How valuable is word of mouth?

The customers who buy the most from you are probably not your best marketers. What's more, your best marketers may be worth far more to your company than your most enthusiastic consumers. Those are the conclusions of professors Kumar and Petersen at the University of Connecticut and professor Leone at Ohio State University, who analyzed thousands of customers in research focused on a telecommunications company and a financial services firm. In this article, the authors present a straightforward tool that can be used to calculate both customer lifetime value (CLV), the worth of your customers' purchases, and customer referral value (CRV), the value of their referrals. Knowing both enables you to segment your customers into four constituent parts: those that buy a lot but are poor marketers (which they term Affluents); those that don't buy much but are very strong salespeople for your firm (Advocates); those that do both well (Champions); and those that do neither well (Misers). In a series of one-year experiments, the authors demonstrated the effectiveness of this segmentation approach. Offering purchasing incentives to Advocates, referral incentives to Affluents, and both to Misers, they were able to move significant proportions of all three into the Champions category. Both companies reaped returns on their marketing investments greater than 12-fold--more than double the normal marketing ROI for their industries. The power of this tool is its ability to help marketers decide where to focus their efforts. Rather than waste funds encouraging big spenders to spend slightly more while overlooking the power of customer evangelists who don't buy enough to seem important, you can reap much higher rewards by nudging big spenders to make referrals and urging enthusiastic proponents of your wares to buy a bit more.     

The calling of a creative transdisciplinarity

A relational approach to the problem of interdisciplinary studies is presented and arguments made for rethinking our disciplinary identity from our experiential and aspirational vantage point of transdiciplinary participation. But transdisciplinary participation requires overcoming our disciplinary chauvinism and an openness to the perspectives of other disciplines. In transdisciplinary participation, the other perspective, the other disciplines, need recognition and invitation into the hard core of the disciplinary self and for this the method and weltanschauung of the conventional interdisciplinary research is not enough. Interdisciplinary research now calls for a transdiciplinary interrogation, opening and enrichment which transforms the pious hopes and waiting for interdisciplinarity into a calling of transdiciplinary striving.     

New empirical evidence on the bid-ask spread

In this article, we model the determinants of spread for 734 firms listed on the NYSE over the period 1 January 1998 to 31 December 2008. We propose a panel data model of the determinants of spread. There are four main messages emerging from our work. We find a statistically significant effect of volume on spread inconsistent with the work of Johnson (2008). On price, we find mixed results, consistent with the literature. On the effect of price volatility on spread, our results are completely the opposite of the cross-sectional literature but sides with the relatively recent work of Chordia et al. (2001). We allow for persistence of spread as a determinant of spread and find significant evidence of spread persistence across all 16 sectors. Finally, we examine size effects and find statistically strong evidence of size effects based on the relationship between price and spread, persistence and spread, and volatility and spread.     

Economies of scale in school operation–a reply

In addition to pointing out that Kumar (1983) omits Hough (1981) and Knight (1983) from its list of reference, Hough (1983) raises two issues of largely statistical nature. ^{1 1} Omissions are clearly inadvertant. The time lag between publication and the general availability makes ther reference list look more subjective than it actually is. These are:

1. the use of an average (AC) rather than a total (TC) cost curve as the correct statistical device for examining economies of scale, and

2. estimation problems arising from possible heteroscedasticity of the error term in the estimating relation.

Exactly the same issues are also raised in Hough (1981). Notwithstanding our earlier disclaimer (p. 324) that ‘no new grounds are broken on the methodological front’ as well as a clear mention of both problems (Footnotes 1 and 2), Hough is quite correct that the implications of these issues for our results were not spelled out. We take this opportunity to offer some clarifications with respect to the results in Kumar (1983).     

A New Keynesian IS curve for Australia: is it forward looking or backward looking?

This article estimates the forward looking, backward looking and an extended version of the New Keynesian IS curve for Australia. The validity of these models is investigated by imposing the constraint on real rate of interest as well as when the constraint is relaxed. Two measures of output gap, namely GAP1 (constructed using the unobserved components approach) and GAP2 (constructed using a quadratic trend) are utilized. Our results suggest that the baseline backward looking and forward looking models are overwhelmingly rejected by the data. This evidence strongly supports the extended backward looking model (with GAP2) being relevant for monetary policy analysis.     

