Patient people earn more money

World Savings Day on October 30: Bonn-Cologne economists have evaluated data on patient behavior

Those who are more patient earn and save more on average. Institutions and campaigns such as World Savings Day encourage this from an early age. Researchers of the Cluster of Excellence ECONtribute: Markets & Public Policy of the Universities of Bonn and Cologne have evaluated data on patient behavior from 76 countries.

Once a year, empty your savings jar, deposit the saved coins in the bank and in return receive a stuffed animal, books or other gifts: On Friday it is time again – October 30 is World Savings Day. It teaches children to be frugal with their money and to be patient – “an important factor for later household income,” says economist Prof. Dr. Thomas Dohmen, researcher of the ECONtribute Cluster of Excellence at the University of Bonn. Together with cluster member Prof. Dr. Armin Falk and five other researchers, he analyzed data on the time preference of 80,000 people from 76 countries. The result: More patient people earn more on average.

More prosperity in countries with patient inhabitants
Differences in patience explain about 40 percent of disparities in per capita income between countries. A rule of thumb: Starting from the equator, average patience increases towards the north and decreases towards the south. There are also clear differences within countries. The average level of education is higher in regions with more patient inhabitants and people earn more.
More patient people save more on average, are more productive and invest more time in education. While previous literature has already reported that impatient individuals are more likely to procrastinate, consume more drugs, or have poorer grades, little is known about the effects of patience on the economy as a whole. Patient behavior is one of the main factors for productivity, which in turn determines income.
Why some people are more patient than others cannot be clearly determined. However, various institutions, such as political stability, education and free competition, can contribute to this. Moreover, patterns of behavior have usually become established over generations.

Promoting patient behavior
Economies benefit in the long term from a high level of patience among the population. “Good development policy should always aim to encourage patient behavior,” says Thomas Dohmen, professor at ECONtribute. In other words, encouraging sustainable economic activity through education, instead of just giving financial aid. The World Savings Day shows: Patient behavior can be learned.

The study by Thomas Dohmen, Armin Falk, Uwe Sunde, Benjamin Enke, David Huffmann and Gerrit Meyerheim has been published as a discussion paper by ECONtribute: https://selten.institute/RePEc/ajk/ajkdps/ECONtribute_035_2020.pdf

Funding:
The work received financial support from the German Research Foundation (Deutsche Forschungsgemeinschaft – DFG) and the Cluster of Excellence “ECONtribute” at the Universities of Bonn and Cologne, also funded by the DFG as part of the Excellence Strategy of the German Federal and State Governments.

ECONtribute: The only Cluster of Excellence in economics
The study was conducted within the framework of ECONtribute. It is the only Cluster of Excellence in economics that is funded by the German Research Foundation and a joint initiative of the universities of Bonn and Cologne. The Cluster’s research focuses on markets at the interface between business, politics and society. The Cluster aims to advance a new paradigm for the analysis of market failure in light of fundamental societal, technological and economic challenges, such as increasing inequality and political polarization or global financial crises.

Content contact:
Prof. Dr. Thomas Dohmen
ECONtribute, Universität Bonn
Tel. +49 228 73 9303
t.dohmen@uni-bonn.de

Press and communication:
Carolin Jackermeier
ECONtribute
Tel. +49 221 470 7258
jackermeier@wiso.uni-koeln.de

Katrin Tholen
ECONtribute
Tel. +49 228 737808
E-mail: katrin.tholen@uni-bonn.de

Victims of crime earn less

Victims earn up to 12.9 per cent less in the aftermath of a crime and are more dependent on social benefits / evaluation of more than 800,000 Dutch police files

Crime victims forfeit income in the labour market in the long term. This is shown by an empirical analysis of data on more than 800,000 crime victims by Professor Anna Bindler, economist of the Cluster of Excellence ECONtribute: Markets & Public Policy at the universities of Cologne and Bonn, together with Nadine Ketel (Assistant Professor, Free University of Amsterdam, Netherlands). The Dutch register data on victims of crime cover a period of twelve years, from 2005 to 2016. Using anonymized numbers, the researchers link the data to labour market outcomes collected since 1999.

Across offences, both males and females earn up to 12.9 per cent less than before the crime. At the same time, they receive social benefits on up to 6 percent more days per month. Reasons for the reduction in income may be a change to lower-paid jobs, or victims losing their employment because they are no longer able to continue their work due to physical or mental health impacts of the incident.

