This paper addresses a question which is fundamental to the perceived legitimacy of the distribut... more This paper addresses a question which is fundamental to the perceived legitimacy of the distribution of resources today: to what extent does unfairness in how assets came to be acquired in the past affect incomes and wealth now? To answer that question requires two things: first, a principle to determine what is, and what is not, a just acquisition of wealth or a just source of income; second, a means of using that principle to estimate what fraction of wealth and income is now unjust. I use a principle put forward by Robert Nozick to provide the first of these things and then use a model of wealth accumulation and economic growth to illustrate its implications for the scale of unfairness today. The greater is depreciation of assets, the higher are saving rates out of labor income and the less important is human capital the more transient are the effects of past economic injustices. I use data on the perceived unfairness of economic outcomes to see if there is any evidence that those features which the model implies should influence the durability of injustice help explain crosscountry differences in attitudes towards unfairness.
This note outlines a simple method for estimating the spread of the COVID virus in the absence of... more This note outlines a simple method for estimating the spread of the COVID virus in the absence of data on test results for a large, random sample of the population. It applies the method to the UK, and other countries, and finds that to match data on daily new cases of the virus, the estimated model favours high values for the number of people infected but asymptomatic. That result is very sensitive to whether the transmission rate of the virus is di erent for symptomatic and asymptomatic cases, something about which there is significant uncertainty. This illustrates how di icult it is to estimate the spread of the virus until very large samples of the population can be tested.
This article assesses whether economic injustices that took place in the past still have signific... more This article assesses whether economic injustices that took place in the past still have significant implications for the material welfare of people many years later. That issue is central to the question of how fair is the distribution of wealth and income today. It is also relevant to issues of reparations for past wrongs. I find that in standard neoclassical models of economic growth the lingering effects of injustice from more than 70 years ago are generally small. But effects can last much longer once we allow for impacts of past injustices to be transmitted through human capital accumulation as well as physical capital.
Vaccination against the COVID-19 virus began in December 2020 in the UK and is now running at 5% ... more Vaccination against the COVID-19 virus began in December 2020 in the UK and is now running at 5% population/week. High Levels of social restrictions were implemented for the third time in January 2021 to control the second wave and resulting increases in hospitalisations and deaths. Easing those restrictions must balance multiple challenging priorities, weighing the risk of more deaths and hospitalisations against damage done to mental health, incomes and standards of living, education outcomes and provision of non-Covid-19 healthcare.
This paper addresses a question which is fundamental to the perceived legitimacy of the distribut... more This paper addresses a question which is fundamental to the perceived legitimacy of the distribution of resources today: to what extent does unfairness in how assets came to be acquired in the past affect incomes and wealth now? To answer that question requires two things: first, a principle to determine what is, and what is not, a just acquisition of wealth or a just source of income; second, a means of using that principle to estimate what fraction of wealth and income is now unjust. I use a principle put forward by Robert Nozick to provide the first of these things and then use a model of wealth accumulation and economic growth to illustrate its implications for the scale of unfairness today. The greater is depreciation of assets, the higher are saving rates out of labour income and the less important is human capital the more transient are the effects of past economic injustices. I use data on the perceived unfairness of economic outcomes to see if there is any evidence that tho...
... Campbell and Shiller ( 1989) also use constructed data, in their case created by non-linear i... more ... Campbell and Shiller ( 1989) also use constructed data, in their case created by non-linear interpolation We would like to thank Anthony S. Courakis and two anonymous referees for detailed and helpful comments on earlier drafts. ...
< p> It is well known that over the next few decades there will be significant changes in t... more < p> It is well known that over the next few decades there will be significant changes in the demographic structures of nearly all developed countries; in the absence of massive immigration, or of catastrophic new fatal illnesses, by the middle of the next century the ...
This paper uses stochastic simulations on calibrated models to assess the optimal degree of relia... more This paper uses stochastic simulations on calibrated models to assess the optimal degree of reliance on funded pensions and on a particular type of unfunded (PAYG) pension. Surprisingly little is known about the optimal split between funded and unfunded systems when there are sources of uninsurable risk that are allocated in different ways by different types of pension system. This paper calculates the expected welfare of agents in different economies where in the steady state the importance of PAYG pensions differs. We estimate how the optimal level of unfunded, state pensions depends on rate of return and income risks and also upon the actuarial fairness of annuity contracts.
