scholarly journals Subtractive versus Multiplicative Habits in Environmental Economics

2021 ◽  
Vol 27 (1) ◽  
pp. 72-90

The present paper presents overlapping generations set-up with internal habits in consumption and the presence of environmental quality in the utility function. The modeling of habits implies that the consumer preferences are influenced not only by a household’s own current consumption, but also by their personal past consumption. Our main objective is to study and compare the impacts of first subtractive second multiplicative internal habits on the environmental quality and the capital accumulation through a comparative static behavior at the stable steady state equilibrium. By changing the way the habit is specified, we have shown that introducing habit can lead to different findings regarding the capital and the environment.

2019 ◽  
Vol 24 (6) ◽  
pp. 583-607
Author(s):  
Andreas Schaefer ◽  
Anna Stünzi

AbstractIn an overlapping generations model with multiple steady states, we analyse the impact of endogenous environmental policies on the relevance of history and expectations for the equilibrium selection. In a polluting regime, environmental preferences cause an increasing energy tax which raises the risk that the economy transitions to the inferior equilibrium under pessimistic expectations. However, higher environmental preferences imply an earlier switch to the clean energy regime. Then, the conflict between production and environmental preferences is resolved and the prospects of selecting the superior equilibrium improve, since positive expectations become more relevant. In an empirical analysis we find that people with environmental preferences tend to have more optimistic expectations about economic development. Using these findings to analyse the steady-state dynamics implies that agents with environmental preferences support higher energy taxes and switch to clean production more quickly. Due to their optimism, the likelihood of reaching the superior stable steady state increases.


2021 ◽  
Vol 67 (1) ◽  
pp. 1-12
Author(s):  
Fatma Safi

Abstract The present paper presents a standard overlapping generations model with external habits formation and environmental quality in the utility function. Our main objective is to study the impact of external habits on capital accumulation and environmental quality on the intertemporal competitive equilibrium. We notice that striving for status leads to environment worsening and capital increasing when the cohort size is large.


2021 ◽  
Vol 6 (1) ◽  
pp. 42-50
Author(s):  
Fatma Safi

Outward habit formation affects consumption decisions. Since consumption displays a negative environmental externality, outward habits has as well an (adverse) effect on the environment. This research paper centers around the theoretical linkage between the combination of both externalities (environmental deterioration and outward habits). The objective of this study is to examine the impacts of outward habits on the state of the environment in the context of an overlapping generations economy. In our study, environmental quality is a public good negatively affected by consumption activity and positively affected by maintenance investment. With outward habit formation, the build-up level of average past consumption in the economy at large influences the current utility of an individual consumer. Thus, individuals draw utility not only from their own level of current consumption, but also from its level relative to the average consumption in the economy. How does outward habit influence the state of the environment? We analyze this question using an overlapping generations model with outward habit and environmental quality in the utility function. In steady state equilibrium allocation, we show that whether outward habits are destructive to the environment depends on the degrees of outward habit formation and the size of the economy.


2021 ◽  
pp. 1-19
Author(s):  
PARTHA SEN

Pay-as-you-go social security schemes in the Organisation for Economic Co-operation and Development countries are facing solvency problems, as people are living longer and birth rates have declined. Postponing the full retirement age (FRA), when retirees are entitled to full pension, has been proposed as a solution. This effectively lowers the payroll tax rate since pension is paid only in the post-FRA period. In a two-period two-sector overlapping generations model, I show that this shift lowers savings (because a part of the expected old-age income is consumed in the first period), as employment increases. In the transition to the new steady state, capital is decumulated and the wage rate falls. Contrast this with a reduction of the payroll tax rate where the initial old suffer reduced consumption, but the young have higher post-tax income and this spurs capital accumulation.


2018 ◽  
Vol 17 (2) ◽  
pp. 1-20
Author(s):  
Shiyu Li ◽  
Shuanglin Lin ◽  
Suresh Narayanan

This paper develops a dynamic equilibrium model of overlapping generations to study the effect of an introduction of a retail sales tax (RST) in China. Total government tax revenue is fixed, consumption-type value-added tax (VAT) is reduced in response to the introduction of RST, and an output tax exists. An introduction of RST accompanied by a decrease in VAT increases capital accumulation and welfare in the steady state. In the transition period, an introduction of RST accompanied by a decrease in VAT increases capital accumulation but decreases the current generation's welfare. Simulations based on the data from China show that introducing an 8 percent RST increases capital accumulation by 0.43 percent in the steady state.


