Equity Premia as Low as Three Percent? Evidence from Analysts' Earnings Forecasts for Domestic and International Stock Markets

The returns earned by U.S. equities since 1926 exceed estimates derived from theory, from other periods and markets, and from surveys of institutional investors. Rather than examine historic experience, we estimate the equity premium from the discount rate that equates market valuations with prevailing expectations of future flows. The accounting flows we project are isomorphic to projected dividends but use more available information and narrow the range of reasonable growth rates. For each year between 1985 and 1998, we find that the equity premium is around three percent (or less) in the United States and five other markets.     

Social capital and cultural adjustment of international assignees in NGOs: do support networks really matter?

International assignees face cultural adjustment challenges in their host countries in work and nonwork situations. At the same time, social capital theory suggests that individuals can access and mobilize resources from their social networks. We explore the use of social networks by international assignees from a non-governmental organization in their cross-cultural adjustment to the host country. Specifically, we are interested in the individuals who directly provided support to the expatriate, a network that we term the ‘current assignment support network’. We focus on the size, type and frequency of contact of the international assignee's support network, and investigate to what extent these variables can predict overall cultural adjustment to the host country, or separate dimensions of cultural adjustment such as interaction adjustment, general adjustment and work adjustment. Our findings indicate that certain characteristics of the international assignee's current assignment support network do impact their cultural adjustment to the host country, but that the effects are moderated by whether the assignee has prior international experience.     

Casting Light upon an Evil Spectre

Jagdish Bhagwati, Protectionism (Cambridge, Massachusetts, and London: MIT Press, 1988) 142 pp., $16.95 and £12.95.     

Cost-minimization analysis of sublingual immunotherapy versus subcutaneous immunotherapy for house dust mite respiratory allergic disease in Denmark

Objectives Currently, patients with persistent moderate-to-severe house dust mite (HDM) allergic rhinitis despite use of symptom-relieving medication can be offered subcutaneously administered allergy immunotherapy (SQ SCIT; Alutard SQ) as standard care of treatment in Denmark. Recently, a HDM sublingually administered allergy immunotherapy tablet (SQ SLIT-tablet; ACARIZAX) has been developed for at-home treatment. The purpose of this analysis is to compare the costs related to treatment and administration of SQ SLIT-tablet and SQ SCIT.

Methods Assuming equal efficacy between ther SQ SLIT-tablet and SQ SCIT, the cost-minimization analysis was the most appropriate for the comparison. According to guidelines and Summary of Product Characteristics, the treatment duration of SQ SLIT-tablet is 3 years and 3–5 years for SQ SCIT. The courses of treatment vary among patients and, therefore, the costs of treatment have been calculated for an average patient with HDM respiratory allergic disease (RAD) receiving either SQ SLIT-tablet or SQ SCIT. All costs associated with allergy immunotherapy were collected, i.e., cost of medication, administration and treatment setting, and discounted according to Danish guidelines. Comprehensive univariate sensitivity analyses were carried out.

Results The treatment costs for an average patient with HDM RAD are €3094 for SQ SLIT-tablet and €3799 for SQ SCIT; however, when adding indirect costs to the calculations the total costs of the treatments are €3697 and €6717 for SQ SLIT-tablet and SQ SCIT, respectively. Therefore, if 2500 patients with HDM RAD were treated with SQ SLIT-tablet instead of SQ SCIT, it would elicit a saving to the healthcare system of ～€1.8 million. The conclusion was robust to any changes in the sensitivity analysis.

Conclusion With regards to the cost of treating Danish patients with HDM RAD, it is clearly cost-saving to treat patients with SQ SLIT-tablet compared to SQ SCIT.     

Regulating the UK

How are privatised utilities regulate? Sir Gorden Borrie, the Director General of the Office of Fair Trading and doyen of regulactors, review the recent dramatic changes in regulating utilities and the fostering of competition in Britain.     

Monetary Policy in Illiquid Markets: Options for a Small Open Economy

Two impediments to effective monetary policy operation include illiquidity in bond markets and the zero bound of interest rates. Under these conditions alternative means of enacting monetary policy may be required. This paper empirically explores policy options implemented through equity and currency markets that will generate similar inflation responses at different time horizons. In terms of GDP loss the least costly means of achieving a particular long run inflation outcome is via the current monetary policy arrangements. Currency market alternatives are volatile but less expensive than the equity market in terms of output loss for short term inflation horizons.

Great deeds or great risks? Scientists’ social representations of nanotechnology

Nanotechnologies are becoming a larger presence in everyday life and are viewed by governments and economic actors as a key area for development. The theory of social representations suggests that specialist views eventually disseminate to shape representations among the public. Yet nanotechnologies remain relatively little known to the general public. The media emphasize potential benefits, while potential risks get less attention. The literature has not yet addressed whether representations by a well-informed population (scientists) are indeed structured in terms of the risk–benefit polarity that dominates research framing to date. We attempted a systematic assessment of how background knowledge about nanotechnology may influence experts’ perception. Study 1 delivered the first demonstration derived from a qualitative analysis confirming the existence of a polarized representation of nanotechnologies, contrasting opportunity (medical, economic, and technological) and risk. Interestingly, risk was distinguished at two levels: that associated with nanomaterial characteristics (toxicity, reactivity) and at the larger scale of impact (health, environment, legislation). Does this polarity indicate a ‘yes, but’ logic (nanotechnology carries opportunity but also risk), or two clusters of specialists (sensitive, respectively, to opportunity or to risk)? Study 2 surveyed a larger sample of experts who self-described their scientific background and role viz. nanotechnology. Role had no influence. Specialists consensually viewed that nanotechnology represents opportunity, but depending on scientific background they did not agree to the same extent that nanotechnology also constitutes a risk. Participants with a physics and chemistry background tended to represent nanotechnologies predominantly in terms of opportunities and not in terms of inherent risks or impacts. In contrast, toxicologists, life and social scientists appeared to explicitly incorporate both benefits and risks in their representation of this new technology. Environmental scientists were a more diverse group, divided between the two patterns of representation.