Bindler and Ketel differentiate between violent crimes (assault, sex offences, and threat of violence) and property crimes (burglary and robbery). The income of women declines more than that of men for all examined offences. One year after a violent crime, earnings decrease by up to 7.5 per cent for males and 10.4 per cent for females. After property crimes, especially robbery, males earn up to 8.4 per cent less, while females face a decline in income of up to 12.9 per cent. The researchers investigate domestic violence separately and find a larger effect of up to 17.9 per cent lower earnings in addition to a strongly increased dependence on social benefits.

Overall, the economists calculated an aggregated loss of earnings of about 366 million euros within only the first year after an assault. ‘Our research provides an indication of the social costs of crime’, said Anna Bindler, professor at ECONtribute: Markets & Public Policy and at the University of Cologne. ‘The results could be an impetus for appropriate compensation payments or further assistance for victims of crime, such as labour market programmes.’

The study was conducted within the framework of ECONtribute. It is the only Cluster of Excellence in economics that is funded by the German Research Foundation (DFG) and a joint initiative of the universities of Bonn and Cologne. The Cluster’s research focuses on markets at the interface between business, politics, and society. The Cluster aims to advance a new paradigm for the analysis of market failure in light of fundamental societal, technological, and economic challenges, such as increasing inequality and political polarization or global financial crises.

 

In an episode of the podcast “Probable Causation” Anna Bindler will discuss her study with Jennifer Doleac. It will be published on 27 October: https://www.probablecausation.com/index

Want to learn more about the author Anna Bindler? Check out her interview In Brief. 

You can find the German version of the press release here.

 

Media Contact:

Professor Anna Bindler, Ph. D.

Faculty of Economics, Management, and Social Sciences

+49 221 470-7303

bindler@wiso.uni-koeln.de

Press and Communications Team:

Carolin Jackermeier

ECONtribute: Markets & Public Policy

+49 221 470-7258

jackermeier@wiso.uni-koeln.de

Publication:

https://ideas.repec.org/p/ajk/ajkdps/030.html

 

Lack of support prolongs unemployment

Economist from Bonn evaluates Swiss unemployment insurance data

Unemployed persons whose appointment with the responsible caseworker at the employment office is canceled unexpectedly remain unemployed for an average of twelve days longer. This is what Bonn economist Amelie Schiprowski established in a study by the Cluster of Excellence ECONtribute: Markets & Public Policy at the Universities of Cologne and Bonn.

Everyone has to call in sick at work at some point. With caseworkers at the employment office, however, a sudden absence has direct economic consequences for a third party: The people they support are unemployed on average five percent longer if a meeting is canceled, which corresponds to a period of twelve days. This may sound rather trivial, but it can entail considerable costs for both the welfare state and the individual concerned.

Amelie Schiprowski, economist of the Cluster of Excellence ECONtribute at the Universities of Cologne and Bonn, evaluated Swiss unemployment insurance data from 2010 to 2012 and investigated how much the personal interaction with caseworkers matters for unemployed individuals. She found out: The duration of unemployment depends to a large extent on how reliable and committed the support provided by the employment office is.

Regular support important for reintegration

Caseworkers at the employment office help to reintegrate unemployment benefit receipients into the labor market. A spontaneous absence of a caseworker reduces the average number of meetings that an unemployed individual can attend. As there are only about two to three meetings per half-year, one missed meeting corresponds in the analyzed data to about 40 percent of support time. The cancellation of a meeting results on average in a five percent longer unemployment spell. This means in turn that regular support is very important for successful reintegration.

Quantity and quality are important

The economist divided the observed caseworkers into two groups according to their productivity; productivity means how quickly, on average, the people they supported found a job again. The result: Absences of less productive caseworkers have no negative effect, while the absence of a more productive caseworker extends unemployment by an average of 13 percent. The negative impact of a canceled appointment therefore depends on the quality of the support.

Investment in human capital can reduce duration of unemployment

The paper highlights the economic importance of staff at the employment office. “Caseworkers are underestimated as an important resource for welfare states,” says Amelie Schiprowski. Every day of additional unemployment is expensive for the state. Unemployment could be decreased by reducing the workload of individual caseworkers to facilitate more individual meetings, and by investing into the quality of the support provision.

Amelie Schiprowski received the Joachim Herz Foundation Prize for Economics for her paper. The study was published in August in the Journal of Labor Economics: https://www.journals.uchicago.edu/doi/10.1086/706092

Want to learn more about the author Amelie Schiprowski? Check out her interview In Brief. 

You can find the German Version of the press release here.

