Public policies as specification errors

Treating public policies as computable dynamic general equilibrium model specification errors offers computational and conceptional advantages for comparing models with data. The set of policies calculated to rationalize observed behaviors raises the substantive economic question whether, in any particular market, actual public policies sufficiently coincide with the model's behavior-rationalizing policies, or whether the model offers correct hypotheses about the determinants of demand and supply. As illustrations, public policies are calculated to rationalize, with respect to the stochastic neoclassical growth model, capital market behavior since WWII and labor market behavior in 1929–1950. One conclusion is that capital taxation drives a wedge between consumption growth and the expected pre-tax capital return, in the direction and amount predicted by the theory, and that capital taxation is the major intertemporal distortion in the postwar capital market. Second, a good theory of the Great Depression labor market must explain why measured MRS and MPL diverged so dramatically in 1929–1933 and why the wedge persisted.     

Hardening soft accounting information: Games for planning organizational change

This study provides theory and field evidence on the social process of hardening soft accounting information to make it persuasive for planning organizational change. Accounting information intended to support organizational change is often soft, that is, there is lack of interpersonal agreement about its quality. For example, employees can lack agreement about the quality of accounting information (e.g., activity-based costing) because the information is constructed from subjective information obtained from interviews and surveys. This information can contain unintentional errors as well as intentional distortions that are intended to avoid revealing embarrassing inefficiencies and/or to resist painful organizational change. We use concepts from applied game theory and social psychology to identify from the accounting literature four multi-person games that may be played to harden soft accounting information. These hardening games are characterized in terms of payoffs, players, the comparability of soft accounting information, and the rules of the games that are expected to emerge. We interpret the field evidence as indicating that the hardening games that emerge depend on who the players are and the comparability of their soft accounting information. In addition, we provide evidence on how the rules of the games that harden the information emerge from the players’ social interactions. Finally, we provide evidence on how an organization learns by trial-and-error how to harden soft accounting information by changing the players and the comparability of the soft accounting information.     

An assessment of market-based approaches to providing ecosystem services on agricultural lands

Market-based approaches are increasingly being advocated as tools for achieving the conservation of ecosystem services. We examine the reasons why markets so far appear to have failed to provide an efficient allocation of many ecosystem services, and identify the conditions under which markets deliver efficient resource allocation. We discuss different forms of market-based approaches to ecosystem services and identify the characteristics of services that make them better suited to one or another of these approaches. We find that lack of low-cost measurability and valuation currently precludes efficient allocation of many ecosystem services through market-based approaches. Still, some forms of market-based approaches hold promise for cost-effectively managing some ecosystem services provided by and to agricultural lands. In many cases some form of well-designed government involvement will be required to seek outcomes that protect the public interest.     

Effects of organizational process change on responsibility accounting and managers’ revelations of private knowledge

We report the results of a nine-year field study that examines how responsibility accounting (RA) is used to manage horizontal relationships among several responsibility center (RC) managers including those who work on committees or cross-functional teams. We find theory-consistent evidence that the goal-congruent design or redesign of accounting and participation practices in general, and of RA in particular, depends on the magnitude, scope, and speed of organizational process change. When there is a change in the magnitude, scope, and speed of organizational process change, we find that the measurability of RC managers’ financial performance can change, and we also find that using RA to manage RC boundaries is an important mechanism for achieving goal-congruent behavior and avoiding dysfunctional behavior. Moreover, we show that several accounting and participation practices (e.g., activity-based costing, open book accounting, project budgeting, cross-functional teams) support RC boundary management that involves framing or reframing RC boundaries so as to influence competitive or cooperative behavior among RC managers. Finally, this study contributes by introducing a new research method to the accounting literature that is effective in structuring and interpreting longitudinal field data in relation to theoretical expectations.     

Cultural and Ethical Effects in Budgeting Systems: A Comparison of U.S. and Chinese Managers

This study developed and tested a model of culture’s effect on budgeting systems, and hypothesized that system variables and reactions to them are influenced by culture-specific work-related and ethical values. Most organizational and behavioral views of budgeting fail to acknowledge the ethical components of the problem, and have largely ignored the role of culture in shaping organizational and individual values. Cross-cultural differences in reactions to system design variables, and in the behaviors motivated or mitigated by those variables, has implications for the design and effectiveness of budgeting systems. The data largely support our research model, demonstrating the hypothesized national cultural differences in system design variables (e.g., participation, standards tightness, budget emphasis, etc. which we characterized as the opportunity and incentives to create budgetary slack), and the expected relationship between incentives (but not opportunity) to create slack and slack creation behavior. The data demonstrate hypothesized cultural differences in ethical ideology but show ethical ideology related to slack creation behavior only for U.S. managers. A discussion of the results and their implications is included.     

Does tourism really cause stress? A natural experiment utilizing ArcGIS Survey123

ABSTRACT

Tourism related stress has recently been revealed as an issue for tourism host community residents. Prior studies have relied on directly asking residents if tourism caused them stress, resulting in possible participant priming. This study utilized the ArcGIS Survey123 app to collect data on resident stress from a community with high levels of tourism visitation and a community with low levels of tourism visitation. During the study, researchers never mentioned tourism. Half of study participants in the community with high tourism visitation discussed tourism directly as a stressor, accounting for almost 5% of all stressful experiences, while no participants in the community with low tourism visitation mentioned tourism as a stressor. Geospatial data revealed that tourism related stressors occurred outside of the ‘tourism zone’ in the community with high tourism visitation, and tourism related stressors mirrored perceived tourism impacts measured in a post experiment survey of study participants.