MOTIVATING RECYCLING: A MARGINAL COST ANALYSIS

Areas considering alternative house-to-house recycling programs as a means of diverting material from landfills can determine the most efficient choice by comparing programs' marginal costs with diversion's marginal benefits. This paper describes a controlled field experiment that observed individual household recycling habits over a six-month period. The experiment monitored the quantity of material that households recycled under increasingly more convenient (and increasingly more costly) programs. The analysis here uses a Tobit model to determine how the quantity of material diverted varies as a function of convenience factors and demographic characteristics. The analysis compares the value of the expected marginal increase in diversion to the marginal cost of increasing recycling convenience to determine the efficient level of convenience for an area's recycling program.     

Does the Market Value Financial Expertise on Audit Committees of Boards of Directors?

We examine three‐day cumulative abnormal returns around the announcement of 702 newly appointed outside directors assigned to audit committees during a period before implementation of the Sarbanes‐Oxley Act (SOX). Motivated by the SOX requirement that public companies disclose whether they have a financial expert on their audit committee, we test whether the market reacts favorably to the appointment of directors with financial expertise to the audit committee. In addition, because it is controversial whether SOX should define financial experts narrowly to include primarily accounting financial experts (as initially proposed) or more broadly to include nonaccounting financial experts (as ultimately passed), we separately examine appointments of each type of expert. We find a positive market reaction to the appointment of accounting financial experts assigned to audit committees but no reaction to nonaccounting financial experts assigned to audit committees, consistent with accounting‐based financial skills, but not broader financial skills, improving the audit committee's ability to ensure high‐quality financial reporting. In addition, we find that this positive reaction is concentrated among firms with relatively strong corporate governance, consistent with accounting financial expertise complementing strong governance, possibly because strong governance helps channel the expertise toward enhancing shareholder value. Together, these findings are consistent with financial expertise on audit committees improving corporate governance but only when both the expert and the appointing firm possess characteristics that facilitate the effective use of the expertise.     

Raise Rates to Raise Inflation? Neo‐Fisherianism in the New Keynesian Model

Increasing the inflation target in a New Keynesian (NK) model may require increasing, rather than decreasing, the nominal interest rate in the short run. We refer to this positive short‐run comovement between the nominal rates and inflation conditional on a nominal shock as Neo‐Fisherianism. We show that the NK model is more likely to be Neo‐Fisherian the more persistent is the change in the inflation target and the more flexible are prices. Neo‐Fisherianism is driven by the forward‐looking nature of the model. Modifications that make the framework less forward‐looking make it less likely for the model to exhibit Neo‐Fisherianism.     

High School Economic Education and Access to Financial Services

This study provides a long-term assessment of economic education by examining an individual's decision to have a bank account. Using the results of a nationwide telephone survey, high school courses in economics and business reduced the probability that an adult was unbanked, ceteris paribus. In addition, adults who demonstrated a higher level of understanding of basic economic concepts were less likely to be unbanked. The results indicated that an individual's understanding of the economic system was as important as formal coursework in explaining access to basic financial services.     

The effect of cookery method on beef palatability and cooking properties

A total of 432 boneless beef loin steaks were prepared using three different cookery methods (conventional electric oven, electric convection oven and microwave oven) and evaluated for palatability by an experienced six-member laboratory taste panel. Cooking losses and times were also recorded. Composite results indicate that microwave cookery can not be utilized to shorten cooking times without compromising the eating quality, but that preparation time can be substantially reduced (66%) without compromising eating quality by using convection rather than conventional cookery methods, under the conditions in which this study was conducted.     

Growth in Australian Cities

This paper is an empirical investigation of the determinants of city growth in Australia from 1981 to 1991. Our basic goal is to explain the population and labour force growth of a cross-section of cities in the time period using variables representing the initial characteristics of cities. While we find that city growth is negatively correlated with initial size, government sector employment and a city's level of specialization, we also find it to be positively correlated with various measures for the degree of human capital investment in the city. Our results, while simple and non-structural, mirror the conclusions of studies in the US indicating the importance of studying city level growth in order to understand economy-wide growth.     

Is There a Dead Spot? New Evidence on FOMC Decisions Before Elections

Using new data that chronicle the Fed's internal forecast of the output gap from 1973 to 1998, this paper tests for an electoral cycle in the decisions of the Federal Open Market Committee (FOMC). The paper provides evidence of a dead spot in the committee's decisions before presidential elections. For given values of these internal forecasts, the FOMC is less likely to decide to tighten monetary policy in the year preceding a presidential election than at other times.