Protecting the Vulnerable: the Tradeoff between Risk Reduction and Public Insurance

In a risky world should governments provide public goods thatreduce risk or compensate the victims of bad outcomes throughsocial insurance? This article examines a basic question indesigning social protection policies: how should a governmentallocate a fixed budget between these two activities? In thepresence of income and risk heterogeneities a simple publicinsurance scheme that pays a fixed benefit to all householdsthat suffer a negative shock is an effective redistributionalinstrument of public policy. This is true even when a well functioningprivate insurance market exists, and so the role of public insuranceis not to correct a market failure. In fact, the existence ofa private insurance market means that the public system hasdesirable targeting properties—all but the poor and high-risktake up private insurance. The provision of public goods thatreduce risk for all should therefore be complemented with publicinsurance that (automatically) benefits those who are especiallyvulnerable.     

Information content and the contractual nature of hedging derivative incomes

In a sample of 87 banks representing 631 bank-years for the period 1996–2003, we examine whether information content of hedging derivative incomes is predicated on the contractual nature of the derivative. Of particular interest are the different abnormal trading volume reactions to incomes arising from executory contracts (i.e., cash flow and net investment hedges) and incomes arising from nonexecutory contracts (i.e., fair value hedges). We find a positive and significant relationship between two alternative measures of abnormal trading volume and incomes arising from cash flow and net investment hedges. The results are robust in an equity valuation framework. Our findings suggest that derivative incomes are informative, notably those incomes that are related to executory contracts. An implication for standard setters is that the complex rules for disaggregating incomes on hedging derivatives provide valuable information to the market.     

Changing attitudes and behavior toward community mental health centers

The purpose of Community Mental Health Centers (CMHC's) is to plan and implement preventive maintenance and crisis intervention programs to individuals in the community in need of these services. To do this successfully, the community should be segmented into a variety of markets and special programs designed for each segment. Because every individual thinks his problems are unique. the CMHC's need to be marketed so members of potential client markets will be informed that a service has been designed to meet their individual needs. The problem, in terms of accomplishing this end, is that CMHC's are generally staffed by people trained in medicine, sociology, social work, psychology or psychiatry and are not trained in marketing.     

International Cross-Listing and Order Flow Migration: Evidence from an Emerging Market

Policymakers in emerging markets are increasingly concerned about the consequences for the domestic equity market when companies list stock abroad. We show that the effects of cross-listing depend on the quality of intermarket information linkages. We investigate these issues with unique data from the Mexican equity market. The impact of cross-listing is complex—balancing the costs of order flow migration against the benefits of increased intermarket competition. These effects are exacerbated by equity investment barriers that induce segmentation of the domestic equity market. Consequently, the benefits and costs of cross-listing are not evenly spread over all classes of shareholders.     

Consumer protection in betting

Bettors have been virtually ignored by consumer protection bodies and interest groups. Since wagering contracts are unenforceable in British courts consumer law offers an unsatisfactory basis for bettor protection. The Gaming Board for Great Britain and its regulations offer the necessary protection to gaming consumers and betting needs to be brought under a similar regulatory authority. Draft regulations for this are proposed. They accord bookmakers the rights to engage or not engage in betting on any event from moment to moment and to offer any odds which they wish against the runners in the event. But these rights are subject to their being required, when they are betting, to display their odds, and take bets to a self-chosen amount to lose, on all runners in the event from any customer. They would also be required to display the price of a bet on the event with them in directly informative terms.

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Verbraucherschutz bei Wetten

Zusammenfassung In England sind Personen, die Wetten eingehen, von den Institutionen des Verbraucherschutzes im Grunde genommen völlig übersehen worden. Weil Wett-Verträge nach britischem Recht nicht einklagbar sind, gibt es kaum eine Basis für diese spezielle Form von Verbraucherschutz. Wohl aber bietet die englische Aufsichtsbehörde für das Spielwesen mit ihren Regelungen einen notwendigen Schutz für Personen, die spielen. Der Beitrag plädiert nun dafür, das Wett-Wesen in ähnlicher Weise einer Aufsichtsbehörde zu unterstellen wie das Spielwesen. Regelungen dafür werden vorgeschlagen.Danach sollen Buchmacher als Anbieter von Wett-Verträgen zwar eine weitgehend ungehinderte Möglichkeit haben, Wetten anzubieten. Diese Möglichkeit soll aber geknüpft sein an die Verpflichtung dazu, die Wettverhältnisse offen darzulegen, und an das Recht des Konsumenten, seinen Wetteinsatz selbst zu wählen oder zu bestimmen; außerdem soll kein Teilnehmer der Veranstalter, auf die sich die Wette bezieht, ausgeschlossen werden können. Schließlich müssen die Wett-Bedingungen in einer für jedermann verständlichen Weise offengelegt werden.

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Jack Dowie is Senior Lecturer in Social Sciences at The Open University, Milton Keynes, MK7 6AA, U.K. Mark Coton is a freelance writer on betting. His address is 4 Roymount Court, Lovelace Road, Surbiton, KT6 6NW, U.K. David Miers is Senior Lecturer in Law at Cardiff Law School, P.O. Box 427 Museum Avenue, Cardiff CF1 1XD, U.K.