Risk attitudes are context-specific

Ganna Pogrebna, Graham Loomes, 2 August 2014

Researchers use various measures of individual risk attitudes to help explain a wide variety of economic behaviours, including investment decisions and firms’ entry and exit decisions. This column presents recent evidence showing that such measures are very context-specific and need to be used with caution, since the very same people can sometimes appear to be risk taking and sometimes appear to be risk averse, depending on the specific measure used. These discrepancies may arise because people have imprecise preferences under risk, and their responses are liable to be influenced by the particular methods used to elicit them.

Why developing host countries sign increasingly strict investment agreements

Eric Neumayer, Peter Nunnenkamp, Martin Roy, 1 August 2014

Hoping to attract more FDI, developing countries are increasingly entering stricter investment agreements. But there is no conclusive evidence that such agreements serve them well. This column argues that contagion may help explain this trend. Competition between developing countries for FDI from developed ones could drive the diffusion of international investment agreements.

Dealing with the threat of climate catastrophe

Rick van der Ploeg, Aart de Zeeuw, 31 July 2014

Many ecological systems feature ‘tipping points’ at which small changes can have sudden, dramatic, and irreversible effects, and scientists worry that greenhouse gas emissions could trigger climate catastrophes. This column argues that this renders the marginal cost-benefit analysis usually employed in integrated assessment models inadequate. When potential tipping points are taken into account, the social cost of carbon more than triples – largely because carbon emissions increase the risk of catastrophe.

Can large primary surpluses solve Europe’s debt problem?

Barry Eichengreen, Ugo Panizza, 30 July 2014

For the debts of European countries to be sustainable, their governments will have to run large primary budget surpluses. But there are both political and economic reasons to question whether this is possible. The evidence presented in this column is not optimistic about Europe’s crisis countries. Whereas large primary surpluses for extended periods of time did occur in the past, they were always associated with exceptional circumstances.

Trans-Pacific Partnership negotiations and rulemaking to regulate state-owned enterprises

Tsuyoshi Kawase, 29 July 2014

The regulation of state-owned enterprises in international trade dealings has been cited as a major stumbling block to progress on the Trans-Pacific Partnership negotiations. This column explains the issues of contention, and argues that state-owned enterprises require an explicit and deliberate regulatory treatment. Given their unique properties, a coherent approach to state-owned enterprise regulation would promote progress in negotiations better than the piecemeal of overlapping rules currently considered.

Other Recent Articles:

Vox eBooks

Events

Subscribe