Buying and selling price for risky lotteries and expected utility theory with gambling wealth

I analyze two expected utility models which abandon the consequentialist assumption of terminal wealth positions. In the expected utility of gambling wealth model, in which initial wealth is allowed to be small, I show that a large WTA/WTP gap is possible and the (Rabin in Econometrica, 68(5), 1281–1292, 2000) paradox may be resolved. Within the same model the classical preference reversal which allows arbitrage is not possible, whereas preference reversal (involving buying prices in place of selling prices), which does not allow arbitrage, is possible. In the expected utility of wealth changes model, in which there is no initial wealth, I show that both a WTA/WTP gap as well as the classical preference reversal are possible due to loss aversion, both in its general as well as some specific forms.     

An axiomatic derivation of subjective probability,utility, and evaluation functions

Subjective expected utility maximization is derived from four axioms, using an argument based on the separating hyperplane theorem. It is also shown that the first three of these axioms imply a more general maximization formula, involving an evaluation function, which can still serve as a basis for decision analysis.     

Consensus for belief functions and related uncertainty measures

We extend previous work of Lehrer and Wagner, and of McConway, on the consensus of probabilities, showing under axioms similar to theirs that (1) a belief function consensus of belief functions on a set with at least three members and (2) a belief function consensus of Bayesian belief functions on a set with at least four members must take the form of a weighted arithmetic mean. We observe that these results are unchanged when consensual uncertainty measures are allowed to take the form of Choquet capacities of low order monotonicity.This work was supported in part by a grant from the University of Tennessee Artificial Intelligence Group, and by the U.S. Naval Sea Systems Command, through a grant to Oak Ridge National Laboratory.     

Utility functions for mild and severe health risks

Journal of Risk and Uncertainty - This article reviews economic evidence on health-dependent utility functions and presents new estimates of utility functions for cancer. Estimates of...     

Commodities and monetary policy: Implications for inflation and price level targeting

We examine the relative ability of inflation targeting and price level targeting monetary policy rules to minimize inflation variability and business cycle fluctuations in a commodity-exporting country for supply and demand shocks to global commodity markets. The macroeconomic consequences of oil and non-oil primary commodities differ and affect the relative merits of the alternative monetary policy frameworks. Particularly, the consumption of refined oil products and demand-driven commodity price movements induce highly persistent inflation pressures resulting in a significant deterioration of the inflation-output gap trade-off available to central banks. When such terms-of-trade shocks are prevalent, price level targeting is inferior to inflation targeting.     

Tracing wealth,cooperation and trust: A comparison of two great plains communities

This research examines the relationships between wealth, cooperation, and trust. Utilizing implications from the social capital literature and democratic theory, we found that trust directly affects patterns of socio-economic interactions, especially shopping. We also found that commuting was widespread and it created a rural sprawl deficit that affected trust. Specifically, the results indicated that trust of others in the community (generalized to a certain degree) tended to encourage people to shop more in town, thus contributing to the development of the community, even when controlling for commuting. Findings from this study suggest that further community level research will yield more specifics about how trust (and social capital) works to increase wealth in a community.     

Sustainability of fiscal deficits, monetary policy, and inflation stabilization: The case of Turkey

There is a widespread consensus among economists that the goal of monetary policy, above all else, should be price stability. This study, by analyzing the Turkish experience in the last 15 years, emphasizes the importance of coordination of fiscal and monetary policies in achieving this aim. It is shown that, despite the rapidly changing financial environment, there are stationary long-run money-income relationships. Moreover, the growth rates of various monetary aggregates have predictive power for future movements in the consumer price index. However, as the Turkish experience made clear, in an economy where there are persistent budget deficits, these properties are not sufficient to conduct a successful monetary policy. The sustainability of fiscal policy is analyzed and rejected. Next, in a medium-term perspective, the levels of sustainable budget deficits compatible with a declining inflation path are calculated by making use of a small macroeconometric model.     

Inflation dynamics and monetary policy strategy: some prospects for the Turkish economy

This paper analyzes the dynamics of inflation in the Turkish economy, which has experienced increasingly high levels of inflation over the last 30 years. By conducting a Vector Autoregression (VAR) analysis, the variance decomposition (VDC) and the impulse response functions (IRF) show that the relatively high and inertial nature of inflation mainly stems from the increases in public sector prices and the depreciation of the Turkish lira. On the other hand, the Granger causality tests as well as the VDC and IRF demonstrate that high prices have not been as a result of an expansionary monetary policy. These results together with the previous results show that inertial inflation is not a monetary phenomenon in Turkey, but rather an outcome of a political misconduct, which therefore shows the fiscal dominance.     

