Structure and understanding: Some observations on current activities in the field of structural modeling

Structural modeling has been under study in recent years as a method for dealing with complex societal problems, and is growing in acceptance as a tool for understanding complex social phenomena. Structural models demonstrate the interactions of the separate elements of a system and their combined overall effect. Thus, the nature of the problem for which this method of analysis is appropriate is different from complex problems of the traditional disciplines which lend themselves to reductionist approaches. This is because complex policy problems of society cannot be “solved” with precise analysis. Kenneth Boulding suggests that there are two ways to cope with a complex policy problem, either to “slice” the problem into partial equilibrium sections or “squeeze” it by aggregating numerous variables into a single index or macho variable. Structural modeling is an approach which comes under the general strategy of squeezing the problem and is promising because of the ability to include a range of macro variables which provide insights about social change. The articles in this issue treat several interesting aspects of this approach. In this article we wish to recall for consideration a central purpose for developing such methods. We have taken a historical approach to indicate some of the roots of the concern for the effect of technological process on social change. Within this context, we discuss the nature of the contributions made by the articles in this issue and what promise the methods offer to addressing the historical concern.     

Saving Accounts versus Stocks and Bonds in Household Portfolio Allocation

We study the structure of household portfolios of financial wealth by analyzing both the determinants of total financial wealth and the choice between risky (stocks and bonds) and riskfree assets (saving accounts). The econometric specification is a generalized trivariate Tobit model, estimated on a cross section of 3,077 households in the Netherlands in 1988. We account for endogeneity of financial wealth and for selectivity due to nonreporting. Results show that the level of financial wealth and the marginal tax rate are major determinants of the allocation between riskfree and risky assets.     

Winner-take-all price competition

Summary. We analyze an oligopoly model of homogeneous product price competition that allows for discontinuities in demand and/or costs. Conditions under which only zero profit equilibrium outcomes obtain in such settings are provided. We then illustrate through a series of examples that the conditions provided are “tight” in the sense that their relaxation leads to positive profit outcomes. Received: April 7, 2000; revised version: September 14, 2000     

Right-to-Work Laws and Geographic Differences in Living Costs: Comment

A bstract . M. Reynolds and M. Edwards , commenting on R. J. Cebula's study of geographic differences in living costs in states with Right-to-Work Laws , seek to extend his results and explore the relevance of alternative variables. Cebula, in reply, addresses the comment and re-estimates the living cost impact of such laws, taking into account additional factors. Even after allowing for additional South/non-South differences , Cebula reports, the original basic model is resilient.     

Design considerations for neyman-pearson and wald hypothesis testing

Summary The Neyman-Pearson Lemma describes a test for two simple hypotheses that, for a given sample size, is most powerful for its level. It is usually implemented by choosing the smallest sample size that achieves a prespecified power for a fixed level. The Lemma does not describe how to select either the level or the power of the test. In the usual Wald decision-theoretic structure there exists a sampling cost function, an initial prior over the hypothesis space and various payoffs to right/wrong hypothesis selections. The optimal Wald test is a Bayes decision rule that maximizes the expected payoff net of sampling costs. This paper shows that the Wald-optimal test and the Neyman-Pearson test can be the same and how the Neyman-Pearson test, with fixed level and power, can be viewed as a Wald test subject to restrictions on the payoff vector, cost function and prior distribution.     

Threats to new product manufacturability and the effects of development team integration processes

The thesis of this article is that new product manufacturability (NPM) is influenced by certain challenges inherent in new product development (NPD), and by efforts to integrate manufacturing and other functional concerns into the product design process. This research tests the direct and interacting effects of these influences via a survey of 91 completed NPD projects representing a variety of manufacturing industries. While most hypotheses were supported, the analysis also provides some surprising findings. Project complexity and increased levels of design outsourcing are associated with poorer NPM. Product newness and project acceleration are associated with better NPM. All the measured aspects of development team integration are associated with better NPM, including intense manufacturing involvement, a collaborative work environment, supplier influence on the product design, and strong management support in the project. Furthermore, certain integration variables exert moderating effects on relationships between technological uncertainty, product newness, design outsourcing, project acceleration and NPM. By exposing these relationships this research extends the theory of product development influences on manufacturability beyond a focus on engineering-oriented approaches (e.g., design-for-manufacture). The results suggest that larger managerial issues must be addressed and that more contingency-oriented research is needed to explore the benefits and limitations of development team integration processes.     

Speed under sail during the early industrial revolution (c. 1750–1830)

This article measures technological progress in oceanic shipping directly by using a large database of daily log entries from British, Dutch, and Spanish ships to estimate daily sailing speed in different wind conditions from 1750 to 1850. Against the consensus among economic (but not maritime) historians that the technology of sailing ships was fairly static during this time, we find that average sailing speeds of British East India Company and Navy ships in moderate to strong winds rose considerably after the 1770s. Driving this progress was the introduction of coppering in the 1780s, but subsequent rises are probably due to a continuous evolution of sails and rigging, and improved hulls that allowed a greater area of sail to be set safely in a given wind. By contrast, the speeds of Dutch and Spanish vessels were stagnant. Using separate data on the crossing times of Atlantic mail packets, we find gradual progress from the 1750s, followed by marked improvements when American packets appeared in the 1820s.