Contract Pricing in Consumer Credit Markets

We analyze subprime consumer lending and the role played by down payment requirements in screening high‐risk borrowers and limiting defaults. To do this, we develop an empirical model of the demand for financed purchases that incorporates both adverse selection and repayment incentives. We estimate the model using detailed transaction‐level data on subprime auto loans. We show how different elements of loan contracts affect the quality of the borrower pool and subsequent loan performance. We also evaluate the returns to credit scoring that allows sellers to customize financing terms to individual applicants. Our approach shows how standard econometric tools for analyzing demand and supply under imperfect competition extend to settings in which firms care about the identity of their customers and their postpurchase behavior.     

Benchmarking and Monitoring International Warehouse Operations in Europe

We report on a cross‐sectional and longitudinal comparison of European distribution centers in the Netherlands. European distribution centers are responsible for the distribution of a manufacturer's (mostly Asian or American) products over customers in a large part of Europe, the Middle East, and Africa, often with strict service‐level agreements. In total, 65 physical warehouses, containing 140 European, Asian, and American European distribution center operations, in combination with different outsourcing relations (own‐account, dedicated outsourced, and public outsourced), were benchmarked in 2000 and monitored over the period 2000–2004. We conclude that both in 2000 and 2004, European warehouses are more efficient than Asian and American warehouses, and outsourced operations (particularly public warehouses) are more efficient than own‐account operations. Over the period 2000–2004, efficiency appears to have declined substantially; the most distinct differences are to be found among public outsourced warehouses and, because many European distribution center warehouse operations of European origin are run by public service providers, among European warehouses. This decline in efficiency also led to a decline in productivity, in spite of the fact that overall the available technology has improved. We conjecture potential causes for this decline.     

Inference and rare event simulation for stopped Markov processes via reverse-time sequential Monte Carlo

We present a sequential Monte Carlo algorithm for Markov chain trajectories with proposals constructed in reverse time, which is advantageous when paths are conditioned to end in a rare set. The reverse time proposal distribution is constructed by approximating the ratio of Green’s functions in Nagasawa’s formula. Conditioning arguments can be used to interpret these ratios as low-dimensional conditional sampling distributions of some coordinates of the process given the others. Hence, the difficulty in designing SMC proposals in high dimension is greatly reduced. Empirically, our method outperforms an adaptive multilevel splitting algorithm in three examples: estimating an overflow probability in a queueing model, the probability that a diffusion follows a narrowing corridor, and the initial location of an infection in an epidemic model on a network.     

Differential parenting and children's social understanding

In the current study, a curvilinear association was examined between differential parenting and children's social understanding as measured using standardized assessments and behavioral observations. Social understanding was comprised of theory‐of‐mind and behavior indicating understanding of others’ minds (i.e., cognitive sensitivity and internal state talk and reasoning during sibling interactions). Data came from a community sample of 372 children (51.6% males; M age = 5.57, SD = 0.77), their younger siblings (M age = 3.14, SD = 0.27), and their mothers who were observed in their homes. We hypothesized that in families with higher levels of differential parenting, both favored and disfavored older siblings would display poorer social understanding, but that disfavored children would be more negatively impacted. Results from a hierarchical regression analysis indicated an inverse linear effect, rather than a curvilinear relationship, between being favored by mother and siblings’ social understanding. Specifically, disfavored older children showed higher levels of social understanding when interacting with their favored younger sibling. This relationship remained significant after controlling for variables such as age, SES, and language. Findings suggest that differential parenting plays a role in children's ability to understand others.     

Patterns of consent: evidence from a general household survey

Summary.  We analyse patterns of consent and consent bias in the context of a large general household survey, the 'Improving survey measurement of income and employment' survey, also addressing issues that arise when there are multiple consent questions. A multivariate probit regression model for four binary outcomes with two incidental truncations is used. We show that there are biases in consent to data linkage with benefit and tax credit administrative records that are held by the Department for Work and Pensions, and with wage and employment data held by employers. There are also biases in respondents' willingness and ability to supply their national insurance number. The biases differ according to the question that is considered. We also show that modelling questions on consent independently rather than jointly may lead to misleading inferences about consent bias. A positive correlation between unobservable individual factors affecting consent to Department for Work and Pensions record linkage and consent to employer record linkage is suggestive of a latent individual consent propensity.     

HOW EDUCATION AFFECTS ATTITUDE TO PROTEST:

In a previous study, the authors found that among whites education affected attitude to protest in four ways: by raising commitment to civil liberties; by reducing support for violence; by increasing knowledge of protest justifications; and by altering a person's position in society, hence one's interests and identifications. This study shows that the same set of forces accounts for the variability of correlations between education and protest attitudes among samples of black respondents. Differences in the results among blacks as compared to whites chiefly relate to issue-specific protests. Here results diverge because black experience serves as an alternative to formal education for increasing awareness of protest justifications and identification with protestors.