Dynamic Valuation Decomposition Within Stochastic Economies

I explore the equilibrium value implications of economic models that incorporate responses to a stochastic environment with growth. I propose dynamic valuation decompositions (DVD's) designed to distinguish components of an underlying economic model that influence values over long investment horizons from components that impact only the short run. A DVD represents the values of stochastically growing claims to consumption payoffs or cash flows using a stochastic discount process that both discounts the future and adjusts for risk. It is enabled by constructing operators indexed by the elapsed time between the trading date and the date of the future realization of the payoff. Thus formulated, methods from applied mathematics permit me to characterize valuation behavior and the term structure of risk prices in a revealing manner. I apply this approach to investigate how investor beliefs and the associated uncertainty are reflected in current‐period values and risk‐price elasticities.     

Happiness and Satisfaction with Work Commute

Research suggests that for many people happiness is being able to make the routines of everyday life work, such that positive feelings dominate over negative feelings resulting from daily hassles. In line with this, a survey of work commuters in the three largest urban areas of Sweden show that satisfaction with the work commute contributes to overall happiness. It is also found that feelings during the commutes are predominantly positive or neutral. Possible explanatory factors include desirable physical exercise from walking and biking, as well as that short commutes provide a buffer between the work and private spheres. For longer work commutes, social and entertainment activities either increase positive affects or counteract stress and boredom. Satisfaction with being employed in a recession may also spill over to positive experiences of work commutes.     

The impact of professional and personal satisfaction on perceptions of rural and urban: Some analytic evidence

Studies of rural-urban location decisions traditionally used ana priori definition of rural/urban based on population size. A group of 29 physicians (study group) practising in communities of less than 10 000, that were part of a larger sample, perceived their communities as ‘urban’. A matched group of physicians (control group) in the same communities, who perceived the communities as ‘rural’, was selected. The research question raised was: Are there personal and professional factors that could reliably predict the perception of rural and urban? A logistic regression analysis was done using professional and personal satisfaction items as predictors of the two groups. The analysis gives some evidence that, once the effect of community size is removed, the perception of rural urban can be explained by satisfaction with the following: (i) access to specialist expertise, (ii) quality of education for children, (iii) quality of life for children and (iv) quality of housing; satisfaction with size of community was not a significant predictor of rural/urban perception.     

Do Compensation Consultants Drive Up CEO Pay? Evidence from UK Public Firms

Do compensation consultants drive up CEO pay for the benefit of managers, or do they design pay packages to benefit firm owners? Using a large sample of UK firms from the FTSE All‐Share Index over the 2003–2011 period, we show a positive correlation between the presence of compensation consultants and CEO pay. Importantly, isolating this effect is somewhat dependent on the endogenous selection of consultants and the statistical modelling strategy deployed. We find evidence that compensation consultants improve CEO compensation design when their expertise is of greater importance (e.g. during the post‐financial crisis period, or for firms that have particularly weak compensation policies). In addition, our findings show that compensation consultants increase CEO pay–performance sensitivity. The balance of evidence supports optimal contracting theory more than managerial power theory, but the authors caution the limits to this verification. We are careful to note that the more compelling evidence for the positive effect of pay consultants on CEOs is based on advanced methods (such as propensity score matching and difference‐in‐differences), and that more standard approaches (such as OLS and fixed effects) are unlikely to reveal the same level of causality of consultants on CEO pay.     

Impact of the psychosocial work environment on registered absence from work: A two-year longitudinal study using the IPAW cohort

During the Intervention Project on Absence and Well-being (IPAW), a 5-year project conducted in Denmark, we investigated psychosocial work environment factors as independent predictors of the number of absence days per year. The present two-year longitudinal study used the IPAW cohort, but was not intended to study intervention effects, which will be reported later. Data were derived from baseline questionnaires and employers' registers of absence for 1919 participants (1305 women, 614 men, mainly in low-skilled jobs) in different occupations from 52 workplaces. These workplaces included municipal care, municipal technical services and a large pharmaceutical company. Analyses were performed by Poisson regression accounting for over-dispersion. After controlling for age, family type, health behaviours and physical work environment variables, we found that high levels of decision authority predicted low absence rates in both women and men. We tested two new psychosocial constructs developed for this study: Predictability (relating to being informed on future events at work) and Meaning of Work (relating to how meaningful and useful the work is perceived to be). Higher Predictability was a significant predictor of lower absence rates in men. This study adds to the body of evidence that the psychosocial working environment influences absence and should therefore be considered to be an important target for intervention.     