Regional cultures and health outcomes: Implications for performance measurement,public health and policy

The U.S. Medicare program now ties payment to health care providers based on their patients’ outcomes. This change comes as compilations of data on geographic variations in health outcomes and quality of care indicate patterns that appear to be deeply ingrained. This study explores whether cultural characteristics correlate with health outcomes such that quality indicators may be measuring something other than quality of care, and whether regional subcultures have a significant impact on public health. It concludes that two cultural dimensions, social capital and traditional/rational-secularism, which explain a sufficient proportion of outcome variations to cast doubt as to whether outcome measures capture provider quality. Correlations are explored between American regional subcultures identified by Joel Lieske and the variation in health outcomes. In a multidimensional analysis of Lieske's typology, results indicate that certain U.S. subpopulations have cultural advantages or disadvantages relating to health.     

India's demand for international reserve and monetary disequilibrium: Reserve adequacy under floating regime

The main aim of this study is to investigate India's demand for international reserve by focusing on the role of national monetary disequilibrium and to present new benchmarks for assessing the adequacy of international reserves. We assessed India's position in terms of reserve adequacy and found that India is well placed and has sufficient stock of international reserves to meet the minimum adequacy requirements. Also, the results reveal that the central bank is holding substantial excess reserves and the related opportunity cost (1.5% of GDP) appears to be quite considerable. Further, the estimates of reserve demand function suggest that scale of foreign trade, uncertainty and profitability considerations play significant role in determining India's long-term reserve demand policies. More importantly, validating the monetary approach to balance of payment, our results show that national monetary disequilibrium does play a crucial role in short-run reserve movements. An excess of money demand (supply) induces an inflow (outflow) of international reserves with an elasticity of 0.56 which also implies that Reserve Bank of India responds to correct the domestic money market disequilibrium; and did not just leave it completely on the mercy of reserve inflows.     

社会发展:涵义、结构和功能

社会发展是一个评价性范畴,其本质是社会实践,其核心是人的发展,其形式是社会时间和社会空间.社会发展既有自己内在的基本要素,又有外在的基本形式,其结构是内在要素与外在形式的统一.社会发展有四大功能改造变革的功能、满足维护的功能、调控功能和创新功能.     

Zero Lower Bound and negative interest rates: Choices for monetary policy in the UK

There have been relatively few analyses of the policy context and consequences of a Zero Lower Bound (ZLB) for nominal interest rates. This paper sets out monetary policy alternatives, including negative interest rates, a revision of the inflation target, and rendering unconventional policy instruments such as QE conventional (permanent). Following extensive discussion of policy options, we set out a model that explores the impacts of the real policy rate on economic growth, employment and inflation, with particular attention to the British economy. We use a Time-Varying Structural Vector Auto-regressive (TVSVAR) Model where the sources of time variation are both the coefficients and variance–covariance matrix of the innovations. It was found that real rates have significant implications for real growth, the labour market and price stability even when monetary policy was constrained at the ZLB in nominal terms. The study additionally applies a discrete break in the data to focus on the Post-Global Financial Crisis and ZLB period. This indicates that the effectiveness of real rates did not diminish and this has important implications in terms of a policy approach which seeks to exploit real negative rates.     

A “Pseudo-endowment” effect,and its implications for some recent nonexpected utility models

This article describes a modification of the Allais paradox that induces preferences inconsistent with two conditions weaker than the independence axiom, namely quasi-convexity (a special case of which is the betweenness axom), and Hypothesis II of Machina (also called fanning-out). These violations can be formally derived from prospect theory by invoking a nonliner transformation of probability into decision weight.I would like to thank David Bell, Vijay Krishna, John Pratt, and especially Colin Camerer for helpful comments and criticism.     

Third generation information systems: integrating costs and outcomes. Tools for professional development and program evaluation

The authors present specific procedures for obtaining cost per closed case and a case outcome rating for each closed case, computer generated, yielding a cost-outcome report for single cases and aggregated cases. The procedures are illustrated with field data from an alcohol and drug addiction service. Cost per closed case is seen as the new unit cost datum. Combined with case outcome information, the cost-outcome report is seen as a promising new measure of efficiency. The potential of the cost-outcome report as a new basis for professional self-development, increased treatment effectiveness, and program evaluation is discussed.     

