Where does haven collide?

In public finance, a tax haven is a jurisdiction that offers very low or zero effective tax rates, secrecy, and light reporting rules, so that firms and individuals can book income there to shelter it from taxation elsewhere. Hines and Rice's 1994 Fiscal paradise: Foreign tax havens and American business documented how disproportionately much of the reported profit of U.S. multinationals landed in a handful of tiny low-tax economies. The referent is a place in the international tax system, identified by the profit and capital it attracts relative to its real activity, and it has nothing to do with a defensive financial asset or an attachment figure beyond the shared image of a refuge.[1]

Unit

Reported profit or capital booked in a jurisdiction relative to its real economic activity

Recovery means

Not applicable

Measured by

Gauged by effective tax rates, the ratio of booked profit to local activity, and estimates of profit shifted into the jurisdiction

In attachment theory, the safe haven is one of the two functions an attachment figure serves: when a child or an adult is frightened, ill, or distressed, they seek proximity to that figure for comfort and protection; this is the complement of the 'secure base' that supports exploration. Waters and Cummings' 2000 A secure base from which to explore close relationships traces how these functions carry from infancy into adult bonds. The referent here is a relationship function in a person's emotional system, inferred from whom they turn to when alarmed, and it is a different construct from a low-tax jurisdiction or a crisis-proof asset, sharing only the meaning of a refuge.[2]

Unit

Whether and to whom a person turns for comfort and protection under threat

Recovery means

Not applicable

Measured by

Assessed through attachment measures such as the Strange Situation, adult attachment interviews, and self-report scales

In finance, a safe haven is an asset whose price holds up or rises precisely when other assets, especially equities, fall sharply, so that holding it cushions a portfolio in a crisis, distinct from a mere hedge, which is only uncorrelated on average. Baur and Lucey's 2010 Is gold a hedge or a safe haven? An analysis of stocks, bonds and gold drew that distinction and tested gold against it. The referent is a statistical property of an asset's returns in market turmoil, unrelated to an offshore tax jurisdiction or an attachment figure beyond the common metaphor of safety.[3]

Unit

An asset's co-movement with the broad market during sharp downturns

Recovery means

Not applicable

Measured by

Estimated from the asset's return correlation or regression against the market conditional on extreme negative market moves