Procrastination, Obedince, and Public Policy: The Irrelevance of Salience

A bstract . Modern economics assumes that individuals are rational maximizers, who, in the presence of costly information , sometimes make mistakes. Recently, George Akerlof has challenged this presumption. He proposes that people sometimes fail to maximize their long-run utility , due to the phenomenon of "salience." This refers to the alleged systematic distortion in individual perception where events closer to a person (in time and in space) seem bigger and more important than they really are. The salience phenomenon is claimed to interfere with the process of rational maximization , rendering some individual choices, in effect, irrational. This paper subjects Akerlof's suggestion to critical scrutiny. It is argued that the examples Akerlof offers of the effect of salience are not the anomalies he claims but instead represent behaviors which can be readily explained within the framework of the standard economic model. All of his major examples are considered in this light and it is suggested that the work of Israel Kirzner holds more promise for improving the analytical power of the standard economic model than does the idea of salience.     

Policy and Management Work within International Agricultural Research

The diversity of players in the field of agricultural (and, more generally, rural) policy and management research is sketched in a global overview of relevant research resources, and the small but important part played by the CGIAR Centres in this is explored, particularly where it has maximum value in terms of international public goods, and for strategic links to other parts of the CGIAR portfolio. The patchy and often slender (and perhaps diminishing in specific cases) capacity of national agricultural policy research and analysis units in the less-developed world to deliver the needed research products is examined.     

Asymmetric information,dividends, and external financing

We analyze a signaling game where firms' dividend announcements convey private information but the possible need to externally finance the dividend creates an incentive conflict between inside and outside investors. Consequently, the attempt to address an adverse selection problem creates (or exacerbates) moral hazard. The interaction of these two imperfect information problems results in equilibria that may be separating or pooling. Additionally, the equilibrium may be only partially separating, i.e., firms are incompletely identified.     

Accountability in a Free-Market Economy: The British Company Audit, 1886

The relative merits of market forces compared with regulations as the more efficient mechanism for ensuring adequate accountability from business (and non-business) organizations is a subject of keen debate. Britain in the second half of the nineteenth century is regularly cited as an example of how the market will ensure adequate accountability in the absence of regulatory requirements. There is a great deal of speculation but very little hard evidence concerning the precise levels of accountability during this period. This study is designed to penetrate contemporary attitudes and actions by using primary sources to determine the audit arrangements made by quoted companies in the year 1886. It is discovered that professionally qualified accountants generally, and chartered accountants in particular, had achieved a dominant position by 1886, and possibly rather earlier; a finding which is also used to illuminate the question of the nature of the professional accountants' work in the late nineteenth century.     

A Study of the Use of Targets in the Planning Documents of Executive Agencies

The use of quantitative, often non-financial, targets and performance measures in the plans of both businesses and not-for-profit organisations has recently received increasing attention in the academic literature. In the UK public sector this has been particularly important, given the rise of New Public Management. This has resulted in a shift from issues of policy to issues of management, and the break-up of traditional bureaucratic structures. These changes have been supported by an increasing focus on setting quantitative targets which cover all aspects of an organisation's performance. This paper seeks to examine the possible role of quantitative targets in planning and control in public sector organisations. Furthermore, through an exploratory study of over eighty planning documents from executive agencies, the nature and breadth of targets being used are examined and discussed.     

Compliance and Controversy: The AAS 25 Reporting Paradox

The adoption of AAS 25, which specifies uniform reporting requirements for superannuation funds, has been particularly controversial. While the Australian Accounting Research Foundation (AARF) has maintained that uniform reporting practices for superannuation funds are necessary to provide performance information to investors, the superannuation industry has argued that AAS 25 will cause "confusion, misunderstanding and unnecessary concern among fund members". Although the controversy has been widely reported, little information has emerged about the extent to which funds were already complying, or substantially complying, with the standard. This paper reports the results of a survey which indicates, contrary to expectations, that in the two years before the introduction of AAS 25 most funds were reporting in a way which would effectively comply with provisions of the standard.     

Accounting for Growth in the Australian Wine Industry, 1987 to 2003

A computable general equilibrium model of the Australian economy is used to account for the dramatic growth in Australia's wine industry between 1987 and 1999, and to project grape and wine volumes and prices to 2003. Export demand growth has made a major contribution to total output growth in premium wines, and accounts for most of the increase in the producer price of premium red wine. Domestic consumer preferences have shifted, mainly towards premium red wine, but there is also some evidence of growing demand for premium white wine since the mid 1990s. From the perspective of producers, productivity growth, while being less important than growth in domestic demand, appears to have more than offset the negative effects on suppliers of wine consumer tax increases. From the domestic consumers' perspective, however, tax hikes have raised retail prices much more than productivity gains have lowered them. The high and sustained levels of profitability resulting from export demand growth have led to a massive supply response in Australia. Even so, by 2003 Australian wine output will still be less than 5 per cent of global production.     

Sustaining growth in agriculture: a quantitative review of agricultural research investments

Growth in agriculture depends on many things but one of the most important is investment in agricultural research. Decision making in the agricultural research policy area can only be aided by access to better information. This article overviews a recent endeavor to move policy dialogue beyond merely qualitative impressions towards a process that is underpinned with new and cogent data. The data used have been assembled at ISNAR in a manner designed to make comparisons both over time and between countries more valid than has been the case in the past. The comparisons thus possible reveal considerable diversity both between countries and between broad regional aggregations. Also illuminated here are issues related to the commodity orientation, capital and labor intensity, and size and scope of particular national programs.