Elderly Female-Headed Households and the Decision to Trade Down

Results from the Panel Survey of Income Dynamics show that elderly women appear to be much more circumspect than men about making housing changes. Some of this apparent difference occurs because elderly women have low levels of financial assets. Elderly women also appear to be much more likely than men, when they do move, to dissave out of home equity. Yet what appears on the surface to be a gender difference in the decision to dissave in later life turns out upon closer examination to occur because of divorce and the event of widowhood.     

Information Gathering Externalities for a Multi‐Attribute Good

Most goods and services vary in numerous dimensions. Customers choose to acquire information to assess some characteristics and not others. Their choices affect firms' incentives to invest in quality and so lead to indirect externalities in consumers' choices. We characterize a model in which a monopolist invests in the quality of a product with two characteristics, and consumers are heterogeneous ex‐ante. Consumers do not internalize their influence on the firm's investment incentives when choosing which information to acquire. Cheaper information affects consumers' information gathering and thereby firm investment. This can paradoxically reduce consumer surplus, profits, and welfare.     

An Analysis of the Ex Ante Probabilities of Mortgage Prepayment and Default

Observed mortgage prepayment and default rates have been far different than the ruthless option exercise rates predicted by contingent claims models of mortgage pricing. The discrepancies have been attributed to both the competing-risk nature of prepayment and default and to transactions costs. This paper tries a different means of reconciliation. We introduce a third stochastic process, household income, into the usual pricing model that includes only the spot interest rate and the house price. The presence of income allows considering consumption-theoretic determinants of termination. The role of mortgage underwriting rules in restricting optimal prepayment is also explicitly modeled. Numerical ex ante prepayment and default rates based on the theoretical model come much closer to historical experience.     

Appraisals,Transaction Incentives,and Smoothing

This article is structured around three principal objectives. The first is to determine whether any incentives for appraisals support an underlying purchase offer, which may be termed a transaction bias. Appraisals that are lower than purchase prices could involve additional cost for justification and thus undermine the transaction. The second objective is to test whether appraisal data are smoothed or exhibit less volatility than purchase data. The article compares the volatility of separate appraisal and purchase data. Given separate appraisal and purchase time series, the third objective is to derive the implied optimal appraisal updating rule.The model is applied to appraisal and purchase price indices for 3.7 million repeat transactions on mortgages bought by Fannie Mae and Freddie Mac by using monthly data from January 1975 to December 1993. The estimation procedure uses generalized autoregressive conditioned heteroskedastic (GARCH) analysis to take account of persistence in means and volatility in the house price time series. The article draws three principal conclusions. First, appraisals are systematically higher than purchase data, a first-moment differential. Second, appraisal smoothing does not occur generally. Third, the appraisal updating rule for the United States appears to involve error correction whereby underappraisals from pervious periods are eventually adjusted.     

Market Participation and Rural Poverty in Ghana in the Era of Globalization

Abstract: This paper investigates the factors that influence market participation in rural economies. This is based on the premise that participation in the market is an important channel through which the global economy impacts on the rural areas and can have a positive impact on poverty reduction through increased incomes. A case study approach is adopted using four rural communities in three ecological zones of Ghana.     

Hospitals: The Market for Health Care Facilities

Health care facilities include hospitals and nursing homes. Demand for beds and occupancy depends on income, prices and insurer restrictions. The supply of beds is limited by regulatory certificates of need. The implied equilibrium vacancy leads to a trade-off with rate increases. Rate increases establish an asset price for a hospital bed. If prices of health care rise faster than income and nonhealth prices, patients demand less bed availability and occupancy. Rising vacancy and rising prices occur, consistent with the empirical observations for U.S. health care facilities. For 1980–2001, the equilibrium vacancy rate for U.S. hospitals is between 27% and 36% depending on capacity adjustments, bed availability and price expectations. Equilibrium vacancy is near the actual rate after 2000, but that rate is 11 percentage points higher than in the early 1980s when the number of beds was nearly one-third higher. Usually rent regulation leads to excess demand. But in a general equilibrium model with income, relative prices, expectations, supply and capital markets, price regulation can coexist with excess supply.     

SMEs’ Financing and Banks’ Profitability: A “Good Date” for Banks in Ghana?

Small and medium enterprises (SMEs) are the core of most economies and are a major source of economic growth. In recent times, banks have been actively involved in the financing of SMEs through the provision of loans to this sector. This paper investigates the impact of SMEs financing on banks’ profitability in Ghana. The study employed the fixed effect model as the main regression tool. The study result reveals that SMEs significantly contribute to banks’ profitability in Ghana. Interestingly, transaction cost in administering SME loans was insignificant in all the models. Higher inflation reduces the real value of the loan and erodes the interest returns on the total credit to the SMEs. Conversely, growth of GDP enhances the growth of the bank profit.     

A UK analysis of the cost of switching renal transplant patients from an immediate-release to a prolonged-release formulation of tacrolimus based on differences in trough concentration variability

Background and aims:

Randomized controlled trials have shown that a once-daily prolonged-release (PR) tacrolimus formulation (PR tacrolimus; Advagraf), is non-inferior to a twice-daily immediate-release (IR) tacrolimus formulation (IR tacrolimus; Prograf) in terms of biopsy-proven acute rejection, graft failure and mortality in renal transplant recipients. However, relative to IR tacrolimus, PR tacrolimus exhibits reduced tacrolimus trough concentration variability, which has been associated with reduced graft failure. Based on these data, the present study evaluated the cost of switching UK renal transplant patients from IR tacrolimus to PR tacrolimus.

Methods:

UK-specific data on acute rejection, graft failure, and mortality were used to construct a budget impact model to assess the costs of switching from IR tacrolimus to PR tacrolimus on a 1:1?mg:mg basis. The model assumed that 3.1% of patients on PR tacrolimus had high tacrolimus trough concentration variability compared with 17.4% on IR tacrolimus, based on a study comparing PR tacrolimus and IR tacrolimus pharmacokinetics. A relative graft failure risk of 2.38 was applied to high variability patients based on data from a tacrolimus variability study in which 10/148 patients with low variability experienced graft failure, compared with 24/149 in the high variability group. Cost data were taken from the British National Formulary and 2012–2013 NHS tariff information.

Results:

The mean per-patient cost (including tacrolimus, concomitant immunosuppressive medications, dialysis after graft failure, and treatment for acute rejection) was GBP 26,941 (standard deviation [SD]?=?GBP 2765) with PR tacrolimus vs GBP 30,356 (SD?=?GBP 3085) for IR tacrolimus over a 5-year period, corresponding to a saving of GBP 3415 (SD?=?GBP 516) per patient or GBP 341,500 in a hypothetical 100-patient transplant center. Cost savings were driven primarily by lower dialysis costs resulting from the lower proportion of PR tacrolimus patients with high tacrolimus trough concentration variability (leading to lower graft failure risk).

Limitations:

The main limitation of the study was the use of heterogeneous data sources to capture the effect of within-patient variability on graft failure. The most important difference between the studies was the definition of the threshold between low and high within-patient variability. This was explored in sensitivity analyses in which the inter-arm difference in the inter-arm proportions of patients with high and low variability was abolished.

Conclusions:

Converting UK renal transplant recipients from IR tacrolimus to PR tacrolimus was associated with lower pharmacy and dialysis costs.