Testing evolutionary theory of household consumption behavior in the case of novelty - a product characteristics approach

This article tests and extends the evolutionary theory of household consumption behavior, which is an alternative to neoclassical theory. Evolutionary economists offer novel approaches to the analysis of consumption behavior that emphasize the major role of learning in the evolution of consumer preferences and wants. As a possible inspiration for further progress in evolutionary thought, this paper examines the idea of consumer learning by studying the nature of what consumers should learn in the context of ‘novelty’. Our empirical results regarding novelty during the learning process show that consumers learn the ‘new characteristics’ of consumer goods, contrary to the Lancasterian approach, which suggests that the characteristics space of goods is fixed. We show that during the process of consumption, ‘consumer learning’ extends the characteristics space of consumer goods; this phenomenon is far from negligible and differs across product types. Moreover, our results show that the emergence of new characteristics cannot be modeled as a Poisson process because these new characteristics exhibit clear interdependence over time.     

Statement of the Financial Economists Roundtable: Bank Capital as a Substitute for Prudential Regulation

The Financial CHOICE Act recently passed by the House proposes to create an “off‐ramp” that would allow banks to escape burdensome prudential regulation if the ratio of their equity capital to their total assets is 10% or more. The Financial Economists Roundtable supports this idea as a means of reducing regulatory costs, but believes some additional safeguards are needed. A capital ratio of 10% may not be high enough to discourage banks from excessive risk taking. A solution is to have two capital requirements for banks choosing the off‐ramp: one absolute (as proposed in the act) and one risk‐based. The FER believes that many banks will prefer this regime to the current burdensome prudential regulation, especially if regulators simplify the setting of risk weights and make them more rule‐based. Regulators setting minimum capital requirements should consider not only a bank’s stand‐alone risk, but also the systemic risk posed by banks, as well as the tendency of accounting measures of income and assets to overstate the economic value of banks’ equity capital. The Financial Choice Act would also eliminate useful elements of ongoing supervision and regulation, not all of which can be addressed by higher capital alone. Furthermore, to facilitate regulatory learning about risks, off‐ramped banks should continue to report the data that regulators use for stress tests, even if they are no longer subjected to the discipline of stress tests. Finally, the act is viewed as too permissive in its treatment of off‐ramped banks that get into trouble. To prevent gaming of regulation, FERC recommends that off‐ramped banks that subsequently fall below the minimum requirements should be required to raise new capital immediately.     

Increasing the number of black chartered accountants in South Africa: an empirical review of educational issues

South Africa has a shortage of black chartered accountants. This situation has arisen due to a combination of political, socio-economic and related educational reasons during the four decades of apartheid rule. In recent years, numerous academic ventures have commenced in an attempt to increase the number of black chartered accountants. This paper reviews and identifies, through an empirically-based exploratory study, the educational issues potentially inhibiting the development of black chartered accountants in South Africa, as well as the academic support structures which have arisen in response to these perceived educational barriers. Both academic support organizations and recently qualified black chartered accountants in South Africa were surveyed through in-depth interviews and structured self-administered questionnaires. This study found, inter alia, that role models, as a motivational factor for black accounting students, were extremely important. Cognitive factors, such as writing skills and the interpretation of numerical data, were identified as areas of primary concern, whilst issues with respect to certain study needs, such as assistance with study skills and examination techniques, also warranted attention. This study also found that the overall approach of academic support organizations to programme structure and design appears to be addressing student needs adequately. Certain improvements, however, are recommended. Of particular concern, is the general lack of studies on the effectiveness of academic support programmes.