Showing papers in "European Journal of Law and Economics in 2019"

Cryptocurrency or usury? Crime and alternative money laundering techniques

Abstract: The article presents a novel dynamic setting to compare old—usury—and new—cryptocurrency—money laundering techniques and uses it for calibration to shed light on their relative role as an effective device for the criminal organizations to clean their illegal revenues. The specialness of the usury contract depends on its role in laundering illegal revenues originating from criminal activities and it is independent from the interest rate level, while the cryptocurrency money laundering is associated with an initial coin offering tool. The calibration compares the leverage effect on the overall capital owned by the criminal organizations triggered by the two money laundering techniques.

Coase and transaction costs reconsidered: the case of the English lighthouse system.

Abstract: What is Coase’s understanding of transaction costs in economic theory and history? Our argument in this paper is twofold, one theoretical and the other empirical. First, Coase regarded positive transaction costs as the beginning, not the end, of any analysis of market processes. From a Coasean perspective, positive transaction costs represent a profit opportunity for entrepreneurs to erode such transaction costs, namely by creating gains from trade through institutional innovation. We demonstrate the practical relevance of entrepreneurship for reducing transaction costs by revisiting the case of the lightship at the Nore, an entrepreneurial venture which had arisen to erode the transaction costs associated with regulation by Trinity House, the main lighthouse authority of England and Wales. By intervening into the entrepreneurial market process, Trinity House would pave the way for the nationalization of the entire English and Welsh lighthouse system. By connecting our theoretical contribution with an empirical application, we wish to illustrate that Coase’s theoretical understanding of transaction costs is inherently linked to an empirical analysis of market processes.

The Google search case in Europe: tying and the single monopoly profit theorem in two-sided markets

Abstract: This paper provides an economic and legal theory of harm applicable to the case against Google in Europe over search bias. So far, no clear legal and economic theory has yet been delineated by the European Commission, nor consensus in the literature has emerged with regard to the theory of foreclosure that could support the case, or with regard to the specific form of abuse of dominance applicable under European law. The paper shows that the law and economics of tying applies to search bias. From a legal standpoint, it is not necessary to rely on the more formalistic elements of Article 102 TFEU, or to characterize Google as an essential facility, in order to find a valid legal theory of harm. We show that Google’s conduct of linking its proprietary vertical (or specialized) search platforms to its horizontal (or general) search platform through visual prominence, as it has done with Google Shopping, fits within the legal boundaries of tying under European law. From an economic perspective, we show that the two-sided nature of both horizontal and vertical search provides compelling reasons why foreclosure of competition may be profitable, and why the single monopoly profit theorem may fail in this context. As we show in the paper, by tying vertical search to general search through visual prominence, Google can attract additional advertisers on its vertical search platform that would have possibly advertised on competing vertical search platforms without a tie. The effect of tying is a restriction on competition in vertical search that deserves antitrust scrutiny.

Complexity and the Cathedral: making law and economics more Calabresian

Abstract: This article argues that Calabresi and Melamed’s “Cathedral” framework of property rules, liability rules, and inalienability rules needs to be extended using the tools of complex systems theory in order to capture important institutional features of the law. As an applied field, law and economics looks to law in choosing the appropriate analytical tools from economics—something that Calabresi has identified (in strong form) as law and economics as opposed to economic analysis of law. Recognizing law as a complex system requires a rethinking of some Realist-inspired assumptions that underpin economically inspired analysis of law. These assumptions include a preference for narrow, concrete concepts and a skepticism about traditional doctrines and baselines—and ultimately Legal Realism’s extreme nominalism and the strong bundle of rights picture of property. The article shows how the Calabresi and Melamed (CM these include narrow entitlements to engage in specific activities, liability rules that allow an affected party to buy out an activity (Rule 4), opportunistic behavior by parties that destabilizes liability rules, and the role of equity as an institutional response. Extending the C&M framework to treat it as a system helps prevent the C&M framework from flattening the law out. If we supplement the C&M framework to take account of law as a system, we can bring it closer to Calabresian law and economics.

