Human resourec management and a culture of Respect: Effects on employees' organizational commitment

The literature is reviwed to produce a set of 37 Human Resource Management (HRM) activities related to showing respect for the individual. Eighty-eight full-time employees from different organizations and enrolled in a part-time MBA program report HRM department motivation for such activities and the degree to which they are committed to their organizations. Respectful treatmentis indeed perceived to be one of the HRM departments' reasons for performing these 37 activities, although it was not usually the most common reason. After controlling for job satisfaction, subjects' organizational commitment is positively related to the perception that HRM activities are motivated by (a) management's desire to show respect for the individual and (b) management's desire to attact/retain employees. When the company's HRM activities are perceived to be motivated by the firm's desire to improve performance or to comply with the law, there is no significant relationship with organizational commitment.     

Earnings inequality and the business cycle

Economists have long viewed recessions as contributing to increasing inequality. However, this conclusion is largely based on data from a period in which inequality was increasing over time. This paper examines the connection between long-run trends and cyclical variation in earnings inequality. We develop a model in which cyclical and trend inequality are related, and find that in our model, recessions tend to amplify long-run trends, i.e. they involve more rapidly increasing inequality when long-run inequality is increasing, and more rapidly decreasing inequality when long-run inequality is decreasing. In support of this prediction, we present evidence that during the first half of the 20th century, when earnings inequality was generally declining, earnings disparities indeed appeared to fall more rapidly in downturns, at least among workers at the top of the earnings distribution.     

The Democratic Efficiency Debate and Definitions of Political Equilibrium

An ongoing debate has been occurring within public choice for over a decade concerning the efficiency of democracy. Virginia Political Economy holds that political markets perform very differently from traditional markets. Chicago Political Economy, exemplified by the work of Becker and Wittman, maintains that political equilibrium, properly defined, is relatively efficient. I argue that the debate can be understood at least partially in methodological terms: Chicago views politics exclusively within the equilibrium framework of traditional economics, while Virginia draws at least implicitly on Austrian economics' view of the economy as a disequilibrium process. I contend that the factors which public choice scholarship has identified as distinguishing politics from markets—rational ignorance, majority rule, collective outcomes—affect the performance of politics as a process even if political equilibrium is relatively efficient.     

Valuing nature: From environmental impacts to natural capital

Economic valuation of natural and environmental assets is now a well established practice. Economic analysis provides several methods for discovering the impact on social welfare associated with changes in the ability of these assets to provide different goods and services. In general terms, these valuation exercises have been performed in the framework of Environmental Impact Assessment or, more generally, Cost Benefit Analysis. There is, however, an increasing demand nowadays to go beyond this framework and to value natural capital (natural resource stocks, land and ecosystems) as such. There are two main reasons for this new demand. On the one hand, sustainability requires that proper account should be taken of capital depreciation and, therefore, there is a need to value natural capital changes. This valuation process, nevertheless, only makes sense when some kind of substitution between natural and other forms of capital is allowed. On the other hand, there is also an increasing tendency to demand that the stock of natural capital present in a given territory be valued, either to discover one of the main components of social wealth or to help adequately plan changes in land use. Yet, whereas conventional valuation methods are probably adequate to fulfill the first task, this is less true in the case of the second, while even more difficulties arise in connection with the third one. Even if at first sight the process appears conceptually identical, these tasks are of a different order of magnitude, as the experience of both the World Bank and the Statistics Division of the United Nations in this respect clearly shows.     

Continuous enough

In this paper we give a global condition on the cost function which is necessary and sufficient for continuity of the corresponding production function. A cost function satisfying this condition is ‘continuous enough’ in the sense discussed by Diewert (1974).     

The long-run and short-run demand for money: Additional evidence

This paper presents estimates of Chow's money-demand equations using Chow's data. The equations are adjusted for autocorrelation using two autocorrelation transformations, the standard Cochrane-Orcutt transformation that deletes “initial” observations, and one that does not delete these observations. The estimates focus on the question of the asset versus the transactions specifications. The results reaffirm Chow's original conclusion which supported the asset motive and, thereby, reversed nearly all of the findings recently reported by Lieberman (1980). The paper concludes that one should be wary about using the Cochrane-Orcutt transformation, especially when the ratio of the number of deleted observations to total observations is large.     

Options can induce risk taking for arbitrary preferences

Summary. It is widely believed that call options induce risk-taking behavior. However, Ross (2004) challenges this intuition by demonstrating the impossibility of inducing managers with arbitrary preferences to always act as if they were less risk averse. If preferences and price distributions are unknown, risk-taking behavior cannot be always induced by an option contract. Here, we prove a new result showing that, with no information about preferences and some knowledge about prices, one can write a call option that makes all managers prefer riskier projects to safer ones. This points out that in order to design options that induce risk taking it is sufficient to have information about price distributions.Received: 5 November 2003, Revised: 1 November 2004, JEL Classification Numbers: D81, G00, J33, M21. Correspondence to: Luis H.B. BraidoWe thank Renée Adams, Heitor Almeida, Carlos E. da Costa, Andrew Horowitz, Paulo K. Monteiro, Walter Novaes, Sergio O. Parreiras, Rodrigo R. Soares, and especially Marcos Tsuchida for many helpful comments.     

Revealed stochastic preference: a synthesis

Summary. The problem of revealed stochastic preference is whether probability distributions of observed choices in a population for various choice situations are consistent with a hypothesis of maximization of preference preorders by members of the population. This is a population analog of the classical revealed preference problem in economic consumer theory. This paper synthesizes the solutions to this problem that have been obtained by Marcel K. Richter and the author, and by J. C. Falmagne, in the case of finite sets of alternatives, and utilizes unpublished research of Richter and the author to give results for the non-finite choice sets encountered in economic consumer theory.Received: 13 March 2003, Revised: 11 February 2004, JEL Classification Numbers: D1, C6.The preparation of this paper was supported by the E. Morris Cox endowment at the University of California, Berkeley. I am indebted to Robert Anderson, Salvador Barbara, Werner Hildenbrand, Rosa L. Matzkin, and Aviv Nevo for useful suggestions and comments. I am especially indebted to Marcel K. Richter, who was the source of many of the ideas and arguments contained in this paper.