys, this scoring method has proved very consistent and robust. Derived from some 60 questions, one single score of preference towards risk was sufficient in each wave (with Cronbach's alpha near 0.7). As regards time depreciation, two scores were each time necessary, marking the contrast between the short term and impulsive choices ("short-term impatience") on the one hand, and the long term and more reasoned decisions "time preference" over the life cycle) on the other. One single score of altruism was retained. he contents of these four scores are very similar from one wave to the next, as well as their individual determinants, their individual correlation over time, the degree of correlation between scores, etc. Finally, the effect of these scores on the level and composition of wealth are similar across surveys, in line with theoretical predictions, and more significant than those obtained for alternate measures of preferences which suffer, moreover, from endogeneity biases

Taxing more (large) family bequests: why, when, where?

There is a capital taxation puzzle in most developed countries. Since the 1960s, revenues from wealth transfer taxation have been especially low and decreasing as a percentage of GDP, even to the extent of disappearing in quite a number of cases; by contrast, lifetime wealth or capital taxation generates much higher revenues and shows no decreasing trend. The full tax puzzle is certainly not easy to explain. Many usual explanations of the aversion to wealth transfer taxation also imply limited lifetime capital taxation: they cannot justify the very strong collective preference for lifetime capital taxation observed in most countries. On the other hand, capital market imperfections may explain higher levels of lifetime capital taxation, but not the diverging trends of the two components of capital taxation. We think that a key explanatory factor of the tax puzzle in general and of the growing unpopularity of wealth transfer taxation in particular stems from the rising role of family values and links: the family appears to be the only safe investment nowadays in the face of risky globalized markets and the feared retrenchment of the welfare state. Any realistic reform must take this social and political constraint into account. Most reformist economists think that lifetime wealth or capital taxation could act as quite an efficient substitute for too unpopular taxes on wealth transfers. We offer an alternative solution which recommends heavier and more progressive taxation on family inheritances (only) while allowing for various legal loopholes to avoid the tax. It could hence prompt parents driven by family altruism to increase (early) inter vivos transfers to their progeny and people driven by social altruism to make more charitable gifts and bequests, and would bring in additional and welcome revenues

Risk and time preferences: saver types

In an extended variant of the life-cycle hypothesis, saving behaviour is shown to depend crucially on the interaction between two preference parameters : γ, which represents risk attitudes (aversion, prudence...), and δ, the rate of time depreciation. Hence, the predictions of four specific accumulation regimes : the Armchair investors (high γ, low δ) ; the Entreprising (low γ, low δ) ; the Hotheads (low γ, high δ) ; and the Short-sighted prudent (high γ, high δ). The Insee "Patrimoine 1997" survey allows to obtain global relative measures of the two preference parameters. An econometric analysis of the amount and composition of wealth shows then that this savers' typology has sizeable explanatory power, with effects as predicted. Ceteris paribus, "armchair investors" accumulate more wealth than other households. Hotheads own less homes and Pep (insurance saving products), short-sighted prudent less (often) stocks, and these two types of savers invest less in long-term saving (whether for housing or retirement) than the other categories.Selon la théorie de cycle de vie, le consommateur/épargnant maximise, sous diverses contraintes, une fonction d'utilité définie sur son horizon de vie: le comportement de ce dernier dépendra alors de paramètres de préférence personnels, soit de ses attitudes à l'égard du risque et du temps. Dans ce cadre, tout est fait pour séparer ces préférences ("aversion" et autres attitudes) à l'égard du risque, γ, de celles à l'égard du temps (préférence pour le présent), δ, en les caractérisant par des paramètres définis indépendamment. Paradoxalement, les prédictions de la plupart des modèles vont dépendre de manière cruciale de l'interaction entre les deux séries de paramètres : savoir seulement que l'individu est "risquophile", ou bien "myope" n'apporte qu'une connaissance limitée ; savoir qu'il est les deux à la fois renseigne bien davantage sur ses décisions d'épargne et de composition du patrimoine. On peut alors caractériser le comportement prédit pour quatre types d'agents : les bons pères de famille (γ élevé, δ faible), les entreprenants (γ faible, δ faible), les têtes brûlées (γ faible, δ élevé), les cigales prudentes (γ élevé, δ élevé). Une enquête récente de l'INSEE ("Patrimoine 1997") conforte la validité empirique des prédictions dans le cas de la France. A travers plus de 80 questions balayant divers domaines de la vie, on a construit pour chaque enquêté, sous forme de "scores" qualitatifs, des indicateurs relatifs de son attitude à l'égard du risque et de son degré de prévoyance à long terme. Comme prévu, le croisement des deux paramètres de préférence offre les conclusions les plus intéressantes. L'analyse économétrique du montant et de la composition du patrimoine accorde un pouvoir explicatif appréciable aux paramètres introduits en combinaison. Toutes choses égales d'ailleurs, les "bons pères de famille" accumulent sensiblement plus que les autres ; à l'inverse, les têtes brûlées détiennent moins de produits d'épargne-retraite que les autres, et la détention d'actions apparaît significativement la plus faible dans le groupe des cigales prudentes

