Hitting the Jackpot or Hitting the Skids: Entertainment, Poverty, and the Demand for State Lotteries

A bstract .   State-sponsored lotteries are a lucrative source of revenue. Despite their low payout rates, lotteries are extremely popular, particularly among low-income citizens. State officials laud the benefits of lottery proceeds and promote the fun and excitement of participation. This entertainment value is one explanation for lottery demand by the poor: individuals with lower incomes substitute lottery play for other entertainment. Alternatively, low-income consumers may view lotteries as a convenient and otherwise rare opportunity for radically improving their standard of living. Bad times may cause desperation, and the desperate may turn to lotteries in an effort to escape hardship. This study tests these competing explanations. We examine lottery sales data from 39 states over 10 years and find a strong and positive relationship between sales and poverty rates. In contrast, we find no relationship between movie ticket sales, another inexpensive form of entertainment, and poverty rates.     

How firm capabilities affect who benefits from foreign technology

We explore how firm capabilities affect the diffusion of technology brought with foreign direct investment (FDI). Using a panel dataset on Indonesian manufacturers from 1988 to 1996, we measure how the productivity of differing domestic firms responds to the entry of multinational competitors. We find that firms with investments in research and development and firms with highly educated employees adopt more technology from foreign entrants than others. In contrast, firms that have a small “technology gap,” meaning that they are close to the international best-practice frontier, benefit less than firms with weak prior technical competency. This finding suggests that the marginal return to new knowledge is greater for firms that have more room to “catch up” than it is for already competitive firms.     

Water markets and freshwater ecosystem services: Policy reform and implementation in the Columbia and Murray-Darling Basins

Water markets have featured prominently in the reallocation of water rights to restore freshwater ecosystem health. Incentive-based water rights acquisition and transactions have emerged as a market-oriented policy approach to reallocate water resources from existing uses to enhance the provision, regulation, and sustainability of freshwater ecosystem services. This paper develops a conceptual framework to examine factors enabling and constraining successful policy reform and implementation in market-based environmental water allocation. This analysis distills and extends the findings and lessons of a September 2007 workshop in Brisbane, Australia on environmental water transactions. Two case studies were selected in water stressed basins - the Columbia (U.S.A) and Murray-Darling (Australia) Basins - where transactional approaches to environmental water allocation first emerged. The case studies draw upon practitioner perspectives and previous policy and economic analysis in two regions where shared political economic and physical conditions lend a strong analytical basis for comparison. A common set of policy and regulatory reforms has occurred in both cases - albeit in different forms and via distinct paths - to develop three enabling conditions: (1) establishment of rights to and limits on freshwater extraction and alteration; (2) recognition of the environment as a legitimate water use; and (3) authority to transfer existing water rights to an environmental purpose. However, these elements of policy reform are necessary but not sufficient for effective implementation; a second set of driving forces, barriers, and adaptations explains the ability to achieve larger scale ecological outcomes. These conditions include the physical, social and economic factors driving demand for environmental water allocation; administrative procedures, organizational development and institutional capacity to effect transfers; and adaptive mechanisms to overcome legal, cultural, economic, and environmental barriers. The case study analysis suggests that environmental water transactions can play an important role in establishing environmental water allocations, although water markets require ongoing institutional capacity and adaptive governance. The conceptual framework and empirical lessons generated through this cross-case comparison provide the basis for an expanded research agenda to evaluate the design and performance of market-oriented reforms as implementation experience accrues and new programs emerge in diverse ecological and political economic settings.     

A flexible inventory model for municipal solid waste recycling

State laws mandate the recycling of municipal solid waste (MSW) across most of the United States. In order to comply, municipalities recycle quotas of materials, generally without regard to fluctuating prices. An inventory system is proposed that allows municipalities to be sensitive to materials prices as they recycle in accordance with state mandates. A dynamic model is developed that uses historical secondary material prices as exogenous inputs to minimize the net present value of MSW recycling system cost. The model provides a cost effective method for municipalities to achieve their MSW recycling targets. The savings is approximately $1.28 per ton of MSW generated as based on total MSW management costs of $13.5 per ton. The model also allows one to investigate the effectiveness of various strategies for increasing the recycling rate, including reducing the transportation cost for recyclables, supporting the market price of selected secondary materials, and landfill bans on selected materials. Our proposed model may also be used to investigate the effect of market price changes on the portfolio of materials held in inventory for recycling.     