Ten children (4-to 7-years-old) receiving articulation and language therapy and their student cli... more Ten children (4-to 7-years-old) receiving articulation and language therapy and their student clinicians were evaluated on the Analysis of Behavior of Clinicians System to determine the length of time necessary to obtain a representative sample of clinician-client interaction during a therapy session. Approximately 10 minutes after the clinician and the client entered the experimental room, a video tape recording was made of a 15-minute segment of each therapy session. Data indicated that no significant difference existed between the behavioral patterns of clinician-client interaction when five 3-minute segments of recorded clinician-client interaction were compared. Thus, it was determined that a 3-minute period was sufficient to obtain a representative sample of clinician-client interaction during a therapy session.
This paper reports estimates of the costs and benefits of banks having higher levels of loss-abso... more This paper reports estimates of the costs and benefits of banks having higher levels of loss-absorbing capital. Measuring those costs requires careful consideration of a wide range of issues about how shifts in funding affect required rates of return and on how costs are influenced by the tax system; it also requires a clear distinction to be drawn between costs to individual institutions (private costs) and overall economic (or social) costs. Without a calculation of the benefits from having banks holding more capital no estimate of costs -however accurate -can tell us what the optimal level of bank capital is. We use empirical evidence on UK banks to assess costs; we use data from shocks to incomes from a wide range of countries over a long period to assess risks to banks and how equity funding (or capital) protects against those risks. We find that the amount of equity capital that is likely to be desirable for banks to hold is very much larger than banks have held in recent years and also higher than targets agreed under the Basel III framework.
This paper explores the links between fiscal multipliers and household discount rates. We report ... more This paper explores the links between fiscal multipliers and household discount rates. We report evidence of a large and statistically significant relationship between reported rates of time preference across countries and the government expenditure multiplier. This study uses recent crosscountry data on reported rates of time preferences gathered by Wang, Rieger and Hens (2011). We find that a higher reported rate of time preference is strongly associated with a larger government expenditure multiplier. Our findings may help to explain some of the differences in view over the optimal path for fiscal consolidation in Europe today, between the Germanic and Northern European countries (whose representatives appear to favour a faster fiscal retrenchment) and those in the South (who would like their required fiscal adjustment to occur less rapidly).
This paper develops a model of the housing market that takes account of population density to ass... more This paper develops a model of the housing market that takes account of population density to assess the impact of population changes on the value and size of the housing stock. The model implies that if population density is on an upward trajectory, rises in population and in incomes increasingly generate price responses and diminishing rises in the stock of housing. This has implications for the optimal structure of housing finance. It makes equity financing of home purchase more desirable. The properties of hybrid debt-equity contracts for financing house purchase are explored.
This paper uses data on the stock market valuations of a large sample of UK companies to assess i... more This paper uses data on the stock market valuations of a large sample of UK companies to assess if that market displays short-termism. Tests are undertaken of whether discount rates, implicit in market valuations, applied to cash flows which accrue in the longer term are too high, both absolutely and relative to the rates applied to cash flows in the near term. I find prima facie evidence that these longer-term discount rates are too high, a result consistent with the existence of short-termism. An alternative interpretation of the results is that risk premia applied to expected cash flows systematically increase with the maturity of those flows; whether this interpretation is consistent with asset pricing theories is questionable. Copyright 1993 by Royal Economic Society.
Financial intermediaries in many countries are subject to special forms of regulation over the st... more Financial intermediaries in many countries are subject to special forms of regulation over the structure of their balance sheets. In the UK regulation of banks has involved the supervisor, the Bank of England, issuing guidelines on the adequacy of capital funds and on the risks of large and connected exposures to particular borrowers. The Financial Services Act has resulted in new forms of regulation for a wide range of non-bank financial intermediaries. Analysis of the risks of portfolios held by market-makers, securities dealers and other intermediaries who take open positions will form a key part of the job of the new teams of regulators. Draft guidelines on minimum levels of capital, or maximum leverage, are already being produced by these new regulatory bodies.
This article assesses the impact of Quantitative Easing and other unconventional monetary policie... more This article assesses the impact of Quantitative Easing and other unconventional monetary policies followed by central banks in the wake of the financial crisis that began in 2007. We consider the implications of theoretical models for the effectiveness of asset purchases and look at the evidence from a range of empirical studies. We also provide an overview of the contributions of the other articles in this Feature.
This paper uses micro data to estimate the determinants of household income and to measure how hu... more This paper uses micro data to estimate the determinants of household income and to measure how human capital and earnings uncertainty affect consumption. We also estimate how home-owners react to capital gains on housing and assess whether these gains are ...
This paper analyses the choices made by households in the UK about mortgages. It considers whethe... more This paper analyses the choices made by households in the UK about mortgages. It considers whether there might be forms of market failure that prevent the structure of mortgage debt better reflecting the underlying preferences of households. UK households ...
