Browsing by Author "Akay, Alpaslan"

Now showing 1 - 18 of 18

Back To Bentham: Should We? Large‐Scale Comparison of Decision versus Experienced Utility for Income‐Leisure Preferences
(2015-02) Akay, Alpaslan; Bargain, Olivier; Jara, H. Xavier; Dept. of Economics, University of Gothenburg
Subjective well‐being (SWB) is increasingly used as a way to measure individual well‐being. Interpreted as "experienced utility", it has been compared to "decision utility" using specific experiments (Kahneman et al., 1997) or stated preferences (Benjamin et al. 2012). We suggest here an original large‐scale comparison between ordinal preferences elicited from SWB data and those inferred from actual choices (revealed preferences). Precisely, we focus on income‐leisure preferences, closely associated to redistributive policies. We compare indifference curves consistent with income‐leisure subjective satisfaction with those derived from actual labor supply choices, on the same panel of British households. Results show striking similarities between these measures on average, reflecting that overall, people’s decision are not inconsistent with SWB maximization. Yet, the shape of individual preferences differ across approaches when looking at specific subpopulations. We investigate these differences and test for potential explanatory channels, particularly the roles of constraints and of individual "errors" related to aspirations, expectations or focusing illusion. We draw implications of our results for welfare analysis and policy evaluation.
Does relative income matter for the very poor? - Evidence from rural Ethiopia
(2010-10) Akay, Alpaslan; Martinsson, Peter
We studied whether relative income has an impact on subjective well-being among extremely poor people. Contrary to the findings in developed countries, we cannot reject the hypothesis that relative income has no impact on subjective well-being in rural areas of northern Ethiopia.
Dynamics of Employment- and Earnings-Assimilation of First-Generation Immigrant Men in Sweden, 1990-2000
(2007-12-05T12:55:06Z) Akay, Alpaslan
The employment- and earnings-assimilation of first-generation immigrant men in Sweden was estimated using a dynamic random-e¤ects sample-selection model with eleven waves of unbalanced panel-data during 1990-2000. Endogenous initial values were controlled for using the simple Wooldridge method. Local market unemployment-rates were used as a proxy in order to control for the effect of changing macroeconomic conditions. Significant structural (true) state-dependence was found both on the employment-probabilities and on the earnings of both immigrants and native Swedes. The size of structural state-dependence differed between immigrants and Swedes. Failure to control for the structural state-dependence could have caused bias not only in the assimilation measures but also in the cohort-effects. For example, standard (classic) assimilation model seriously overestimates short-run marginal assimilation-rates and underestimates long-run marginal assimilation- rates. The model controlling for structural state-dependence shows that the earnings of all immigrants in Sweden (except Iraqies) eventually converge to those of native Swedes, but only Nordics and Westerners are able to reach the employment- probability of native Swedes.
Economic Performance of Turkish Immigrant Men in the European Labour-Market: Evidence from Sweden
(2006) Tezic, Kerem; Karabulut, Gokhan; Akay, Alpaslan; Department of Economics
This paper uses eleven waves of panel-data to analyse the earnings assimilation of first-generation Turkish immigrant men in Sweden. Employment-probabilities and earnings are estimated in a fixed-effects sample selection model in order to control for both individual effects and panel-selectivity, which arise due to missing earnings-information. Local unemployment rates are used as proxy for varying local market conditions in order to control for the bias caused by equal-period-effect assumption. The results indicate that the earnings of Turkish immigrant men converge to those of natives, but their probability of being employed does not. The assimilation response of Turkish immigrants differs considerably, depending on arrival-cohorts and educational levels.
