New Economics Papers
on Business, Economic and Financial History
Issue of 2012‒11‒03
23 papers chosen by

  1. Technology and the Era of the Mass Army By Massimiliano Gaetano Onorato; Kenneth Scheve; David Stasavage
  2. What caused the failure of nationalisation of the railway system in Germany? : Malfunction of the German Imperial Railway Office (Reichseisenbahnamt) in the 1870s and 1880s. By Ayumu Banzawa
  3. Destapando la Caja Negra: Sociologías de los Créditos de Consumo en Chile By Ossandón, José
  4. Poverty and Subsistence. The Mercantilist Point of View By Cosma Orsi
  5. Book review: The long divergence: how Islamic law held back the Middle East by Timur Kuran By Islahi, Abdul Azim
  6. Is Protection Good or Bad for Growth? Lessons from Canada's Cotton Textile Mills By Michael Hinton; Thomas Barbiero
  7. On the Welfare Costs of Business-Cycle Fluctuations and Economic-Growth Variation in the 20th Century By Guillén, Osmani Teixeira de Carvalho; Issler, João Victor; Franco Neto, Afonso Arinos de Mello
  8. (Re-) Shaping hatred: Anti-Semitic attitudes in Germany, 1890-2006 By Nico Voigtländer; Joachim Voth
  9. Towards a Political Economy of the Theory of Economic Policy By K.Vela Velupillai
  10. Institutions and the Long-run Impact of Early Development By James, Ang
  11. Goodwin in Siena – Economist, Social Philosopher and Artist By Massimo Di Matteo; Serena Sordi
  12. The training of gold- and silversmiths in eighteenth- century Ghent: the role of the academy By Tim De Doncker
  13. Inventors, Patents and Inventive Activities in the English Brewing Industry, 1634-1850 By Alessandro Nuvolari; James Sumner
  14. Taking firms to the stock market: IPOs and the importance of large banks in Imperial Germany 1896 - 1913 By Lehmann, Sibylle H.
  15. Identity Realization, Multiple Logics and Organizational Form Legitimacy. Organizational Founding Rates during the Emergence of the Dutch Accounting Industry, 1884-1939 By Divarci A.; Boone Ch.; Van Witteloostuijn A.
  16. Why Was Short-Time Work Unattractive During the Crisis? By Gonthier, Pauline
  17. The SO2 Allowance Trading System: The Ironic History of a Grand Policy Experiment By Richard Schmalensee; Robert N. Stavins
  18. "Intra-Firm Trade Network in Mitsubishi Corporation, 1922-28" (in Japanese) By Tetsuji Okazaki
  19. Alimentació i nutrició al Vallès Occidental. Un segle i mig de canvis i permanències: 1787-1936 By Xavier Cussó; Ramon Garrabou
  20. Accounting for Labor Input in Chinese Industry, 1949-2009 By Harry WU; Ximing YUE
  21. The Latin American Development Problem: An Interpretation By Diego Restuccia
  22. The myth of the “cashless society”: How much of America’s currency is overseas? By Feige, Edgar L.
  23. On the Sources of Risk Preferences in Rural Vietnam By Anh Duc Dang

  1. By: Massimiliano Gaetano Onorato (IMT Lucca Institute for Advanced Studies); Kenneth Scheve (Stanford University); David Stasavage (New York University)
    Abstract: We provide the first systematic examination of the determinants of military mobilization over the very long run. Focusing on a sample of thirteen great powers between 1600 and 2000 we argue that changes in transport and communications technology were the single most important factor in both ushering in the era of the mass army and in leading to its eventual demise. During the nineteenth century the development of the railroad made it possible for the first time to mobilize and feed armies numbering in the millions. During the late twentieth century further advances in transport and communications technology made it possible to deliver explosive force from a distance and with precision, making mass armies less desirable. We find strong support for our technological interpretation using a new data set that measures army size, population mobilization, and methods of recruitment from the beginning of the seventeenth century. In so doing we also consider several other plausible determinants of military mobilization. Contrary to what is so often suggested by scholars, we find little evidence that the French Revolution and the invention of the concept of "the nation in arms" was associated with a substantial increase in levels of mobilization across nations. Even for the French case alone, the magnitude of what is sometimes referred to as the "Napoleonic watershed" was smaller than what is often believed.