Self-reported health, self-esteem and social support among young unemployed people: a population-based study

A population-based study was performed in southern Sweden in the autumn of 1998. The aim was to study connections between self-reported health, self-esteem and social support among unemployed (≥ three months) young people. The sample consisted of 264 unemployed individuals aged 20–25 years, and 528 individuals of the same age, randomly selected from the population register and not registered as unemployed. The response rate was 72%. Defined by means of factor analysis, mental health consisted of the symptoms tearfulness, dysphoria, sleeping disturbance, restlessness, general fatigue and irritability. The unemployed had more mental health problems than young people who were working or studying. Restlessness and dysphoria were significantly over-represented in the unemployed among both sexes. However, good social support seemed to predict mental health. Support from parents was most important, particularly in males. Those with low self-esteem and poor parental support were especially vulnerable.     

Maternal Work Absence: A Longitudinal Study of Language Impairment and Behavior Problems in Preschool Children

Combining work and family responsibilities is challenging when children have special needs, and mothers commonly make employment‐related adjustments. In this study, the authors examined associations between maternal work absence and child language impairment and behavior problems in preschool children. Questionnaire data at child age 3 years from 33,778 mothers participating in the prospective population‐based Norwegian Mother and Child Cohort Study were linked to national register data on employment and long‐term physician‐certified sick leave at child age 3–5 years. Mothers who reported having a child with language impairment had a consistently higher risk of not being employed and were at increased risk of taking long‐term sick leave at child age 5 years. Co‐occurring problems were associated with excess risk. Language impairments in preschool children, in particular when they are co‐occurring with behavior problems, are likely to have a range of negative short‐ and long‐term consequences for the financial and overall health and well‐being of mothers and their families.     

GENDER DIFFERENCES IN EXAMINATION BEHAVIOR

A unique examination strategy in first‐year microeconomics courses is used to test for gender differences in examination behavior. Students have the possibility of attaining a seminar bonus on the final exam for near‐perfect seminar attendance and are given two voluntary initial quizzes during the semester. At the final exam, the scores received on initial quizzes can either be accepted as is, or students can attempt to improve their marks by answering similar quiz questions on the exam. Results suggest that female students are more likely to take initial quizzes and receive a seminar bonus but are less likely to re‐take quiz questions on the final exam. These results suggest higher risk aversion, less overconfidence, and more self‐discipline or less procrastination among female students relative to male students. Our estimated behavioral differences may have important implications in terms of final grades on the course. (JEL I21, J16, A12, A14)     

How to improve gait and balance function in elderly individuals—compliance with principles of training

Most balance training regimens for elderly individuals focus on self-controlled exercises, although automatic postural responses after a balance perturbation are not under direct volitional control. We critically review the literature on this topic, and notice that several studies fail to comply with basic principles of training and therefore show little improvement in function. Some present the view that physical function in the too frail and too fit cannot be improved, which we instead argue would be the effect of nonspecific training programs. We propose a concept for balance training that incorporates voluntary exercises as well as perturbation and dual-task exercises to improve balance control. The program is performed on five different levels where levels 1–4 exercises focus on the skill to maintain balance and level 5 adds perturbation exercises that focus on the skill to recover balance as well as dual task exercises providing a cognitive load during execution of a balance motor task. Functional requirements for muscle strength and power are directly incorporated into the program. The feasibility of the concept has been demonstrated on elderly fallers. A randomized control trial is underway to investigate the effects on healthy elderly individuals. Further intervention studies using this concept are encouraged.