Poverty Mapping with Aggregate Census Data: What is the Loss in Precision?

Spatially disaggregated maps of the incidence of poverty can be constructed by combining household survey data and census data. In some countries (notably China and India), national statistics agencies are reluctant, for reasons of confidentiality, to release household‐level census data, but they are generally more willing to release aggregated census data, such as village‐ or district‐level means. This paper examines the loss in precision associated with using aggregated census data instead of household‐level data to generate poverty estimates. The authors show analytically that using aggregated census data will result in poverty rates that are biased downward (upward) if the rate is below (above) 50%, and that the bias approaches zero as the poverty rate approaches zero, 50%, and 100%. Using data from Vietnam, it is found that the mean absolute error in estimating district‐level poverty rates is 2.5 percentage points if the census data are aggregated to the enumeration‐area level means, and 3–4 percentage points if the data are aggregated to commune or district level. Finally, the authors propose a method for reducing the error using variances calculated from the census. When this approach is applied to the Vietnam data, this method can cut the size of the aggregation errors by around 75%.     

Bonus-Malus Systems with Two-Component Mixture Models Arising from Different Parametric Families

Two-component mixture distributions defined so that the component distributions do not necessarily arise from the same parametric family are employed for the construction of Optimal Bonus-Malus Systems (BMSs) with frequency and severity components. The proposed modeling framework is used for the first time in actuarial literature research and includes an abundance of alternative model choices to be considered by insurance companies when deciding on their Bonus-Malus pricing strategies. Furthermore, we advance one step further by assuming that all the parameters and mixing probabilities of the two component mixture distributions are modeled in terms of covariates. Applying Bayes' theorem we derive optimal BMSs either by updating the posterior probability of the policyholders’ classes of risk or by updating the posterior mean and the posterior variance. The resulting tailor-made premiums are calculated via the expected value and variance principles and are compared to those based only on the a posteriori criteria. The use of the variance principle in a Bonus-Malus ratemaking scheme in a way that takes into consideration both the number and the costs of claims based on both the a priori and the a posterior classification criteria has not yet been proposed and can alter the resulting premiums significantly, providing the actuary with useful alternative tariff structures.     

Augmenting the Input–Output Framework for ‘Common Pool’ Resources: Operationalising the Full Leontief Environmental Model

In its initial formulation, the full Leontief (1970) Leontief, W. 1970. Environmental repercussions and the economic structure: an input–output approach. Review of Economics and Statistics, 52: 262–277. [Crossref], [Web of Science ®] [Google Scholar] environmental model augments the conventional Input–Output (IO) table by introducing pollution generation and separately identified pollution elimination sectors. Essentially it extends IO analysis to incorporate the use of a ‘common pool’ resource. Subsequent literature has either been analytical in nature or has concentrated on pollution generation but not cleaning activity. In this paper we generate an empirical full Leontief environmental IO system, based on augmenting the existing Scottish IO tables through endogenising waste generation and waste disposal activity. Due to weaknesses in data, our empirical results need to be treated with some caution. However, the construction of the extended IO system and the interpretation of the output and price multiplier results raise a number of interesting practical and conceptual issues. The analysis undertaken here can be extended to other ‘common pool’ resources such as the use of highways and irrigation systems.     

Did bank distress stifle innovation during the Great Depression?

We find a negative relationship between bank distress and the level, quality and trajectory of firm-level innovation during the Great Depression, particularly for R&D firms operating in capital intensive industries. However, we also show that because a sufficient number of R&D intensive firms were located in counties with lower levels of bank distress, or were operating in less capital intensive industries, the negative effects were mitigated in aggregate. Although Depression era bank distress was associated with the stifling of innovation, our results also help to explain why technological development was still robust following one of the largest shocks in the history of the U.S. banking system.     

Baltic Dry Index and the democratic window of opportunity

In their seminal paper, Brückner and Ciccone (2011) document that a significant effect of democratic change may be triggered by negative transitory economic shocks, and that rainfall can open a democratic window of opportunity in sub-Saharan Africa (SSA). As a complement, this paper uses within-country variation in the Baltic Dry Index (BDI) as a source of transitory negative income shocks to SSA countries. The BDI reflects the cost of utilizing dry bulk carriers, which are specially designed vessels for transporting primary goods internationally, where these goods dominate the output and export sectors of the SSA economies. We find that positive BDI cost shocks are followed by significant contraction in income through trade channel and significant improvement in democratic institutions, where BDI can open a window of opportunity for democratic improvement. Instrumental variables estimates indicate that following a negative income shock of one percentage point, democracy scores improve by around 4–5 percentage points on average.     