    Keywords: Military, Security, Soldiers, Technological Change, Technology, Technology Adoption, War, Warfare
    JEL: F52 N4 N7 O33
    Date: 2012–10
  2. By: Ayumu Banzawa (Graduate School of Economics, Osaka University)
    Abstract: This paper identifies the causes of failure of the nationalisation of the German railway system by the Imperial Railway Office (das Reichseisenbahnamt; REA) that was established during 1873-1874 under the order of Otto v. Bismarck, the first Imperial Chancellor (Reichskanzler). The REA was not able to keep railways in the Reich (unified Germany) under its perfect control as provided by the German Imperial Constitution. What impeded the REAfs mission? We must pay attention to the REAfs problems as an organisation. As the official documents of the REA suggested, the organisation was not free from bureaucratic inflexibility in both structural and personal matters. Furthermore, compared with the other railway administration bodies in Germany in the 19th century, I point out the REAfs incapability in collecting regional information. The REA, the central bureau in the German-Prussian capital, had no regional unit. Its top-heavy structure and the higher-ups in the bureaucracy did not collect the non-lettering information from those who were doing the actual work at each railway, and this caused a criticized edisproportionate emphasis on documentsf. To illustrate this point, I focus on the failure by the REA in playing the leading role in compiling the first German national railway statistics.
    Keywords: Railways, Germany, Nationalisation, 19th century
    JEL: N43 N73
    Date: 2012–10
  3. By: Ossandón, José
    Abstract: There is no doubt; consumer credits are more and more present in the economic life of the Chileans. It is enough to go to any shopping mall, supermarket or even medical centre to realize that today it is possible to buy almost everything with some kind of loan. The expansion of consumer credit has not passed unnoticed by local researchers. But they have been interested mostly in two main sides of this process: the social consequences, such as consumerism and over-indebtedness, of the expansion of consumer credit, and, those regulatory elements that would have shaped the particular characteristic of this industry. However, almost nothing has been yet said about what happens in-between these poles, in the firms and institutions that are behind each loan. The chapters included in this volume explore this “black box”.
    Keywords: consumer credit; economic sociology; sociology of finance; créditos de consumo; Chile; sociología económica; deuda; debt
    JEL: Z1 L81 N3
    Date: 2012–01
  4. By: Cosma Orsi (DISCE,Università Cattolica)
    Abstract: The aim of this article is to look at ideas of social welfare in the English political economy from the 16th to the early 18th Century. In doing so, we shall focus upon the relationship between English Mercantilist economic thought and the evolution of the institutional framework established in order to cope with the problem of poverty and unemployment. In other words, rather than viewing Mercantilism as an “exercise in economic nationalism” we shall inquiry it under the perspective of social policy. Although the most credited assessments of Mercantilism have depicted it as a doctrine which supported a “ruthlessly materialistic ruling class which did not merely neglect but actively exploited the poor”, by placing the emphasis on the role played by the allowance system in the overall strategy of poor relief in England throughout the 17th Century we shall see that during the Mercantilist period social policies were not neglectful of the need of the poor. This reinforced the idea of a social Mercantilism.
    Keywords: Mercantilism, Poverty, Unemployment, Allowances System
    JEL: B11
    Date: 2012–09
  5. By: Islahi, Abdul Azim
    Abstract: This is a critical evaluation of the book entitled The Long Divergence:How Islamic Law Held Back the Middle East by Timur Kuran.
