F. H. G. Gruen: 1921-97

Economics Society of Australia Distinguished Fellow 1997 Fred Gruen was awarded the 1997 Economics Society of Australia Distiguished Fellow for his contribution to the Australian economics profession. Throughout his life Professor Gruen's writtings on economic policy were distinguished by their breadth, relevance and insight. His advice had direct influence on government policy, such as the 25 per cent tariff cut in 1973, and the reintroduction of the assets test on pensions in 1985. His contribution to the development of the economics profession included his role as President both of the Australian Agrucutural Economics Society and the Australian Academy of Social Sciences.
This citation has been shortened to accompany the following obituary.     

Unemployment, Participation and Family Incomes in the 1980s*

Microsimulation methods are used to estimate the impact of changing Australian participation and unemployment rates on the level and distribution of family disposable incomes between 1981-82 and 1988-89. Between 1983-84 and 1988-89 a fall in unemployment and an increase in the labour force participation of married women both led to significant increases in family disposable incomes Whilst the inequality increasing effect of the recession in the early 1980s was thus partly reversed, intra-family employment patterns suggest that the increased incomes due to participation increases largely bypassed those married couples at the bottom end of the income distribution.     

Option Prices and the Underlying Asset's Return Distribution

This work examines the relation between option prices and the true, as opposed to risk-neutral, distribution of the underlying asset. If the underlying asset follows a diffusion with an instantaneous expected return at least as large as the instantaneous risk-free rate, observed option prices can be used to place bounds on the moments of the true distribution. An illustration of the paper's results is provided by the analysis of the information concerning the mean and standard deviation of market returns contained in the prices of S&P 100 Index Options.     

Nature as historical protagonist: environment and society in pre‐industrial England

This article compares chronologies reconstructed from historical records of prices, wages, grain harvests, and population with corresponding chronologies of growing conditions and climatic variations derived from dendrochronology and Greenland ice‐cores. It demonstrates that in pre‐industrial, and especially late medieval, England, short‐term environmental shocks and more enduring shifts in environmental conditions (sometimes acting in concert with biological agencies) exercised a powerful influence upon the balance struck between population and available resources via their effects upon the reproduction, health and life expectancy of humans, crops, and livestock. Prevailing socio‐economic conditions and institutions, in turn, shaped society's susceptibility to these environmental shocks and shifts.     

Client Satisfaction and Big 6 Audit Fees*

This study examines whether client satisfaction can help explain cross-sectional variation in Big 6 audit fees paid by Fortune 1000 clients. After controlling for other factors related to audit fees (including audit quality attributes), client satisfaction with the audit team is positively associated with fees. It appears that a dimension of client satisfaction unrelated to audit quality attributes is the factor associated with an audit fee premium. This dimension of satisfaction may reflect other aspects of service quality not documented in the literature, or it may simply enable an auditor to earn economic rents through enhanced bargaining power. Client satisfaction with the audit firm does not appear to be priced in this segment of the audit market. The results are consistent with the view that a Big 6 audit is a service that is differentiable in the eyes of client management, and the results highlight the importance of the audit team composition in allowing a Big 6 audit firm to differentiate the audit product. Also, if auditors are earning local rents due to enhanced satisfaction levels, then a perfect competition model may not be appropriate for the audit services market.     

The effects of water hardness level on washing quality using commercial laundry detergents

The water hardnesses were determined for 10 samples of water. A wide variation of water hardnesses were found ranging from very soft to very hard. The effectiveness of six commercial laundry detergents of different formulations were evaluated. The detergent containing a non-ionic surfactant with a phosphate builder was found to give the best whiteness results, regardless of water hardness. Because of the possible environmental problems associated with the use of phosphates, consumers may wish to select the next most effective detergent formulation, which varied between water samples.