Book Review: Flood Stage and Rising

Jane Varley\u27s Flood Stage and Rising opens with what becomes the haunting echo of the narrative, how far north should we go? The north of the Great Plains impresses itself on Varley\u27s consciousness immediately when she observes, the land was flat. So flat it looked bizarre. In order to begin her PhD studies, she and her husband Gary move from one landscape (the lush greenery and hills of Virginia) to the rich diluvian river bed of Grand Forks, North Dakota. A Great Plains town that inspires tall tales, Grand Forks is built on the edge of the Red River, the last remnant of the great Agassiz Basin. Undeterred by such a contrasting landscape from what they have known, and ready for adventure in a new location, Varley and her husband learn both the beauty and bizarreness of life on the Great Plains

L'efficacité économique peut-elle justifier l'augmentation des droits de succession ?.

Inégalité sociale; Successions et héritages; Impôts;

How to Measure Risk and Time Preferences of Savers.

Epargne; Risque;

Individual Preferences and Disparities in Personal Wealth

Do the individual preference indicators we developed have any significant effects on net or gross financial assets in keeping with the predictions of microeconomic savings models? The empirical analysis of the 1998 INSEE Patrimoine survey on personal wealth comes to a positive answer to this question, but especially in the case of the scores: these composite indicators have much greater and more consistent explanatory power than that of the other preference measures considered. The explanatory gain obtained with the preference scores may seem modest due to the extremely high concentration of wealth. Unobserved heterogeneity is not greatly reduced. Yet despite all this, the quantitative effects of these subjective variables are far from negligible, especially as regards the time preference: between individuals at either end of the scale i.e. between the shortest sighted and the farthest sighted in the sample the estimated deviations in personal wealth range from 1 to 10.Risk Aversion, Time Preference, Life Cycle Models, Wealth Inequality

Measuring Individual Risk-Related Preferences

Recent microeconomic developments in the study of uncertainty have increased the number of individual preference parameters risk aversion, prudence, temperance, loss aversion, etc. to cover it. Based on a specific questionnaire put to a sub-sample of the 1998 INSEE Patrimoine survey on personal wealth, we paradoxically propose measuring this profusion of individual attitudes to risk using a single, ordinal indicator: we produce a score as a summary measure supposed representative of the range of these preferences with regard to risk. The score information suggests that young people, single people, men, high wage earners and children of well-off self-employed professionals or non-teaching executives are prepared to take greater risks than the others. Seniors, couples, women, the least qualified, and children of prudent, manual employee and farmer parents tend to take fewer risks. The age- and gender-related findings were common to all the indicators.Risk Aversion, Discounted Utility, Non Expected Utility, Life Cycle Models