    Keywords: Economic History of Middle East; Ottoman Economic History; Decadence of Muslim East; Islamic law
    JEL: N85 O1 P00 K00 P51 N80 B00
    Date: 2012
  6. By: Michael Hinton (Rimini Centre for Economic Analysis, and Minerva's Owl, Consultants); Thomas Barbiero (Department of Economics, Ryerson University)
    Keywords: Cotton Textiles, 19th Century Canada, Economic Growth, Tariffs, National Policy
    Date: 2012–07
  7. By: Guillén, Osmani Teixeira de Carvalho; Issler, João Victor; Franco Neto, Afonso Arinos de Mello
    Abstract: Lucas(1987) has shown a surprising result in business-cycle research: the welfare cost ofbusiness cycles are very small. Our paper has several original contributions. First, in computingwelfare costs, we propose a novel setup that separates the effects of uncertainty stemming frombusiness-cycle uctuations and economic-growth variation. Second, we extend the sample fromwhich to compute the moments of consumption: the whole of the literature chose primarily to work with post-WWII data. For this period, actual consumption is already a result of counter-cyclical policies, and is potentially smoother than what it otherwise have been in their absence.So, we employ also pre-WWII data. Third, we take an econometric approach and computeexplicitly the asymptotic standard deviation of welfare costs using the Delta Method.Estimates of welfare costs show major diferences for the pre-WWII and the post-WWII era.They can reach up to 15 times for reasonable parameter values = 0:985, and = 5. Forexample, in the pre-WWII period (1901-1941), welfare cost estimates are 0.31% of consumptionif we consider only permanent shocks and 0.61% of consumption if we consider only transitoryshocks. In comparison, the post-WWII era is much quieter: welfare costs of economic growth are0.11% and welfare costs of business cycles are 0.037% the latter being very close to the estimatein Lucas (0.040%). Estimates of marginal welfare costs are roughly twice the size of the totalwelfare costs. For the pre-WWII era, marginal welfare costs of economic-growth and business-cycle uctuations are respectively 0.63% and 1.17% of per-capita consumption. The same guresfor the post-WWII era are, respectively, 0.21% and 0.07% of per-capita consumption.
    Date: 2012–10–17
  8. By: Nico Voigtländer; Joachim Voth
    Abstract: In this paper, we assess the determinants of long-run persistence of local culture, and examine the success of policy interventions designed to change attitudes. We analyze anti-Semitic attitudes drawing on individual-level survey results from Germany’s social value survey in 1996 and 2006. On average, we find that historical voting patterns for anti-Semitic parties between 1890 and 1933 are powerful predictors of anti-Jewish attitudes today. There is evidence that transmission takes place both vertically (parent to child) and horizontally (among peers). Policy modified German views on Jews in important ways: The cohort that grew up under the Nazi regime shows significantly higher levels of anti-Semitism. After 1945, the victorious Allies implemented denazification programs in their zones of occupation. We use differences in these policies between the occupying powers as a source of identifying variation. The US and French zones today still show high anti-Semitism, reflecting an ambitious botched attempt at denazification. In contrast, the British and Soviet zones, register much lower levels of Jew-hatred.
    Date: 2012–03
  9. By: K.Vela Velupillai
    Abstract: The theory of economic policy, in its mathematical modes, may be said to have had two incarnations, identified in terms of pre-Lucasian and ultra-Lucasian on a time-scale, whose origin can be traced to the Scandinavian works of the 1920s and early 1930s, beginning with Lindahl (1924, 1929), Frisch (1933) and Myrdal (1933). The end - mercifully (meant perversely) - of the ultra-Lucasian period, in Frances Fukuyama senses, might well have been the date of Prescott's Nobel Prize Lecture (Prescott, 2004). The codification of what may be called the `classical' theory of economic policy was initiated in the pioneering formalisations by Frisch (1949, a, b), and Tinbergen (1952), elegantly summarised in Bent Hansen's early, advanced, text book (Hansen, 1955). The launching pads for the ultra-Lucasian period were the Lucas Critique (Lucas, 1975), the elementary saddle-point dynamics based policy ineffectiveness `theorem' in a Rational Expectations context by Sargent and Wallace (1976) and the Dynamic Programming based Time-Invariance proposition in Kydland and Prescott(1977). In this essay I try, first of all, to trace a path of the mathematisation of the theory of economic policy, from this specific origin to the stated culminating point. Secondly, an attempt is made to expose the nature of the Emperor's New (Mathematical) Clothes in which the mathematisation of the theory of economic policy was attired. Finally, it is shown that the obfuscation by the mathematics of efficiency, equilibrium and the fundamental theorems of welfare economics can be dispelled by an enlightened, alternative, mathematisation that makes it possible to resurrect the poetic tradition in economics and ‘connect the prose in us with the passion’ for policy in the manner in which Geoff Harcourt has `connected' them.
    Date: 2012
  10. By: James, Ang
    Abstract: We study the role of institutional development as a causal mechanism of history affecting current economic performance. Several indicators capturing different dimensions of early development in 1500 AD are used to remove the endogenous component of the variations in institutions. These indicators are adjusted with large-scale movements of people across international borders using the global migration matrix of Putterman and Weil (2010) to account for the fact that the ancestors of a population have facilitated the diffusion of knowledge when they migrate. The exogenous component of institutions due to historical development is found to be a significant determinant of current output. By demonstrating that the relationship between early development and current economic performance works through the channel of institutions and that better institutions can be traced back to historical factors, the results of this paper shed some light on how history has played a role in shaping long-run comparative development.
