THE BECKER–COASE THEOREM RECONSIDERED

2015 ◽  
Vol 81 (2) ◽  
pp. 157-177 ◽  
Author(s):  
Pierre-Andre Chiappori ◽  
Murat Iyigun ◽  
Yoram Weiss

Abstract:We reconsider the well-known Becker–Coase (BC) theorem according to which changes in divorce law should not affect divorce rates. We do that in a context of households that consume public goods in addition to private goods. For the Becker–Coase theorem to hold in this setting, utility must be transferable both within marriage and upon divorce, and the marginal rate of substitution between public and private consumption needs to be invariant in marital status. We show that if divorce alters the way some goods are consumed (either because some goods that are public in marriage become private in divorce or because divorce affects either the marginal rate of substitution between public and private goods or even the cardinalization of a spouse’s utility), then the Becker–Coase theorem holds only for very specific preferences. We conclude that, in general, divorce laws will influence the divorce rate, although the impact of a change in divorce laws can go in either direction.

2018 ◽  
Author(s):  
Peter Fallesen

Objective: To study how divorce behavior in Denmark changed following a July 2013 reform that repealed mandatory separation periods for uncontested divorces, instead allowing for immediate administrative divorce.Background: Most countries have mandatory separation periods that couples undergo before they can divorce. Separation allows couples a grace-period, during which they may reconcile and stay together. Yet, the impact of separation periods on divorce risk remains understudied. Methods: Using monthly time series data on divorce rates from 2007-2018 (T=144), the research brief estimates the size and shape of the policy impact of the July 2013 reform. Using monthly administrative population data on all ever-married couples (N*T=40,431,848) the study further calculates the average characteristics of married couples in Denmark who would have remained together absent the reform.Results: After an initial spike in the divorce rate driven by couples divorcing earlier, the divorce rate settled at a 9.7 percent higher level compared to pre-reform. Couples who divorced because of the reform had been married for fewer years, were ethnic Danish, and had high school degree as highest educational level.Conclusion: Mandatory separation periods keep a minor, but substantial, share of potential divorcees together.


2021 ◽  
Author(s):  
Chee Hon Chan

Abstract Background Research has highlighted that satisfaction in health and social support are key areas of life affecting individual’s wellbeing. Many social and public health initiatives use these two intervention mechanisms to improve individual’s wellbeing. For the purpose of cost-benefit assessment, there has been growing interest in expressing these intervention effects in economic terms. However, only a handful of studies have ever estimated these effects in economic terms, and none of which examined in a Chinese context. The aim of this study is to extend this line of valuation work to estimate the implicit willingness-to-pays on the effects of improving individuals’ self-rated health status (SRH) and social support (SS) on their life satisfaction in the Chinese population. Methods Using individual’s life satisfaction data from a two-wave representative panel survey in Hong Kong (n = 1,109), this study first conducted a cross-lagged analysis with structural equation modelling technique to examine the causal effects of SRH and SS on life satisfaction, while simultaneously adjusting their reverse causal influences. The use of this cross-lagged approach was the effort to minimising the endogeneity problem. Then, substituting the respective estimates to the formulae of compensating surplus, the marginal rate of substitution of SRH and SS with respect to individual’s equivalised monthly household were estimated and were then expressed as the willingness-to-pays on the effect of improving individuals’ SRH and SS on their life satisfaction. Results The cross-lagged analysis ascertained the casual effects of SRH (β = 0.078, 95%CI: 0.020, 0.151) and SS on individuals’ satisfaction with life. The sample’s marginal rate of substitution of SRH and SS were found to be 1.28 (95%CI: 0.43, 2.15) and 1.36 (95%CI: 0.23, 2.49) respectively. Translating into the concept of compensating surplus, the implicit monetary values of improving the sample’s SRH from “poor health” to “excellent health” and their SS from “little support” to “a lot of support” are equivalent to an increase in their equivalised monthly household income by HK$56,000 and HK$39,400 respectively. Conclusions This study has implications for the cost-benefit assessment in wellbeing initiatives for the Chinese population.