Essays on Microeconometrics and Immigrant Assimilation
(2008-05-02T11:45:47Z) Akay, Alpaslan
Paper I. Asymptotic bias reduction for a conditional marginal effects estimator in sam- ple selection models. In this article we discuss the differences between the average marginal effect and the mar- ginal effect of the average individual in sample selection models, estimated by the Heck- man procedure. We show that the bias that emerges as a consequence of interchanging the measures, could be very significant, even in the limit. We suggest a computationally cheap approximation method, which corrects the bias to a large extent. We illustrate the implications of our method with an empirical application of earnings assimilation and a small Monte Carlo simulation. Paper II. Local Unemployment and the Earnings-Assimilation of Immigrant Men in Sweden: Evidence from Longitudinal Data, 1990-2000. The earnings-assimilation of first-generation immigrant men in Sweden was analyzed us- ing eleven waves of panel-data, 1990-2000. Employment-probabilities and earnings were estimated simultaneously in a random-effects model, using Mundlak’s formulation to con- trol for both individual effects and panel-selectivity due to missing earnings-information. Assuming equal-period e¤ects produced bias which could distort the findings. To correct the bias, local unemployment-rates were used to proxy for changing economy-wide con- ditions. Labour-market outcomes differed considerably across immigrant arrival cohorts, region and country of origin, and educational levels. Paper III. Monte Carlo Investigation of the Initial Values Problem in Censored Dynamic Random-Effects Panel Data Models. Three designs of Monte Carlo experiments are used to investigate the initial-value problem in censored dynamic random-effects (Tobit type 1) models. We compared three widely used solution methods: naive method based on exogenous initial values assumption; Heck- man’s approximation; and the simple method of Wooldridge. The results suggest that the initial values problem is a serious issue: using a method which misspecifies the condi- tional distribution of initial values can cause misleading results on the magnitude of true (structural) and spurious state-dependence. The naive exogenous method is substantially biased for panels of short duration. Heckman’s approximation works well. The simple method of Wooldridge works better than naive exogenous method in small panels, but it is not as good as Heckman’s approximation. It is also observed that these methods performs equally well for panels of long duration. Paper IV. Dynamics of Employment- and Earnings-Assimilation of First-Generation Im- migrant Men in Sweden,1990-2000. The employment- and earnings-assimilation of first-generation immigrant men in Sweden was estimated using a dynamic random-e¤ects sample-selection model with eleven waves of unbalanced panel-data during 1990-2000. Endogenous initial values were controlled for using the simple Wooldridge method. Local market unemployment-rates were used as a proxy in order to control for the effect of changing macroeconomic conditions. Signifi- cant structural (true) state-dependence was found both on the employment-probabilities and on the earnings of both immigrants and native Swedes. The size of structural state- dependence differed between immigrants and Swedes. Failure to control for the structural state-dependence could have caused bias not only in the assimilation measures but also in the cohort-effects. For example, standard (classic) assimilation model seriously over- estimates short-run marginal assimilation-rates and underestimates long-run marginal assimilation-rates. The model controlling for structural state-dependence shows that the earnings of all immigrants in Sweden (except Iraqies) eventually converge to those of native Swedes, but only Nordics and Westerners are able to reach the employment-probability of native Swedes.
Essays on Microeconometrics and Immigrant Assimilation
(2008) Akay, Alpaslan
Everybody’s a Victim? Global Terror, Well-Being and Political Attitudes
(2018-06) Akay, Alpaslan; Bargain, Olivier; Elsayed, Ahmed; Dept. of Economics, University of Gothenburg
Terror has become a global issue. Terror acts perpetuated by religious, nationalist or political groups around the globe can propagate distress rapidly through different channels and possibly change political attitudes. This paper suggests the first evaluation of the impact of global terror on human welfare. We combine panel datasets for Australia, Germany, Russia, Switzerland, the UK and the US. Individual well-being information for 750,000 individual x year observations, recorded on precise dates, is matched with daily information on the 70,000 terror events that took place worldwide during 1994-2013. High-frequency data and quasi-random terror shocks of varying intensity provide the conditions for robust inference, while external validity is guaranteed by the use of large representative samples. We find a significantly negative effect of global terror on well-being, with a money-metric cost of around 6% - 17% of national income. Among diffusion channels, stock markets and economic anticipations play a minimal role, while traditional media filter the most salient events. The effect is greatly modulated by the physical, genetic or cultural proximity to the terror regions/victims. For a subset of countries, we also show that global terror has significantly increased the intention to vote for conservative parties. Heterogeneity analyses point to the mediating effect of risk perception: individuals who exhibit stronger emotional responses to terror impossibly more exposed to potential threats - are also more likely to experience a conservative shift.
‘Fair’ Welfare Comparisons with Heterogeneous Tastes: Subjective versus Revealed Preferences
(2017-09) Akay, Alpaslan; Bargain, Olivier B.; Jara, H. Xavier; Dept. of Economics, University of Gothenburg
Multidimensional welfare analysis has recently been revived by money-metric measures based on explicit fairness principles and the respect of individual preferences. To opera- tionalize this approach, preference heterogeneity can be inferred from the observation of individual choices (revealed preferences) or from self-declared satisfaction following these choices (subjective well-being). We question whether using one or the other method makes a di¤erence for welfare analysis based on income-leisure preferences. We estimate ordinal preferences that are either consistent with actual labor supply decisions or with income- leisure satisfaction. For di¤erent ethical priors regarding work preferences, we compare the welfare rankings obtained with both methods. The correlation in welfare ranks is high in general and very high for the 60% of the population whose actual choices coincide with subjective well-being maximization. For the rest, most of the discrepancies seem to be ex- plained by labor market constraints among the low skilled and underemployment among low-educated single mothers. Importantly from a Rawlsian perspective, the identification of the worst off depends on ethical views regarding responsibility for work preferences and the extent to which actual choices are constrained on the labor market.
