The welfare implications of increasing disability insurance benefit generosity

In order to evaluate whether workers are over- or under-insured through the Disability Insurance (DI) program, we develop a framework that allows us to simulate the benefits as well as the costs associated with marginal changes in payment generosity from a representative cross-sectional sample of the population. Under the assumption that individuals are reasonably risk averse, we find that the typical worker would value increased benefits somewhat above the average costs of providing them. However, whether the benefit increases tend to lower or raise utility when we average across all individuals in our sample is sensitive to assumptions that affect the relative marginal utility of income to disabled individuals.     

Reply to Russo

Consumption is the sole end and purpose of all production; and the interest of the producer ought to be attended to only so far as it may be necessary for promoting that of the consumer. The maxim is so perfectly self-evident that it would be absurd to attempt to prove it. But in the mercantile system the interest of the consumer is almost constantly sacrificed to that of the producer; and it seems to consider production and not consumption, as the ultimate end and object of all industry and commerce.In the restraints upon the importation of all foreign commodities which can come into competition with those of our own growth or manufacture, the interest of the home consumer is evidently sacrificed to that of the producer. It is altogether for the benefit of the latter that the former is obliged to pay that enhancement of price which this monopoly almost always occasions (Adam Smith, 1952, pp. 287–289).Rachel Dardis is a Professor at the Department of Textiles and Consumer Economics, University of Maryland, College Park, MD 20742, USA.     

An analysis of the value of cash flow statements of New Zealand pension schemes

Superannuation (pension, retirement) schemes (plans) are required to report their earnings on a fair-value basis, reflecting recent shifts toward fair-value reporting in financial reporting. Fair-value earnings of such schemes include realised earnings and unrealised changes in values of assets and liabilities (unrealised earnings). This study examines the relation between components of fair-value earnings (realised and unrealised) and cash flows of 161 New Zealand defined benefit schemes for the financial year 1998. The findings of the study include that realised earnings are negatively associated with unrealised earnings and positively associated with cash flows from operations, but no association is found between unrealised earnings and cash flows from operations. This suggests that fair-value reporting has reduced the informational disparity between realised earnings and operating cash flows and therefore the reporting of cash flows information may not provide users with different information from reported in realised earnings. However, the results suggest that unrealised earnings provide additional information to users.     

The Virtual IELab – an exercise in replicating part of the EXIOBASE V.2 production pipeline in a virtual laboratory

ABSTRACT

We explore options to replicate the EXIOBASE2 multi-region input–output (MRIO) database in the Virtual IELab cloud-computing laboratory environment. Whereas EXIOBASE2 is constructed using a multi-process reconciliation procedure, we present an alternative compilation technique that uses EXIOBASE2's pre-processed data and final tables in reconciling the IELab MRIO with conflicting raw data information. This approach skips the labour-intensive step of detailing and harmonising country tables. Adherence metrics reveal the EXIOBASE2-based IELab table to be considerably less balanced than the original but with stronger adherence to other constraints data. However, these metrics are not comparable to the original EXIOBASE2 statistics due to the distinctive implementation of constraint sets in the two platforms. IELab's main value-added is its flexibility in tailoring EXIOBASE2-based MRIOs beyond the original recipe. Finally, IELab's global carbon, water and material footprints are shown to be comparable with previously reported resource footprints. In contrast, deviations in land footprints warrant further investigation.     

The case of the combative CFO

Minute Publishing Chairman and CEO Neil Harcum has a right to be proud of his new national newspaper, America Today. It has won three Pulitzer Prizes and attracted one million readers in just three years of publication. But, as CFO Peter Rawson points out, it's also losing $100 million a year and has broken Minute's 20-year string of earnings gains. In the process, the company has been split between two warring factions: one is backing Harcum and favors continuing the paper. The other agrees with Rawson that the project must be stopped. The board of directors has been assembled to decide the newspaper's fate. In his speech to the board, Rawson says it's time to cut Minute's losses and put an end to America Today. And Wall Street agrees. Several brokerage houses have taken Minute off their buy lists, and rating agencies are about to down-grade the company's debt. "America Today is not a good investment," Rawson argues. "Certainly, it isn't in keeping with our commitment to deliver maximum value to our shareholders." But Harcum thinks Rawson is way out of line. "We cannot allow our bean-counters to set policy," he claims. Harcum sees the newspaper as a product of the future that has created its own market. It's only a matter of time before America Today attracts enough advertising to put it in the black. He has a successful track record, and he doesn't want the board to lose faith in him now.(ABSTRACT TRUNCATED AT 250 WORDS)     

