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Article

Anthropometrics is a research program that explores the extent to which economic processes affect human biological processes using height and weight as markers. This agenda differs from health economics in the sense that instead of studying diseases or longevity, macro manifestations of well-being, it focuses on cellular-level processes that determine the extent to which the organism thrives in its socio-economic and epidemiological environment. Thus, anthropometric indicators are used as a proxy measure for the biological standard of living as complements to conventional measures based on monetary units. Using physical stature as a marker, we enabled the profession to learn about the well-being of children and youth for whom market-generated monetary data are not abundant even in contemporary societies. It is now clear that economic transformations such as the onset of the Industrial Revolution and modern economic growth were accompanied by negative externalities that were hitherto unknown. Moreover, there is plenty of evidence to indicate that the Welfare States of Western and Northern Europe take better care of the biological needs of their citizens than the market-oriented health-care system of the United States. Obesity has reached pandemic proportions in the United States affecting 40% of the population. It is fostered by a sedentary and harried lifestyle, by the diminution in self-control, the spread of labor-saving technologies, and the rise of instant gratification characteristic of post-industrial society. The spread of television and a fast-food culture in the 1950s were watershed developments in this regard that accelerated the process. Obesity poses a serious health risk including heart disease, stroke, diabetes, and some types of cancer and its cost reaches $150 billion per annum in the United States or about $1,400 per capita. We conclude that the economy influences not only mortality and health but reaches bone-deep into the cellular level of the human organism. In other words, the economy is inextricably intertwined with human biological processes.

Article

Florian Exler and Michèle Tertilt

Consumer debt is an important means for consumption smoothing. In the United States, 70% of households own a credit card, and 40% borrow on it. When borrowers cannot (or do not want to) repay their debts, they can declare bankruptcy, which provides additional insurance in tough times. Since the 2000s, up to 1.5% of households declared bankruptcy per year. Clearly, the option to default affects borrowing interest rates in equilibrium. Consequently, when assessing (welfare) consequences of different bankruptcy regimes or providing policy recommendations, structural models with equilibrium default and endogenous interest rates are needed. At the same time, many questions are quantitative in nature: the benefits of a certain bankruptcy regime critically depend on the nature and amount of risk that households bear. Hence, models for normative or positive analysis should quantitatively match some important data moments. Four important empirical patterns are identified: First, since 1950, consumer debt has risen constantly, and it amounted to 25% of disposable income by 2016. Defaults have risen since the 1980s. Interestingly, interest rates remained roughly constant over the same time period. Second, borrowing and default clearly depend on age: both measures exhibit a distinct hump, peaking around 50 years of age. Third, ownership of credit cards and borrowing clearly depend on income: high-income households are more likely to own a credit card and to use it for borrowing. However, this pattern was stronger in the 1980s than in the 2010s. Finally, interest rates became more dispersed over time: the number of observed interest rates more than quadrupled between 1983 and 2016. These data have clear implications for theory: First, considering the importance of age, life cycle models seem most appropriate when modeling consumer debt and default. Second, bankruptcy must be costly to support any debt in equilibrium. While many types of costs are theoretically possible, only partial repayment requirements are able to quantitatively match the data on filings, debt levels, and interest rates simultaneously. Third, to account for the long-run trends in debts, defaults, and interest rates, several quantitative theory models identify a credit expansion along the intensive and extensive margin as the most likely source. This expansion is a consequence of technological advancements. Many of the quantitative macroeconomic models in this literature assess welfare effects of proposed reforms or of granting bankruptcy at all. These welfare consequences critically hinge on the types of risk that households face—because households incur unforeseen expenditures, not-too-stringent bankruptcy laws are typically found to be welfare superior to banning bankruptcy (or making it extremely costly) but also to extremely lax bankruptcy rules. There are very promising opportunities for future research related to consumer debt and default. Newly available data in the United States and internationally, more powerful computational resources allowing for more complex modeling of household balance sheets, and new loan products are just some of many promising avenues.