THE IMPACT OF ANTISMOKING POLICIES IN KOREA ON QUIT SUCCESS AND SMOKING INTENTIONS

In 2001 and 2002, the Korean government dramatically increased cigarette taxes, anti‐smoking advertisements, and smoking prohibitions as part of an anti‐smoking campaign. This paper examines the impacts of these policy changes by modeling quit success and smoking intentions pre‐ and post‐policy and attributing model differences to anti‐smoking policies. Model results provide evidence that national anti‐smoking policies increased both quitting success and intention to quit. However, the impacts of these policies are uneven throughout Korean society. Females and those who exercise for health maintenance experienced higher quit success. Heavy smokers and high frequency alcohol drinkers stated they are less likely to quit smoking post‐policy. One impact of national anti‐smoking policies is reduced provincial differences among Koreans in both quit success and intention to quit. Future anti‐smoking policies should address the different needs of these groups. (JEL D12, I19)     

Financial Education and Counseling—Still Holding Promise

This article reviews the evaluation literature on financial education and counseling for adults in order to synthesize implications for research and practice. Most evaluations report positive impacts, but the findings are often small when compared with valid comparison groups. Many evaluations use self-reported measures, measure outcomes over short time periods and cannot rule out selection bias due to nonrandomized designs, all of which may bias results. Although future research and practice in this field hold promise, more attention to theory-based evaluations and further investment in randomized field experiments may be fruitful.     

Announcement or Contribution? The Relative Efficiency of Manipulated Lindahl Mechanisms

The private provision mechanism is individually incentive compatible but inefficient. The Lindahl mechanism is efficient but not incentive compatible. We analyze the outcome of the manipulated Lindahl mechanism. When the demand announcements of participants are unrestricted the Lindahl mechanism suffers from multiple equilibria. If the government removes the multiplicity by restricting the functional form of announcements the resulting Lindahl equilibrium can be made approximately efficient. Approximate efficiency is achieved by announcements that are one-dimensional regardless of the number of participants in the mechanism. This is in contrast to mechanisms that achieve exact efficiency but require announcements whose dimensionality increases at the same rate as the number of participants. The mechanism we describe benefits from simplicity at the cost of approximate efficiency. We demonstrate that mechanisms in which a linear demand function is announced are supermodular so play will converge to the Nash equilibrium for a range of learning dynamics.     

Noisy Accounting Earnings Signals and Earnings Response Coefficients: The Case of Foreign Currency Accounting*

