On the measurement of risk aversion from experimental data

Attitudes towards risk are measured for households in Northern Zambia using an experimental gambling approach with real payoffs that at maximum were equal to 30% of average total annual income per capita. The results of the experiment show decreasing absolute risk aversion and increasing partial risk aversion. Determinants of risk aversion are investigated using random effects interval regression model exploiting the panel data structure of the repeated experiments. Wealth indicator variables are found to be significant, and partial relative risk aversion decreases as wealth increases. Females are found to be more risk averse than males.     

Livestock and land share contracts in a Hindu society

This article examines factors related to a livestock rental market in western Nepal and assesses whether this market is associated with caste differentiation and land rental market participation. Theoretical models for asset‐rich (i.e., high‐caste) households, rich in land and livestock, and asset‐poor (i.e., low‐caste families) households are presented to provide logical explanations for the existence of a livestock rental market and the synergy between livestock and land rental markets participation. A combination of double hurdle models and bivariate‐ordered probit models were used to test the implications of the models. Consistent with the theoretical models, land‐ and livestock‐rich high‐caste households were more likely to rent out land and/or livestock, whereas land‐ and livestock‐poor and credit constrained low‐caste households were more likely to rent livestock and land from others. Participation in the two markets was positively correlated, indicating a synergistic relationship that may be due to production and transaction costs reducing benefits. Policies that can enhance the allocative efficiency of livestock and land rental markets can improve equity as well as efficiency of land use in Nepal. Provision of livestock credit to land‐poor low‐caste households is also crucially dependent on their access to more long‐term contracts for land.     

Predators in the market: implications of market interaction on optimal resource management

A two-species bioeconomic model is analyzed, but in contrast to most similar models, there is no biological interaction between the species, only economic. The interaction takes place in the market where the quantity of either species may affect the price of the other. The effects of cross-price elasticities on the optimal steady state and on the optimal paths in the sole-owner case are investigated both analytically (steady states) and numerically (optimal paths). First, it is shown that if the harvest of one species has impact on the price of another species, then this has a positive effect on its steady-state stock. The effect increases with the stock-elasticity in the cost function. Further, in the case of linear demand functions, the steady state outcome depends solely on the sum of the cross-price parameters and not their individual values. Secondly, in the investigation of optimal paths, it is shown that if the harvest of one species has impact on the price of the other, optimal trajectories reach steady state faster for itself and slower for the other species. Further, when cross-price elasticities are sufficiently high, the paths go from being monotonic to feature over- or undershooting.     

Traditions,Land Rights,and Local Welfare Creation: Studies from Eastern Indonesia

This research focuses on the impacts of traditional systems of land distribution among households, clans, and the government in two of Indonesia’s poorest provinces: East Nusa Tenggara and Maluku. Our main goal is to discuss and propose alternative ways of dividing and governing productive land to meet new needs in the management of agriculture and forestry. We apply a mixed research methodology that includes in-depth discussions with more than 50 key informants and survey interviews with 640 randomly selected respondents. We find that the number of land conflicts is rising, that land privatisation is becoming increasingly relevant, and that communal land ownership tends to lead to land under-utilisation rather than to natural resource overuse and environmental degradation. We argue that economic gains can be made by changing land-use patterns and land user rights. Our policy recommendations include introducing formalised and taxable clan land ownership with specified and registered family user rights.     

The prognosis and surveillance of risks from commercial credit borrowers

This paper reports the main results of an empirical research project dealing with the prognosis and surveillance of corporate credit risks. In the course of the research programme both quantitative (balance sheet analysis, current accounts data analysis) and qualitative (assessment of management) methods were applied. Each of the three parts of the project is independently usable However, the combined application of the three approaches avoids deficiencies of using only one of the components and improves the early detection of credit risks.     

Managed Care Incentives and Inpatient Complications

Managed care organizations control costs through restrictions on patient access to specialized services, oversight of treatment protocols, and financial incentives for providers. We investigate possible effects of such practices on the care patients receive by studying frequencies of in-hospital complications. We find significant differences in complication rates between managed care and fee-for-service patients. We investigate the sources of this variation by comparing probabilities of complications among patients with different types of managed care coverage and patients treated in different hospitals. For several patient categories, the differences in outcomes we find appear to arise not from differential treatment of patients within hospitals or from heterogeneity in patients, but from variations in care across hospitals that tend to treat patients with different insurance types.     

SAMPLING ERROR IN FIRST ORDER STOCHASTIC DOMINANCE

This study analyzes the standard method of testing for first order stochastic dominance from a statistical viewpoint and applies a boundary crossing algorithm to approximate the resulting error probabilities. Error probabilities can be estimated even when the two distributions are not equal. This approach, which is useful when large sample simulations are not feasible, helps clarify some of the unusual results obtained by Kroll and Levy in an earlier study.     

Evaluating inventive activity: the cost of nineteenth-century UK patents and the fallibility of renewal data

It has long been recognized that counting patents offers a poor gauge of the extent and value of inventive activity, not least because the quality of patented inventions varies enormously. The Schankerman-Pakes model provides a valuable alternative gauge that utilizes the data from renewal fees which are regularly paid to keep a patent in force. This article suggests, however, that the model's application to nineteenth-century UK patents may underestimate the value of Victorian inventive activity because many patentees lacked the financial resources to implement the rational choice that the model assumes. Focusing on steam-engineering patents, it explores further problems with renewal data and the increasing rate of lapsed applications.