Sequential Tests of the Arbitrage Pricing Theory: A Comparison of Principal Components and Maximum Likelihood Factors

We examine the cross-sectional pricing equation of the APT using the elements of eigenvectors and the maximum likelihood factor loadings of the covariance matrix of returns as measures of risk. The results indicate that, for data assumed stationary over twenty years, the first vector is a surprisingly good measure of risk when compared with either a one- or a five-factor model or a five-vector model. We conclude that in some circumstances principal components analysis may be preferred to factor analysis.     

Factors Affecting Perceptions of Smallest Meaningful Pay Increases

This analysis suggests that an individual's current level of earnings may be one of the most important variables influencing his/her perception of incremental increases. Also, job difficulty (measured in terms of the average number of nights spent away from home per month on job-related duties) contributes significantly to the explanation of SMPI for both the organizational recognition group and the monetary considerations group. For the ORG group, the pay increase an individual finds meaningful appears to be influenced as well by job input factors such as total work experience, tenure in present job, tenure with present employer, and age. These results support the hypothesis that individuals with relatively high levels of training and experience and higher current earnings will tend to have higher expectations with regard to salary increases than will others, and that these expectations in turn will be reflected in higher thresholds of what is perceived as the smallest meaningful pay increase. Overall, much of the evidence supports the hypothesis that the predictors of SMPI will be different for the ORG and MCG groups. However, the relatively small size of the MCG sample and the associated problem of multicollinearity dictate caution in generalizing our results.* In addition, our study suffers from problems related to model underspecification, insofar as some of the explanatory variables identified in Lawler's model of pay satisfaction were not considered.     

EMPIRICAL SUPPORT FOR AND THE EVALUATION OF AN INTERVENTION MODEL FOR ELDERLY CONSUMERS*

This paper reports the development and evaluation of a consumer education intervention model for elderly consumers. Data on the consumer decision making patterns of married elderly were analysed to ascertain the correlates of a specialized or syncratic decision pattern. No differences were found relative to the type or intensity of consumer problems. Additionally, no support was observed for a resource theory of consumer decision-making power. T-test and analysis of covariance suggested that the educational model was effective. Suggestions for future research are offered.     

COMMENT—ALCOHOL ADVERTISING IN MAGAZINES AND YOUTH READERSHIP: ARE YOUTHS DISPROPORTIONATELY EXPOSED?

This article investigates the relationship between alcohol advertising in magazines and youth readership, while controlling for a set of magazine and readership variables related to the demand for advertising space. It reconstructs and reanalyzes a data set including count data for alcohol ads placed in 28 magazines in 2001-2003 that was the basis for a previous study, which concluded that alcohol advertisers do not target youths. We address the problem of collinearity in that data set and add an explanatory variable to explicitly model the hypothesis that alcohol advertising is preferentially directed to a young adult audience. We find that the number of alcohol advertisements in magazines increases significantly with the proportion of youth readers, even after controlling for young adult readership. Our results indicate that youths are disproportionately exposed to alcohol advertising and that reducing youth exposure to alcohol advertising remains an important public policy concern. ( JEL L82, L66, M37)     

Weak Moral Motivation Leads to the Decline of Voluntary Contributions

We develop a model that accounts for the decay of the average contribution observed in experiments on voluntary contributions to a public good. The novel idea is that people's moral motivation is “weak.” Their judgment about the right contribution depends on observed contributions by group members and on an intrinsic “moral ideal.” We show that the assumption of weakly morally motivated agents leads to the decline of the average contribution over time. The model is compatible with persistence of overcontributions, variability of contributions (across and within individuals), the “restart effect” and the observation that the decay in contributions is slower in longer games. Furthermore, it offers a rationale for conditional cooperation.