Personal debt crises: an economic approach

This article provides further empirical investigation, using an ongoing data-set, of the level of arrears experienced by debtors in crisis. Various extensions to the traditional choice model are reviewed as explanations for the presence of personal debt crises. The regression model shows significant effects of exogenous shocks and life cycle position on the level of debt. However, the most powerful explanation of the level of debt appears to be the degree of self-control (as captured by the over-commitment variable) a factor not normally included in studies of household behaviour. Future research is needed which attempts to capture the dimensions of personality associated with crisis debt and embed these in an econometric model.     

How well do anatomical-based injury severity scores predict health service use in the 12 months after injury?

There is an acknowledged need for valid and reliable injury scores, suitable for use at the population level, which can accurately predict the long-term outcome of injury. The objective was to quantify the extent to which the abbreviated injury severity score (AIS) and the functional capacity index score (FCI) predict use of health services in the 12 months following an injury event. A cohort of injured people (ICD-9-CM 800-995) aged 18 - 64 years was identified from Manitoba hospital discharge abstracts from January 1988 to December 1991. For each member of the cohort whose injuries could be mapped to an abbreviated injury scale unique identifier, a maximum AIS (maxAIS) and a maximum FCI (maxFCI) were obtained. The cohort was linked with hospital discharge abstracts, physicians' claims and deaths from the population registry for the 12 months following injury. Negative binomial regression was used to model the relationships between the severity scores and the three outcome measures, while controlling for potential confounding variables. In total, 20 677 (97%) eligible cases were identified, of which 16 834 (81%) could be assigned a maxAIS and 15 823 (77%) a maxFCI. MaxAIS and maxFCI were significantly associated with total days in hospital following injury, but explained little of the variation in any of the health service use outcome variables (maxAIS, partial pseudo r2 ranging from < 0.001 to 0.041; and maxFCI, partial pseudo r2 ranging from < 0.001 to 0.018). It was concluded that anatomical damage is only partly responsible for long-term injury outcome. Additional variables would need to be included in predictive models of health outcomes of injury before these models could be reliable.     

A Note: The CSCE cheddar cheese cash and futures price long-term equilibrium relationship revisited

In the early 1990s, after four decades of relying on government mandated minimum price supports and public stockholding to achieve price risk management, the United States dairy industry is undertaking a shift to a market clearing equilibrium system. A potentially important component of this new structure is the development of an operational futures market for selected milk and dairy products. In June of 1993 the Coffee, Sugar, & Cocoa Exchange introduced a contract on Cheddar Cheese. As the production of cheese represents over one third of the use of raw milk in the United States, this contract has the potential of serving as an important price risk management tool. Using unit root and cointegration techniques, Fortenbery and Zapata studied the cheese cash-futures relationship over the period June 1993–July 1995. They reach the conclusion that the cash and futures markets, during the period of their analysis, had not established an economic equilibrium relationship. F&Z raise the important question as to whether the cheddar cheese market is in some sense “slow” to develop or whether there something fundamentally amiss. The work of F&Z provides an important initial step toward understanding the cash–futures relationship. This research revisits the existence of a cointegrating relation using a much longer time period and additional time-series statistical tests. The results of this study suggest that the data support the establishment of an equilibrium relationship in the cheese markets and therefore provide support for the use of the futures market as a price risk management tool by the dairy industry. © 1999 John Wiley & Sons, Inc. Jrl Fut Mark 19: 233–244, 1999     

Indicators of injury burden: which types are the most important?

Injury indicators are used for monitoring the impact of injury prevention initiatives on the population burden of injury. The object of the present study was to identify the types of injury responsible for the major component of the population health burden of injury in a large cohort in Manitoba, Canada. Injury cases (ICD-9-CM 800-995) aged 18-64 years were identified from all Manitoba hospital data between 1988 and 1991. Morbidity data were obtained from hospital discharge abstracts 12 months prior to date of injury and for 12 months post-injury. Outcomes for individuals were calculated as the difference pre- and post-injury in hospital inpatient days. Death outcomes in the 12 months post-injury were obtained by linking the cohort with the population registry. Summed outcomes across the population were stratified into injury types based on the International Code of Diseases (ICD) code of the index injury. Outcomes were also stratified by injury severity score categories where the injury severity score was obtained using ICDMAP-90. When ranked by contribution to the cohort's cumulative hospital inpatient days in the 12 months post-injury, the six most common ICD subchapter groups accounted for 65% of the total inpatient days. These six injury types also accounted for 62% of the total number of deaths in this cohort in 12 months after injury. The suggested injury types to use as indicators of burden include fracture of the lower limb, fracture of the head and neck, poisonings, intracranial injury, fracture of the upper limb, and fracture of skull.     

Smoothing Mechanisms in Defined Benefit Pension Accounting Standards: A Simulation Study*

The accounting for defined benefit (DB) pension plans is complex and varies significantly across jurisdictions despite recent international convergence efforts. Pension costs are significant, and many worry that unfavorable accounting treatment could lead companies to terminate DB plans, a result that would have important social implications. A key difference in accounting standards relates to whether and how the effects of fluctuations in market and demographic variables on reported pension cost are “smoothed". Critics argue that smoothing mechanisms lead to incomprehensible accounting information and induce managers to make dysfunctional decisions. Furthermore, the effectiveness of these mechanisms may vary. We use simulated data to test the volatility, representational faithfulness, and predictive ability of pension accounting numbers under Canadian, British, and international standards (IFRS). We find that smoothed pension expense is less volatile, more predictive of future expense, and more closely associated with contemporaneous funding than is “unsmoothed” pension expense. The corridor method and market‐related value approaches allowed under Canadian GAAP have virtually no smoothing effect incremental to the amortization of actuarial gains and losses. The pension accrual or deferred asset is highly correlated with the pension plan deficit/surplus. Our findings complement existing, primarily archival, pension accounting research and could provide guidance to standard‐setters.     

Beyond the world of packaged goods: assessing the relevance of integrated marketing communications for retail and consumer service marketing

Product and packaged goods marketers have responded to changing consumer and media environments by adopting integrated approaches to marketing communication. The value and utility of such approaches likely extend to a wide range of marketers, but there have been few published attempts to examine the viability of the integrated marketing communication concept in retail and service marketing. This study addresses this void by using a seven-stage model of integrated marketing communications to examine the media and message delivery practices of national and regional retailers and consumer service marketers. The results of a national mail survey found many of these marketers using such key integrated marketing communication elements as multiple media, databases, individual-level consumer information and behavioural response measures in their media and message delivery practices. Few, however, were using these elements in a strategic or coordinated fashion. Integrated approaches thus appear to have much value in retail and service marketing, particularly as a means for coordinating media and message delivery elements in a fashion that provides a way to link behavioural responses to media vehicles and advertising messages.     

Behavioural Economics,Hyperbolic Discounting and Environmental Policy

This paper reviews some recent research in “behavioural economics” with an application to environmental issues. Empirical results from behavioural economics provide a reminder that human behaviour is context-dependent, implying that policy may go awry if based upon models of behaviour which are inappropriate to the contexts in which decisions are made. Recognizing that agents may, in some contexts, systematically make mistakes raises challenging questions about the role of “paternalism” in government policy. The paper considers the research into hyperbolic discounting, and examines the implications for environmental policy. We develop a model of resource management under hyperbolic discounting, which shows that if a planner is unable to commit to a policy, the temptation to re-evaluate the policy in future could lead to an inadvertent collapse in the stocks of a natural resource.