Analysis of arrest rates for trends in criminality

During the 1960s, the United States experienced a substantial increase in crime with the rates of reported crime more than doubling. It has been postulated that the increase in the proportion of young adults in the population which also occurred during the Sixties is a primary factor in the increase in crime. In this paper, we attempt to explore this question by partitioning the recent increases in rates between an increasing crime-committing propensity for various demographic groups on one hand, and a changing demographic mix to the other. We do this by analyzing arrest rates by demographic group over time. However, since arrest rates are a complex function of both criminality and police activity, a model is developed which attempts to distinguish between these phenomena. The model is estimated using data on age, race, and sex-specific arrest rates for Pittsburgh residents over the period 1967–1972. The results of the analysis suggest that there has been no significant increase in criminality for men in the Pittsburgh population, while there is some evidence of increased criminality for women. However, this increase may reflect an increased willingness of the police to arrest women. We hesitate to generalize our conclusions too widely from the experience of a single urban center. Additional analysis, using the model developed here, of arrest rates from other cities or regions would do much to illuminate this very significant issue.     

Product differentiation, cost‐reducing mergers, and consumer welfare

Abstract.  Cost synergies are an explicitly recognized justification for a two‐firm merger, and empirical techniques are now widely used to assess the impact of cost‐reducing mergers on prices and welfare in the post‐merger market. We show that if the merger occurs in a vertically product differentiated market, then the merger will lead to a reduction in product offerings that limits the usefulness of pre‐merger empirical estimates. Indeed, we further show that in such markets, two‐firm mergers will typically lead to higher prices regardless of the merger's cost savings. JEL classification: L10, L41     

Technology assessment: Impact of high-tech engineering research on energy consumption

A technology assessment (TA) program was launched in Switzerland in 1991. One project in the series of pilot projects was meant to assess the impact of so-called LESIT technologies on energy consumption. (LESIT was a priority research program and a German acronym for power electronics, systems and information technology.) In this paper the institutional environment, applied methods and main results of the TA study are summarised. One of the questions that arose was whether it is reasonable to expect a high-tech engineering research program to serve any societal goals other than the more immediate technical and economic goals the research partners in university and industry are accustomed to follow. It was found that without special efforts this expectation was not realistic. Politically desirable goals are best served when enough emphasis, time, and money are given to the process of bringing together research partners from academia and industry who all have a (self-serving) interest in furthering the politically desirable goal and then support their collaboration.     

Searching for the sunk cost fallacy

We seek to isolate in the laboratory factors that encourage and discourage the sunk cost fallacy. Subjects play a computer game in which they decide whether to keep digging for treasure on an island or to sink a cost (which will turn out to be either high or low) to move to another island. The research hypothesis is that subjects will stay longer on islands that were more costly to find. Eleven treatment variables are considered, e.g. alternative visual displays, whether the treasure value of an island is shown on arrival or discovered by trial and error, and alternative parameters for sunk costs. The data reveal a surprisingly small sunk cost effect that is generally insensitive to the proposed psychological drivers. Electronic Supplementary Material Supplementary material is available in the online version of this article at . Jel Classification C91, D11     

Can intertemporal choice experiments elicit time preferences for consumption?

The paper considers what can be inferred about experimental subjects’ time preferences for consumption from responses to laboratory tasks involving tradeoffs between sums of money at different dates, if subjects can reschedule consumption spending relative to income in external capital markets. It distinguishes three approaches identifiable in the literature: the straightforward view; the separation view; and the censored data view. It shows that none of these is fully satisfactory and discusses the resulting implications for intertemporal decision-making experiments. JEL Classification C90, C91, D90, D91, D11, D12     

The Effect of Respondent Experience/Knowledge in the Elicitation of Contingent Values: An Investigation of Convergent Validity,Procedural Invariance and Reliability

Tests of convergent validity and procedural invariance were used to investigate whether individuals lacking direct experience with a commodity can provide valid responses to contingent-valuation questions eliciting ex post use values. Convergent validity between samples with and without experience was shown to hold for dichotomous-choice responses, but not for open-ended responses.     

Finding a lasting cure for U.S. health care

In "Making Competition in Health Care Work" (July-August 1994), Elizabeth Olmsted Teisberg, Michael E. Porter, and Gregory B. Brown ask a question that has been absent from the national debate on health care reform: How can the United States achieve sustained cost reductions while at the same time maintaining quality of care? The authors argue that innovation driven by rigorous competition is the key to successful reform. A lasting cure for health care in the United States should include four basic elements: corrected incentives to spur productive competition, universal insurance to secure economic efficiency, relevant information to ensure meaningful choice, and innovation to guarantee dynamic improvement. In this issue's Perspectives section, eleven experts examine the current state of the health care system and offer their views on the shape that reform should take. Some excerpts: "On the road to innovation, let us not forget to develop the tools that allow physicians, payers, and patients to make better decisions." I. Steven Udvarhelyi; "Health care is not a product or service that can be standardized, packaged, marketed, or adequately judged by consumers according to quality and price." Arnold S. Relman; "Just as antitrust laws are the wise restraints that make competition free in other sectors of the economy, so the right kind of managed competition can work well in health care." Edward M. Kennedy "Biomedical research should be considered primarily an investment in the national economic well-being with additional humanitarian benefits." Elizabeth Marincola.     

Professional design and primary children

An analysis of the way in which primary age children design, particularly when working with a professional designer, suggests that there are several similarities in approach between the two. This observation is supported by evidence from developmental psychology, which has stressed the crucial role which play performs in developing children's inventiveness and ability to solve problems. Subsequent research focusing on children's designing suggests that this play is fundamental to designing activity, and extends naturally into the more formalised activities of drawing and modelling. Through playing and using narrative language to describe their actions, children are learning to interpret their own mental images. To develop these images and make them more concrete children use their hands in drawing and modelling whilst drawing on their accumulated personal knowledge about the activity of designing, in a similar way to that in which professional designers make use of their own, highly sophisticated skills to bring an idea to concrete fruition. By comparison with some of the rigid models of the design process described in schools, designers and children may have more in common than we realise.