Knowledge Recipients,Acquisition Mechanisms,and Knowledge Transfer at Japanese Subsidiaries: An Empirical Study in China

Although knowledge transfer contributes to a firm's competitive advantage, the effect of mechanisms used by a knowledge recipient on knowledge acquisition has been understudied. This article provides some insights on the interplay of knowledge recipients and transfer mechanisms between Japanese multinational corporations and their subsidiaries operating in China. Using structural equation methodology, this research proposes a knowledge transfer model that captures knowledge recipients’ characteristics and acquisition mechanisms, and empirically investigates the impact of knowledge recipients on mechanisms to test the applicability of specific mechanisms in knowledge acquisition. This article argues that knowledge recipients’ motivation and absorptive capacity have a positive impact on knowledge acquisition, and simultaneously provides evidence that mechanisms have mediating effects, which are vital to our understanding of knowledge transfer effectiveness. This study extends our understanding by adding knowledge transfer mechanisms as mediating factors in the relationship between knowledge recipients’ characteristics and knowledge acquisition, and quantifying the relationship. © 2015 Wiley Periodicals, Inc.     

Are we overestimating the negative impact of higher food prices? Evidence from Ghana

Most studies of the welfare impact of higher food prices adopt Deaton's approach, based on the first‐order effect of prices changes using income and expenditure survey data. This paper explores the impact of higher maize and food prices in Ghana and considers the sensitivity of results to changes in several assumptions. If second‐order effects are included, incorporating household response to price changes, the welfare impact of food price increases is more positive, but only modestly so. However, if we assume that marketing margins are constant in real terms rather than proportional to prices, the welfare impact is substantially more positive. These findings highlight the need for more research on the behavior of marketing margins under volatile prices.     

Innovations, Stakeholders & Entrepreneurship

In modern societies entrepreneurship and innovation are widely seen as key sources of economic growth and welfare increases. Yet entrepreneurial innovation has also meant losses and hardships for some members of society: it is destructive of some stakeholders’ wellbeing even as it creates new wellbeing among other stakeholders. Both the positive benefits and negative externalities of innovation are problematic because entrepreneurs initiate new ventures before their private profitability and/or social costs can be fully recognized. In this paper we consider three analytical frameworks within which these issues might be examined: pre-commitments, contractarianism, and an entrepreneurial framework. We conclude that the intersection of stakeholder theory and entrepreneurial innovation is a potentially rich arena for research. Nicholas Dew, Ph.D. is an assistant professor at the Naval Postgraduate School in Monterey, CA. He teaches strategic management in private and public sector organizations. His research interests include entrepreneurship, strategy and innovation. He has published in several scholarly journals, including Strategic Management Journal, the Journal of Business Venturing, Industrial and Corporate Change and the Journal of Evolutionary Economics. Saras D. Sarasvathy, Ph.D. is an associate professor at the Darden Graduate School of Business Administration. She teaches courses in entrepreneurship and ethics in Darden's MBA and doctoral programs. Her research focuses on the cognitive basis for high-performance entrepreneurship. She has published in various scholarly journals, including the Academy of Management Review, Strategic Management Journal, the Journal of Businesss Venturing and the Journal of Evolutionary Economics. Her first book Effectuation: Elements of Entrepreneurial Expertise was recently published by Edward Elgar.     

Targeted characteristics and use of socially marketed preventive health goods: evidence from condoms in sub-Saharan Africa

Social marketing is a popular method for allocating targeted publicly funded preventive health goods in poor countries. However, low demand among targeted groups may inhibit take-up relative to non-targeted groups, ownership may not result in use, and there exists little large-scale evidence on how use of socially marketed goods varies by targeted characteristics. I assemble national household survey data from 27 sub-Saharan African countries to examine how use of one of the most common socially marketed preventive health goods (i.e. male condoms) varies by the main targeted characteristics (i.e. low income, low educational attainment, and high HIV risk).

The results suggest that the majority of condoms used are socially marketed condoms, engaging in transactional sex is associated with an increased likelihood of using a socially marketed condom brand, and low-income/low educational attainment are not associated with increased likelihoods of using socially marketed brands. The fact that distribution targets low socioeconomic status groups and relative use remains low suggests that weak demand for condoms among these groups inhibits use. Policymakers should consider mechanisms to increase demand and to further refine targeting efforts.