Scoring rules and survey density forecasts

This article provides a practical evaluation of some leading density forecast scoring rules in the context of forecast surveys. We analyse the density forecasts of UK inflation obtained from the Bank of England’s Survey of External Forecasters, considering both the survey average forecasts published in the Bank’s quarterly Inflation Report, and the individual survey responses recently made available to researchers by the Bank. The density forecasts are collected in histogram format, and the ranked probability score (RPS) is shown to have clear advantages over other scoring rules. Missing observations are a feature of forecast surveys, and we introduce an adjustment to the RPS, based on the Yates decomposition, to improve its comparative measurement of forecaster performance in the face of differential non-response. The new measure, denoted RPS*, is recommended to analysts of forecast surveys.     

Model selection in random effects models for directed graphs using approximated Bayes factors

With the development of an MCMC algorithm, Bayesian model selection for the p ₂ model for directed graphs has become possible. This paper presents an empirical exploration in using approximate Bayes factors for model selection. For a social network of Dutch secondary school pupils from different ethnic backgrounds it is investigated whether pupils report that they receive more emotional support from within their own ethnic group. Approximated Bayes factors seem to work, but considerable margins of error have to be reckoned with.     

Heterogeneity and exchange: Safe-conducts in Medieval Spain

During a time when religious animosities were reaching their peak in Medieval Europe leading up to the violent crusades, Christians, Jews, and Muslims residing in close proximity in Medieval Spain experienced a period of relative peace, prosperity, and cultural exchange. This historical episode, referred to as La Convivencia, or the coexistence, is a puzzle to many period historians. This paper argues that this anomalistic period arose due to the emergence of commerce, which generated cooperation and mitigated conflict among these heterogeneous groups, à la the Doux-Commerce Thesis of the Scottish Enlightenment. Commercial exchange between Christians, Jews, and Muslims was established through the use of safe-conducts, a promise of protection sold to foreign merchants. This paper details the operation of safe-conducts and the civilizing role that commerce played among Christians, Jews, and Muslims in Medieval Spain.     

Random coefficients models of arms imports

This paper uses a large panel of data with up to 19 time-series observations for almost 150 countries to estimate models of arms imports. Qualitative evidence suggests a non-linear relationship. As income and military expenditure grow, the propensity to import first rises and then falls as a domestic arms industry develops. We face the difficulty that there is virtually no data on domestic arms procurement or production capability. We respond to this difficulty by adopting a random coefficient approach in order to identify any systematic influences on import propensity, through the impact of military expenditure, size of the armed forces or income on unobserved domestic production capability. While a clear non-linear pattern is apparent in the cross-section relationship, once one allows for parameter heterogeneity such a pattern is not apparent in the time-series.     

Short Run Constraints and the Increasing Marginal Value of Time in Recreation

Leisure activities such as local recreation trips usually take place in discrete blocks of time that are surrounded by time devoted to other commitments. It can be costly to transfer time between blocks to allow for longer outings. These observations affect the value of time within those blocks and suggest that traditional methods for valuing time using labor markets miss important considerations. This paper presents a new model for time valuation that uses non-employment time commitments to infer the shadow value of time spent in recreation. A unique survey that elicited revealed and stated preference data on household time allocation is used to implement the model. The results support the conclusion that there is an increasing marginal value of time for recreation as the trip length increases.     

The Effect of Gasoline Taxes and Public Transit Investments on Driving Patterns

This paper analyzes how driving patterns are affected by gasoline taxes and the availability of a substitute for driving—public transportation. We develop a measure of transportation substitutability based on the difference between individuals’ predicted commute times by private and public transit, conditional upon their demographic characteristics and geographic location. Improved substitutability decreases annual vehicle miles traveled (VMT) by inducing modal shifts to public transit, though gasoline taxes are found to have a much larger impact on VMT. Our results imply that a policy that raises gasoline taxes and recycles the revenues into public transit improvements can have even larger impacts on driving patterns than either policy alone.     

Is Meta-Analysis a Noah's Ark for Non-Market Valuation?

This paper describes meta-analytical methods as they have been appliedto non-market valuation research. These studies have been used to reviewand synthesize literature and, more recently, in benefit transfer. Thissecond use imposes a higher standard on the consistency in economicconcepts being summarized and in the resources included in ameta-analysis. To meet this need, the paper proposes and illustrates astructural framework using a generalized method of moments estimator toestimate the parameters of a preference function with the benefitsestimates usually encountered in meta-analytic summaries.     

Do bookmakers possess superior skills to bettors in predicting outcomes?

In this paper we test the hypothesis that bookmakers display superior skills to bettors in predicting the outcome of sporting events by using matched data from traditional bookmaking and person-to-person exchanges. Employing a conditional logistic regression model on horse racing data from the UK we find that, in high liquidity betting markets, betting exchange odds have more predictive value than the corresponding bookmaker odds. To control for potential spillovers between the two markets, we repeat the analysis for cases where prices diverge significantly. Once again, exchange odds yield more valuable information concerning race outcomes than the bookmaker equivalents.     

HEGY Tests in the Presence of Moving Averages*

We analyze the asymptotic distributions associated with the seasonal unit root tests of Hylleberg et al. (1990) for quarterly data when the innovations follow a moving average process. Although both the t‐ and F‐type tests suffer from scale and shift effects compared with the presumed null distributions when a fixed order of autoregressive augmentation is applied, these effects disappear when the order of augmentation is sufficiently large. However, as found by Burridge and Taylor (2001) for the autoregressive case, individual t‐ratio tests at the semi‐annual frequency are not pivotal even with high orders of augmentation, although the corresponding joint F‐type statistic is pivotal. Monte Carlo simulations verify the importance of the order of augmentation for finite samples generated by seasonally integrated moving average processes.     

Information processing and leadership styles: Constructive thinking and transformational leadership

Transformational leaders increase job satisfaction and well‐being among workers. According to the cognitive‐experiential self‐theory (CEST), all behavior is guided by two information‐processing systems: a rational and an experiential system. Study 1 examined the relationship between information processing and transformational leadership among experienced school leaders (N = 183). The rational system had a strong positive correlation with transformational leadership, whereas the experiential system was weakly correlated. Study 2 (N = 126) examined constructive thinking and transformational leadership. Global constructive thinking, emotional coping, and behavioral coping all had strong positive correlations with transformational leadership. These results suggest that improving leaders' awareness of their own information‐processing and thinking systems might encourage more productive transformational‐leadership techniques.