CHANCE AND CHOICE WEST OF THE DARLING

Twenty-one pastoralists in the West Darling region of New South Wales were interviewed to gain an understanding of the attitudes of managers in this high-risk pastoral area to uncertain prospects. It was found that pastoralists had no difficulty in specifying subjective probabilities but in modifying probabilistic information they were conservative relative to the 'correct' revision implied by Bayes' Theorem. All the surveyed pastoralists were non-indifferent to risk, as evidenced by their non-linear utility functions for gains and losses.     

On a lemma associated with Box,Jenkins and Granger

The lemma that the aggregate of independent moving average processes is also moving average is discussed, and a simple proof presented. This proof depends on the fact that, for any order q, the vectors of MA autocorrelations (?₁…?_q) occupy a convex space.     

Rational expectations forecasts from nonrational models

This paper puts forward a method of policy simulation with an existing macroeconometric model under the maintained assumption that individuals form their expectations rationally. This new simulation technique grows out of Lucas' criticism that standard econometric policy evaluation permits policy rules to change but doesn't allow expectations mechanisms to respond as economic theory predicts they will. The technique is applied to versions of the St. Louis Federal Reserve model and the Federal Reserve-MIT-Penn (FMP) model to simulate the effects of different constant money growth policies. The results of these simulations indicate that the problem identified by Lucas may be of great quantitative importance in the econometric analysis of policy alternatives.     

Return on advertising: Another approach

With companies becoming more cost conscious the need for a more effective method of measuring the Return on Advertising is becoming more crucial. Previous attempts at measuring the return on advertising have focused on measuring either the sales effect or the communicative effect of an advertising campaign. However, both methods of measurement leave something to be desired and yet both techniques have strong points. This article proposes that one should synthesize the best elements of both measurement techniques into an objective design that will enable the practitioner to determine his ROA.     

Effects of social and cultural processes on health1

Future advances in the planning and evaluation of health service systems are highly dependent upon the development of a methodology that permits the empirical validation of hypotheses concerning the effects of social and cultural processes on health. In this paper such a methodology has been proposed. A structural model has been developed and analyzed, using the causal modeling technique of path analysis, in which social, economic, and demographic characteristics of New Mexico counties have been related to the infant mortality rate as an index of health. Path coefficients have been estimated from census data and vital statistics. Dynamic programming has been utilized to predict the combined direct and indirect effects on the health of New Mexico's population that would result from changes in the composition of the population.Analysis of the model suggests that these structural characteristics are causally interrelated, with economic factors a major determinant of infant mortality. While urbanization and migration also significantly affect infant mortality rates, education surprisingly is not important causally when compared to other variables, nor is proportion nonwhite when other social and economic factors are taken into account. In contrast, the proportion of Spanish-Americans residing in a county has a rather unexpected effect in that infant mortality rates decline as the proportion of this ethnic group rises. This finding suggests that it is important in health planning to consider cultural factors that may be unique to particular ethnic groups.In general the model building techniques and the algorithms presented here provide a valuable means of generating and testing hypotheses regarding the effects of social and cultural processes on health.     

A NOTE ON THE EFFECTS OF EFFICIENCY CRITERIA AND PORTFOLIO SIZE ON CHARACTERISTICS OF EFFICIENT PORTFOLIOS*

Comparisons of the results of using alternative efficiency criteria for portfolio selection, while plentiful overseas, are seemingly scarce in Australia. Here, mean-variance efficient sets are compared with and found to be not too different from sets efficient according to second and third degree stochastic dominance. In examining the effect of increasing the number of securities allowed in each portfolio, it is found that the size of efficient sets of portfolios diminishes, as does the mean return and, most significantly, the variance of return for efficient portfolios.