Elasticity optimism

Estimates of the elasticity of substitution between domestic and foreign varieties are small in macroeconomic data, and substantially larger in disaggregated studies. This may be an artifact of heterogeneity. We use disaggregated multilateral trade data to structurally identify elasticities of substitution in US goods. We spell out a partial equilibrium model to aggregate them adequately at the country level. We compare aggregate elasticities that impose equality across sectors, to estimates allowing for heterogeneity. The former are similar in value to conventional macroeconomic estimates; but they are more than twice larger -up to 7- with heterogeneity. The parameter is central to calibrated models in most of international economics. We discuss the difference our corrected estimate makes in various areas of international economics, including the dynamics of external balances, the international transmission of shocks, international portfolio choice and optimal monetary policy.Trade Elasticities, Aggregation, Calibration, Global Imbalances, International Transmission, International Portfolio, Monetary Policy.

Optimism as a Candidate Health Asset: Exploring Its Links With Adolescent Quality of Life in Sweden

This study aims to understand the role that optimism could play in the context of a health asset approach to promote adolescent health-related quality of life (HRQOL). Adolescents (n = 948), between 11 and 16 years old from a medium-sized rural town in Sweden, answered questionnaires measuring optimism, pessimism, and HRQOL. The findings indicate a significant decrease in optimism and a significant increase in pessimism between early and mid adolescence. The study has allowed us to present associational evidence of the links between optimism and HRQOL. This infers the potential of an optimistic orientation about the future to function as a health asset during adolescence and by implication may provide additional intervention tools in the planning of health promotion strategies.</p

Optimal choice and beliefs with ex ante savoring and ex post disappointment

We propose a new decision criterion under risk in which people extract both utility from anticipatory feelings ex ante and disutility from disappointment ex post. The decision maker chooses his degree of optimism, given that more optimism raises both the utility of ex ante feelings and the risk of disappointment ex post. We characterize the optimal beliefs and the preferences under risk generated by this mental process and apply this criterion to a simple portfolio choice/insurance problem. We show that these preferences are consistent with the preference reversal in the Allais’ paradoxes and predict that the decision maker takes on less risk compared to an expected utility maximizer. This speaks to the equity premium puzzle and to the preference for low deductibles in insurance contracts. Keywords: endogenous beliefs, anticipatory feeling, disappointment, optimism, decision under risk, portfolio allocation

Why the optimism?

In spite of the recent recession, hopes for the New Economy have been little daunted. Surprisingly robust productivity growth during the recent downturn provides compelling new evidence that something truly fundamental is going on. This Commentary argues that advances in information technology, and their diffusion through the economy, justify our optimism. Higher productivity growth is not an ephemeral phenomenon but one likely to persist for some time into the future, perhaps even accelerating further.Economic conditions - United States ; Labor productivity

Underlying construct of empathy, optimism, and burnout in medical students.

OBJECTIVE: This study was designed to explore the underlying construct of measures of empathy, optimism, and burnout in medical students. METHODS: Three instruments for measuring empathy (Jefferson Scale of Empathy, JSE); Optimism (the Life Orientation Test-Revised, LOT-R); and burnout (the Maslach Burnout Inventory, MBI, which includes three scales of Emotional Exhaustion, Depersonalization, and Personal Accomplishment) were administered to 265 third-year students at Sidney Kimmel (formerly Jefferson) Medical College at Thomas Jefferson University. Data were subjected to factor analysis to examine relationships among measures of empathy, optimism, and burnout in a multivariate statistical model. RESULTS: Factor analysis (principal component with oblique rotation) resulted in two underlying constructs, each with an eigenvalue greater than one. The first factor involved positive personality attributes (factor coefficients greater than .58 for measures of empathy, optimism, and personal accomplishment). The second factor involved negative personality attributes (factor coefficients greater than .78 for measures of emotional exhaustion, and depersonalization). CONCLUSIONS: Results confirmed that an association exists between empathy in the context of patient care and personality characteristics that are conducive to relationship building, and considered to be positive personality attributes, as opposed to personality characteristics that are considered as negative personality attributes that are detrimental to interpersonal relationships. Implications for the professional development of physicians-in-training and in-practice are discussed

Consumer optimism and price discrimination

In many principal-agent environments, the two parties hold different prior beliefs regarding the agent's future preferences. These differences may be due to inherent biases such as over-optimism or over-pessimism. We analyze the principal's optimal contract design under the assumption that the agent's prior is private information. In order to screen the agent's prior, the principal devises a menu of contingent contracts, some of which are 'speculative' as they involve betting on the agent's future action. We characterize the optimal menu and show that the characterization enables us to interpret real-life contract design in a variety of economic contexts

Stock market optimism and participation cost: a mean-variance estimation

We use household data to estimate the cost of participating to financial markets and the cross sectional dispersion of stock market optimism. Our analysis is based on a mean-variance framework, within which we derive structural decision rules for individual composition of the risky assets portfolio to be efficient, as function of both the amount to invest and the optimism about excess return of stocks over bonds. Exploiting the observed heterogeneity in risky asset holdings, we identify both the fixed cost of stock market participation and the dispersion of optimism about excess return. Using the Italian Survey of Household Income and Wealth we estimate a fixed cost of participating to the stock market of about 150 euro per year and a standard deviation of 30% in the optimism about excess returnheterogeneous household portfolios, mean-variance frontier, participation cost, expectation error