Author(s):  
Darius N. Lakdawalla ◽  
Charles E. Phelps

AbstractThe generalized risk-adjusted cost-effectiveness (GRACE) model generalizes conventional cost-effectiveness analysis (CEA) by introducing diminishing returns to Health-Related Quality of Life (QoL). This changes CEA practice in three ways: (1) Willingness to pay (WTP) increases exponentially with untreated illness severity or pre-existing permanent disability, and WTP ends up lower for mild diseases but higher for severe diseases compared with conventional CEA; (2) Average treatment effectiveness should be adjusted for uncertainty in outcomes; and (3) The marginal rate of substitution between life expectancy and QoL varies with health state. Implementing GRACE requires new parameters describing risk preferences over QoL, the marginal rate of substitution between life expectancy (LE) and QoL, and the variance and skewness of treatment outcomes distributions. In this paper, we provide: (1) a generalized WTP threshold incorporating the possibility of permanent disability; (2) a simpler method to estimate the tradeoff rate between QoL and LE, eliminating the need to carry out treatment-by-treatment estimates; (3) a more-general method to adjust WTP for illness severity that permits non-constant relative risk-aversion in QoL; (4) a new approach to estimating risk-preferences over QoL, leveraging established empirical methods from “happiness” economics; and (5) a step-by-step guide for practitioners wishing to implement multi-period GRACE analyses.


SERIEs ◽  
2011 ◽  
Vol 2 (3) ◽  
pp. 401-421 ◽  
Author(s):  
Manuel Besada ◽  
Javier García ◽  
Miguel Mirás ◽  
Carmen Vázquez

1984 ◽  
Vol 5 (1) ◽  
pp. 47-69 ◽  
Author(s):  
BECKY L. GLASS

The impact of no-fault divorce laws was investigated through direct observation of divorce hearings, with emphasis on how divorce is experienced by contesting and uncontesting clients, and by the judge. Client expectations were identified and found to be largely unmet. The judge was found to have a general antipathy toward divorce cases; four factors that contribute to this antipathy are identified. Finally, it is suggested that, despite the no-fault divorce laws, divorce hearings are generally unsatisfactory for all parties due at least in part to the traditional adversarial nature of the legal procedure.


SERIEs ◽  
2021 ◽  
Author(s):  
Silvia Martinez-Gorricho ◽  
Miguel Sanchez Villalba

AbstractWe generalize the disutility of effort function in the linear-Constant Absolute Risk Aversion (CARA) pure moral hazard model. We assume that agents are heterogeneous in ability. Each agent’s ability is observable and treated as a parameter that indexes the disutility of effort associated with the task performed. In opposition to the literature (the “traditional” scenario), we find a new, “novel” scenario, in which a high-ability agent may be offered a weaker incentive contract than a low-ability one, but works harder. We characterize the conditions for the existence of these two scenarios: formally, the “traditional” (“novel”) scenario occurs if and only if the marginal rate of substitution of the marginal disutility of effort function is increasing (decreasing) in effort when evaluated at the second-best effort. If, further, this condition holds for all parameter values and matching is endogenous, less (more) talented agents work for principals with riskier projects in equilibrium. This implies that the indirect and total effects of risk on incentives are negative under monotone assortative matching.


2020 ◽  
Vol 11 (1) ◽  
pp. 88
Author(s):  
Rafaela Nogueira Carvalho

This paper studies the impact of unilateral divorce laws on child weight gain. I use difference-in-differences approach exploiting time and state variation in the adoption of the unilateral divorce law. I analyze a comprehensive nationwide health examination survey (NHANES I) during 1971-1974. The results show that exposure to unilateral divorce law leads to bigger Body Mass Index (BMI) for children between 2 and 18 years.However, according to the Center of Disease Control and Prevention (CDC), this weight gain is still under the normality patterns. I also investigate the possibles transmission mechanisms for the increase in BMI. Results indicate that for the specic age group of children between 7 and 18 years the exposure to unilateral divorce law leads to bigger BMI and bigger probability to be overweight.


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