    Keywords: institutions; long-run comparative development; technology adoption
    JEL: O30 O10 O43
    Date: 2012–10
  11. By: Massimo Di Matteo; Serena Sordi
    Abstract: This article describes the years of Goodwin’s ‘third life’ at the University of Siena, stressing in particular his main contributions to economic theory, the evolution in his political and philosophical ideas and his love of art. First, after a brief description of his arrival in Siena and of the background he found there, we explore some of his contributions of the period and we argue that his achievements in the explanation of irregular growth cycles are remarkable and still open to further analysis and generalisation. Second, we remark that, as testified by an unpublished essay, in these years of dramatic changes such as the Fall of the Berlin Wall, his social philosophical beliefs underwent a significant evolution. Finally, we conclude with a tribute to Goodwin, the abstract painter.
    Keywords: Economic dynamics, MKS system, Long waves, Growth cycle, Chaos
    JEL: B31 C61 E32
    Date: 2012
  12. By: Tim De Doncker (Department of History, Ghent University)
    Abstract: This article will look for the training of Ghent gold- and silversmiths in the second half of the eighteenth century. Initially, attention will be focused on the importance of the new and fashionable. It will be argued that in several countries the solution to the design deficit will be countered by the establishment of art academies and drawing schools. Thereafter, it will be shown that in the historiography there is no general consensus on the academic training of artisans. Subsequently, the focus will be moved to the city of Ghent. First, the importance of design skills for gold- and silversmiths will be given a chance. In the second part, the emphasis is on how precious-metalsmiths develop strategies within the existing structures to be competitive on the market. This contribution will show that the legitimation of skills was high on the academic agenda.
    JEL: D2 N93 O31
    Date: 2012–10
  13. By: Alessandro Nuvolari; James Sumner
    Abstract: This paper examines the relationship between patents, appropriability strategies and market for technologies in the English brewing industry before 1850. Previous research has pointed to the apparent oddity that large-scale brewing in this period was characterized both by a self-aware culture of rapid technological innovation, and by a remarkably low propensity to patent. Our study records how brewery innovators pursued a wide variety of highly distinct appropriability strategies, including secrecy, selective revealing, patenting, and open innovation and knowledge-sharing for reputational reasons. All these strategies could co-exist, although some brewery insiders maintained a suspicion of the promoters of patent technologies which faded only in the nineteenth century. Furthermore, we find evidence that sophisticated strategies of selective revealing could support trade in inventions even without the use of the patent system.
    Date: 2012–10–23
  14. By: Lehmann, Sibylle H.
    Abstract: Large universal banks played a major role for Germany's industrialisation because they provided loans to the industry and thereby helped firms to overcome liquidity constraints. Previous research has also argued that they were equally important on the German stock market. The present paper provides quantitative and qualitative evidence that although the market for underwriters was dominated by a small oligopoly of six large banks, there was still perceptible competition, which kept fees and short run profits low. Another interesting finding of the paper is the absence of a signalling effect to investors. Neither underpricing nor the one year performance was different for the IPOs issued by one of the Big Six. Thus, although the German IPO business was in the hands of a small oligopoly, investors did not benefit from the lack of competition. One explanation is that the quality of IPOs on the German stock market of the time was very good in general caused by the competition between underwriters, but also by the tight regulation of underwriting, which ensured the quality of all firms on the German stock market. --
    Keywords: Financial History,Universal Banks,IPOs
    JEL: G21 G24 N23
    Date: 2012
  15. By: Divarci A.; Boone Ch.; Van Witteloostuijn A.
    Abstract: We analyze the difficult process of identity realization and legitimation development of a new organizational form. Particularly in the early decades of an emerging population, organizations face the challenging task to construct an identity that facilitates the build-up of legitimacy. The efforts of organizations in search of an identity often trigger collective action that crystallizes into multiple competing institutional logics that, eventually, result in the emergence of different organizational sub-forms. In our paper, we analyze the consequences of this contestation among multiple logics during a population’s emergence stage, fueled by competing self-organizing collective actors, on organizational founding rates. We claim that competition among collective actors affects the founding process in two opposing ways. On the one hand, such contestation spurs founding rates as entry barriers are reduced. On the other hand, identity heterogeneity undermines population-level legitimacy, producing fuzziness that hampers founding rates. We argue that differences in a sub-form’s perceived template quality will moderate the effects of this contestation on organizational founding rates. Our hypotheses are tested with data from the early history of the Dutch accounting industry, which took many years to reach a taken-for-granted status because of contestation among different professional associations.