The role of mutuals and community-based insurance in social health protection systems: International experience on delegated functions

The institutional architecture for the provision of social health protection varies across countries, as do the actors and organizations involved. In some countries, mutual benefit societies and community-based health insurance organizations (CBHI) play a role in this area. In the 1990s, these were promoted particularly as a means of extending social security coverage, especially in sub-Saharan Africa. In the current context, the adoption of the 2030 Agenda for sustainable development, as well as renewed political will to realize universal coverage, has led to a questioning of the role of mutuals/CBHI. However, the literature on the roles they play in national social security systems remains limited. For this scoping review, 49 documents were analysed, covering 18 countries worldwide, focused on the delegation of functions to mutuals/CBHI in national social health protection systems. The results reveal the dynamics of the delegation of functions within social protection systems over time and their implementation processes. These provide areas for reflection that can inform policy processes.     

Biodiversity,coastal protection and resource endowment: Policy options for improving ocean health

The paper develops a production function for the Global Ocean Health Index (OHI) for 2013. Data from the Ocean Health Statistics, plus from the Human Development Index (HDI) for 151 countries are used. We employ two-stage regression model to conduct this evaluation. The Tobit model, used to obtain the estimated dependent variable, results show Coastal Protection, Livelihoods and Economies, Tourism and Recreation, Iconic Species, Clean Water and Biodiversity, Food Provision, Artisanal Fisheries Opportunities, Natural Products, and Carbon Storage are significant variables. The rank regression in the second stage showed that HDI and Marine Protected Areas (MPAs) significantly influenced the predicted value of the OHI. Policy makers should note that biodiversity increases have the greatest effect on OHI, and its improvement is within reach of even the poorest country. Countries with varying levels of resource endowment may choose different techniques to improve OHI, but the implementation of MPAs should be priority.     

Work,health and welfare: new challenges1

Gainful employment is a core prerequisite of individual autonomy and the well‐being of a majority of adult people, preventing them from economic dependence on welfare transfer. Yet, the quality of work and employment acts as an important determinant of work ability and health. This contribution offers an extended framework for analysing quality of work by introducing a theoretical approach towards assessing an adverse psychosocial work environment. Two models are briefly described, the demand‐control and effort‐reward imbalance models, and selected empirical evidence demonstrating their health‐adverse effects is summarised. Importantly, poor quality of work in addition reinforces employees’ intentions to leave their job as soon as possible. Results from a recent survey in ten European countries support this observation. In view of these findings and their relevance for occupational health and the prevention of early retirement, policy implications aimed at improving quality of work are discussed.     

Correcting expected utility for comparisons between alternative outcomes: A unified parameterization of regret and disappointment

A unified parameterization of an expected utility model corrected for regret and disappointment effects is presented, constrained to conform to a well-known choice pattern, the common consequence effect, a special case of the Allais paradox. For choices subject to regret and disappointment effects to be consistent with this choice pattern, the function that corrects the utility of the obtained outcome has to have a positive second derivative for its regret component and a negative second derivative for its disappointment component. These hypothesized functional forms make predictions about the relative effect that small vs. large differences between obtained and alternative outcomes should have on people’s experiences of regret or disappointment.

Young people leaving care: health, well-being and outcomes

This paper focuses on the health and well‐being of young people making the transition from care to independent adulthood. It draws on findings from a wider study of outcomes for young people leaving care in England. Notably, the study used, as its key outcome indicators, measures of general and mental well‐being. In doing so, it was able to explore the interrelationship between these areas and young people's overall progress after care. The paper explores the extent to which young people experience difficulties related to physical and mental health, disability and emotional and behavioural problems. It will show that such difficulties can impact upon and be influenced by overall well‐being and post‐care progress in more traditional outcome areas such accommodation and career, and will suggest that the transition from care itself can adversely affect health and well‐being. The paper considers these issues within the context of a changing policy framework which has given increased priority to the health and well‐being of young people in and leaving care, particularly in light of the Children (Leaving Care) Act 2000. It considers the ways that young people are supported to address health and well‐being and the implications for and impact on leaving care services.