Case selection and judicial decision-making: evidence from French labor courts

Abstract: Using a database on French labor courts between 1998 and 2012, we investigate case selection and judicial decision-making. In France, judges are elected at the labor court level on lists proposed by unions, and litigants can first try to settle their case before the judicial hearing. We show that the ideological composition of the court indirectly impacts the settlement behavior of the parties but has no influence on the decision made in court. In addition, parties have self-fulfilling behavior and adapt to institutional rules. When they anticipate long judicial procedures at court, they settle more frequently and only require judicial hearings for complex cases. The duration to decide these complex cases is longer, explaining why they observe (and build their anticipation on) long case duration. Our empirical strategy uses probit, ordered probit and triprobit estimations to control for case selection.

On the choice of legal standards: a positive theory for comparative analysis

Abstract: In contrast to existing economic theory on the choice of legal standards in the enforcement of Competition Law, we develop a modelling framework that accounts explicitly for (a) Courts’ choices, given the substantive standard adopted and (b) Competition Authorities (CAs) setting legal standards anticipating Courts’ choices, recognizing that CAs place at least some weight on the implications of their choices for the outcome of the judicial review process and, hence, for their reputation. We then show why CAs may favor Per Se type standards (even when an error-minimising or welfare maximization approach would suggest the choice of an effects-based standard), with sub-optimal utilization of economic analysis, how this choice is affected by the Courts’ substantive standards, why the legal standards for any given conduct may differ between countries, why there may be a U-shaped empirical relationship between legal standards and the probability that the CA’s decisions are annuled and how the choice of standards affects other aspects of enforcement, such as the number of investigations undertaken.

Do we need behavioral economics to explain law

Abstract: Do we need behavioral economics to explain law? I analyze Judge Guido Calabresi’s claim that we do. I find that, actually, we don’t; traditional economic theory can explain law just fine.

The efficiency of bankruptcy law: evidence of creditor protection in Poland

Abstract: A debt does not function as a liquid asset in an ineffective enforcement environment. In this study, we investigated the efficiency of creditor protection in insolvency. We approached efficiency in three dimensions: ex ante, ex post, and interim. This paper presents the differences between Polish and Spanish ex ante efficiency, the factors influencing the interim recovery rate and efficiency, and the differences between ex ante and ex post efficiency in Polish proceedings. We studied 17,494 financial statements of Polish companies and the finalized proceedings of 784 court cases from the period 2004–2012. We applied regression analysis, combined with classification and robustness tests. Our evidence supports the conclusion that Polish insolvency proceedings are inefficient. The interim efficiency oscillates at 12% per annum. The duration of the proceeding from filing until resolution takes an average of 853 days. These results have policy implications, as creditor protection is a major aspect in attracting investment for net foreign debtors.

Mistaken about mistakes

Abstract: Theoretical work in behavioral economics aims to modify assumptions of standard neoclassical models of individual decision-making to better comport with observed behavior. The alternative assumptions fall into at least two categories: non-standard preferences and psychological mistakes. Applications of behavioral economics models in law, however, tend to assume that deviations from standard neoclassical models are meant to build in psychological mistakes that produce regrettable choices. Often follow-on policy prescriptions suggest interventions that either help individuals choose correctly or go further to substitute the “correct” choices for those that mistake-prone individuals might choose in error. Such policy prescriptions are ill suited in cases where the applied behavioral economics model assumes non-standard preferences as opposed to psychological mistakes. This essay provides examples of models in each category and examples of mistaken applications of models that assume non-standard preferences rather than psychological mistakes. It also suggests ways to avoid errors when applying behavioral economics theories in law.

How many patents are truly valid? Extent, causes, and remedies for latent patent invalidity

Abstract: A substantial number of patents tested in court for validity are invalidated. If a similar portion of all patents was deemed invalid in hypothetical validity tests, then this would indicate a seriously flawed patent system due to restrictions unduly imposed by these erroneously granted patents on users and follow-on innovators. Thus, we ask, if a randomly picked patent underwent revocation proceedings, what are the odds of its invalidation? We address this question by analyzing the various selection effects through which patents become subject to validity decisions. Empirically, we focus on Germany, where revocation proceedings are separate from infringement suits and where, in court decisions during the period of 2010–2012, 45% of patents were determined to be fully invalid and 33% to be partially invalid. Based on data gleaned through expert interviews, a survey among lawyers, and an econometric analysis of court judgments, we find the likelihood of (hypothetical) invalidation of a randomly picked patent to be in the same range as that for actually adjudicated patents. As the main cause of patent invalidity we identify incomplete searches for prior art during examination. Our arguments carry over to other legislations. To remedy this situation, we suggest a significant increase of the inventive step required for patent grant combined with a smaller increase of the inventive-step standard in litigation.

