BIASES IN MACROECONOMIC FORECASTS: IRRATIONALITY OR ASYMMETRIC LOSS?

Empirical studies using survey data on expectations have frequently observed that forecasts are biased and have concluded that agents are not rational. We establish that existing rationality tests are not robust to even small deviations from symmetric loss and hence have little ability to tell whether the forecaster is irrational or the loss function is asymmetric. We quantify the trade‐off between forecast inefficiency and asymmetric loss leading to identical outcomes of standard rationality tests and explore new and more general methods for testing forecast rationality jointly with flexible families of loss functions that embed squared loss as a special case. Empirical applications to survey data on forecasts of real output growth and inflation suggest that rejections of rationality may largely have been driven by the assumption of squared loss. Moreover, our results suggest that agents are averse to “bad” outcomes such as lower‐than‐expected real output growth and higher‐than‐expected inflation and that they incorporate such loss aversion into their forecasts. (JEL: C22, C53, E37)     

Do union organizing activities affect decertification?

This paper tests the hypothesis that unions face a trade-off between retaining organized units and organizing new bargaining units. Using cost-benefit analysis, a model is developed which examines the impact of representation elections on the level of decertification activity for the period 1948 to 1979. The results indicate that as unions increase their efforts to organize more employees, they trade-off a loss of membership through decertification. The shift of resources from servicing existing units to organizing new units causes a sufficient change in the benefit/cost ratio for employees to result in loss of union certification.     

Scientific judgment and the limits of conflict-of-interest policies

This article argues that the three major elements of typical university conflict-of-interest (COI) policies (i.e., disclosure, management, and elimination of conflicts via divestiture or recusal) are likely to be insufficient for screening out many worrisome influences of financial COIs. Current psychological research challenges the effectiveness of disclosure, management plans are unlikely to address the wide range of ways that financial COIs can influence scientific judgment, and it is often impractical to eliminate conflicts. Identifying the limits of these policies highlights the importance of considering alternative strategies, such as encouraging more independently funded esearch, in order to maintain the integrity of science.     

Tests for Unit Roots and the Initial Condition

The paper analyzes the impact of the initial condition on the problem of testing for unit roots. To this end, we derive a family of optimal tests that maximize a weighted average power criterion with respect to the initial condition. We then investigate the relationship of this optimal family to popular tests. We find that many unit root tests are closely related to specific members of the optimal family, but the corresponding members employ very different weightings for the initial condition. The popular Dickey‐Fuller tests, for instance, put a large weight on extreme deviations of the initial observation from the deterministic component, whereas other popular tests put more weight on moderate deviations. Since the power of unit root tests varies dramatically with the initial condition, this paper explains the results of comparative power studies of unit root tests. The results allow a much deeper understanding of the merits of particular tests in specific circumstances, and a guide to choosing which statistics to use in practice.     

Application of the experimental watershed approach to advance urban watershed precipitation/discharge understanding

Reliable methods are required to provide the detailed hydrologic information necessary to improve management of water resources and aquatic ecosystems in developing/urbanizing watersheds. A case study was implemented in a representative 230 km² mixed-use, urbanizing watershed to advance precipitation/discharge understanding. Precipitation and streamflow were monitored in five sub-watersheds (nested-scale experimental watershed study design), partitioned by dominant land use type. Data were collected at 30-min intervals through the 2009 to 2015 water years. Individual sub-watershed area-normalized flow and runoff coefficients differed by as much as 400%. Two high density, urban sub-watersheds displayed large runoff coefficients indicating disproportionately high flow response to precipitation inputs. Regression analyses of sub-watershed land use characteristics and flow metrics showed strong (i.e. R² > 0.9) statistically significant (p < 0.05) linear relationships for percentage developed, forest, and agriculture land cover. Observed relationships between land use and flow metrics illustrate the complexity of contrasting and intermingled land use types in urbanizing, mixed-land-use watersheds. Results highlight the variable hydrologic impacts of land use and suggest the potential for vegetation management as a tool for streamflow mediation in urban settings. The work is one of the first to utilize the experimental watershed method to isolate and quantify land use impacts in the context of a contemporary mixed-land-use watershed. Collectively, results emphasize the utility of the method for land and water resource managers seeking science-based information to guide management decisions and more effectively target remediation efforts in contemporary multiple-land-use watersheds.     

Disabling Spaces and Spatial Strategies: Feminist Approaches to the Home Environment of Family Caregivers of People with Dementia

ABSTRACT

The home environment becomes very important for family caregivers of people with dementia as a place of safety, retreat and care provision. Using a gender-based perspective, the authors analyzed thirteen interviews with family caregivers to understand how they perceived their home space. The data was analyzed thematically with the help of adjacency diagrams. Our analysis identified three main themes: compact layout, spatial flexibility, and the wider neighborhood. Given the gendered nature of caring, the findings are discussed drawing on the work of feminist architects regarding the home environment. The authors argue that feminist architectural approaches can usefully inform spatial strategies regarding dementia, ageing friendly housing, accessible living and the wellbeing of the caregiver. Different bodies and users’ needs should be at the epicenter of design, as opposed to conventional design and the current practices by developers, which may create a series of disabling spaces.     

Institutional Pathology and the Death of Dan Markingson

In the spring of 2015, 11 years after a mentally ill young man named Dan Markingson stabbed himself to death in an industry-sponsored drug study, officials at the University of Minnesota suspended recruitment of subjects into drug trials in its Department of Psychiatry. University officials agreed to act only after a scathing investigation by Minnesota Office of the Legislative Auditor found damning evidence of coerced recruitment, inadequate clinical care, superficial research oversight, a web of serious, disturbing conflicts of interest, and a pattern of misleading public statements by university officials aimed at deflecting scrutiny. In this article, I examine the larger institutional factors leading up to Markingson’s suicide and prevented corrective action for so long.