Climbing the drug staircase: a Bayesian analysis of the initiation of hard drug use

Since empirical studies have shown that cannabis users are much more likely to initiate hard drug use, a causal linkage has been suggested (‘gateway hypothesis’). However, individual differences in proneness and accessibility to drugs provide alternative non‐causal explanations for the observed drug use pattern. We propose a Bayesian estimation and predictive framework to analyze the effects and relative importance of previous cannabis use, proneness and accessibility factors on hard drug initiation and to explore possible policy implications. We employ a novel model specification, motivated by four gateway transmission channels, to analyze data from a recent Norwegian survey of young adults. Copyright © 2010 John Wiley & Sons, Ltd.     

New Evidence on Optimal Asset Allocation

Brocato and Steed (1998) showed that portfolio rebalancing based on NBER business cycle turning points substantially improves in‐sample Markowitz efficiency. In a similar vein, we investigate potential improvements from rebalancing based on turning points in the monetary cycle. We find that the monetary cycle has greater influence than the business cycle on the variance/covariance structure of multiple asset classes. Furthermore, we find substantial improvements in in‐sample efficiency beyond a buy‐and‐hold strategy and the business‐cycle approach. Importantly, our indicator of monetary cycle turning points has a practical advantage over NBER business cycle turning points, in that it relies only on ex ante information. In out‐of‐sample tests, we continue to find superior portfolio performance after transactions costs using the monetary cycle to time portfolio rebalancing.     

Shopping orientation and online travel shopping: The role of travel experience

This paper investigates how consumers' shopping orientation toward travel shopping influences their tendency to shop for travel products on the Internet. The paper also looks into the role of consumers' travel experience. A conceptual model is developed and a number of hypotheses are forwarded and tested by structural equation modeling, using data from 256 respondents. The results support several of the stated hypotheses. Shopping orientation and travel experience both influence travelers' intentions to shop travel products online. Implications for management practice and further research are discussed at the end of the paper. Copyright © 2011 John Wiley & Sons, Ltd.     

Applying a CRESH aggregate labour index to generate age-wage profiles

This article shows how a CRESH (Constant Ratios of Elasticity of Substitution, Homothetic) labour index can generate more realistic optimal wage profiles than traditional (restrictive) functional forms. The CRESH index function allows for age-specific elasticities of substitution that are implied by a proper choice of CRESH parameters. The ability to generate plausible optimal age-wage profiles can be useful in, for example, calibrating demographic macroeconomic models. The CRESH analysis also provides one explanation for the well-established divergence of actual relative wages by age from the relative age-specific intensity parameters of a simple additive labour index. Moreover, CRESH labour index may explain the increasing relative wages for middle-aged workers as a result of employing larger numbers of older workers (population aging).     

How suboptimal are linear sharing rules?

The objective of this paper is to analyze criteria for portfolio choice when two investors are forced to invest in a common portfolio and share the proceeds by a linear sharing rule. A similar situation with many investors is typical for defined contribution pension schemes. The restriction implies two sources of suboptimal investment decisions as seen from each of the two investors individually. One is the suboptimal choice of portfolio, the other is the forced linear sharing rule. We measure the combined consequence for each investor by their respective loss in wealth equivalent. We show that significant losses can arise when investors are diverse in their risk attitude. We also show that an investor with a low degree of risk aversion, like the logarithmic or the square root investor, often applied in portfolio choice models, can either inflict or be subject to severe losses when being forced to participate in such a common investment pool.     

Do long swings in the business cycle lead to strong persistence in output?

This paper investigates how the occasional long swing in the business cycle can produce long-memory behavior in US output. To prove this theoretical relationship, we extend the Hamilton Markov chain regime switching model of real aggregate output to include the occasional long regime. We do this by modeling the duration length of the expansion and recession regimes as draws from a fat-tailed distribution with realized durations that are high in variability and occasionally extreme in value. Empirically, we find that the tail indices for the length of US economic booms and busts correspond with the long-memory parameter estimates of Diebold and Rudebusch [1989. Long memory and persistence in aggregate output. Journal of Monetary Economics 24, 189-209] and Sowell [1992a. Modeling long-run behavior with the fractional ARIMA model. Journal of Monetary Economics 29, 277-302] for real US output. Estimates of our extended regime switching model produce better short- and long-run forecasts of output in comparison to forecasts with a fractionally integrated model. Furthermore, our estimated regime-switching model finds US expansions to be fragile during their infancy, but become more and more likely to continue after surviving the first seven quarters.     

How to inspire value-laden collaborative consumer-generated content

Marketing is evolving into true participatory conversations. Once-tidy, controlled marketing communications with distinct, identifiable corporate spokespeople are giving way to a messy tangle of market-based communications consisting of multiple authors including customers, competitors, observers, employees, and interested collectives. Amidst this, we find consumer-generated content (CGC) that is predominantly antithetical to previous studies, which assumed CGC to be inspired by personal brand attachment and/or the desire to see discrete-authored CGC disseminated, or even motivated by monetary reward. Authorship of collaboratively-produced CGC is virtually untraceable, unknown, and monetarily uncompensated. The true reward is the process, and the outcome is not reliant on technical prowess but rather semiotic manipulation, narrative manipulation, and complex brand character development. Consumers—especially those who are members of active consumer collectives—are skillful, proficient, and prolific in the creation of CGC, with high resonance among very engaged consumers. We advocate harnessing collaborative CGC efforts toward long-term marketing objectives, and offer a brief tutorial.