Abstract. This paper extends the growing literature on factors affecting cross-sectional and intertemporal variation in earnings response coefficients. It tests the empirical implications of recent theoretical work by Choi and Salamon (1989) and Holthausen and Verrecchia (1988), who model the degree of price adjustment associated with earnings announcements as a function of the amount of noise or garbling in the accounting earnings signal relative to valuation-relevant cash flows or dividends. The particular earnings measurements considered relate to U.S. multinational companies and to the differences in income determination under Statement of Financial Accounting Standards (SFAS) No. 8 and SFAS No. 52. The study finds a modestly smaller relative price adjustment for a given amount of unexpected earnings for multinational firms than for nonmultinationals during the SFAS No. 8 period. This finding is consistent with multinationals producing “noisier” earnings signals during this time period. However, several indirect measures suggest that there was greater prior probability uncertainty associated with the future cash flows or dividends of the nonmultinational sample. Accordingly, this cannot be ruled out as a competing explanation for the observed differences in the market's response to earnings signals during the SFAS No. 8 period. Following the implementation of SFAS No. 52, the earnings response coefficient increased substantively for firms whose accounting for translation gains or losses was most affected by this standard. These results suggest that the earnings measurements produced under SFAS No. 52 were perceived by market participants to be of higher quality (less noisy) than those produced under SFAS No. 8. The framework and analysis in this paper hold promise for investigating the relative informativeness of earnings signals produced under alternative income determination rules. Résumé. Les auteurs apportent leur contribution personnelle aux publications de plus en plus nombreuses portant sur les facteurs qui touchent la variation transversale et temporelle des coefficients de réaction aux bénéfices. Ils vérifient les conséquences empiriques des travaux théoriques récents de Choi et Salamon (1989) et de Holthausen et Verrecchia (1988), qui modélisent le degré d'ajustement du cours des valeurs associé aux annonces de bénéfices comme étant fonction de la quantité de parasites ou de l'importance du brouillage dans le signal que constituent des bénéfices comptables par rapport aux flux monétaires ou aux dividendes pertinents à l'évaluation. Les mesures particulières des bénéfices auxquelles s'intéressent les auteurs sont celles de multinationales des États-Unis et font état de la variation des bénéfices, selon qu'ils sont évalués conformément au SFAS no 8 ou au SFAS no 52. Pour un montant donné de bénéfices inattendus, les auteurs constatent un ajustement relatif du cours des valeurs légèrement plus faible dans le cas des multinationales que dans celui des entreprises d'envergure plus modeste, au cours de la période d'application du SFAS no 8. Cette constatation est conforme à l'hypothèse voulant que les multinationales aient produit des indicateurs de bénéfices plus « brouillés » au cours de cette période. Toutefois, plusieurs mesures indirectes donnent à penser qu'il existait une incertitude plus grande quant à la probabilité a priori des flux monétaires ou des dividendes futurs dans l'échantillon des entreprises d'envergure plus modeste. Les auteurs ne peuvent donc écarter cette hypothèse à titre d'explication concurrente des différences observées dans la réaction du marché aux indicateurs de bénéfices, au cours de la période d'application du SFAS no 8. À la suite de l'instauration du SFAS no 52, le coefficient de réaction aux bénéfices a sensiblement augmenté dans le cas des entreprises dont la méthode comptable relative à la conversion des gains et des pertes était davantage touchée par cette norme. Ces résultats laissent croire que les mesures des bénéfices conformes au SFAS no 52 ont été perçues par les intéressés comme étant de plus grande qualité (c'est-à-dire moins brouillées) que les mesures conformes au SFAS no 8. Le cadre de référence et l'analyse contenus dans cet article sont prometteurs pour l'analyse de la qualité relative de l'information livrée par les indicateurs de bénéfices conformes à d'autres règles d'évaluation des bénéfices.     

Schooling and the Intergenerational Transmission of Values

We present a model of the evolution of identity via dynamic interaction between the choice of education and the transmission of values in a community from parents to children, when parents care about the preservation of their traditional community values, different from the values of the host society. We compare the educational and socioeconomic outcomes in different scenarios (melting pot versus multiculturalism). If schooling shifts children's identity away from their parents' values, parents may choose lower levels of education for their children, at the cost of reducing their future earnings. We show how this effect can be attenuated and reversed when the school or, indeed, the host society are willing to accommodate the values of the community and/or to adjust to these values; otherwise the community gradually becomes alienated. This approach may be applied to the analysis of temporal changes in values and attitudes in a community of immigrants, as well as ethnic, religious, or other minority groups.     

Index of Consumer Expectations: Food Price Effects and Durable Goods Expenditures

The Index of Consumer Expectations (ICE), which includes expenditures on durable goods, has been adopted as a leading indicator of national economic activity. A rational expectations model of the ICE was developed and the economic determinants of consumers' expectations were estimated. Aggregate expenditures on durable goods were explained by an endogenous ICE and sentiment about current economic conditions. Consumers were more likely to purchase durable goods when they felt better off in the current period relative to the future.     

SAVING ENERGY THROUGH BETTER INFORMATION: A NEW ENERGY PARADIGM?

For the past 40 years, governments, utilities, and private companies have developed increasingly efficient appliances for household use and governments have initiated policies to encourage the deployment of these technologies. To the credit of these activities, we have improved the efficiency of electricity use in the United States, but it has not been enough to overcome the increasing demand from proliferation of electricity‐using devices. In addition, penetration rates for some types of efficient equipment have remained relatively low in certain regions. U.S. electricity demand thus continues to grow. In this paper, we argue that to achieve significantly greater efficiency improvements needed to meet future demand for energy services, we should provide more information to consumers about their energy use and give them more control over this use. While more studies are needed to assess just how far these types of measures can take us, there is enough evidence to show that with better information, consumers often make choices that reduce energy use.