The Engineering Economist

ABSTRACT There are many different notations used to describe industrial property mortality; some are mathematical formulas, while others use a graphical format. The Weibull distribution is a mathematical formulation and is commonly used in life testing and quality control. Because of the kinship of life testing and industrial property mortality, the Weibull distribution was selected as a possible distribution to describe mortality characteristics. Tests were performed to determine how well the distribution fulfilled this function. The results indicate that the Weibull distribution describes industrial property mortality patterns as well as the Iowa-type curves. On this basis, the distribution shows promise for use in life analysis.     

The Current State of Genetic Testing

Recent advances in genetic technology and progress in the multinational Human Genome Project are providing scientists with the ability to look into and manipulate the very makeup of life: the DNA molecule. We can already examine many dozens of plant and animal genes for disease producing abnormalities. In the near future, we will have the ability to alter specific genes in living tissue. This genetic technology holds great promise in our quest for preventing, diagnosing, treating, and predicting disease, not just in humans, but in all forms of life.

But there are some problems. Philosophically many are not ready for the implications of this technology. There are social and ethical issues that have not been well addressed, and which have, in part, resulted in an unprecedented amount of legislative activity over the past four years aimed at restricting access to and use of genetic information. The ability of the U.S. insurance industry to risk-select may be severely hampered if these restrictions are widely applied.     

Estimating Trade Mis-invoicing from China： 2000-2005

An examination of available data reveals large trade misinvoicing between China and its trade partners. The analysis finds a net trade misinvoicing of US$287.6bn between 2000 and 2005, while the full magnitude of unrecorded trade is estimated at US$1.4tn. China needs to establish more effective management of its international trade flows. At the same time, the international community needs to provide more effective governance mechanisms to address trade misinvoicing.     

The effect of ESOP adoptions on corporate performance: are there really performance changes?

Employee Stock Ownership Programs (ESOPs) have long been promoted as a motivational tool: employees become profit‐minded owners. Latterly, however, more ESOPs are being used as part of a takeover defense: here the ESOPs main purpose is to put more company stock in friendly hands—the employees—who, like existing management, could suffer layoffs, etc. in a hostile takeover. We find that, as a group, only the takeover‐related ESOPs are associated with increased leverage (itself a takeover defense). Non‐target firms show no long‐term increase in debt‐to‐assets. We find little evidence to support the motivation hypothesis: while actual labor costs are lower for ESOP firms, after industry‐adjusting they tend to be unaffected or higher. We find that a few measures of firm financial performance [return‐on‐equity (ROE), return‐on‐assets (ROA), net profit margin (NPM)] do improve significantly, but this appears to be largely a short‐term effect. Industry‐adjusted holding period returns appear to be unaffected by the ESOP; however, ESOP firms that leverage show evidence of long‐term market underperformance. We conclude that ESOPs provide, at best, only a short‐term boost to corporate performance. Copyright © 2000 John Wiley & Sons, Ltd.     

Multiple-objective methods in regulatory decision making: A conceptual framework applied to U.S. automobile safety standards

Public policy making is a complex matter. Policy makers are charged with balancing a broad spectrum of competing objectives, reflecting in varying degrees the interests and aspirations of a diverse range of constituencies and stakeholders. Policy decisions have differential impacts on differing constituencies and the contributions of these impacts to objectives are frequently uncertain, difficult to quantify, and hotly disputed. Formal methods of decision analysis have been advanced as aids for coping with complexity and have been applied to some public policy issues, most notably the management of water resources. While formal methods have the apparent benefit of rationalizing the policy process and improving the efficacy and equity of policy decisions, serious questions remain concerning the acceptability and ultimate usefulness of formal analyses in the public arena. In this article we examine these questions in the context of policy making relating to government regulation of automobile designs for safety. We consider what would be involved in attempting to use a relatively modern, multiple-objective approach in this context. The key questions are how and, more importantly, why multiple-objective methods might be used. The article begins with an illustrative case study, describes the current policymaking process, identifies the parties involved in and affected by this process, elicits key objectives, looks briefly at some scalar-objective approaches, and then outlines a multiple-objective approach. The framework developed arguably is useful in assisting policy making, at least at a qualitative level. Issues which impede a more quantitative resolution of this framework are discussed. This article is intended as a pilot study which may promote research toward the achievement of a useable multiple-objective procedure applicable in the public domain.