WHO WANTS PATERNALISM?

Little is known about the demand side of paternalism. We investigate attitudes towards paternalism among Danish students. The main question is whether demand for paternalism is related to self‐control, either because people with self‐control problems seek commitment devices to overcome these problems, or because people with good self‐control want those who lack it to change their behaviours. We find no evidence linking self‐control to attitudes towards weak forms of paternalism (e.g., nudges or information about health consequences). But respondents with good self‐control are significantly more favourable towards strong paternalism (e.g., restricting choices or sin taxes) than those struggling with self‐control.     

Effects of local fiscal policy on firm profitability

For decades, scholars and policy-makers have been interested in how fiscal policy influences entrepreneurship. Until now, research has focused on fiscal policy at the federal or regional level and used macro-economic outcome measures. Considerably less attention was given to how municipal governments can influence economic outcomes at the micro level. The present study examines the effect of municipal taxes, spending and tax compliance costs on firm profitability within the Flemish hospitality industry. This is an interesting research setting, since Flemish municipalities have far-ranging fiscal autonomy which has resulted in a proliferation of local taxes, many of which are specific to the hospitality industry. The findings reveal that local taxes have a negative impact on firm profitability, while aggregate public spending has a positive influence. The tax effect is economically relevant and exceeds the public spending impact. Finally, we find no impact of compliance costs from local taxes.     

Robust covariance matrix estimation and identification of unusual data points: New tools

Most consistent estimators are prone to total breakdown in the presence of a handful of unusual data points (UDPs). This compromises inference. Robust estimation is a (seldom-used) solution; but methods commonly-used in applied research have severe drawbacks. In this paper, building upon methods that are relatively unknown outside of the robust statistics literature, we provide an enhanced tool for robust estimates of mean and covariance, useful both for robust estimation and for detection of unusual data points. It is relatively fast and useful for large data sets. We also provide a new robust cluster method, an input to our broader method, but also useful for standalone UDP detection or cluster analysis. We provide a comparative study of numerous methods that is not available in the current literature. Testing indicates that our method performs at par with, and often better than, two of the currently best available methods. We also demonstrate that the issues we discuss are not merely hypothetical, by applying our tools to real world data, and to re-examine two prominent economic studies. Our methods reveal that their central results are driven by a set of unusual points.     

A Knowledge–based Algorithm for the Internet Transmission Control Protocol (TCP)

Using a knowledge–based approach, the authors derive a protocol for the sequence transmission problem, which provides a high–level model of the Internet transmission control protocol (TCP). The knowledge–based protocol is correct for communication media where deletion and reordering errors may occur. Furthermore, it is shown that both sender and receiver eventually attain depth– n knowledge about the values of the messages for any n , but that common knowledge about the messages is not attainable.     

Does Forecast Combination Improve Norges Bank Inflation Forecasts?*

We develop a system that provides model‐based forecasts for inflation in Norway. We recursively evaluate quasi out‐of‐sample forecasts from a large suite of models from 1999 to 2009. The performance of the models are then used to derive quasi real time weights that are used to combine the forecasts. Our results indicate that a combination forecast improves upon the point forecasts from individual models. Furthermore, a combination forecast outperforms Norges Bank's own point forecast for inflation. The beneficial results are obtained using a trimmed weighted average. Some degree of trimming is required for the combination forecasts to outperform the judgmental forecasts from the policymaker.     

Online Music Consumption in Today’s Technological Context: Putting the Influence of Ethics in Perspective

Whereas in the past ‘free’ and ‘illegal’ were nearly synonymous in the music industry, consumers nowadays face a myriad of music platforms with widely different characteristics in terms of business model (advertising supported, fee based, etc.), delivery mode (streaming, downloading, etc.), and others. The current research examines music consumption preferences in this new context. In order to break with the outmoded free-illegal versus paid-legal dichotomy, the present research studies consumer preferences for a broader range of music platform attributes, including free versus paying business models, (il)legality of use, artist revenues, downloading versus streaming, and audio quality. Based on a literature review and a qualitative study with in-depth interviews (N = 92), an online conjoint survey (N = 764) quantifies online music preferences. Results show that consumers of all ages clearly and consistently prefer legal and ethical options if available, but favor different ways of making this economically viable. Youngsters and young adults are more open to advertising, while middle-aged adults are more often willing to pay for advertising-free platforms. Thus, in real-life choices, youngsters may appear to be less ethical and law abiding, but the driving force behind this is mainly economical. Finally, a market segmentation provides deeper insights into online music consumer preferences and leads to recommendations on how to define viable legal and ethical music offerings.     

Determinants of Differential Rent Changes: Mean Reversion versus the Usual Suspects

This is a hedonic regression study of the 2001–2004 and 2004–2007 rent growth of 18,000 rental units. Which variables matter: Location? Age? Rent level? Occupancy duration? Structure type? The answers deepen understanding of the rental market and help guide statistical agency practice. We document significant rent stickiness. Initial relative rent level is the best predictor, mainly because of mean reversion. (This problem likely extends well beyond the present study.) “Location” comes in second, though often not statistically significant: the relative value of location is persistent. Age and occupancy duration are also notable. Our findings support statistical agency practices.