Home Sweet Home? Macroeconomic Conditions in Home Countries and the Well-Being of Migrants
(2014-04) Akay, Alpaslan; Bargain, Olivier; Zimmermann, Klaus F.; Dept. of Economics, University of Gothenburg
This paper examines whether the subjective well-being of migrants is responsive to fl uc- tuations in macroeconomic conditions in their country of origin. Using the German Socio- Economic Panel for the years 1984 to 2009 and macroeconomic variables for 24 countries of origin, we exploit country-year variation for identi cation of the effect and panel data to con- trol for migrants observed and unobserved characteristics. We find strong (mild) evidence that migrants ' well-being responds negatively (positively) to an increase in the GDP (un- employment rate) of their home country. That is, we originally demonstrate that migrants regard home countries as natural comparators and, thereby, suggest an original assessment of the migration s relative deprivation motive. We also show that migrants are positively affected by the performances of the German regions in which they live (a signal effect ). We demonstrate that both e¤ects decline with years-since-migration and with the degree of assimilation in Germany, which is consistent with a switch of migrants reference point from home countries to migration destinations. Results are robust to the inclusion of country-time trends, to control for remittances sent to relatives in home countries and to a correction for selection into return migration. We derive important implications for labor market and migration policies.
I Can’t Sleep! Relative Concerns and Sleep Behavior
(2017-10) Akay, Alpaslan; Martinsson, Peter; Ralsmark, Hilda; Dept. of Economics, University of Gothenburg
We investigate the effect of relative concerns with respect to income on the quantity and quality of sleep using a long panel dataset on the sleep behavior of people in Germany. We find that relative income has a substantial negative effect on number of hours of sleep on weekdays and overall satisfaction with sleep, i.e., sleep quality, whereas absolute income has no particular effect on sleep behavior. The .ndings are robust to several speci.cation checks, including measures of relative concerns, reference group, income inequality, and local price differences. The paper also investigates the importance of the potential channels including working hours, time-use activities, and physical and mental health to explain how relative concerns relate to sleep behavior. The results reveal that while all of these channels partially contribute to the effect, it appears to be mainly driven by physical and mental health and overall and financial well-being/stress. We also use a subjective well-being valuation approach to calculate the monetary value of sleep lost due to income comparisons. The total cost is as high as about 2.6 billion euro/year (1.8% of the overall monetary value of sleep and 1.3% of total health expenditures) among the working-age population in Germany.
Local Unemployment and the Earnings-Assimilation of Immigrant Men in Sweden: Evidence from Longitudinal Data, 1990-2000
(2007-12-05T12:46:25Z) Akay, Alpaslan; Tezic, Kerem
The earnings-assimilation of first-generation immigrant men in Sweden was analyzed using eleven waves of panel-data, 1990-2000. Employment-probabilities and earnings were estimated simultaneously in a random-effects model, using a quasifixed effects to control for both individual effects and panel-selectivity due to missing earnings-information. Assuming equal-period effects produced bias which could distort the findings. To correct the bias, local unemployment-rates were used to proxy for changing economy-wide conditions. Labour-market outcomes differed consider- ably across immigrant arrival cohorts, region and country of origin, and educational levels.
Monte Carlo Investigation of the Initial Values Problem in Censored Dynamic Random-Effects Panel Data Model
(2007-12-05T12:50:17Z) Akay, Alpaslan
Three designs of Monte Carlo experiments are used to investigate the initial-value problem in censored dynamic random-effects (Tobit type 1) models. We compared three widely used solution methods: naive method based on exogenous initial values assumption; Heckman's approximation; and the simple method of Wooldridge. The results suggest that the initial values problem is a serious issue: using a method which misspecifies the conditional distribution of initial values can cause misleading results on the magnitude of true (structural) and spurious state-dependence. The naive exogenous method is substantially biased for panels of short duration. Heckman's approximation works well. The simple method of Wooldridge works better than naive exogenous method in short panels, but it is not as good as Heckman's approximation. It is also observed that these methods performs equally well for panels of long duration.
Personality and Positionality
(2019-03) Akay, Alpaslan; Department of Economics, University of Gothenburg
This paper employs survey experiments to examine the relationship between personality characteristics and positional concerns across a wide range of “goods,” e.g., income and market value of a car, and “bads,” e.g., infant mortality and poverty rates. Personality characteristics are measured using the five-factor model (Big-5), the locus of control, and the reciprocity. We demonstrate that there are significant relationships between personality types and positional concerns, which differ both by the type of personality and by the nature of a good. The results are highly consistent with the predictions presented in the field of personality psychology. That is, while agreeableness is negatively associated, conscientiousness, neuroticism, and external locus of control are positively associated with positional concerns for most goods. Importantly, there is also a substantial heterogeneity in the mean degree of positional concerns across the low and high values of most personality characteristics and goods.
