TRENDS IN AMERICAN LIVING STANDARDS AND INEQUALITY, 1959–2007

We analyze the trends from 1959 to 2007 using an expanded measure of income called the Levy Institute Measure of Economic Well‐Being (LIMEW). LIMEW is different in scope from the official U.S. Census Bureau measure of gross money income (MI) in that our measure includes non‐cash transfers, public consumption, imputed income from wealth, and household production and nets out personal taxes. While the annual growth rates of median LIMEW and MI are very close over the whole period (0.67 and 0.63 percent), median LIMEW grew much faster than median MI after 1982 and much slower before. The Gini coefficient of MI is uniformly higher than that of LIMEW but both show about the same change from 1959 to 2007. Decomposition analysis shows that changes in inequality are driven to a large extent by non‐home wealth in LIMEW and earnings in MI. While the racial gap in MI declined somewhat over the 1990s and 2000s, the racial gap in LIMEW actually widened a bit. Over the same years, while there was little change in the gap in MI between the elderly and non‐elderly, the LIMEW of the elderly actually overtook that of the non‐elderly.     

CAP Forum on E‐Business: Compromise or Customize: XBRL's Paradoxical Power

Business reports are changing in response to regulatory and market demands. Requests by regulators for electronic filings of financial statements and tax forms are increasing and such filings are rapidly becoming mandatory in many countries. In response, extensible business reporting language (XBRL) is a market‐driven, collaborative effort to make electronic filings more useful to, and to reduce the burden on, both publishers and consumers of business reports. XBRL does much more than simply list data items that can be submitted in an electronic filing. XBRL is a complete set of tools for regulators or groups to fully communicate the meanings of and interrelationships among the business reporting concepts. In addition, core sets of concepts from regulators or groups can be extended, expanded, or otherwise modified for more specific communication by jurisdictions, industries, or individual corporations. This unique customization capability lets companies better present their electronic filings as parallels to their paper filings. A “customizable standard” offers new opportunities and new challenges. This paper discusses XBRL's paradoxical power ‐ the trade‐offs between customizing to better parallel existing paper reports and compromising to more closely match the standards, and the research needed for the transition from freeform to customized reports.     

Product Liability in the European Community: The Legislative History

This article analyzes the complex history of the important new product liability directive of the European Community. The member countries must amend their laws and meet the directive's proconsumer standards and spirit. The lengthy political evolution of this policy involved many aggressive constituencies, including nations, parts of the European Community governance structure, business federations, consumer organizations, and other functional interest groups.     

Risk-Benefit Analysis of Cigarette Smoking: Public Policy Implications

The objective of this study is to investigate the internal risks and benefits from smoking over the lifetime of a male individual. It differs from many earlier studies in that it focuses on the costs borne by the individual, as opposed to external or societal costs. It also includes the benefits from smoking which play an important role in the individual's smoking decision. Risk-benefit ratios range from 0.25 to 3.67 depending on the tar and nicotine content of cigarettes, the discount or time preference rate, the value of a life year, and the price elasticity of demand for cigarettes.     

Consumer Reaction to a Risk/Benefit/Option Message about Agricultural Chemicals in the Food Supply

Audience segmentation and focus group methods were used to evaluate consumer reactions to a risk/benefit/option message about agricultural chemicals in the food supply. The approach was well-received and showed potential for raising consumers' concerns regarding health and environmental risks associated with pesticides, along with confidence in their ability to minimize exposure to residues. Concern and confidence increased most among consumers who already were concerned and who were most removed from agriculture.     

The Role of Qualifying Language on Consumer Perceptions of Environmental Claims

A copy-test of seven environmental claims on aerosol packages shows that consumers interpret general, unqualified claims (e.g., environmentally friendly or ozone friendly) as meaning the product is safe for the environment in both an absolute (safe) and a relative (safer) sense. These perceptions of environmental safety are enhanced by specific qualifiers for general claims such as No CFCs and general qualifiers for specific claims. In addition, the results show that almost all specific environmental claims improve consumers’ perceptions of the aerosol product relative to general claims for environmental benefits of the product. Implications for marketing and public policy professionals are presented.     

Commitment Approach to Motivating Community Recycling: New Zealand Curbside Trial

An urban community in New Zealand was the site of a field experiment designed to assess different approaches to increasing household participation in a cnrbside recycling program. Two different commitment interventions were delivered using a 2 × 2 factorial design, and weekly participation data were collected over 12 weeks. Half of the households were asked to make an explicit verbal commitment to participate in the program, while half were not. Half of the households were also requested to pay for their recycling bins, while half received bins free of charge. All households received the same educational and promotional information, specifically designed to maximize participation, regarding program details. The verbal commitment intervention significantly increased participation relative to the no commitment intervention, while difficulties in the operationalization of the financial commitment intervention made it difficult to assess its validity as a construct. Notably, differences in participation rates between the control group, who received only educational and promotional materials, and the experimental treatment groups were not statistically significant. The discussion focuses oh the increasing importance of well-designed educational materials for encouraging voluntary curb-side recycling.     

Incremental Information Content of the Change in the Percent of Production Added to Inventory*

Abstract. Manufacturing firms can manipulate income by producing in excess of the quantity needed to meet current period demand, thereby allocating part of current period fixed manufacturing overhead costs from cost of goods sold to inventory. Because it is subject to manipulation, the component of earnings due to producing in excess of sales may be of lower quality than the remaining component of earnings. We investigate this possibility using a regression of security returns on unexpected income and an estimate of the change in percent of production added to inventory (CPAI). An analytical model indicates that CPAI determines the “earnings surprise” subject to manipulation by overproducing. Assuming the market recognizes this, the coefficient on CPAI should be negative because this low quality component must be deducted from the total “good news” conveyed by the change in reported earnings. Alternatively, CPAI may convey good or bad news to the market that is unrelated to the manipulation of current period earnings. Firms may increase the percent of production added to inventory in anticipation of high levels of future sales. In this case, the estimated coefficient on CPAI should be positive. Or, if the increase in the percent of production added to inventory reflects anticipation of a strike or an unexpected downturn in current sales, the estimated coefficient should be negative. Cross-sectional tests using a large sample of manufacturing firms indicate a significant positive relation between security returns and CPAI. This finding is consistent with market participants viewing CPAI as a leading indicator of firm performance. Although the results are most supportive of CPAI conveying good news, there is some evidence that CPAI is used by managers to smooth earnings and, for firms classified as smoothing earnings, there is weak evidence that the component of earnings related to CPAI is viewed by market participants to be of lower quality.