Promoting justice by treating people unequally: an experimental study

Which inequalities among individuals are considered unjust? This paper reports the results of an experiment designed to study distributive choices dealing with arbitrarily unequal initial endowments. In a three-person distribution problem where subjects either know or do not know their endowments, we find impartial behavior to be a stable pattern. Subjects either compensate for initial inequalities fully or not at all in both conditions, and they do so more often when they do not know their endowment than when they know it. Moreover, the type and the size of the good to be distributed also affect the frequency of impartial behavior.     

Cigarette pack and advertising displays at point of purchase: community demand for restrictions

Tobacco promotion influences tobacco consumption. Traditional forms of tobacco promotion have been heavily restricted in response to the harmful effects of tobacco. Tobacco displays at the point of purchase are increasingly important as a means of communicating brand imagery for the tobacco industry, especially when advertising is restricted at these points. Previous research has demonstrated that children exposed to tobacco advertising at the point of purchase have inflated perceptions of availability, use and popularity of tobacco. Internationally, laws are being debated and implemented to prohibit or restrict the display of tobacco at the point of purchase or put tobacco out of sight. Such measures would reduce tobacco product exposure and, hence, tobacco marketing among youth and the community. In South Australia, a ban on all cigarette advertising at the point of purchase was introduced in 2005. This study was designed to assess community support for restrictions on cigarette displays and advertising at the point of purchase. A telephone survey was conducted with a random sample of 2026 South Australian adults (aged 18 years and over) in July 2005. Overall, 63% of the community approved of a hypothetical total ban on cigarette displays at the point of purchase, with over three‐quarters believing this should happen in the next 12 months. A further 24% believed that cigarette displays should be restricted and 82% would approve of a ban on displays in stores that sell confectionary. Only 7% of adult smokers reported making their decision about the brand of cigarettes to buy at the point of purchase and 90% made their decision before they even entered the shop. The results strengthen arguments that cigarette displays are not necessary to maintain brand loyalty or to encourage brand switching of established smokers. Instead, the results make arguments more credible that cigarette displays normalize and promote smoking among young people and may also promote unplanned purchase or increased consumption among less frequent smokers or former smokers. Placing cigarettes out of sight would be unlikely to impact on brand choice for most smokers, who have already made up their mind before they enter the store.     

The Great Moderation and the Relationship between Output Growth and Its Volatility

This study examines the effect of the Great Moderation on the relationship between U.S. output growth and its volatility over the period 1947 to 2006. First, we consider the possible effects of structural changes in the volatility process. We employ generalized autoregressive conditional heteroscedasticity in mean (GARCH-M) specifications, which describe output growth rate and its volatility with and without a one-time structural break in volatility. Second, our data analyses and empirical results suggest no significant relationship between the output growth rate and its volatility; this favors the traditional wisdom of dichotomy in macroeconomics. Moreover, the evidence shows that the time-varying variance falls sharply or even disappears once we incorporate a one-time structural break in the unconditional variance of output starting in 1982 or 1984. That is, the integrated GARCH effect proves spurious. Finally, a joint test of a trend change and a one-time shift in the volatility process finds that the one-time shift dominates.     

Using Leading Indicators to Forecast U.S. Home Sales in a Bayesian Vector Autoregressive Framework

This article uses Bayesian vector autoregressive models to examine the usefulness of leading indicators in predicting U.S. home sales. The benchmark Bayesian model includes home sales, price of homes, mortgage rate, real personal disposable income, and unemployment rate. We evaluate the forecasting performance of six alternative leading indicators by adding each, in turn, to the benchmark model. Out-of-sample forecast performance over three periods shows that the model that includes building permits authorized consistently produces the most accurate forecasts. Thus, the intention to build in the future provides good information with which to predict U.S. home sales. Another finding suggests that leading indicators with longer leads outperform the short-leading indicators.     

Price-Fixing and Shareholder Returns: An Empirical Study

This paper examines the market reaction to three different events related to allegations of price-fixing: the initial charges, the firm's plea, and the resolution of the case. Negative, risk-adjusted shareholder returns are associated with the initial charge of price-fixing, while mixed results are observed during the two days immediately after the plea. The ultimate resolution of the case appears to be anticipated by the market. The overall decline in shareholder wealth from all three events combined is about 5 percent. These results suggest that shareholders are at least partial beneficiaries of price-fixing and that the presumption of an agency problem may be incorrect.     

The Effectiveness of Tax-Expenditure Limitations: A Re-evaluation

A bstract . A 1982 study of the efficacy and impact of tax and expenditure limitations (TEL) is updated. Utilizing various statistical comparisons, growth in expenditures and revenues in states with TELs is compared to growth in states without a TEL in place. This comparison matches growth in the pre tax revolt years with growth in the post revolt years. In all cases the statistical tests show that the existence of a TEL has had virtually no impact on the growth of statewide expenditures or revenues. Additionally, while aggregate state expenditures and revenues exhibited some decline during the tax revolt years, this decline was short-lived and has since been reversed. Thus, the primary implication is that TELs as presently construed are an ineffective means of limiting growth in state budgets     

Measuring Residential Real Estate Liquidity

There are many factors, other than price alone, that may affect the liquidity of real estate. This study develops a liquidity measure based on the Cox proportional hazard technique, a statistical model widely used in the epidemiologic and social sciences. The odds ratio, along with an estimate of market value for a home, are used to construct a liquidity measure. This measure can extract from the data a rich statistical profile of the variables that affect liquidity.     

Homeownership and Child Welfare

Recent studies have concluded that homeownership is beneficial to children. This result is important because it is used to justify large government subsidies that encourage homeownership. We reexamine the results of two of the most prominent of these studies using the Panel Study of Income Dynamics, Public Use Microsample, and National Longitudinal Survey of Youth data. We extend this research by controlling for residential mobility, wealth, dwelling type and vehicle ownership, as well as by using a "differences in differences" methodology to deal with possible treatment effects bias. We find that the beneficial effects of homeownership previously measured are substantially reduced or eliminated by controlling for these factors. We confirm these results using data from the Early Childhood Longitudinal Study.