 

Funding:

The work received financial support from the Cluster of Excellence “ECONtribute” at the universities of Cologne and Bonn, funded by the German Research Foundation (DFG) as part of the Excellence Strategy of the German Federal and State Governments. Furthermore, the study was supported by the DFG-funded Collaborative Research Center Transregio “Economic Perspectives on Social Challenges” of the universities of Bonn and Mannheim and the German National Academic Foundation.

ECONtribute: The only Cluster of Excellence in economics

The study was conducted within the framework of ECONtribute. It is the only Cluster of Excellence in economics that is funded by the German Research Foundation and a joint initiative of the universities of Bonn and Cologne. The Cluster’s research focuses on markets at the interface between business, politics and society. The Cluster aims to advance a new paradigm for the analysis of market failure in light of fundamental societal, technological and economic challenges, such as increasing inequality and political polarization or global financial crises.

 

Content contact:

JProf. Dr. Amelie Schiprowski

Universität Bonn

amelie.schiprowski@uni-bonn.de

 

Press and communication:

Carolin Jackermeier

ECONtribute

Tel. +49 221 470 7258

jackermeier@wiso.uni-koeln.de

 

Katrin Tholen

ECONtribute

Tel. +49 228 737808

katrin.tholen@uni-bonn.de

 

 

From pandemic shock to recession: Change in working hours reflects development of corona crisis

The pandemic-related restrictions on economic activity resulted in a massive reduction in working hours in March and April 2020. Only the key professions and those jobs that could be done from home were largely spared. Once the strict corona rules were relaxed, the sectors that were particularly affected recovered relatively quickly, while other sectors recorded a significant drop in hours. This is shown in a new study by economists of the Cologne-Bonn Cluster of Excellence ECONtribute and the Institute of Labor Economics (IZA), which is based on detailed Dutch data.

Copyright: Institute of Labor Economics (IZA)

The early stages of the crisis in March saw a massive drop in working hours, especially in the food service industry (minus 15 hours per week) and in the cultural and tourism sector (minus nine hours). In the key sector of health and social care, the decline in hours was much smaller at 2.5 hours. As Figure 1a illustrates, the change in working hours depended largely on the extent to which the activity could be relocated to home.   For example, the average working time in the financial and business services sector remained almost unchanged with a slight minus of just under two hours.

In June, the picture is partially reversed (Figure 1b): The number of working hours in the food service industry increased significantly again, more than halving the gap to pre-crisis levels. At t

Copyright: Institute of Labor Economics (IZA)

he same time, there was a more than twice as strong decline in hours in fields with high levels of home working, such as in financial and business services.

The researchers attribute this finding to the fact that the “character” of the recession has changed: After the first “pandemic shock” with strong industry-specific slumps due to government restrictions and the immediate effects of the virus, a general decline in demand set in that impacted the entire economy. This also meant that the “home working advantage” was no longer relevant: Figure 2 shows how the gap between low and high levels of home working closes between March and June.

 

 

Copyright: Institute of Labor Economics (IZA)

The authors conclude that the short-time work regulations made a decisive contribution to enabling companies to adjust working hours flexibly without causing waves of redundancies. There were also hardly any shifts in income distribution, although low-income earners were much more affected by the reduction in hours. “This is where the government programs have a beneficial short-term effect. However, they are of little help when it comes to long-term changes in demand and can even be harmful,” says Hans-Martin von Gaudecker, ECONtribute Professor of Applied Microeconomics at the University of Bonn and head of the IZA research team Structural Policy Evaluation.

The study is based on the work of the CoViD-19 Impact Lab, in which von Gaudecker, together with his research team from Bonn and the Dutch University of Tilburg, analyzes the effects of the corona pandemic and its countermeasures. The aim is to quickly generate helpful data in the current crisis and make it available to the public. More in-depth analyses will follow in the medium term.

Data based on the Dutch LISS panel

The data was collected using the Dutch LISS panel (Longitudinal Internet Studies for the Social Sciences), which, for more than ten years, has regularly surveyed 4,500 households on a variety of topics. The households are representative of the Dutch population and answer the questionnaires online. For this data set, LISS participants aged 16 and over were interviewed in four survey waves in late March, April, May and June. 6,650 people completed at least one questionnaire in full. There is currently no data available for Germany in such abundance and currentness. However, the structural similarity of the Dutch and German labor markets means that the basic findings can largely be transferred to Germany.

The data collection was funded by the German Research Foundation (DFG) through ECONtribute and through the Collaborative Research Center TR/224, by IZA, and by the the Dutch Research Council (NWO).

