A Simple Artificial Regression Based Test of the Goodness of Fit of Binary Choice Models

A test of the goodness of fit of a binary choice model is derived using the conditional moment testing approach. The test statistic may be calculated as the explained sum of squares or N:R² in a simple artificial regression. The test statistic has reasonably good small sample properties since it is not based on the outer product gradient (OPG) form.     

On Pooling of Data and Its Relative Efficiency

Pooling of data is often carried out to protect privacy or to save cost, with the claimed advantage that it does not lead to much loss of efficiency. We argue that this does not give the complete picture as the estimation of different parameters is affected to different degrees by pooling. We establish a ladder of efficiency loss for estimating the mean, variance, skewness and kurtosis, and more generally multivariate joint cumulants, in powers of the pool size. The asymptotic efficiency of the pooled data non‐parametric/parametric maximum likelihood estimator relative to the corresponding unpooled data estimator is reduced by a factor equal to the pool size whenever the order of the cumulant to be estimated is increased by one. The implications of this result are demonstrated in case–control genetic association studies with interactions between genes. Our findings provide a guideline for the discriminate use of data pooling in practice and the assessment of its relative efficiency. As exact maximum likelihood estimates are difficult to obtain if the pool size is large, we address briefly how to obtain computationally efficient estimates from pooled data and suggest Gaussian estimation and non‐parametric maximum likelihood as two feasible methods.     

Symposium Introduction

This symposium's focus is on connections that might be forged between leadership theory and practice, leadership development, and the theory and practice of design. Our intent in exploring the narratives of and literature about designers is to understand and appreciate how the design leadership crucible might forge more effective research approaches, generative pedagogical experience, and produce more effective leaders who can address adaptive problems. The guest editors and authors for the symposium are Elizabeth Johnston and Anthony Kortens. The symposium includes an introduction to the topic of design using current literature, incorporating a report on a series of conversations with two individuals who have enjoyed long and successful careers in design and leadership. These individuals, Michael Schonhofen and Ben Shaw, were contributing partners who shared their experiences as designers and leaders, as well as tirelessly reviewed the symposium documents and offered insights, interpretations, and suggestions.     

A processing fluency perspective on overhead aversion: How much is too much?

Overhead aversion has afflicted the nonprofit sector in recent decades. Yet, questions remain regarding how high is too high from a donor perspective and at what level overhead expenses just “feel right.” Using processing fluency as a theoretical foundation, the central purpose of this research was to investigate whether a nonprofit overhead ratio fluency level exists that significantly reduces both donation likelihood and nonprofit perceptions. Results from two studies show that a 25% overhead ratio appears to be the proximate ceiling regarding what fluently fits within a potential donor's schema for acceptance. Overhead ratios exceeding this threshold tended to decrease donation likelihood and nonprofit perceptions in a relatively stable manner. Moreover, the 25% threshold seems most relevant to human and animal causes and not as relevant to arts and cultural nonprofits such as museums. The results suggest that donors have a preconceived overhead ratio limit. Nonprofits that exceed that threshold are in danger of deterring donors. If nonprofit overhead ratios exceed the donor fluency threshold, nonprofit managers should consider distinct promotional strategies that entice donors and diminish overhead aversion effects.     

The Effect of Conforming Loan Status on Mortgage Yield Spreads: A Loan Level Analysis

The magnitude of the effect of government-sponsored enterprise purchases on primary mortgage market rates has been a difficult research question with differing data and competing methodologies producing varying results. Here we present a new approach using loan level data and controlling for credit risk differentials between conforming and nonconforming loans. Our method also addresses econometric problems of endogeneity and sample selection bias. We find that conforming loans have yield spreads about 5.5% lower compared to other loans on a risk-adjusted basis. This is lower than previous estimates appearing in the literature.     

Exchange Rates and Prices: Sources of Sterling Real Exchange Rate Fluctuations 1973–94

We attempt to identify the sources of UK exchange rate and relative consumer price fluctuations by applying the Clarida and Gali (1994) extension of the Blanchard and Quah (1989) structural VAR method to UK data. We (r)nd that IS shocks underlay the majority of the variance of sterling real and nominal exchange rates. Aggregate supply (AS) shocks were the second most important source of such variations, while LM shocks played an extremely limited role. In contrast, the variance of UK relative consumer prices primarily reflected LM shocks.     

Equity and arbitration in major league baseball

Equity theory argues that workers examine their job performance and salaries relative to workers in comparable situations. If compensation is inequitable, workers may adjust their behavior. We test the hypothesis that an arbitration‐eligible player in Major League Baseball is more likely to file for arbitration and/or proceed to an arbitration hearing if he feels he is underpaid relative to his comparison other. Bivariate probit is used to increase efficiency and correct for the sample bias in estimating decision models within the two‐step arbitration process. The results indicate that equity is a significant predictor of a player's unilateral decision to file but is an insignificant determinant of going to a hearing because of offsetting responses to equity by player and owner. Copyright © 2002 John Wiley & Sons, Ltd.     

Using Charm to Adjust for Cross-Hauling: The Case of the Province of Hubei,China

Data for the Chinese province of Hubei are used to assess the performance of Kronenberg's Cross-Hauling Adjusted Regionalization Method (CHARM), a method that takes explicit account of cross-hauling when constructing regional input–output tables. A key determinant of cross-hauling is held to be the heterogeneity of commodities, which is estimated using national data. However, contrary to the authors’ findings for Finland, CHARM does not generate reliable estimates of Hubei's sectoral exports, imports and volume of trade, although it is more successful in estimating sectoral supply multipliers. The poor simulations of regional trade are attributed to the fact that Hubei is a relatively small region, where there is a large divergence between regional and national technology and pattern of final demand. The simulation errors are decomposed into components reflecting differences between regional and national technology, final demand and heterogeneity. The third component is found to be the least important of the three sources of error.