This paper addresses a question which is fundamental to the perceived legitimacy of the distribut... more This paper addresses a question which is fundamental to the perceived legitimacy of the distribution of resources today: to what extent does unfairness in how assets came to be acquired in the past affect incomes and wealth now? To answer that question requires two things: first, a principle to determine what is, and what is not, a just acquisition of wealth or a just source of income; second, a means of using that principle to estimate what fraction of wealth and income is now unjust. I use a principle put forward by Robert Nozick to provide the first of these things and then use a model of wealth accumulation and economic growth to illustrate its implications for the scale of unfairness today. The greater is depreciation of assets, the higher are saving rates out of labor income and the less important is human capital the more transient are the effects of past economic injustices. I use data on the perceived unfairness of economic outcomes to see if there is any evidence that those features which the model implies should influence the durability of injustice help explain crosscountry differences in attitudes towards unfairness.
This note outlines a simple method for estimating the spread of the COVID virus in the absence of... more This note outlines a simple method for estimating the spread of the COVID virus in the absence of data on test results for a large, random sample of the population. It applies the method to the UK, and other countries, and finds that to match data on daily new cases of the virus, the estimated model favours high values for the number of people infected but asymptomatic. That result is very sensitive to whether the transmission rate of the virus is di erent for symptomatic and asymptomatic cases, something about which there is significant uncertainty. This illustrates how di icult it is to estimate the spread of the virus until very large samples of the population can be tested.
This article assesses whether economic injustices that took place in the past still have signific... more This article assesses whether economic injustices that took place in the past still have significant implications for the material welfare of people many years later. That issue is central to the question of how fair is the distribution of wealth and income today. It is also relevant to issues of reparations for past wrongs. I find that in standard neoclassical models of economic growth the lingering effects of injustice from more than 70 years ago are generally small. But effects can last much longer once we allow for impacts of past injustices to be transmitted through human capital accumulation as well as physical capital.
Vaccination against the COVID-19 virus began in December 2020 in the UK and is now running at 5% ... more Vaccination against the COVID-19 virus began in December 2020 in the UK and is now running at 5% population/week. High Levels of social restrictions were implemented for the third time in January 2021 to control the second wave and resulting increases in hospitalisations and deaths. Easing those restrictions must balance multiple challenging priorities, weighing the risk of more deaths and hospitalisations against damage done to mental health, incomes and standards of living, education outcomes and provision of non-Covid-19 healthcare.
This paper addresses a question which is fundamental to the perceived legitimacy of the distribut... more This paper addresses a question which is fundamental to the perceived legitimacy of the distribution of resources today: to what extent does unfairness in how assets came to be acquired in the past affect incomes and wealth now? To answer that question requires two things: first, a principle to determine what is, and what is not, a just acquisition of wealth or a just source of income; second, a means of using that principle to estimate what fraction of wealth and income is now unjust. I use a principle put forward by Robert Nozick to provide the first of these things and then use a model of wealth accumulation and economic growth to illustrate its implications for the scale of unfairness today. The greater is depreciation of assets, the higher are saving rates out of labour income and the less important is human capital the more transient are the effects of past economic injustices. I use data on the perceived unfairness of economic outcomes to see if there is any evidence that tho...
... Campbell and Shiller ( 1989) also use constructed data, in their case created by non-linear i... more ... Campbell and Shiller ( 1989) also use constructed data, in their case created by non-linear interpolation We would like to thank Anthony S. Courakis and two anonymous referees for detailed and helpful comments on earlier drafts. ...
< p> It is well known that over the next few decades there will be significant changes in t... more < p> It is well known that over the next few decades there will be significant changes in the demographic structures of nearly all developed countries; in the absence of massive immigration, or of catastrophic new fatal illnesses, by the middle of the next century the ...
This paper uses stochastic simulations on calibrated models to assess the optimal degree of relia... more This paper uses stochastic simulations on calibrated models to assess the optimal degree of reliance on funded pensions and on a particular type of unfunded (PAYG) pension. Surprisingly little is known about the optimal split between funded and unfunded systems when there are sources of uninsurable risk that are allocated in different ways by different types of pension system. This paper calculates the expected welfare of agents in different economies where in the steady state the importance of PAYG pensions differs. We estimate how the optimal level of unfunded, state pensions depends on rate of return and income risks and also upon the actuarial fairness of annuity contracts.