Scope-of-practice regulation: Physician control and the wages of non-physician health-care professionals

We analyze the impact of licensing statutes that limit physician control over non-physician health-care providers. Contrary to the standard capture theory of regulation, we find that physical therapists have devoted considerable effort to obtain passage of laws that ultimately result in lower wages. This seemingly perverse result is robust across different data sets and various specifications. There is limited evidence to suggest that some physical therapists who treat patients without a physician's referral benefit at the expense of other therapists. However, it seems that non-monetary rewards associated with professional independence are the primary benefit to therapists from elimination of physician control.The authors thank Bill Haley of Forum Publishing, Inc., Mark Goldstein of the American Physical Therapy Association, Barry Hirsch, Dave Macpherson, and Carl Schmertmann for graciously providing data used in this paper. We have also benefited from the comments and suggestions of Barry Hirsch, Dave Macpherson, Sam Peltzman, Beate Gregory Sass, and an anonymous referee. Any remaining errors are solely our responsibility.     

Budget impact analysis of comprehensive genomic profiling in patients with advanced non-small cell lung cancer

Aims: Broad molecular profiling of patients with advanced non-small cell lung cancer (NSCLC) is strongly advised to optimize genomic matching with available targeted treatment options or investigational agents. Unlike conventional molecular diagnostic testing, or smaller hotspot panels, comprehensive genomic profiling (CGP) identifies genomic alterations across hundreds of clinically relevant cancer genes from a single tissue specimen. The present study sought to estimate the budget impact of increased use of CGP using a 324-gene panel (FoundationOne) vs non-CGP (represented by a mix of conventional molecular diagnostic testing and smaller NGS hotspot panels) and the number needed to test with CGP to gain 1 life year.

Materials and methods: A decision analytic model was developed to assess the budget impact of increased CGP in advanced NSCLC from a US private payer perspective. Model inputs were based on published literature (epidemiology and treatment outcomes), real-world data (testing and rates, medical service costs), list prices for CGP and anti-cancer drugs, and assumptions for clinical trial participation.

Results: Among 2 million covered lives, 532 had advanced NSCLC; 266 underwent molecular diagnostic testing. An increase in CGP among those tested, from 2% to 10%, was associated with $0.02 per member per month budget impact, of which $0.013 was attributable to costs of prolonged drug treatment and survival and $0.005 to testing cost. Approximately 12 patients would need to be tested with CGP to add 1 life year.

Limitations: The model incorporated certain assumptions to account for inputs with a limited evidence profile and simplify the possible post-CGP treatments.

Conclusions: An increase in CGP utilization from 2% to 10% among patients with advanced NSCLC undergoing molecular diagnostic testing was associated with a modest budget impact, most of which was attributable to increased use of more effective treatments and prolonged survival.     

How True Is True? Assessing Socially Desirable Response Bias

Health care professionals' (HCPs) opinions and perspectives are highly valuedbecause these individuals often play a major role in developing and implementingsupport and education services aimed at cancer patients and their families. Thepurpose of this study was to examine the efficacy of adding a substantive measurethat would be useful for determining socially desirable responses (SDRs) withoutadding unnecessary length to the questionnaire design. A total of 1180 nurses,physicians, and social workers specializing in oncology returned fully completedmailed questionnaires (61% response rate) originally intended to measure HCPs'awareness (i.e., knowledge, helpfulness, and recommendations) of cancer supportservices. SDRs were assessed by the inclusion of a bogus program that was comparedto actual support programs. Results indicated that relative to the bogus program, HCPswere significantly more likely to endorse programs that they knew about, thought helpful,and recommended. Evidence of SDR bias was lacking. These findings provide supportfor the inclusion of measures that can be used on brief questionnaires to strengthenresearch methodology.     

The relationship between competition and business segment reporting decisions under the management approach of IAS 14 Revised

This research addresses the relationship between industry competition and managers’ choice regarding whether to separately disclose a business segment following the adoption of International Accounting Standard 14 Revised (IAS 14R) and the management approach to segment determination. Logistic regression reveals a significant negative relationship between disclosure and company returns in excess of the industry average.Prior research indicated a significant relationship between disclosure and abnormal returns under the industry approach to segmentation. Our results provide evidence that this flexibility persists as managers maintain their ability to aggregate segments to protect excess returns under IAS 14R and the management approach. Our findings are timely as the IASB plans to modify its segment reporting requirements as part of the Board's convergence agenda and as thousands of companies worldwide, effective from 2005 onward, are now preparing financial statements using IFRS.