American Economic Association Nashville, TN 0022-8282 Journal of Economic Literature http://www.aeaweb.org/journal.html 46 1 March 2008 http://www.aeaweb.org/articles/issue_detail.php?journal=JEL&volume=46&issue=1&issue_date=March 2008 Journal Article Economic Forecasting GrahamElliottU CA, San Diego AllanTimmermannU CA, San Diego and CREATES 3 56 Forecasts guide decisions in all areas of economics and finance and their value can only be understood in relation to, and in the context of, such decisions. We discuss the central role of the loss function in helping determine the forecaster's objectives. Decision theory provides a framework for both the construction and evaluation of forecasts. This framework allows an understanding of the challenges that arise from the explosion in the sheer volume of predictor variables under consideration and the forecaster's ability to entertain an endless array of forecasting models and time-varying specifications, none of which may coincide with the "true" model. We show this along with reviewing methods for comparing the forecasting performance of pairs of models or evaluating the ability of the best of many models to beat a benchmark specification. http://www.aeaweb.org/articles/article_detail.php?journal=JEL&volume=46&issue=1&article=1&issue_date=March 2008 10.1257/jel.46.1.3 American Economic Association Nashville, TN 0022-8282 Journal of Economic Literature http://www.aeaweb.org/journal.html 46 1 March 2008 http://www.aeaweb.org/articles/issue_detail.php?journal=JEL&volume=46&issue=1&issue_date=March 2008 Journal Article What Do We Know about Global Income Inequality? SudhirAnandU Oxford and Harvard U PaulSegalU Oxford 57 94 In this paper, we review the recent literature on global interpersonal income inequality. While all estimates agree that the level is very high, with a Gini of between 0.630 and 0.686 in the 1990s, there is no consensus regarding the direction of change. We discuss methodological issues, including the use of national accounts versus survey- based estimates of mean income (or consumption) and the choice of purchasing power parity exchange rates. Findings of a rise or fall in global income inequality are not robust across different estimation methods and datasets. Given the diversity of estimates and various sources of uncertainty, including gaps and errors in the underlying data, we conclude there is insufficient evidence to determine the direction of change in global interpersonal inequality in recent decades. http://www.aeaweb.org/articles/article_detail.php?journal=JEL&volume=46&issue=1&article=2&issue_date=March 2008 10.1257/jel.46.1.57 American Economic Association Nashville, TN 0022-8282 Journal of Economic Literature http://www.aeaweb.org/journal.html 46 1 March 2008 http://www.aeaweb.org/articles/issue_detail.php?journal=JEL&volume=46&issue=1&issue_date=March 2008 Journal Article Relative Income, Happiness, and Utility: An Explanation for the Easterlin Paradox and Other Puzzles Andrew E.ClarkParis School of Economics and IZA PaulFrijtersQueensland U Technology Michael A.ShieldsU Melbourne 95 144 The well-known Easterlin paradox points out that average happiness has remained constant over time despite sharp rises in GNP per head. At the same time, a micro literature has typically found positive correlations between individual income and individual measures of subjective well-being. This paper suggests that these two findings are consistent with the presence of relative income terms in the utility function. Income may be evaluated relative to others (social comparison) or to oneself in the past (habituation). We review the evidence on relative income from the subjective well-being literature. We also discuss the relation (or not) between happiness and utility, and discuss some nonhappiness research (behavioral, experimental, neurological) related to income comparisons. We last consider how relative income in the utility function can affect economic models of behavior in the domains of consumption, investment, economic growth, savings, taxation, labor supply, wages, and migration. http://www.aeaweb.org/articles/article_detail.php?journal=JEL&volume=46&issue=1&article=3&issue_date=March 2008 10.1257/jel.46.1.95 American Economic Association Nashville, TN 0022-8282 Journal of Economic Literature http://www.aeaweb.org/journal.html 46 1 March 2008 http://www.aeaweb.org/articles/issue_detail.php?journal=JEL&volume=46&issue=1&issue_date=March 2008 Journal Article A Review of Janos Kornai GerardRolandU CA, Berkeley 145 50 This article reviews the memoirs of János Kornai. The famous Hungarian economist describes his life experiences and the concurrent history of Hungary. More importantly, he leads us through his intellectual evolution, explaining how his thinking evolved, how it was influenced by events, how one research question led to another. This brings alive the intellectual and historical developments that led to Kornai's work on socialist incentives, on the theory of planning, on the economics of shortage, and on the transition from socialism to capitalism. The book takes us on a journey that encompasses large elements of the history of economic thought in the second half of the twentieth century, as well as the history of Central Europe. http://www.aeaweb.org/articles/article_detail.php?journal=JEL&volume=46&issue=1&article=4&issue_date=March 2008 10.1257/jel.46.1.145 American Economic Association Nashville, TN 0022-8282 Journal of Economic Literature http://www.aeaweb.org/journal.html 46 1 March 2008 http://www.aeaweb.org/articles/issue_detail.php?journal=JEL&volume=46&issue=1&issue_date=March 2008 Journal Article Book Reviews 151 93 http://www.aeaweb.org/articles/article_detail.php?journal=JEL&volume=46&issue=1&article=5&issue_date=March 2008 10.1257/jel.46.1.151 American Economic Association Nashville, TN 0022-8282 Journal of Economic Literature http://www.aeaweb.org/journal.html 46 1 March 2008 http://www.aeaweb.org/articles/issue_detail.php?journal=JEL&volume=46&issue=1&issue_date=March 2008 Journal Article Annotated Listing of New Books 194 268 http://www.aeaweb.org/articles/article_detail.php?journal=JEL&volume=46&issue=1&article=6&issue_date=March 2008 10.1257/jel.46.1.194 American Economic Association Nashville, TN 0022-8282 Journal of Economic Literature http://www.aeaweb.org/journal.html 46 1 March 2008 http://www.aeaweb.org/articles/issue_detail.php?journal=JEL&volume=46&issue=1&issue_date=March 2008 Journal Article JEL Classification System for Books 269 281 http://www.aeaweb.org/articles/article_detail.php?journal=JEL&volume=46&issue=1&article=7&issue_date=March 2008 10.1257/jel.46.1.269