ROY MODEL SORTING AND NONRANDOM SELECTION IN THE VALUATION OF A STATISTICAL LIFE*

Wage‐hedonics is used to recover the value of a statistical life (VSL) by exploiting the fact that workers choosing riskier occupations are compensated with a higher wage. Roy (Oxford Economic Papers 3 (1951), 135–46) suggests that observed wage distributions will be distorted if individuals choose jobs according to idiosyncratic returns. We describe how this type of sorting biases wage‐hedonic VSL estimates and implement two new estimation strategies that correct that bias. Using data from the Current Population Surveys, we recover VSL estimates that are three to four times larger than those based on the traditional techniques, statistically significant, and robust to a wide array of specifications.     

Volume XXXIV – 2000

In the attempt to deepen the understanding of Keynes' thought as an international macroeconomist, we explore the hypothesis of consistency between his general methodological approach to the economic material and his way of reasoning about international economic relations. As a first step toward this direction, we investigate the methodology of The Economic Consequences of the Peace and find that it reflects Keynes' attempt to cope with the attributes of the complexity characterizing the European settlement for the post-war period, e.g., 1) organic interdependence among variables at play, 2) irreducible dilemmas and situations of conflict, as well as 3) the need for external, public assistance to overcome the impasse and promote a "shared responsibilities" approach to the imbalances. Striking similarities appearing with the method of Keynes' economic diplomacy in the 1940s are shown to substantiate the current rediscovery of his plans for Bretton Woods.     

The Pro‐Poorness,Growth and Inequality Nexus: Some Findings From a Simulation Study

An income growth pattern is pro‐poor if it reduces a (chosen) measure of poverty by more than if all incomes were growing equiproportionately. Inequality reduction is not sufficient for pro‐poorness. In this paper, we explore the nexus between pro‐poorness, growth, and inequality in some detail using simulations involving the displaced lognormal, Singh–Maddala, and Dagum distributions. For empirically relevant parameter estimates, distributional change preserving the functional form of each of these three‐parameter distributions is often either pro‐poor and inequality reducing, or pro‐rich and inequality exacerbating, but it is also possible for pro‐rich growth to be inequality reducing. There is some capacity for each of these distributions to show trickle effects (weak pro‐richness) along with inequality‐reducing growth, but virtually no possibility of pro‐poorness for growth which increases overall inequality. Implications are considered.     

Rio+20: Looking Back at 20 Years of Environmental and Resource Economics

Twenty years on from the Rio ’92 conference, we must face the fact that there have been a few successes but more failures. Scientific complexity, uncertainty, short-termism inherent in politics, the free-rider problem, and issues of fairness are part of the explanation for the lack of progress, but we point to more fundamental motivational problems. It is time to assess our responsibility as economists in the field of environment and resources. Our scientific contribution has been misleading because our models are structurally incapable of addressing major concerns. The cost-benefit test is not fit to assess large-scale resource conservation projects, including climate abatement. This understanding was already present during the Rio ‘92 summit, but the problems, while identified, have not been resolved twenty years later. The contribution from theory, through the sustainability paradigm of non-decreasing welfare, has turned out ineffective. It does not provide us with tools for designing a better future for our children. Instead, it risks choosing a constant welfare path, with knowledge increasing but natural resources deteriorating, while not properly analyzing the richer possibilities for a better future that nature and creativity imply. It is time for our profession to search for a more constructive contribution in theory and practice.     

Cooperative Strategy,Technology Innovation and Competition Policy in the United States and the European Union

The widespread adoption of joint ventures in the 1980s and strategic alliances in the 1990s by a spectrum of businesses across industries has resulted in cooperative strategy emerging as the corporate and business strategy of the global economy. Of further significance, however, is the relaxation by antitrust authorities in the USA and the EU of policies forbidding or restricting horizontal or competitor collaborations. Beginning in the 1980s, legislation, regulations and guidelines have established a business environment conducive to competitor collaborations. This evolution in competition policy is justified by the need for accelerating technology-based innovations at the firm level, thus improving competitiveness at the national level. The US government and the European Commission have provided firms with "safe harbors' to develop strategic technology alliances with competitors, albeit with notable differences in specific market share thresholds and emphases on qualitative versus quantitative perspectives in their respective competition policy frameworks.     