Purchasing-Power-Parity and the Saving Behavior of Temporary Migrants
(2018-08) Akay, Alpaslan; Brausmann, Alexandra; Djajic, Slobodan; Kirdar, Murat G.; Dept. of Economics, University of Gothenburg
How does saving behavior of immigrants respond to changes in purchasing power parity between the source and host countries? We examine this question by building a theoretical model of joint return-migration and saving decisions of temporary migrants and then test its implications by using data from the German Socioeconomic Panel on immigrants from 92 source countries. As implied by our theoretical model, we find that the saving rate increases in the nominal exchange rate but decreases in the source-country price level and that the absolute magnitude of both relationships increases as the time to retirement becomes shorter. At the median level of years to retirement, the absolute values of the elasticity of savings with respect to the nominal exchange rate and with respect to the source-country price level are both close to unity. Moreover, as we gradually restrict the sample to individuals with stronger return intentions, the estimated magnitudes become larger and their statistical significance higher.
Remittances and Relative Concerns in Rural China
(2015-08) Akay, Alpaslan; Bargain, Olivier B.; Giulietti, Corrado; Robalino, Juan D.; Zimmermann, Klaus F.; Dept. of Economics, University of Gothenburg
The paper investigates the impact of remittances on the relative concerns of households in rural China. Using the Rural to Urban Migration in China (RUMiC) dataset we estimate a series of well-being functions to simultaneously explore the relative concerns with respect to income and remittances. Our results show that although rural households experience substantial utility loss due to income comparisons, they gain utility by comparing their remittances with those received by their reference group. In other words, we find evidence of a “status-effect” with respect to income and of a “signal-effect” with respect to remittances. The magnitudes of these two opposite effects are very similar, implying that the utility reduction due to relative income is compensated by the utility gain due to relative remittances. This finding is robust to various specifications, controlling for the endogeneity of remittances and selective migration, as well as a measure of current migrants’ net remittances calculated using counterfactual income and expenditures.
Second Order Approximation for the Average Marginal Effect of Heckman's Two Step Procedure
(2006) Tsakas, Elias; Akay, Alpaslan; Department of Economics
In this paper we discuss the differences between the average marginal effect and the marginal effect of the average individual in sample selection models, estimated by Heckman's two step procedure. We show that the bias that emerges as a consequence of interchanging them, could be very signifcant, even in the limit. We suggest a computationally cheap approximation method, which corrects the bias in a large extent. We illustrate the implications of our method with an empirical application of earnings assimilation and a small Monte Carlo simulation.
Standing in Others’ Shoes: Empathy and Positional Behavior
(2019-09) Akay, Alpaslan; Karabulut, Gökhan; Terzioğlu, Bilge; Department of Economics, University of Gothenburg
Studies show that people are concerned with other people’s consumption position in a varying degree with respect to the type of goods consumed and individual characteristics. Using both survey experiments and a large survey of subjective wellbeing (SWB) dataset, this paper presents robust associations between the degree of empathic capacity and positional concerns for consumption items involving pleasure and pain. The paper exploits both empathy quotient (EQ) and interpersonal reactivity index (IRI) measures of empathic capacity, i.e., dispositional empathy, which are sufficient measures capturing affective and cognitive aspects of empathy. Positional concerns are identified directly using a series of stated choice experiments and indirectly using the SWB approach. The main result of the paper is that positional concerns vary substantially with the levels of empathic capacity. Both EQ and IRI are found to be positively associated with positional concerns for “goods” (e.g., after-tax income, market value of a luxury car), reflecting a degree of selfregarded feelings and behavior to reduce personal distress, and negatively associated with positional concerns for “bads” (e.g., working hours and poverty rates), reflecting a degree of other-regarding feelings and behavior. The results are robust with respect to various checks including statistical specifications, reference groups, and omitted variables (e.g., prosocial behavior and competitivity) that could bias the results.
Sundays Are Blue: Aren’t They? -The Day-of-the-Week Effect on Subjective Well-Being and Socio-Economic Status
(2009-11-13T09:58:02Z) Akay, Alpaslan; Martinsson, Peter
This paper analyses whether individuals are influenced by the day of the week when reporting subjective well-being. By using a large panel data set and controlling for observed and unobserved individual characteristics, we find a large day-of the-week effect. Overall, we find a ‘blue’ Sunday effect with the lowest level of subjective well-being. The day-of-the-week effect differs with certain socio-economic and demographic factors such as employment, marital status and age. The paper concludes with recommendations for future analyses of subjective well-being data and design of data collections.