MARKET FORCES AND AIRCRAFT SAFETY: THECASEOFTHEDC-10

The May 25th, 1979 Chicago DC-10 crash provides the opportunity to test an important proposition in the theory of consumer product safety: Can market forces provide safety when products are too complex to permit buyer prepurchase inspection? This paper combines economic theory with modern finance theory to measure the cost of the crash to shareholders of the plane's manufacturer, McDonnell Douglas. The results indicate that the DC-10 crash resulted in a $200 million loss to McDonnell Douglas stockholders and that this amount exceeds any reasonable estimate of regulatory or liability costs.     

THE POLITICAL ECONOMY OF U.S. WHEAT LEGISLATION

Both taxpayer subsidies to U.S. wheat producers and domestic deadweight losses increased as a result of the U.S. wheat program adopted in 1985. A calculation of the costs and benefits of alternative wheat policies shows that mandatory production controls with no taxpayer expense could have made wheat producers as well off as the adopted policy. Becker's theory of competition among interest groups and Peltzman's theory of the equilibrium amount of regulation are shown to be consistent with the observed policy choice if the list of fnfected interest groups includes agricultural input suppliers and grain marketing firms.     

Thomas William Cramp, Almoner: The Forgotten Man in a Female Occupation

Correspondence to Andrew Sackville, Social Sciences Department, Edge Hill College of Higher Education, St Helens Road, Ormskirk, Lancashire, L39 4QP. Summary This paper uses archive sources to reconstruct the activitiesof a pioneer almoner who had the unique distinction of beingthe only man in what at that time was a female occupation. Againstthe background of an account of the development of almoningas an occupation, it examines both the hospital work and theinvolvement in his professional association of Mr Thomas WilliamCramp, the Almoner at the Metropolitan Hospital, London, from1902 to 1923. The paper also questions why Mr Cramp has beenwritten out of the great majority of historical accounts ofalmoning/medical social work.     

Price Versus Quantity: Market-Clearing Mechanisms When Consumers are Uncertain about Quality

High-quality producers in a market where quality varies can reap superior profits by charging higher prices, selling greater quantities, or both. Empirical analyses of the mutual fund and automobile industries show that high-quality producers sell more units than their low-quality competitors, but at no higher price (or retail markup) per unit. Our theoretical models find that if qualities are known by consumers and production costs are constant, then having a higher quality secures the producer both higher price and higher quantity. The market may clear in a different fashion if there is "quality uncertainty"; that is, if some consumers can discern quality but others cannot. Then, high- and low-quality producers may end up setting a common price, which allows the high-quality producer to sell substantially more. In this context, quality begets quantity.     

CONSUMPTION BENEFITS OF NATIONAL HOCKEY LEAGUE GAME TRIPS ESTIMATED FROM REVEALED AND STATED PREFERENCE DEMAND DATA

This paper examines the demand for hockey game trips among metropolitan and nonmetropolitan residents of Alberta, Canada. Using data on both revealed and stated preference game‐trip behavior from a telephone survey conducted throughout Alberta, we estimate the effect of ticket prices, team quality, arena amenities, and capacity on the latent demand for National Hockey League hockey games. We find that lower ticket prices, higher team quality, and additional capacity encourage attendance. In the status quo scenario, consumer surplus per game is $50 for those who had attended hockey games and about 50% less for those who had not attended games. Exploiting the stated preference data, we develop a number of other consumer surplus estimates. We also include travel costs in the estimation of the demand function and estimate the full value of the game trip considering both ticket prices and travel costs. Sold‐out arenas in Calgary and Edmonton generate annual consumption benefits of $40 and $35 million when only ticket prices are used to calculate consumer surplus (i.e., excluding travel costs). Considering the full‐price consumer surplus for the Calgary Flames of $103 per game trip, the annual consumption benefits may be as high as $82 million. (JEL R22, L83, D61)     

THE EMPIRICAL DEFINITION OF MONEY: A CRITIQUE

Money talks, but it does not give itself away. Lately there has been much talk about money, and even less agreement than heretofore about what it is. Because of the growing immateriality of money, the difficulty of defining it has waxed rather than waned with increased knowledge. This, of course, has not made the development of monetary theory or the determination of monetary policy any easier. Milton Friedman and Anna Jacobson Schwartz (hereafter referred to as F-S) prefer an empirical definition of money to a priori definitions, such as the generally acceptable means of payment.1 However, they fail to demonstrate either that complete freedom from a priori conceptualization is possible or that such procedure can avoid circularity of reasoning.2 If there is no "right" definition of money (F-S, 1970, pp. 137, 145–146, 151, 197–198), there is no "empirical" definition in the absence of the "right" monetary theory.     

WHY UNDERSTANDING SMOKING BANS IS IMPORTANT FOR ESTIMATING THEIR EFFECTS: CALIFORNIA'S RESTAURANT SMOKING BANS AND RESTAURANT SALES

A large literature has sought to determine whether smoking bans help or hinder restaurants. Much of the literature improperly specifies its econometric equations and thus mistakenly infers causality. Examining the relationship between restaurant smoking bans and restaurant revenues in 267 California communities, we reach two main conclusions. First, California's municipal restaurant smoking bans are endogenous in a critical way—restaurant sales growth (or something correlated with restaurant sales growth) appears to cause restaurant bans, not vice versa. Consequently, failure to control properly for trends can produce spurious "evidence" of causation. Second, ban heterogeneity (e.g., state versus local) can be exploited to sort out—or rule out—causal effects. In other words, pooling data and treating smoking bans implemented at different levels as homogenous (as many studies do) ignores an important source of information and is likely to lead to erroneous conclusions. Our analysis holds lessons for the many studies that have examined the arguably more important question of how smoking bans affect smoking rates. ( JEL L51)