Kynecting the Dots: How Kentucky’s Willingness to Loosen the Reins Sparked a Health Insurance Enrollment Race in the Bluegrass State

The development of health insurance exchanges within the Patient Protection and Affordable Care Act (ACA) legislation is one of the hottest health policy issues of this decade. With the surprise enrollment success of Kentucky’s exchange called “Kynect,” the influence of how marketing and branding have contributed to the embrace of the policy has garnered interest from scholars and practitioners alike. Driven by the utilization of in-depth interviews, this study found that Kynect’s success was aided by three emergent themes: frequent communication between the outsourced marketing firm, Doe-Anderson, and relevant stakeholders; the willingness to delegate all marketing and branding control to Doe-Anderson; and a multiparty commitment to developing and executing a campaign that would simultaneously adhere to public values and accentuate a feeling of localness to constituents across the state. The paper contributes to existing literature by providing an inside look at how a government can find marketing success against historical odds.     

Socio-Institutional Environment and Innovation in Russia

This article investigates the impact of social capital and institutions on innovation outcome in Russian regions in 1997–2011. The novelty of the article also lies in the use of two metrics of innovation: the number of new technologies developed and patents filed. The findings provide strong support for the argument that social capital (proxied by social tension) and institutions (proxied by institutional potential) influence innovation activity. Furthermore, different types of innovation outcome are affected differently: the effect of social tension on technology development is significantly negative but insignificant with patenting, while institutional potential affects patenting negatively but its effect on technology development is insignificant.     

Communication costs in the performance of unrelated tasks: Continuum models and finite models

We consider two two‐person organizations, called A and B. Each organization faces a changing environment; an environment has two components and each of them is privately observed by one of the organization's two members. Each organization's task is to respond to the current environment by taking a correct action; the correct action is a known function of the environment. However, the task of A is totally unrelated to the task of B: if A knew B's current environment and B's current correct action, that would tell A nothing at all about its own current correct action (and vice versa). Now suppose that each organization performs its task by a sequence of message announcements that stop when an “action‐taker”; has just enough information about the two members’ private observations so that he can take the correct action. Suppose we measure the effort this requires by the size of the set of possible message announcements. Then a compelling conjecture says that there can be no saving in total effort if we merge the two organizations into a single four‐person organization in which a single action‐taker takes both actions.

The conjecture turns out to be true when the possible messages form a continuum whose size is measured by its dimension, provided the message‐announcing procedure obeys suitable regularity conditions. When we turn to a model in which the number of possible messages is finite, the situation is different. While a certain general proposition about coverings and projections is the main tool in proving the “continuum”; conjecture, the finite analog of that proposition is (surprisingly) false. The finite version of the conjecture holds, on the other hand, when one adds a certain regularity requirement ("contiguity") to the message‐announcement procedure. The truth of the finite conjecture without such a requirement remains open.     

Non‐Recognition of Print Advertising: Emotion Arousal and Gender Effects

Research in the behavioral sciences has found that memory tends to be enhanced by exposure to emotion‐arousing stimuli. While this relationship is not fully understood, the linkage appears to be more pronounced for females than for males. While the majority of prior studies dealing with memory have relied on the use of visual stimuli in a clinical experimental setting, this research examined the impact on memory resulting from exposure to actual print advertisements of varying degrees of arousal‐producing content. Differences in the relationship between arousal and memory were explored for male and female participants. In general, females were found to exhibit higher memory levels than males. As a single combined group, subjects exposed to emotion arousing versus emotion neutral ad. stimuli exhibited no significant difference in memory. For the set of emotion neutral ad. stimuli, no difference in memory was found between sexes. However, retention was significantly higher for females than males for the set of emotion‐arousing stimuli. The study identifies opportunities for further applied memory research.