Use of Product-Testing Organizations' Recommendations as a Strategy for Choice Simplification

A re-examination of survey data concerning the manner in which subscribers to Consumer Reports actually use the information presented in the magazine suggests that some subscribers simplify their decision making by following the brand recommendations provided. The results of a separate laboratory study with students as subjects provide additional evidence for the use of brand recommendations as part of a decision simplifying strategy. Implications of the findings for public policy are discussed.     

IS HISPANIC POPULATION DISPERSION INTO RURAL COUNTIES CONTRIBUTING TO LOCAL ECONOMIC GROWTH?

In the 1990s, rural counties in the United States, which had been losing population, became the destinations for an increasing number of Hispanics, slowing and in some cases reversing population declines. In this paper, we examine whether faster growth in the Hispanic population is linked to faster growth in income per capita in rural counties. Our results indicate strong support for the hypothesis that population growth caused by the increase in Hispanics, whether from international immigrants, migrants from within the United States, or from natural growth in families, has fueled increased economic growth in those small, rural communities whose populations had been in decline during the 1970s or the 1980s. (JEL J15, J61, R11)     

PRODUCT VARIETY AND DEMAND UNCERTAINTY: WHY MARKUPS VARY WITH QUALITY*

We demonstrate that demand uncertainty can explain equilibrium product variety in the presence of sunk costs. Product variety is an efficient response to uncertainty because it reduces the expected costs associated with excess capacity. We find that within the firm's product line, the highest quality product has the highest profit margin but the lowest percentage margin, while the lowest quality product has the highest percentage margin but the lowest absolute margin. Both of these relationships are consistent with evidence available from marketing studies.     

The Effects of Labour on Accounting Choice in Canada

This study examines the effects of labour considerations on accounting choice in Canada. Two potential labour‐related incentives are considered: ability to pay and employee attraction and retention. Measures of these incentives are developed based on Canadian data: unionization for ability‐to‐pay incentives, and labour intensity and the percentage of white‐collar employees for the attract and retain incentives. Our results indicate that ability‐to‐pay incentives, measured by unionization, are not associated with depreciation policies in Canada. In contrast, the findings provide mixed support for the attract‐and‐retain perspective, because labour intensity was significantly correlated with these choices, while the percentage of white‐collar employees was marginally significant.     

Hyperbolic Discounting and the Phillips Curve

Using a standard dynamic general equilibrium model, we show that the interaction of staggered nominal contracts with hyperbolic discounting leads to inflation having significant long-run effects on real variables.