Ten children (4-to 7-years-old) receiving articulation and language therapy and their student cli... more Ten children (4-to 7-years-old) receiving articulation and language therapy and their student clinicians were evaluated on the Analysis of Behavior of Clinicians System to determine the length of time necessary to obtain a representative sample of clinician-client interaction during a therapy session. Approximately 10 minutes after the clinician and the client entered the experimental room, a video tape recording was made of a 15-minute segment of each therapy session. Data indicated that no significant difference existed between the behavioral patterns of clinician-client interaction when five 3-minute segments of recorded clinician-client interaction were compared. Thus, it was determined that a 3-minute period was sufficient to obtain a representative sample of clinician-client interaction during a therapy session.
This paper reports estimates of the costs and benefits of banks having higher levels of loss-abso... more This paper reports estimates of the costs and benefits of banks having higher levels of loss-absorbing capital. Measuring those costs requires careful consideration of a wide range of issues about how shifts in funding affect required rates of return and on how costs are influenced by the tax system; it also requires a clear distinction to be drawn between costs to individual institutions (private costs) and overall economic (or social) costs. Without a calculation of the benefits from having banks holding more capital no estimate of costs -however accurate -can tell us what the optimal level of bank capital is. We use empirical evidence on UK banks to assess costs; we use data from shocks to incomes from a wide range of countries over a long period to assess risks to banks and how equity funding (or capital) protects against those risks. We find that the amount of equity capital that is likely to be desirable for banks to hold is very much larger than banks have held in recent years and also higher than targets agreed under the Basel III framework.
This paper explores the links between fiscal multipliers and household discount rates. We report ... more This paper explores the links between fiscal multipliers and household discount rates. We report evidence of a large and statistically significant relationship between reported rates of time preference across countries and the government expenditure multiplier. This study uses recent crosscountry data on reported rates of time preferences gathered by Wang, Rieger and Hens (2011). We find that a higher reported rate of time preference is strongly associated with a larger government expenditure multiplier. Our findings may help to explain some of the differences in view over the optimal path for fiscal consolidation in Europe today, between the Germanic and Northern European countries (whose representatives appear to favour a faster fiscal retrenchment) and those in the South (who would like their required fiscal adjustment to occur less rapidly).
This paper develops a model of the housing market that takes account of population density to ass... more This paper develops a model of the housing market that takes account of population density to assess the impact of population changes on the value and size of the housing stock. The model implies that if population density is on an upward trajectory, rises in population and in incomes increasingly generate price responses and diminishing rises in the stock of housing. This has implications for the optimal structure of housing finance. It makes equity financing of home purchase more desirable. The properties of hybrid debt-equity contracts for financing house purchase are explored.
This paper uses data on the stock market valuations of a large sample of UK companies to assess i... more This paper uses data on the stock market valuations of a large sample of UK companies to assess if that market displays short-termism. Tests are undertaken of whether discount rates, implicit in market valuations, applied to cash flows which accrue in the longer term are too high, both absolutely and relative to the rates applied to cash flows in the near term. I find prima facie evidence that these longer-term discount rates are too high, a result consistent with the existence of short-termism. An alternative interpretation of the results is that risk premia applied to expected cash flows systematically increase with the maturity of those flows; whether this interpretation is consistent with asset pricing theories is questionable. Copyright 1993 by Royal Economic Society.
Financial intermediaries in many countries are subject to special forms of regulation over the st... more Financial intermediaries in many countries are subject to special forms of regulation over the structure of their balance sheets. In the UK regulation of banks has involved the supervisor, the Bank of England, issuing guidelines on the adequacy of capital funds and on the risks of large and connected exposures to particular borrowers. The Financial Services Act has resulted in new forms of regulation for a wide range of non-bank financial intermediaries. Analysis of the risks of portfolios held by market-makers, securities dealers and other intermediaries who take open positions will form a key part of the job of the new teams of regulators. Draft guidelines on minimum levels of capital, or maximum leverage, are already being produced by these new regulatory bodies.
This article assesses the impact of Quantitative Easing and other unconventional monetary policie... more This article assesses the impact of Quantitative Easing and other unconventional monetary policies followed by central banks in the wake of the financial crisis that began in 2007. We consider the implications of theoretical models for the effectiveness of asset purchases and look at the evidence from a range of empirical studies. We also provide an overview of the contributions of the other articles in this Feature.
This paper uses micro data to estimate the determinants of household income and to measure how hu... more This paper uses micro data to estimate the determinants of household income and to measure how human capital and earnings uncertainty affect consumption. We also estimate how home-owners react to capital gains on housing and assess whether these gains are ...
This paper analyses the choices made by households in the UK about mortgages. It considers whethe... more This paper analyses the choices made by households in the UK about mortgages. It considers whether there might be forms of market failure that prevent the structure of mortgage debt better reflecting the underlying preferences of households. UK households ...
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Papers by David Miles