    Date: 2012–09
  16. By: Gonthier, Pauline
    Keywords: Economics, General, International Economics, Short Time Work Crisis, Europe, Germany, France
    Date: 2012–06–14
  17. By: Richard Schmalensee (Howard W. Johnson Professor of Economics and Management, Emeritus at the Massachusetts Institute of Technology, and a Research Associate of the National Bureau of Economic Research); Robert N. Stavins (Albert Pratt Professor of Business and Government at the Harvard Kennedy School, a University Fellow of Resources for the Future, and a Research Associate of the National Bureau of Economic Research)
    Abstract: Two decades have passed since the Clean Air Act Amendments of 1990 launched a grand experiment in market-based environmental policy: the SO2 cap-and-trade system. That system performed well but created four striking ironies. First, by creating this system to reduce SO2 emissions to curb acid rain, the government did the right thing for the wrong reason. Second, a substantial source of this system’s cost-effectiveness was an unanticipated consequence of earlier railroad deregulation. Third, it is ironic that cap-and-trade has come to be demonized by conservative politicians in recent years, since this market-based, cost-effective policy innovation was initially championed and implemented by Republican administrations. Fourth, court decisions and subsequent regulatory responses have led to the collapse of the SO2 market, demonstrating that what the government gives, the government can take away.
    Keywords: Market-based Instruments, Cap-and-trade, Clean Air Act Amendments of 1990, Sulfur Dioxide, Acid Rain
    JEL: Q54 Q58 Q40 Q48
    Date: 2012–09
  18. By: Tetsuji Okazaki (Faculty of Economics, University of Tokyo)
    Abstract: This paper presents the intra-firm trade network in Mitsubishi Corporation (Mitsubishi Shoji) in the 1920s. In this period, Mitsubishi Co. established a global branch network to expand trades. Using original documents of Mitsubishi Co., we obtained the data on the trade flow between every pair of the headquarters and branches in 1922 and 1928. It was confirmed that there was a dense global intra-firm trade network, and that some branches as well as the headquarters played the role of hubs in the network. Also, we found that the structure of the network substantially changed over time for the headquarters to have a central position.
    Date: 2012–10
  19. By: Xavier Cussó (Unitat d'Història Econòmica, Departament d'Economia i d'Història Econòmica, Universitat Autònoma de Barcelona); Ramon Garrabou (Unitat d'Història Econòmica, Departament d'Economia i d'Història Econòmica, Universitat Autònoma de Barcelona)
    Abstract: En aquest treball s’analitzen els canvis que es produeixen en la dieta de la població de la comarca catalana del Vallès Occidental entre finals del segle XVIII i 1936, un període marcat per les grans transformacions econòmiques i socials que experimenta aquesta comarca amb el procés d’industrialització, d’urbanització, l’intens creixement demogràfic i la transformació de la seva agricultura. El resultat serà una millora i canvis importants en la composició de la dieta, que es poden emmarcar en el context de l’anomenada transició nutricional, i que acaben repercutint a llarg termini en un augment dels nivells de vida i de benestar de la població.
    Keywords: Vallès Occidental, 1787-1936, Transició Nutricional, alimentació, industrialització, especialització agrària, ferrocarril
    JEL: I31 O13 N33 N53
    Date: 2012–10
  20. By: Harry WU; Ximing YUE
    Abstract: Following the user cost theory on measuring labor input, after a careful scrutiny of available information, we construct employment and compensation matrices for China's industrial workforce over the period 1949-2009. Our measures are able to capture both individual and interactive effects of changes in gender, age, education, industry and ownership types of China's industrial workforce, and decompose the growth of labor input in Chinese industry into quantity and composition ("quality") effects. We find that the annual growth of the labor input in Chinese industry experienced a substantial decline from 6.9% per annum in the pre-reform period to 3.8% per annum in the post-reform period. Change of labor composition accounted for about 12% in the planning period (or 0.8% growth per annum), but it made little contribution during the reform period. We also find that the changes in industrial structure and age structure (reflecting the effects of seniority and experience) almost explained for the entire (positive) change in labor composition in the planning period. However, the change of education turned into negative after 1965 which made the average contribution of education negative in the planning period. Following the reform, education showed the most important contribution in the 1990s when the reform deepened, but the effect turned into negative again alongside China's entry into the World Trade Organization (WTO).
