The emerging forum for business policy scholars

This note is a follow-up on two others, published in 1987 and 1989. A sample of tenured business policy scholars, with significant track records in publishing, rated key management journals with respect to their appropriateness as outlets for scholarly research in the business policy field. The results of the survey are reported.     

R&D AND ECONOMIC GROWTH IN A CASH‐IN‐ADVANCE ECONOMY

R&D investment has well‐known liquidity problems, with potentially important consequences. In this study, we analyze the effects of monetary policy on economic growth and social welfare in a Schumpeterian growth model with cash‐in‐advance (CIA) constraints on R&D investment, consumption, and manufacturing. Our main results can be summarized as follows. Under the CIA constraints on R&D and consumption (the CIA constraint on manufacturing), an increase in the nominal interest rate decreases (increases) R&D and economic growth. We also analyze the optimality of Friedman rule and find that Friedman rule can be suboptimal due to a unique feature of the Schumpeterian model.     

COMMERCIAL FORESTS IN SCOTLAND: AN ECONOMIC APPRAISAL OF REPLANTING

The economic returns from replanting commercial forests are estimated using an investment model which links physical resource information with economic data, including appropriate monetised values for the major non-market benefits such as recreation and carbon storage. The area and location of sites in Scotland which are uneconomic, i.e. forests, which if replanted with commercial crops, would fail to achieve the current government target rate of return of 6%, are identified. Depending on the values and assumptions used, between 12% (105,000 ha) and 48% (532,500 ha) of existing forests were found to be uneconomic. Because data on the water resource costs of commercial forests are not available and the higher biodiversity value of natural regeneration could not be included in the opportunity cost of land, these percentages are likely to be lower-bound estimates. On the grounds of economic efficiency, abandonment to natural regeneration is the most appropriate land use for these sites, but this might be considered undesirable because of land management considerations. Modified grant payments for natural regeneration under the Woodland Grant Scheme to ensure delivery of enhanced non-market benefits through judicious management and silviculture are suggested. Cautious implementation of this new policy is, however, recommended while further research on the physical suitability of sites for natural regeneration is carried out. More work is also needed to value the non-use benefits of different forest types.     

A note on the psychometric properties of the Learning Styles Questionnaire (LSQ)

The objective of this study is to examine some psychometric properties of Honey and Mumford's (1992 The Manual of Learning Styles. Maidenhead: Peter Honey) Learning Styles Questionnaire (LSQ) and therefore its potential utility for accounting education research. Prior research in other cognate disciplines (managers; US business undergraduates) suggests that the LSQ may be preferable to Kolb's Learning Style Inventory (LSI) and Revised LSI. However, little measurement information exists regarding the application of the LSQ in higher education. The present study uses samples of undergraduate accounting students (N = 127) at a UK university. Evidence of only modest internal consistency reliability is reported. The construct validity of the scores produced by the instrument is not supported by the results of the present study. Limitations and implications for the use of the LSQ by accounting education researchers are discussed.     

Psychometric methods in accounting education: a review,some comments and implications for accounting education researchers

Psychometric instruments are widely used in accounting education research (Herring et al., Issues in Accounting Education, 4(1), 48–57, 1989; Benke and Street, Accounting Education: an international journal, 1(1), 33–45, 1992). Problems with the reliability of scores produced by such instruments have led to difficulties in interpreting the results of applied research (Schriesheim et al., Journal of Management, 19, 385–417, 1993). This paper has three aims. The first is to present a rationale for including information about the measurement properties of research instruments used in published accounting education research. Information regarding the reliability and validity of item scores is useful to readers, journal editors and reviewers - especially when the research topic addresses changes in educational policy and processes. Second, problems encountered with questionnairebased research are presented and current practice in accounting education is reviewed. Third, construct validation is discussed in respect of measurement validity and factor analytic methods. The paper concludes with suggestions for improving contemporary practice in accounting education research.     

Modeling the Impact of Genetics on Insurance

The role of probabilistic models in the debate over genetics and insurance is discussed. A Markov model is used to show that, under quite extreme assumptions, adverse selection in life insurance ought to be controllable. The statistical problems of estimating small differences in mortality are discussed; these might limit the use of many genetic disorders as rating factors. The influence of the insurance industry on policy-making, especially through its support of research, is discussed. It is suggested that participating contracts are suitable and simple vehicles to carry the genetic risks in life insurance.     

Adult Polycystic Kidney Disease and Insurance

Abstract

Adult Polycystic Kidney Disease (APKD) is a single-gene autosomal dominant genetic disorder leading to end-stage renal disease (ESRD, meaning kidney failure). It is associated with mutations in either of two genes, APKD1 and APKD2, and although diagnosis is still mostly by ultrasonography rather than DNA-based tests, this may change in the future. Recent studies have shown that the rates of onset of ESRD associated with APKD1 mutations are much greater than those associated with APKD2 mutations, a form of genetic heterogeneity that differs from, for example, familial breast cancer. In this paper we model the the impact of mutations in APKD1 or APKD2 on critical illness insurance, extending the work of Gutiérrez and Macdonald (2003), which was based on studies predating DNA-based tests. We then extend the model to life insurance and show that the financial impact is strongly dependent on the availability of treatment (dialysis and transplant), but that if it is available, extra premiums for life insurance are modest. We show that genetic heterogeneity introduces a novel problem, because carrying an APKD2 mutation is less risky than having a family history of APKD. Thus, in jurisdictions where family history may be used in underwriting but genetic tests may not, it may be illegal to use knowledge that benefits the applicant.     

Dairy disaggregation and joint production in an economy‐wide model*‡

We examine the impact of dairy disaggregation and joint production on trade liberalisation outcomes in an economy‐wide model. Depending on parameterisation, our model includes either (i) a single dairy commodity, (ii) several dairy commodities without joint production or (iii) several dairy commodities with joint production. In a numerical application, we consider the removal of US tariffs on dairy exports from New Zealand (the world’s largest dairy exporter). We show that failing to account for joint production when dairy commodities are disaggregated leads to misleading results. Our preferred dairy production function differs from those used in other applied trade models. Our analysis can be used to determine when accounting for joint production in other sectors is important.     

Insurance loss coverage and social welfare

Restrictions on insurance risk classification may induce adverse selection, which is usually perceived as a bad outcome, both for insurers and for society. However, a social benefit of modest adverse selection is that it can lead to an increase in ‘loss coverage’, defined as expected losses compensated by insurance for the whole population. We reconcile the concept of loss coverage to a utilitarian concept of social welfare commonly found in the economic literature on risk classification. For iso-elastic insurance demand, ranking risk classification schemes by (observable) loss coverage always give the same ordering as ranking by (unobservable) social welfare.