What Can Be Learned from DuPont and the Freon Ban: A Case Study

Between 1974 and 1988, executives of DuPont, the world's largest producer of CFCs, were confronted with emerging evidence that CFCs were destroying the stratospheric ozone layer. The difficulty that executives face in such cases is that scientific knowledge develops over time and does not necessarily proceed in a straight line toward true conclusions. At the beginning of a new field of research, there is much uncertainty and disagreement among the experts. The solution of the ozone problem required a remarkable cooperation among science, business, and international governments. After looking at the role of DuPont executives in this drama, and the difficulties facing any executive dealing with uncertain science, the paper turns to an evaluation of the field of Business Ethics to see what light it might throw on this and analogous problems. Finally, the paper offers specific suggestions in terms of principles in dealing with uncertain science, and concludes that the course of action that DuPont followed, including some mistakes, can serve as a model for analogous crises.     

The Robustness of the APT to Alternative Estimators

We test the robustness of the APT to two alternative estimation procedures: the Fama and MacBeth (1973) two-step methodology; and the one-step procedure due to Burmeister and McElroy (1988). We find that the APT is indeed sensitive to the chosen estimator and assumptions about the factor structure of stock returns. We believe that our findings have implications for the estimation of asset pricing models in general.     

THE RETURNS TO ENDOGENOUS HUMAN CAPITAL IN PAKISTAN'S RURAL WAGE LABOUR MARKET

This paper estimates the private returns to human capital in Pakistani rural labour markets. The rich data used permit inclusion of several dimensions of human capital and control for endogeneity resulting from investment in human capital. The results suggest that, without data on determinants of human capital, it would not be possible to disentangle the separate effect of each dimension of human capital on wage differentials nor to distinguish human capital explanations for wage differentials from signalling and credentialist models. With control for endogeneity of human capital and selectivity into wage employment, cognitive achievement, but not schooling attainment separate from cognitive achievement nor long-run health status, affects wage differentials.