On an Asymptotic Theory of Conditional and Unconditional Coverage Probabilities of Empirical Bayes Confidence Intervals

Empirical Bayes (EB) methodology is now widely used in statistics. However, construction of EB confidence intervals is still very limited. Following Cox (1975 ), Hill (1990 ) and Carlin & Gelfand (1990 , 1991 ), we consider EB confidence intervals, which are adjusted so that the actual coverage probabilities asymptotically meet the target coverage probabilities up to the second order. We consider both unconditional and conditional coverage, conditioning being done with respect to an ancillary statistic.     

HEDONIC IMPUTATION AND THE PRICE INDEX PROBLEM: AN APPLICATION TO HOUSING

In this study, we show how use of the hedonic imputation method complicates the price index problem. In addition to the usual choice between formulas such as Fisher and Törnqvist, the fact that index compilers have some discretion over which prices are imputed implies that it is necessary to choose as well between different varieties of each formula. The functional form of the hedonic model must also be taken into account. We illustrate the importance of these issues in a housing context using house price data for three regions in Sydney over a 3‐yr period. (JEL C43, E31, O47, R31)     

BUSINESS CYCLE ASYMMETRY: A DEEPER LOOK

This paper distinguishes two types of asymmetry in business cycles: deepness and steepness. Deepness is defined as the characteristic that troughs are further below trend than peaks are above. Most previous research has focused exclusively on steepness, which refers to cycles in which contractions are steeper than expansions. A test for deepness is proposed and applied to U.S. post-war quarterly unemployment, real GNP, and industrial production. Evidence of deepness is found for unemployment and industrial production, while the evidence for real GNP is weaker. Previous evidence of steepness in unemployment is confirmed.     

ALTERNATIVES FOR RESTRUCTURING THE RAILROADS: END-TO-END OR PARALLEL MERGERS?

The U.S. railroad industry has seen considerable merger activity over the past two decades and more mergers are expected in the near future, but little is presently known about the relative social benefits of alternative merger configurations. Using traffic data for origin-destination pairs affected by recent mergers, this paper examines the impact of end-to-end and parallel mergers on increases in the market share of merged firms. To the extent that increases in market share reflect social benefits in the form of improved service and lower costs, end-to-end mergers are found to outperform parallel mergers.     

ESTIMATING COMMUNITY STANDARDS: THE USE OF SOCIAL SCIENCE EVIDENCE IN AN OBSCENITY PROSECUTION

Elements of the legal test for obscenity of sexually explicitmaterial indicted in a criminal case are examined. A cross-sectionof residents of Mecklenburg County (Charlotte, NC) were randomlyassigned to view either one of the sexually explicit films andthe sexually explicit magazine charged in the criminal case,or a control film. Before and after the viewing, residents judgedthe materials' appeal to a prurient interest (a shameful, morbid,unhealthy interest in sex) and patent offen siveness (communitytolerance for such material). The results indicated that therespondents felt that the films and magazine did not appealto a shameful, morbid, or unhealthy interest in sex, nor didthey perceive these materials as going beyond the level of toleranceregarding depictions of sexual conduct for the average adultin that community. A lower percentage of subjects thought thecommunity tolerated the materials they had just viewed thanwhen they were asked to report on what they personally tolerated.Fewer people felt the films appealed to a shameful, morbid,or unhealthy interest in sex after they had an opportunity tosee them than before viewing. The advantages of providing jurorsin obscenity cases with information about community standardsbased on summations of personal tolerance for materials actuallycharged in these cases, rather than hypothetical judgments aboutthe community and obscenity, is discussed.     

THE EFFECTS OF DIFFERENTIAL MORTALITY RATES ON THE PROGRESSIVITY OF SOCIAL SECURITY

Does the Old-Age and Survivors Insurance portion of Social Security become regressive once we allow for the shorter lifespan of poor people? This paper compares the net returns of poor households to the net returns of other households after taking into account differential longevity. Earnings and Social Security tax and benefit histories are simulated for families of various income levels in the 1925 birth cohort. These tax and benefit profiles are then weighted by the agents' probabilities of survival. For some plausible values of key mortality parameters, differences in mortality eliminate the progressive spread in returns across income categories.     

THE VOLUNTARY PROVISION OF PUBLIC GOODS? THE TURNPIKE COMPANIES OF EARLY AMERICA

The turnpike companies of early America (roughly 1795–1840) were very unprofitable but conferred vast benefits to communities served. Purchasing stock was like paying for the road since such purchases were necessary to complete the road and unprofitability was foreseen. Thus the turnpikes would appear to have been public goods. Yet hundreds of turnpikes were provided through voluntary association. The free rider problem was overcome by an almost vigilant impulse to participate and to see that your neighbor did likewise.