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Having long been stigmatized as an immoral and even illegal
"superstition", the popular practice of divination is experiencing
a revival in contemporary China. Fate Calculation Experts explores
how diviners attempt to achieve legitimation in a society which
identifies strongly with modernity, science, and rationality. As
well as associating with modern knowledge production systems,
diviners build a positive social image for their occupation via
claims to moral authority and appeals to "tradition". Beyond
matters of image management, diviners' efforts towards legitimation
also figure in the social relationships and fundamental cultural
values they develop in their practice.
Despite news reports suggesting a rise in 401(k) borrowing in
recent years, we find that the share of eligible households with
401(k) loans in the 2007 Survey of Consumer Finances was about 15
percent, roughly what it has been since 1995. We find that the best
predictors of 401(k) borrowing appear to be the presence of
liquidity or borrowing constraints and the size of 401(k) balances
relative to income. Since the ongoing financial crisis has likely
caused these factors to move in opposite directions, the predicted
effect of the crisis on 401(k) borrowing is ambiguous. More
fundamentally, we find that many loan-eligible households carry
relatively expensive consumer debt that could be more economically
financed via 401(k) borrowing. In the aggregate, we estimate that
such households could have saved as much as $5 billion in 2007 by
shifting expensive consumer debt to 401(k) loans. This would
translate into annual savings of about $275 per household-roughly
20 percent of their overall interest costs--with larger reductions
for households that carry consumer debt at high interest rates or
who hold larger 401(k) balances. We posit that households might
utilize 401(k) loans less than expected due to risk-aversion,
self-control problems, and confusion about the potential gains, and
suggest better financial education that clarifies the conditions
under which 401(k) borrowing is advantageous. Finally, we note that
allowing households to repay 401(k) loans gradually even after
separation from their employers could improve household welfare by
reducing the risks of 401(k) borrowing.
Gambling behavior can serve as an informative indicator of
important household heterogeneity that is difficult to observe
directly in data. We present, to the best of our knowledge, the
first comprehensive study of the consumption and personal finance
of gamblers using a nationwide representative household survey. We
find that consumers are more likely to gamble when income is higher
than its normal level predicted by observable characteristics, and
that nongambling expenditures tend to increase with gambling
activities. In addition, gamblers are more likely to concurrently
have various types of debt and assets, assuming a more active
position on household balance sheets. However, gamblers do not
necessarily have a higher net worth than comparable nongamblers.
Gamblers also tend to engage in health-wise risky behaviors, such
as smoking and heavy drinking, while paying out-of-pocket on life
and health insurance. We present extensive evidence that such
behavior differences observed in the data are not primarily due to
different degrees of careless reporting to the survey. Rather, we
argue that our findings are consistent with the notion that certain
consumers, namely, the active participants in personal finance
markets, take on gambling as a form of entertainment.
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