Welfare gains from Foreign Direct Investment through technology transfer to local suppliers

We hypothesize that multinational firms operating in emerging markets transfer technology to local suppliers to increase their productivity and to lower input prices. To avoid hold-up by any single supplier, the foreign firm must make the technology widely available. This technology diffusion induces entry and more competition which lowers prices in the supply market. As a result, not just the foreign-owned firm, but all firms downstream of that supply market obtain lower prices. We test this hypothesis using a panel dataset of Indonesian manufacturing establishments. We find strong evidence of productivity gains, greater competition, and lower prices among local firms in markets that supply foreign entrants. The technology transfer is Pareto improving — output and profits increase for firms in both the supplier and buyer sectors. Further, the technology transfer generates an externality that benefits buyers in other sectors downstream from the supply sector as well. This externality may provide a justification for policy intervention to encourage foreign investment.     

Driving fatalities after 9/11: a hidden cost of terrorism

We show that the public's response to terrorist threats can have unintended consequences that rival the attacks themselves in severity. Driving fatalities increased significantly after the 11 September 2001 terrorist attacks, events that prompted many travellers to substitute road transportation for safer air transportation. After controlling for time trends, weather, road conditions and other factors, we find that travellers’ response to 9/11 resulted in 327 driving deaths per month in late 2001. Moreover, while the effect of 9/11 weakened over time, as many as 2300 driving deaths may be attributable to the attacks.     

Recoveries on Distressed Real Estate and The Relative Efficiency of Public versus Private Management

This study examines average recoveries from distressed commercial real estate assets held by FSLIC receiverships, and explores differences in the relative efficiency of public versus quasi-private and private entities in the management of these assets. It finds that properties located in markets with rising per capita income and properties that were judged to be less difficult to manage and sell provided higher recoveries, while properties with smaller writedowns prior to government takeover provided lower recoveries. The analysis also provides evidence that quasi-private management by the Federal Asset Disposition Agency provided higher mean recoveries, while private management by contractors provided lower mean recoveries than did public management by FSLIC receivership staff.     

Financial constraints on investment in an emerging market crisis

We investigate whether capital market imperfections constrain investment during an emerging market financial crisis. Both large currency devaluations and banking sector failures characterize recent crises. Although a currency devaluation should increase exporters’ competitiveness and investment, a failing banking system may limit credit to these firms. Foreign-owned firms, which may have greater access to overseas financing but otherwise face the same investment prospects, provide an ideal control group for determining the effect of liquidity constraints. We test for liquidity constraints in Indonesia following the 1997 East Asian financial crisis, a period when the issuance of new domestic credit shrank rapidly. Exporters’ value added and employment increased after the crisis, suggesting that they profited from the devaluation and had sufficient cash flow to finance more workers. However, only exporters with foreign ownership increased their capital significantly. Our results suggest that liquidity constraints greatly retarded domestic-owned manufacturing firms’ ability to take advantage of improved terms of trade. Specifically, compared to foreign-owned exporters they had resembled before the crisis, after the crisis domestic-owned exporters had more than 20% lower employment and capital and more than 40% lower value added and materials usage.     

Excuses,Excuses: Rationalisations of Western Sex Tourists in Thailand

This paper focuses upon the behaviour of heterosexual Western male sex tourists in Thailand. It is based on a review of the sex tourism literature and attempts to analyse the rationalisations that are constructed by these men in order to assuage feelings of guilt that are often felt from participating in Third World sex tourism. Therefore, these rationalisations potentially serve to allow for the continued patronage of Western men in commercial sex in less developed nations and thus perpetuate the sex tourism industry as a whole.     

Governance and control in distributed ledgers: Understanding the challenges facing blockchain technology in financial services

As blockchain platforms are becoming increasingly noticeable in financial services and beyond, questions arise regarding their suitability to compete with or replace existing payment systems and marketplaces and redesign the financial infrastructures of the future. Prominent among these concerns are issues around governance and control in distributed ledgers: How are distributed ledger technologies governed? Can blockchains address complex administration problems? What key issues of note for practitioners and academics have emerged thus far? In this paper we aim to review the existing governance practices of established or popular blockchain and decentralized autonomous organization (DAO) systems with a view to understanding how they hold up in times of crises. What questions are raised when they are compromised or faced consensus challenges in coordinating action especially around control and accountability? We use a translational process, generating focal insights about present concerns from the reference point of completed academic studies and extensive practitioner consultation. Rather than adopting a declarative approach attempting to provide all the answers, we draw insights from the IT platform governance literature to offer a critical perspective for asking the right questions around key governance issues in financial infrastructure such as decision rights, control mechanisms, and incentives.