Dead man walking: an empirical reassessment of the deterrent effect of capital punishment using the bounds testing approach to cointegration

This paper empirically estimates a murder supply equation for the United States from 1965 to 2001 within a cointegration and error correction framework. Our findings suggest that any support for the deterrence hypothesis is sensitive to the inclusion of variables for the effects of guns and other crimes. In the long run we find that real income and the conditional probability of receiving the death sentence are the main factors explaining variations in the homicide rate. In the short run the aggravated assault rate and robbery rate are the most important determinants of the homicide rate.     

The J‐Curve: Evidence from Fiji*

This article provides new evidence on both long run and short‐run determinants of trade balance for Fiji and investigates evidence of J‐curve adjustment behaviour in the aftermath of a devaluation. We adopt a partial reduced form model that models the real trade balance directly as a function of the real exchange rate and real domestic and foreign incomes. Cointegration analysis is based on a recently developed autoregressive distributed lag approach—shown to provide robust results in finite samples. The long run elasticities are also estimated using a dynamic ordinary least squares approach and the Fully Modified Ordinary Least Squares (FM‐OLS) approach. Amongst our key results we find that there is a long‐run relationship between trade balance and its determinants. There is evidence of the J‐curve pattern; growth in domestic income affects Fiji’s trade balance adversely while foreign income improves it.     

Infusion administration billing for vedolizumab and infliximab in inflammatory bowel disease

Abstract

Aims: Increasing use of biologics has led to interest in treatment components with potential for cost savings. This study was aimed at comparing administration times and associated costs of infliximab and vedolizumab infusions for inflammatory bowel disease (IBD).

Materials and methods: This study used claims data from the Symphony Health Integrated Dataverse to identify IBD patients using infliximab or vedolizumab between 20 May 2014 and 29 February 2016. Use of Current Procedural Terminology administration codes was evaluated and costs calculated using the 2016 Center for Medicare and Medicaid Services Physician Fee Schedule. Assessments included infusion times, associated costs, productivity loss using average wage estimates from the United States Bureau of Labor Statistics, and home infusion adoption.

Results: A total of 10,051 infliximab and 3114 vedolizumab patients with first-hour claims were identified; 52.0% were female and 64.5% had Crohn’s disease. There were 48,377 infliximab first-hour claims (mean 4.8 infusions per patient); 46,462 (96.0%) had a second-hour claim. In comparison, there were 14,717 vedolizumab claims (mean 4.7 infusions per patient), with only 411 (2.8%) second-hour claims, resulting in vedolizumab cost savings of approximately $1.27 million. The difference in second-hour infusions resulted in 46,051 additional hours of productivity loss with infliximab, and lost wages averaging $1.18 million (range $0.68–$1.77 million).

Limitations: Administration costs were inferred as charge costs and not directly assessed. Productivity loss assessed time spent on infusion only, and included a small proportion of patients beyond working age.

Conclusions: Second-hour infusion billing was significantly lower with vedolizumab than with infliximab, corresponding to cost savings and reduced productivity loss.     

Measuring environmental efficiency of industry: a case study of thermal power generation in India

Technical and environmental efficiency of some coal-fired thermal power plants in India is estimated using a methodology that accounts for firm’s efforts to increase the production of good output and reduce pollution with the given resources and technology. The methodology used is directional output distance function. Estimates of firm-specific shadow prices of pollutants (bad outputs), and elasticity of substitution between good and bad outputs are also obtained. The technical and environmental inefficiency of a representative firm is estimated as 0.06 implying that the thermal power generating industry in Andhra Pradesh state of India could increase production of electricity by 6/ while decreasing generation of pollution by 6%. This result shows that there are incentives or win–win opportunities for the firms to voluntarily comply with the environmental regulation. It is found that there is a significant variation in marginal cost of pollution abatement or shadow prices of bad outputs across the firms and an increasing marginal cost of pollution abatement with respect to pollution reduction by the firms. This result calls for the use of economic instruments like pollution taxes instead of command and control regulation used currently in India to reduce air pollution.