Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/146512
Authors: 
Stark, Oded
Zawojska, Ewa
Year of Publication: 
2016
Series/Report no.: 
University of Tübingen Working Papers in Economics and Finance 91
Abstract: 
We study a policy response to an increase in post-merger social stress. If a merger of groups of people is viewed as a revision of their social space, then the merger alters people's comparators and increases social stress: the social stress of a merged population is greater than the sum of the levels of social stress of the constituent populations when apart. We use social stress as a proxy measure for looming social protest. As a response to the post-merger increase in social stress, we consider a policy aimed at reversing the negative effect of the merger by bringing the social stress of the merged population back to the sum of the premerger levels of social stress of the constituent populations when apart. We present, in the form of an algorithm, a cost-effective policy response which is publicly financed and does not reduce the incomes of the members of the merged population. We then compare the financial cost of implementing such a policy when the merger involves more or fewer groups. We show that the cost may fall as the number of merging groups rises.
Subjects: 
Merger of populations
Revision of social space
Aggregate relative deprivation
Social stress
A cost-effective policy response
JEL: 
D04
D63
F55
H53
P51
Persistent Identifier of the first edition: 
Document Type: 
Working Paper

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