Reasons not to exit? A survey of the effectiveness and spillover effects of international investment arbitration

Abstract: One of the most important characteristics of an investment treaty is that often it grants aggrieved investors access to international arbitration. This arbitration system does not require a foreign investor to petition his home state in order to bring claims against a host state, and provides an alternative to resolving disputes in the host state’s local court. Although international investment arbitration is beneficial for countries in terms of foreign direct investment, it has been accused of not being transparent or effective especially in relation to environment or public health cases. Some countries expressed their discomfort with the current international investment law regime by radical exit solutions such as denunciation of the Convention on the settlement of investment disputes between states and nationals of other states, rejection of investor-state dispute settlement provisions and unilateral denunciation of investment treaties. Based on a vast law, economics and political science literature, this paper proposes arguments to examine these criticisms. First, it is argued that investor-state arbitration is currently a concern in both developing and developed countries. Second, although assessing the spillover effects of arbitration outcomes on some dimensions of public interests such as the environment or public health is not straightforward, the uncertainty that leads to arbitrariness and sometimes inconsistencies in arbitral decision-making exists and needs to be properly identified. Finally, this article argues that exit is not efficient at either the national or international levels, and that it is possible for countries to adapt the current regime to new situations without wholesale exit.

Corporate insolvency procedures in England: the uneasy case for liquidations

Abstract: Our paper investigates a comprehensive sample of 574 English corporate insolvency cases, including direct liquidation cases. In contrast to other insolvency procedures, liquidations perform poorly on average and fail to produce satisfactory repayments to creditors. We run multinomial Logit regressions to explain the choice between liquidation and reorganization. We obtain three main results. First, we confirm that size matters: distressed firms owning low assets have higher chances of being liquidated immediately. Second, the presence of secured creditors decreases the risk of direct liquidation. This provides a clue that in England, the most-informed creditors adapt their strategies and turn away from the less-performing procedures. Third, we find that the likelihood of administration—which appears nowadays as the main alternative to direct liquidation—significantly depends on the proportion of fixed/current assets owned by the firms.

Political economy of pension reforms: an empirical investigation

Abstract: We examine effects of political institutions on the probability of introducing pension reforms. A novel dataset is constructed that tracks the systematic development of pension legislation in 36 countries for the period 1970–2013 by focusing on mandatory pay-as-you-go, occupational, and supplementary pension reforms. The evidence highlights the fundamental importance of political institutions in shaping the probability of pension reforms, after controlling for potentially confounding effects of demographic structure, preferences for redistribution and macroeconomic fundamentals. Countries with stronger constraints on the chief executive, non-fractionalized political competition with moderate political power of government and opposition parties with centrist parties in power, and fiscal federalism in the presence of electoral rules with vote sharing thresholds and a high degree of regional autonomy are significantly more likely to introduce pension reforms. The beneficial effects of executive constraints, political competition and inter-jurisdictional federalism on reforms are robust to several misspecification checks, unobserved heterogeneity, and country-specific time trends. We show that when pension reforms occur, some layers of political institutions strengthen public and private pensions relative to GDP while others tend to weaken it.

Law, economics and Calabresi on the future of law and economics

Abstract: There exists a distinction between ‘law and economics’ and the ‘economic analysis of law’. The former, corresponding to Coase’s approach, consists in taking legal rules into account insofar as they influence economic activities. The latter, associated to Posner’s name, consists in using economics to analyze legal problems. Methodologically speaking, if one admits that the economic analysis of law consists in using economic tools to analyze legal problems, Calabresi’s own work must be classified as such. However, Calabresi has always insisted that his own approach differs from Posner’s economic analysis of law. In this paper, we take the opportunity of Calabresi’s new book—The Future of Law and Economics—to revisit Calabresi’s approach to law and economics. In his book, Calabresi explains that the economic analysis of law is unsatisfactory because economics is too narrow. He insists on the need to amplify economic analysis by: first, adopting a more realistic approach a la Coase; second, taking merit goods into account; and third, including individuals’ propensity to be altruistic. We analyze these three aspects and show that it leads to a certain ambiguity in terms of the distinction between ‘law and economics’ and the ‘economic analysis of law’.

