SIMULATION AND THE CAPITAL ASSET PRICING MODEL: A COMMENT*

This paper challenges Lewellen and Long's contention that a Hertz-type simulation generates irrelevant data for the evaluation of capital expenditure opportunities. The conclusion is reached that an estimate of an asset's “own risk” may be a vital first step in estimating its covariance properties with the market index. A method of incorporating the information generated by simulation into the capital asset pricing model is also provided.     

OPTIMIZING ORGANIZATIONAL GOALS IN ASSIGNING FACULTY TEACHING SCHEDULES

The administration of higher education, as with other administrative environments, has become increasingly complex. This paper presents a mathematical model which addresses one of the administrative tasks concerning administrators in all institutions, the establishment of faculty teaching schedules. The assignment technique utilized by the model is linear programming with two special characteristics: goal programming and mixed-integer programming. The goal programming characteristic refers to the provision of explicit stack variables to take on values representing deviations from assignment criteria that may result in resolving conflicts which arise from interactive administrative priorities. The mixed-integer programming characteristic refers to a requirement of the model that certain variables take on only integer values if they appear in the final solution. The model is demonstrated using two different sets of preference orderings for goal achievement.     

How do marital status,work effort,and wage rates interact?

How marital status interacts with men's earnings is an important analytic and policy issue, especially in the context of debates in the United States over programs that encourage healthy marriage. This paper generates new findings about the earnings-marriage relationship by estimating the linkages among flows into and out of marriage, work effort, and wage rates. The estimates are based on National Longitudinal Survey of Youth panel data, covering 23 years of marital and labor market outcomes, and control for unobserved heterogeneity. We estimate marriage effects on hours worked (our proxy for work effort) and on wage rates for all men and for black and low-skilled men separately. The estimates reveal that entering marriage raises hours worked quickly and substantially but that marriage's effect on wage rates takes place more slowly while men continue in marriage. Together; the stimulus to hours worked and wage rates generates an 18%-19% increase in earnings, with about one-third to one-half of the marriage earnings premium attributable to higher work effort. At the same time, higher wage rates and hours worked encourage men to marry and to stay married. Thus, being married and having high earnings reinforce each other over time.     

Family transitions in Young Adulthood

Using the first (1995) and third (2001-2002) waves of the Add Health survey, we examine women 's family transitions up to age 24. Only a third of all women marry, and a fifth of those marriages dissolve before age 24. Three out of eight women have afirst birth, with a substantial majority of those births outside of marriage: 66% for whites, 96% for blacks, and 72% for Mexican Americans. Cohabitation is the predominant union form; 59% of women cohabit at least once by age 24. Most cohabitations are short lived, with approximately one in five resulting in a marriage. We summarize the family and relationship experience of women up to age 24 in terms offour categories, each accounting for roughly a quarter of all women. Category 1 has the women who remain single nonparents. Category 2 has the early marriers, women whose marriage is not preceded by a first birth. Category 3 has those who become single parents. Category 4 has the women who cohabit at least once, but who do not marry or have a birth by age 24. The strictly ordered transitions of the 1950s are long gone and have been replaced by a variety of paths to adulthood.     

On the mode of administering a questionnaire and responses to open-ended items

Concurrently administered personal and telephone surveys are compared to measure differences between the modes for identical questions. Speed of questioning is found to be greater in telephone interviews than personal interviews. The faster pace of telephone interviews is linked to shorter answers to open-ended items on the telephone. The tendency to reduce such responses is disproportionately exhibited by younger, affluent respondents who tend to provide detailed responses in personal interviews.     

Birth outcome, not pregnancy process: Reply to van der Veen

In a recent article (Frisbie. Forbes. and Pullum 1996) we documented racial/ethnic differences in birth outcomes according to a more fine-grained classification than has typically been employed in the demographic literature. In his commentary, van der Veen focuses on the measurement of one of the dimensions of that classification, maturity of the infant. as proxied by the fetal growth ratio. The crux of the critique is easily seen in van der Veen's statement that “all of my disagreements with Frisbie et al. 's method arise from their particular use of a postnatal standard for the assessment of intrauterine growth.” Our critic misunderstands our objective: He fails to realize our interest in birth outcome, not pregnancy process, and does not perceive that our intent was to extend the research extant in both the demographic and public-health literatures in which patently postnatal (i.e., ex utero) measures are taken as outcomes interesting in their own right and/or as risk factors for infant mortality and infant and childhood morbidity. Specifically, he does recognize that we purposefully expanded our focus to include moderately compromised births to determine if they were at higher risk than the normal births with whom they are conventionally categorized. Our discussion draws on research cited in the original article, on studies cited by our critic, and on a few more recent investigations. Although we have never argued that ours is the only, or even the best, approach in all cases, we try to clarify the rationale for, and adduce additional empirical evidence of, the utility of the method we used.     

Beyond single mothers: Cohabitation and marriage in the AFDC program

We investigate the extent and implications of cohabitation and marriage among U.S. welfare recipients. An analysis of four data sets (the Current Population Survey, the National Survey of Families and Households, the Panel Study of Income Dynamics, and the National Longitudinal Survey of Youth) shows significant numbers of cohabitors among recipients of AFDC. An even more surprising finding is the large number of married women on welfare. We also report the results of a telephone survey of state AFDC agencies conducted to determine state rules governing cohabitation and marriage. The survey results indicate that, in a number of respects, AFDC rules encourage cohabitation. Finally, we conduct an analysis of the impact of AFDC rules on cohabitation, marriage, and single motherhood and find weak evidence in support of incentives to cohabit.     

Three faces of international inequality

Recent studies of international inequality have focused mostly on the trend in international income inequality. This article extends the analysis of international inequality to also include inequalities in education and health. Analyses of time-series data for more than 100 countries show that international income inequality declined from 1980 to 2003 as several large, poor Asian countries outpaced many Western countries in national income growth. By contrast, international health inequality followed a U-shaped trend, falling in the 1980s before rising in the 1990s. The turnaround in health inequality coincides with a trend of declining life expectancy in sub-Saharan Africa. International educational inequality experienced the sharpest recent decline, spurred by the global expansion of formal schooling. These findings confirm that there is more to international inequality than income inequality alone and suggest that patterns of inequality in the current era of globalization are likely more complex than many leading theories suggest.