THE WELFARE COST OF LAWLESSNESS: EVIDENCE FROM SOMALI PIRACY

In spite of general agreement that establishing the rule of law is central to properly functioning economies, little is known about the cost of law and order breakdowns. This paper studies a specific context of this by estimating the effect of Somali piracy attacks on shipping costs using data on shipping contracts in the dry bulk market. To estimate the effect of piracy, we look at shipping routes whose shortest path exposes them to piracy and find that the increase in attacks in 2008 led to around an 8% to 12% increase in costs. From this we calculate the welfare loss imposed by piracy. We estimate that generating around 120 USD million of revenue for Somali pirates led to a welfare loss in excess of 630 USD million, making piracy an expensive way of making transfers.     

The financial crisis,investor activists and corporate strategy: will this mean shareholders in the boardroom?

The concept of stakeholder engagement is gaining increasing attention in the mainstream media and may feature as part of a corporation’s strategy for corporate social responsibility. Not only are boards considering how they might engage with key stakeholders, but stakeholders are also pursuing greater participation in the strategic decisions of companies in which they invest. While this is an emerging concept in companies governed by unitary boards, as in North America, the issue of stakeholder engagement in various forms is also entering debate in other countries around the world. In general, however, the idea of shareholder or stakeholder representation on the boards of most UK and Commonwealth companies is anathema. Forces now influencing the development of strategies for stakeholder engagement and the rise of active investors include changing corporate governance rules which give investors more power in the election of directors, the increasing role of pension plans and hedge fund investment groups which have produced investors who keep a close eye on company performance and value, and a sluggish or turbulent stock market as a result of the financial crisis initiated by the credit crunch in the sub-prime mortgage markets. In this paper the phenomenon of stakeholder representation is examined and results of a recent survey conducted among a large sample of New Zealand directors are presented. The findings suggest that these traditionally oriented boards are increasingly inwardly focused and are without an agenda for building and managing shareholder and stakeholder relations. Accordingly, such boards are unlikely to regard stakeholder engagement as a serious strategic issue and are thus also likely to miss significant opportunities in the changed business environment to benefit from stakeholder support.     

The use of DNA typing in forensic science

Controversy has surrounded the use of DNA typing in forensics especially with respect to providing estimates of the frequency of genetically similar individuals in human populations. To address these concerns the National Academy of Sciences has recently produced a report in which specific recommendations are made to alleviate some of this controversy. The reaction of the forensic community to this report is discussed along with many specific concerns about the interaction of the legal and scientific communities.     

Terrorism Risks and Cost‐Benefit Analysis of Aviation Security

We evaluate, for the U.S. case, the costs and benefits of three security measures designed to reduce the likelihood of a direct replication of the 9/11 terrorist attacks. To do so, we assess risk reduction, losses, and security costs in the context of the full set of security layers. The three measures evaluated are installed physical secondary barriers (IPSB) to restrict access to the hardened cockpit door during door transitions, the Federal Air Marshal Service (FAMS), and the Federal Flight Deck Officer (FFDO) Program. In the process, we examine an alternate policy measure: doubling the budget of the FFDO program to $44 million per year, installing IPSBs in all U.S. aircraft at a cost of $13.5 million per year, and reducing funding for FAMS by 75% to $300 million per year. A break‐even cost‐benefit analysis then finds the minimum probability of an otherwise successful attack required for the benefit of each security measures to equal its cost. We find that the IPSB is costeffective if the annual attack probability of an otherwise successful attack exceeds 0.5% or one attack every 200 years. The FFDO program is costeffective if the annual attack probability exceeds 2%. On the other hand, more than two otherwise successful attacks per year are required for FAMS to be costeffective. A policy that includes IPSBs, an increased budget for FFDOs, and a reduced budget for FAMS may be a viable policy alternative, potentially saving hundreds of millions of dollars per year with consequences for security that are, at most, negligible.     

Psychological stress in adoptive parents of special-needs children

This article focuses on the nature and extent of parental stress among adoptive parents of special-needs children. In-depth face-to-face interviews of adoptive parents of 35 children were conducted, on average, four months postplacement (but before adoption). One-year follow-up interviews were conducted with parents of 15 (43%) of these children. Qualitative and quantitative data were collected, including parenting stress scores. Results indicated higher than average levels of stress, particularly on subscales related to parent-child dysfunctional interactions and to raising a difficult child. Increased stress levels were associated with poorer family adjustment and with higher levels of child behavior problems. Stress levels remained mostly unchanged over the year. Responses to open-ended questions identified five stress categories: child characteristics, parent-child interactions, family cohesion, parental adjustment, and adoptions service issues. Practice and research implications are discussed.     

Human Resource Management and the Appropriation Learning Perspective

This paper posits the concept ofappropriation to explain the underlyingethos and rationale for seeking to secure thecontribution of people to organizational functioning.Human resource management (HRM) practice is therefore largely underpinnedby the objective of appropriating the human resourcevalue. This is ignored by thepractitioner-oriented literature which has a financialinterest in helping organizations to secure this value,and by the academic literature which is unwilling toconfront the contradictions and uncomfortable truthsinherent in such activities. The traditional approach to appropriation is characterized by suchconcerns as skill-formation, commitment to theorganization, shared corporate values, and a reliance onformally constituted governance structures with aputative integrative ethos. This paper advocates areconstitution of the appropriation regime toincorporate the concepts of knowledge and learning. Wedraw from the innovation management literature tohighlight the problematic nature of appropriation and toclarify the implications of appropriation to themanagement of the knowledge that resides in people.Finally, we suggest how future research might proceed within an Appropriation Learning (A–L)perspective.     

The Centers for Medicare and Medicaid Services' Nursing Home Case-Mix and Quality Demonstration: a descriptive overview

This paper presents the first comprehensive account of a major national demonstration designed to integrate skilled nursing facilities (SNF) prospective case-mix payment and quality of care. It describes the Centers for Medicare and Medicaid Services' Nursing Home Case-Mix and Quality (NHCMQ) Demonstration-the template for Medicare's SNF Prospective Payment System (PPS) implemented July 1998. The NHCMQ Demonstration provided the basis for one of the most significant changes in SNF reimbursement and quality monitoring policies to date. Prospective reimbursement policies created positive incentive for providers to admit Medicare residents under more equitable payment rates. However, controversy regarding unanticipated perverse provider incentives remains. The quality management system designed under the NHCMQDemonstration is currently used in over 17,000 nursing homes. Furthermore, under the NHCMQ Demonstration, one standardized assessment tool-the MDS-was used to assess a resident's clinical condition, to monitor quality, and to calculate provider reimbursement. Experiences from the NHCMQ Demonstration and continued evaluation of the current national PPS, along with state systems, provide a rich information source regarding prospective, case-mix reimbursement, and provider incentives.