Law and economics and the role of explanation: A comment of Guido Calabresi, The Future of Law and Economics

Abstract: A central theme of Guido Calabresi’s The Future of Law and Economics is the way that economic analysis of law tends to reject as irrational whatever aspects of law or life do not fit its approach. Calabresi argues instead for a different approach he labels “law and economics,” which includes a greater willingness to modify economic analysis to allow it better to fit law and life. This Review Essay elaborates Calabresi’s argument, supplementing it with ideas from other sources, including Arthur Leff’s parallel response to economic analysis, “Some Realism about Nominalism,” and an earlier Calabresi article, “Supereditor or Translator.” Among the topics discussed are the role of historical/causal analysis, and the different sorts of explanation that we do expect, or should expect, from theories of law.

Law and economics versus economic analysis of law

Abstract: I agree with Calabresi’s general distinction between Economic Analysis of Law and Law and Economics. However, these broad categories may obscure important differences between types of law and economics scholarship. I would distinguish positive economic analysis from normative economic analysis, and positivist legal analysis from nonpositivist analysis. The four categories generated by these distinctions provide a more fine-grained map of the styles of reasoning in law and economics, and has implications for the future of law and economics.

A reappraisal of the Arrovian postulate and the intellectual property regime: user-specific patents

Abstract: Recent advances in the economics of knowledge are raising questions related to the current intellectual property regime. This paper discusses the foundations of the appropriability trade-off, highlights the crucial distinction between inter- and intra-industry spillovers, and advocates the introduction of patents based on a combination of property and liability rules. These two-layered patents would include: (i) exclusive protection which applies the property rule to intra-industry spillovers: Rivals and competitors in the same product market would be unable to use proprietary patented knowledge without authorization from the patent holder which had exclusive intellectual property rights on its knowledge, and (ii) non-exclusive patents characterized by compulsory licensing which applies the liability rule to inter-industry spillovers. Prospective users of proprietary knowledge to generate new knowledge for innovation in other product markets, can access proprietary knowledge, for a royalty fee charged by the patent holder.

Consensus and dissent in the resolution of conflicts of competence by the Spanish Constitutional Court: the role of federalism and ideology

Abstract: Given the lack of unambiguously constitutional foundations, Spain’s Constitutional Court (TC) has being playing a leading role in building the regulatory framework of the Autonomic State. This paper analyses whether this function is sufficient to explain the level of agreement among TC justices when adopting their resolutions, and in particular, on reaching unanimous rulings. If so, the legalist/federalist model would be a more adequate model to explain the behaviour of TC justices than the other models proposed in the literature on judicial behaviour: the attitudinal and the strategic models. A database has been constructed for this purpose with the 390 positive conflicts of competence between the central government and the autonomous communities resolved by the TC from 1981 to 2017, which have been used to estimate various explanatory models of unanimous rulings. The results obtained show the importance of the legalist/federalist model when attempting to explain unanimity in the Court’s pronouncements, but they also offer evidence that there are other factors that also influence the level of agreement among TC justices, remarkably the ideological ones.

How to turn crowding-out into crowding-in? An innovative instrument and some law-related examples

Abstract: Using a simple decision-theoretic approach, we formalize how agents with different kinds of intrinsic motivations react to the introduction of monetary incentives. We contend that empirical results supporting the existence of a crowding-out effect under various legal procedures hide a more complex reality, where some individuals contribute thanks to these additional monetary incentives while others reduce their contributions. Our approach allows us to study the theoretical ability of the self selection mechanism (Mellstrom and Johannesson in J Eur Econ Assoc 6:845–863, 2008; Beretti et al. in Kyklos 66(1):63–77, 2013) to reduce the likelihood to backfire against the cause it is meant to promote. This mechanism consists of a monetary payment for the pro-social behavior and it offers agents the choice to either keep the money for themselves or to direct it to a charity. We show that this legal procedure dominates others more classical procedures because it taps wisely into the motivational heterogeneity of individuals. It uses a self-selection mechanism to match adequate monetary incentives with individuals’ types regarding intrinsic motivations. It may even turn a situation subject to crowding-out into a crowding-in outcome.