Further information about the COVID Impact Lab https://covid-19-impact-lab.io.

Find the paper here.

ECONtribute: The only Cluster of Excellence in economics

The study was conducted within ECONtribute. It is the only Cluster of Excellence in economics and neighboring disciplines   that is funded by the German Research Foundation (DFG) and a joint initiative of the universities of Bonn and Cologne. The Cluster’s research focuses on markets at the interface between business, politics and society. The Cluster aims to advance a new paradigm for the analysis of market failure in light of fundamental societal, technological and economic challenges, such as increasing inequality and political polarization or global financial crises.

Press contact:
Katrin Tholen
ECONtribute: Markets & Public Policy
Tel. +49 228/737808
E-mail: katrin.tholen@uni-bonn.de

Contact the author of the study:
Prof. Dr. Hans-Martin von Gaudecker
Institut für angewandte Mikroökonomik
Universität Bonn
Tel: +49 228 73-9357
E-mail: hmgaudecker@uni-bonn.de

Financial industry often employs untrustworthy employees

Scientists identify one possible reason for the many scandals in the world of finance: Employees in this industry are often less trustworthy and less socially aware.

Whether Cum-Ex businesses or Wirecard – at regular intervals a scandal shakes the financial industry. The already shaken image sinks after each new revelation and customers, politics and society increasingly lose confidence. Matthias Heinz and Matthias Sutter, both economists of the ECONtribute Cluster of Excellence: Markets & Public Policy of the Universities of Cologne and Bonn, together with Heiner Schumacher (KU Leuven) and Andrej Gill (University of Mainz) have found a possible reason for the scandals in the financial sector: In an experimental study, they measured the trustworthiness of students and found that the least trustworthy ones work increasingly in the financial industry later on.

To this end, the researchers conducted a long-term study with students of economics at the Goethe University in Frankfurt. In a first wave in 2013, they asked 265 students about their career aspirations, social preferences and personality traits. In addition, they tested how trustworthy the students are in a computer-supported laboratory experiment, a so-called trust game. The students received eight Euros and were able to give a second person an amount between 0 and 8 Euros. The amount was then tripled by the researchers and the second person could then decide how much to give back to the first person.  People who returned a higher amount were considered more trustworthy than others, resulting in students who planned their careers in the financial world being 30 percent less trustworthy than those who planned their careers in another industry after graduation. In 2019 and 2020, the research team repeated the survey and found that the less trustworthy people had actually taken a job in the financial world.

Trust is particularly important in the financial world – and is the basis for a business relationship between customers and consultants. If consultants exploit the trust placed in them by being better able to assess the complex information available to them in the financial world than their clients, this can lead to misconduct on the part of financial employees. This in turn can become a source of scandals and fraud. The financial world could counteract this by weeding out the less trustworthy employees when they are hired – but research suggests otherwise:

“Students who want to work in the highly competitive financial world are less trustworthy than those who want to work in other industries. However, the financial world does not seem to weed out less trustworthy people during a hiring process, but actually hire them. In addition, only four percent of employees move from finance to another industry, which makes the selection of employees particularly important,” explains Matthias Heinz, Professor at ECONtribute: Markets & Public Policy and at the University of Cologne the results. Further research is needed to understand hiring processes in the financial world and derive implications for policy, the team of researchers summarizes.

The study has been published as an ECONtribute Discussion Paper: https://ideas.repec.org/p/ajk/ajkdps/022.html

 

About ECONtribute: Markets & Public Policy

The study is part of the Cluster of Excellence ECONtribute: Markets & Public Policy Cluster of Excellence. It is the only economic cluster of excellence funded by the German Research Foundation (DFG) – supported by the universities of Bonn and Cologne, the Max Planck Institute for the Study of Public Goods and the Institute on Behavior & Inequality (briq). The cluster conducts research on markets at the interface between business, politics and society. The goal of ECONtribute is to better understand markets and to find a fundamentally new approach to the analysis of market failures that meets today’s social, technological and economic challenges, such as increasing inequality and political polarization or global financial crises.

 

Media Contact:

Professor Dr. Matthias Sutter

Chair of Economics: Design & Behavior at the University of Cologne

Director of the Max Planck Institute for the Study of Public Goods Bonn

matthias.sutter@coll.mpg.de

Professor Dr. Matthias Heinz
Professorship for Strategy at the University of Cologne
heinz@wiso.uni-koeln.de

 

Press and Communication:

Katrin Tholen

+49 221 470 3555

tholen@wiso.uni-koeln.de