A model to project loss of earnings from impaired or destroyed capacity

Conclusions Attempts have been made for many years to place a monetary value on human life. Rather than becoming easier over time, determination of a value has become more difficult, especially within the past 25 years. Accuracy of estimates is reduced because of uncertainties associated with changing economic and social conditions. For example, the importance of the variables used in this analysis has intensified within recent years because of the changing nature of the American economy, coupled with expanding social programs. Particularly important among the variables affecting earnings are occupational alternatives, education, age, productivity, inflation, and interest rates. Despite the restraints noted above, a methodology exists for conceptualizing these factors into a systematic economic approach for estimating and projecting individual earnings. This article has utilized a methodology to relate economic concepts to the problem of establishing a monetary value of lost earnings due to impaired capacity or death. It essentially involved determination of the difference in expected lifetime earnings prior to and after the occurrence of impairment or death and discounting this difference to a present value. The authors wish to express their appreciation to Professor R. Kenneth Manning, Jr., of the Cumberland School of Law of Samford University for his helpful comments and suggestions.     

Safety performance differences between unionized and non-union motor carriers

This paper analyzes the safety performance differences between union and non-union motor carriers. Based primarily on the safety and health provisions of a national agreement between the International Brotherhood of Teamsters and a major unionized motor carrier, a hypothesis is developed that union carriers have a positive safety impact. The hypothesis is tested using safety performance data. Key findings are that union membership has a statistically significant positive impact on both driver and vehicle safety performance. Union membership results in significantly fewer crashes as well.     

Do Investors Perceive the Link Between Equity Method Earnings and Future Earnings? The Role of Supplemental Disclosures

Equity method investments are commonly a material component of a firm's corporate structure, yet these investments are presented to financial statement users through opaque financial reporting. This study demonstrates that the link between equity method earnings and future earnings is stronger than the link between consolidated earnings and future earnings, consistent with the synergistic and diversification benefits of equity method investments. Next, this study demonstrates a limitation in the opaque reporting of equity method investments by revealing that the market fails to fully incorporate into prices the link between equity method earnings and future earnings. Further, this study contributes to the active debate among practitioners and regulators about the usefulness of supplemental disclosure requirements related to equity method investments. Results indicate that supplemental equity method investment disclosures aid the market in impounding the persistence of equity method earnings into share price.     

Price experimentation with strategic buyers

A two-period model in which a monopolist endeavors to learn about the permanent demand parameter of a specific repeat buyer is investigated. The buyer may strategically reject the seller’s first-period offer for one of two reasons. First, in order to conceal information (i.e., to pool), a high-valuation buyer may reject high prices that would never be accepted by a low-valuation buyer. Second, in order to reveal information (i.e., to signal), a low-valuation buyer may reject low prices that would always be accepted by a high-valuation buyer. Given this, the seller often finds it optimal to post prices that reveal no useful information. Indeed, in the equilibrium where there is no signaling, the seller never charges an informative first-period price. Learning may occur in the equilibrium where there is maximal signaling, but the scope for learning is quite limited even in this case. Indeed, in order to preempt information transmission through signaling, the seller may be induced to set a first-period price strictly below the buyer’s lowest possible valuation.      

Cost-effectiveness of telaprevir in combination with pegylated interferon alpha and ribavirin in previously untreated chronic hepatitis C genotype 1 patients

Background:

Telaprevir (T, TVR) is a direct-acting antiviral (DAA) used for the treatment of genotype 1 chronic hepatitis C virus (HCV) infection. The sustained virological response (SVR) rates, i.e., undetectable HCV RNA levels 24 weeks after the end of treatment, is what differentiate treatments. This analysis evaluated the cost-effectiveness of TVR combined with pegylated interferon (Peg-IFN) alfa-2a plus ribavirin (RBV), with Peg-IFN and RBV (PR) alone or with boceprevir (B, BOC) plus Peg-IFN alfa-2b and RBV, in naïve patients.

Methods:

A Markov cohort model of chronic HCV disease progression reflected the pathway of naïve patients initiating anti-HCV therapy. SVR rates were derived from a mixed-treatment comparison including results from Phase II and III trials of TVR and BOC, and trials comparing both PR regimens. SVR has significant impact on survival, quality-of-life, and costs. Incremental cost per life year (LY) gained and quality-adjusted-life-year (QALY) gained were computed at lifetime, adopting the (National Health Service) NHS perspective. Cost and health outcomes were discounted at 3.5%. Uncertainty was assessed using deterministic and probabilistic sensitivity analyses. Sub-group analyses were also performed by interleukin (IL)-28B genotype and fibrosis stage.

Results:

Higher costs and improved outcomes were associated with T/PR relative to PR alone, resulting in an ICER of £12,733 per QALY gained. T/PR retained a significant SVR advantage over PR alone and was cost-effective regardless of IL-28B genotype and fibrosis stages. T/PR regimen ‘dominated’ B/PR, generating 0.2 additional QALYs and reducing lifetime cost by £2758. Sensitivity analyses consistently resulted in ICERs less than £30,000/QALY for the T/PR regimen over PR alone.

Limitations:

No head-to-head trial provides direct evidence of better efficacy of T/PR vs B/PR.

Conclusion:

The introduction of TVR-based therapy for genotype 1 HCV patients is cost-effective for naïve patients at the £30,000 willingness-to-pay threshold, regardless of IL-28B genotype or fibrosis stage.