Does law and economics help decide cases

Abstract: Our answer is “less often than you might think.” We qualify and defend this answer in several steps. First, we offer some suggestive evidence that major scholarly contributions in law and economics have had relatively more influence with academics than with judges. For example, ranking articles on the basis of judicial citations rather than academic citations produces interesting results: Judges cite Ronald Coase’s “The Problem of Social Cost,” by far the most cited paper in the legal academy, much less frequently than doctrinal papers that have received relatively little attention from scholars. Second, we argue that some common features of law and economics scholarship are unappealing to judges. The broadest form of explanatory law and economics—like the hypothesis that the common law has tended to produce efficient rules—is often of little use to judges, who require reasons for making or justifying current decisions. Prescriptive law and economics, meanwhile—like various arguments that the legal system should produce efficient rules—often proceeds from ideological premises that judges don’t share, or fails to account for the institutional constraints under which judges operate. In short, much law and economics scholarship is insufficiently doctrinal to appeal to the average judge. These features of law and economics scholarship don’t prevent judges from using economics all the time. After all, economics is a basic social science, and judges encounter economic questions with some regularity. But, even here, we find little evidence that today’s judges are making greater use of concepts like “efficiency” and “incentives” than those of the past. Throughout this essay, we comment on Guido Calabresi’s “The Future of Law and Economics” (2016) and Richard Posner’s “Divergent Paths: The Academy and the Judiciary” (2016).

Do judges hate speculators

Abstract: Historically, people have often expressed negative feelings toward speculators, a sentiment that might have even been reinforced since the latest financial crisis, during which taxpayer money was warranted or spent to bail out reckless investors. In this paper, we conjecture that judges may also have anti-speculator sentiment, which might affect their professional decision making. We asked 123 professional lawyers and 247 law students in Germany this question, and they clearly predicted that judges would have an anti-speculator bias. However, in an actual behavioral study, 185 judges did not exhibit such bias. In another sample of 170 professional lawyers, we found weak support for an anti-speculator bias. This evidence suggests that an independent audience may actually perceive unbiased judgments as biased. While the literature usually suggests that a communication problem exists between lawyers and non-lawyers (i.e. between judges and the general public), we find that this problem can also exist within the legal community.

Do professions curb free-riding? An experiment

Abstract: The question of ethical conduct is key for professionals, such as lawyers, doctors, or experts of different kinds. We run a laboratory experiment aimed at investigating whether acting within a profession leads to more (or less) ethical, prosocial behaviour compared to acting outside of it. We also investigate how professionals react to others’ misbehaviour. We invite subjects studying or having studied economics, law or medicine and either match them in mixed groups or in homogeneous groups (telling them that we did so). We then let them play public goods games with punishment. Overall, there is little difference in cooperation levels and patterns of punishment between the homogeneous and heterogeneous groups. If anything, our subjects free ride more when matched with their peers than in a mixed group.

Did specialised courts affect the frequency of business bankruptcy petitions in Spain

Abstract: Spanish small businesses rarely file for bankruptcy, and Spanish bankruptcy rates are abnormally small. The historical inadequacy of the Spanish insolvency system has led most enterprises to rely on the de facto alternative mortgage system and to overinvest in fixed tangible assets: a distortion that may trigger significant adverse effects, for instance on the enabling environment of novel entrepreneurship. The reform of the bankruptcy law that took place in Spain some 10 years in order to modernise the insolvency system involved, as a main novelty, the establishment of specialised commercial courts (Juzgados de lo Mercantil). Since the net benefits of specialised judicial functions are in principle ambiguous, we study empirically whether these new bodies had any impact, over and above the economic crisis, on the use of the bankruptcy system. Exploiting the staggered timing of the new courts geography, we estimate an endogenous treatment model with a binary policy variable which allows to measure the effect of the reform on bankruptcy rates. The results support the view that the new bankruptcy law took the right path, but the size of the estimated parameters call for further policy efforts in that direction.

