APPLICATIONS OF BEHAVIOURAL ECONOMICS TO TAX EVASION

The paper reviews recent models that have applied the techniques of behavioural economics to the analysis of the tax compliance choice of an individual taxpayer. The construction of these models is motivated by the failure of the Yitzhaki version of the Allingham–Sandmo model to predict correctly the proportion of taxpayers who will evade and the effect of an increase in the tax rate upon the chosen level of evasion. Recent approaches have applied non‐expected utility theory to the compliance decision and have addressed social interaction. The models we describe are able to match the observed extent of evasion and correctly predict the tax effect but do not have the parsimony or precision of the Yitzhaki model.     

Information Technology Support for Corporate Bank Lending

Decision-making in corporate bank lending occurs at both strategic and individual proposition levels. In principle, these levels will require a different type of IT support for the decisions taken therein. This article discusses the concepts of decision support systems and management information systems, in the light of recent developments in information technology, particularly those in the field of expert systems. The conclusions drawn are that a decision support system will be needed at the strategic level, while an augmented management information system will be required for dealing with individual propositions. This augmentation is seen to come from an expert system front-end’ to the information system, providing an expert management information system.     

Consumption, Wealth, and Indebtedness in the Context of Uncertainty: The Consumption Function Meets Portfolio Theory

The objective of this paper is to provide a sound theoretical framework for the empirical analysis of consumer indebtedness, by integrating Portfolio theory with the Life-Cycle hypothesis (LCH) model of consumption. Modern versions of this LCH theory almost always assume that utility is additive over time, but in this study, the multiplicative Cobb–Douglas function is used. The new synthesis also explains the stochastic properties of consumption more fully and clearly than previous studies, in particular the uncertainty arising from rates of return on risky assets. The new theory will also help to improve the explanation of the surprise changes in consumption because these sources of risk are incorporated explicitly into the analysis.     

Fracture incidence among elderly people in institutional care: linking injury surveillance data with a postal code-based register of residential and nursing homes

Fracture prevention strategies will be most cost-effective if targeted at groups of frail elderly people who are at particularly high risk of falls and fractures. Elderly people living in residential and nursing homes are one potential target population, but fracture incidence in this setting remains poorly defined in many countries. We have used the All Wales Injury Surveillance System (AWISS) in a population-based study of people aged over 65 living in the city of Cardiff. We linked a postal code-based register of all care homes in the city with injury data from Cardiff’s only Accident and Emergency department. Cardiff has 47,520 residents aged over 65, and 1,874 (3.9%) live in residential or nursing homes. Fracture incidence was 25/1,000/year overall, and 5/1,000/year for hip fracture. During 1997, the care home residents suffered 162 fractures, 82 of which were of the hip; an incidence of 86/1,000/year overall, 44/1,000/year for hip fracture. Even after adjustment for the age and sex profile of the care home population, fracture incidence remained 2.3 times higher and hip fracture incidence 3.6 times higher than in the general elderly population. Such figures support the potential cost-effectiveness of strategies that prevent fractures in care homes, and are of special interest to those planning intervention studies in this setting.     

Sustainability,performance and organizational strategy: an empirical analysis of public organizations

This paper presents a first time empirical analysis of sustainable management and performance in public organizations. Prior evidence from private firms on the relationship between sustainable management and performance indicates that the benefits of adopting social responsibility practices accrue across a number of dimensions of performance. Empirical analysis of English local government suggests that sustainable management is related to sustainability performance but not to other measures of organizational performance. These conclusions raise questions about the nature of sustainable management in public agencies and the measurement of performance. Copyright © 2005 John Wiley & Sons, Ltd and ERP Environment.     

Dividend Stability, Dividend Yield and Stock Returns: UK Evidence

This paper establishes an empirical role for two measures of dividend stability (as a proxy for dividend policy) in explaining UK stock returns. There is little systematic empirical evidence concerning the relation between dividend stability, dividend yield and stock returns despite the fact that a variety of theoretical models point to dividend policy as an important stock attribute. Here we construct two definitions of dividend stability, one of which involves dividend cuts, and use a sample of all listed UK firms from 1975 to 1997 to explore the relationship between stock returns and a variety of characteristics, including dividend stability. We find an inverse correlation between the stability of past dividend policy and systematic risk. Both stability measures have explanatory power over returns, but this is concentrated in January.     

Facts & figures

Financial Management in the NHS: a Manager's Handbook By H. Mellett, N. Marriott, S. Harris (Chapman and Hall, London, 1993), pp. xvii + 265. £29.50. ISBN 0 412 47320 8.

Competing for Quality—a Manager's Guide to Market Testing By Lynton Barker (Longman, Harlow, 1993). £38.50. ISBN 0 582 23688 6.

The Role of Chief Executives in Local Government By Janice Morphet (Longman, Harlow, 1993), pp. vi + 245. £29.95.     

Uniform Versus Discriminatory Tariffs

We analyze the non‐cooperative interaction between two exporting countries producing differentiated products and one importing country when governments use optimal policies to maximize welfare. The analysis includes product differentiation, asymmetric costs, and Bertrand competition. For identical exporting countries we demonstrate that the importing country always prefers a uniform tariff regime while both exporting countries prefer a discriminatory tariff regime for any degree of product differentiation. If countries are asymmetric in terms of production cost then the higher‐cost exporter always prefers the discriminatory regime but the lower‐cost exporter prefers the uniform regime if there is a significant cost differential. With cost asymmetry the announcement of a uniform tariff regime by the importer is not a credible strategy since there is an incentive to deviate to discrimination. This implies an international body can play a role in ensuring that tariff agreements are respected.     

Barriers to growth: skills and training in telematics

Great claims have been made about the growth prospects of the telematics sector, the primary source of communications networks and services. However, this article argues that the telematics sector faces some formidable barriers to growth, especially with respect to skills provision.