    Date: 2012–10
  21. By: Diego Restuccia
    Abstract: By international standards, gross domestic product (GDP) per capita in Latin America is low: around one fourth of that of the United States. Moreover, in the last five decades, Latin America has failed to catch-up in wealth to the level of the United States while other countries at similar or even lower stages of development have been successful. The failure to attain higher levels of relative income represents what I call the development problem in Latin America. Using a development accounting framework, I find that the bulk of the difference in GDP per capita between Latin America and the United States is accounted for by low GDP per hour and, in particular, low total factor productivity (TFP) in Latin America. I estimate that to explain the difference in GDP per hour, TFP in Latin America must be around 60 percent of that in the United States. I then consider a model with heterogeneous production units where institutions and policy distortions lead to a 60 percent productivity ratio between Latin America and the United States. Removing the barriers to productivity can increase long-run GDP per hour in Latin America by a factor of 4 relative to that of the United States. This increase is equivalent to 70-years worth of post-world-war-II economic development in the United States.
    Keywords: productivity, capital, schooling, establishments, distortions
    JEL: O1
    Date: 2012–10–25
  22. By: Feige, Edgar L.
    Abstract: The rapid growth of substitutes for cash, particularly debit and credit cards, has led economists to predict the advent of the “cashless society”. Yet cash holdings in most developed economies continue to grow and in the U.S., per capita currency holdings now amount to $3000. This paper revisits the long-standing controversy concerning the whereabouts of U.S. cash. Specifically, we employ a previously confidential data source on net shipments of U.S. currency abroad to re-estimate the fraction of U.S. currency held overseas. Contrary to the widely cited figure that 65 percent of U.S. currency is abroad, we now find that direct evidence supports the notion that overseas holdings amount to less than 25 percent. Currently, the official figure for the percent of U.S. currency held abroad as published by the Federal Reserve in their Flow of Funds Accounts and by the Bureau of Economic Analysis in the U.S. Balance of Payments Accounts is 37 percent. This official figure is a proxy variable that is supposed to mimic the previously confidential data series maintained by the New York Federal Reserve. Judson (2012) made this series public enabling us to discover that the official estimates of currency abroad require downward revision to reflect accurately the newly released data on actual cash shipments abroad. We also review the “indirect” approaches to estimating the fraction of currency overseas employed by Porter and Judson (1996) and Judson (2012). We find that these indirect methods to be innovative but deeply flawed due to violations of their restrictive assumptions. Moreover, sensitivity analysis reveals the estimates highly sensitive to alternative specifying assumptions. We conclude that the large estimates of currency abroad obtained by these methods are spurious. The paper also examines the temporal pattern of overseas holdings of U.S. currency and finds that the observed decline in the demand for U.S cash abroad coincides with the growing popularity of the Euro and its growth as a second currency held outside the Euro area between 2003 and 2008. These new findings have significant implications for estimating the domestic money supply and other domestic monetary aggregates; for estimating the net benefits of seigniorage earnings of the Federal Reserve; for forecasting changes in output and prices and for estimating the amount of unreported income and tax evasion in the U.S.
    Keywords: Overseas Currency; cashless society; currency abroad; underground economy; seigniorage;
    JEL: C82 E51 E01 E26 O17 F24 E41
    Date: 2012–06
  23. By: Anh Duc Dang
    Abstract: In this paper, I provide new empirical evidence that the natural environment can shape individual risk preferences. By combining historical data on weather variation and contemporary survey questions on risk aversion, I find that risk aversion is significantly different for people who live in areas that have suffered high frequency of natural disasters. In particular, households highly affected by weather volatility show a longterm risk aversion and are more willing to buy insurance to protect crop losses. The finding also supports the hypothesis that when people are used to live in a risky environment, an incremental increase in risk affects their risk preferences less.
    JEL: D03 Q54 O53
    Date: 2012–10

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