Use of formal insolvency procedure and judicial efficiency in Spain

Abstract: In the framework of law and finance literature, this study focuses on analysing the impact of judicial efficiency in firms’ decision on the use of court proceedings in the resolution of financial distress. The question as to whether the use of formal bankruptcy procedures can be related to efficiency in the implementation of legislation by the courts has been posed. The scarce empirical evidence has focused on the analysis of the impact of judicial efficiency at the international level, which implies assumption that the degree of efficiency is similar within each country. However, studies from Brazil and Spain have revealed the existence of differences among districts within the same country and its impact on different economic and financial aspects. Consequently, the work focuses on a single country allowing to isolate the effect of the content of the legislation from the efficiency of the application of these legal rules by the courts. The sample consists of 4160 unlisted firms in Spain experiencing financial difficulties, among which are companies that have and have not opted to use the formal bankruptcy proceedings. The results indicate that firms located in Spain’s autonomous communities that exhibit a higher efficiency of their judicial systems are more likely to use court proceedings to resolve financial distress.

An economic analysis of court fees: evidence from the Spanish civil jurisdiction.

Abstract: The adoption of “court fees” has been traditionally justified as a means to improve the performance of enforcement institutions as they may have an effect of “deterrence” of the dispute. Judicial congestion has clear negative impacts on economic performance. Spain, which has one of the highest rates of litigation of the OECD, has traditionally lacked a general system of court fees. In 2002, the Congress passed a system of court fees to be paid by legal entities and enterprises. In 2012, the fees were extended to individuals and abrogated in 2015. This bounded period of enforcement allows us to empirically test the impacts of court fees on congestion. In order to do this, we collected a comprehensive database of quarterly data on the real workload of civil courts. This study concludes that the effects of court fees, although reduced court’s congestion, are far from homogeneous and depend on the type of procedure, the workload of the courts and the local macroeconomic conditions.

Law enforcement with criminal organizations and endogenous collaboration

Abstract: This paper proposes a simple framework consisting of a law enforcement model in which criminal organizations (Mafias) can collaborate with each other to control an illegal market. Within this framework, we investigate two different situations: (1) a single monopolistic criminal organization operation or (2) an organization collaborating with another criminal organization. Depending on the quality of the controlled illegal market, the welfare implications of these scenarios vary. This paper also investigates an incentive for criminal organizations to engage in endogenous cooperation. As a result, we explore how criminal organizations’ incentives coincide with social welfare implications.

There ain’t no such thing as a free deed: the case of Italian notaries

Abstract: The cost of starting a business in Italy is relatively high as compared with other EU member states. One reason is the cost of notarization, which is mandatory under the Italian law. In order to reduce this cost, in 2012 a new type of limited liability company was created—the simplified limited liability company—for which notarization should be provided free-of-charge. In this paper we explore the reasons behind the requirement of notarization and review the evidence from a few cases where notarization was made optional. Subsequently, we describe the results of an ad hoc experiment in order to evaluate the design of the policy. We performed a randomized control trial involving almost 350 notaries in Rome, Italy. We find that the majority of the notaries in our sample do not fulfill the obligation by asking a greater-than-zero fee, therefore suggesting the policy is not fully effective. We conclude that obliging notaries to perform specific tasks below-costs (or even free-of-charge) may not be an effective policy, leading to suboptimal results.

A regulation and transaction cost perspective on the design of corporate law

Abstract: For the corporate business model to be successful, it is important to align the interests of those who control and finance the firm. Corporate law has here an important task to fulfill. It offers a legal framework that can facilitate parties to conclude mutually preferable agreements at low transaction costs. The purpose of this paper is to show how to design corporate law to fulfill this task and apply this knowledge to a Swedish case. A two-dimension model that simultaneously considers both the regulation intensity and the level of default of corporate law is presented. The earlier literature treats these dimensions separately. By adding a transaction cost perspective to our model, we assess different regulatory techniques and examine how the Swedish legislation can be amended to help corporations by offering a standard contract that lowers the transaction costs of contracting. This can be achieved if default rules or standards of opt-out character are combined with other regulatory techniques with lower transaction costs such as opt-in alternatives and menus. We also show how our model can be used in other studies as a tool to analyze the design of legal rules.

Compensation in personal injury cases: mean or median income?

Abstract: Courts typically base compensation for loss of income in personal injury cases on either mean or median work income. Yet, quantitatively, mean and median incomes are typically very different. For example, in the US, median income is 65% of mean income. In this paper we use economic theory to determine the relation between the appropriate make-whole (full) compensation and mean and median work incomes. Given that consumption uncertainty associated with compensation generally exceeds that associated with work income, we show that the appropriate make-whole compensation exceeds mean (and therefore median) work income. Hence, if the compensation must be either the mean or the median work income, then mean work income should generally be selected.