De Economist ◽  
2020 ◽  
Author(s):  
Ben J. Heijdra ◽  
Pim Heijnen

Abstract We study environmental policy in a stylized economy–ecology model featuring multiple deterministic stable steady-state ecological equilibria. The economy–ecology does not settle in either of the deterministic steady states as the environmental system is hit by random shocks. Individuals live for two periods and derive utility from the (stochastic) quality of the environment. They feature warm-glow preferences and engage in private abatement in order to weakly influence the stochastic process governing environmental quality. The government may also conduct abatement activities or introduce environmental taxes. We solve for the market equilibrium abstracting from public abatement and taxes and show that the ecological process may get stuck for extended periods of time fluctuating around the heavily polluted (low quality) deterministic steady state. These epochs are called environmental catastrophes. They are not irreversible, however, as the system typically switches back to the basin of attraction associated with the good (high quality) deterministic steady state. The paper also compares the stationary distributions for environmental quality and individuals’ welfare arising under the unmanaged economy and in the first-best social optimum.


2012 ◽  
Vol 17 (6) ◽  
pp. 1198-1226 ◽  
Author(s):  
Luca Bossi ◽  
Gulcin Gumus

In this paper, we set up a three-period stochastic overlapping-generations model to analyze the implications of income inequality and mobility for demand for redistribution and social insurance. We model the size of two different public programs under the welfare state. We investigate bidimensional voting on the tax rates that determine the allocation of government revenues among transfer payments and old-age pensions. We show that the coalitions formed, the resulting political equilibria, and the demand for redistribution crucially depend on the level of income inequality and mobility.


Insects ◽  
2021 ◽  
Vol 12 (2) ◽  
pp. 123
Author(s):  
Roberta Moruzzo ◽  
Simone Mancini ◽  
Fabio Boncinelli ◽  
Francesco Riccioli

Insect-based food is not common in Europe, because most people do not consider insects to be edible, but rather a threat and a health risk. Fear and refusal to eat a new food product introduced into a culture is called food neophobia, which results in a hesitation to trying and experimenting with new foods. Although there is significant interest in this novel sector, there is a lack of research on the link between rejection, the level of food neophobia, and consumer behavior related to the introduction of insects into the diet. In this study, through 420 questionnaires, a specific experimental scale of insects was introduced which, together with a neophobia scale, analyzed the probability and the intention of respondents to consume insects. Another issue tested has been their intention to eat food containing insects. We observed that the analyses of the two scales produced different results, confirming the need for a specific scale to measure “insect phobia”. This is important, since knowledge about consumer preferences for and barriers to using insects as human food sources is limited but necessary in order to set up commercialization strategies. The development of insect-based food offers physical health benefits and also improves the sustainability of the food industry.


2012 ◽  
Vol 6 (3) ◽  
pp. 573-588 ◽  
Author(s):  
F. Pattyn ◽  
C. Schoof ◽  
L. Perichon ◽  
R. C. A. Hindmarsh ◽  
E. Bueler ◽  
...  

Abstract. Predictions of marine ice-sheet behaviour require models that are able to robustly simulate grounding line migration. We present results of an intercomparison exercise for marine ice-sheet models. Verification is effected by comparison with approximate analytical solutions for flux across the grounding line using simplified geometrical configurations (no lateral variations, no effects of lateral buttressing). Unique steady state grounding line positions exist for ice sheets on a downward sloping bed, while hysteresis occurs across an overdeepened bed, and stable steady state grounding line positions only occur on the downward-sloping sections. Models based on the shallow ice approximation, which does not resolve extensional stresses, do not reproduce the approximate analytical results unless appropriate parameterizations for ice flux are imposed at the grounding line. For extensional-stress resolving "shelfy stream" models, differences between model results were mainly due to the choice of spatial discretization. Moving grid methods were found to be the most accurate at capturing grounding line evolution, since they track the grounding line explicitly. Adaptive mesh refinement can further improve accuracy, including fixed grid models that generally perform poorly at coarse resolution. Fixed grid models, with nested grid representations of the grounding line, are able to generate accurate steady state positions, but can be inaccurate over transients. Only one full-Stokes model was included in the intercomparison, and consequently the accuracy of shelfy stream models as approximations of full-Stokes models remains to be determined in detail, especially during transients.


2017 ◽  
Vol 23 (2) ◽  
pp. 674-698 ◽  
Author(s):  
Luciano Fanti ◽  
Luca Gori ◽  
Cristiana Mammana ◽  
Elisabetta Michetti

This article aims at studying a general equilibrium model with overlapping generations that incorporates inherited tastes (aspirations) and endogenous longevity. The existence of standard-of-living aspirations transmitted between two subsequent generations in a context where the individual state of health depends on public investments in health has some remarkable consequences at the macroeconomic level. First, aspirations allow escaping from the well-known poverty trap scenario described by Chakraborty (2004). Second, the steady-state equilibrium may be destabilized through a super-critical Neimark–Sacker bifurcation when the health tax rate is set at too high or too low a level. This causes endogenous fluctuations in income and longevity.


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