The economics of the private finance initiative

This article outlines and assesses the private finance initiativein the UK. The initiative has been slow to develop despite pressurefrom governments (anxious to limit the PSBR) and several revampsto facilitate the PFI approach. Within a PFI project there arebeneficial incentives to avoid cost over-runs but not to reducecosts where they affect long-run services. These incentivesand the limits to their effectiveness are explored. Such contractsrequire the transfer of risk from the public to the privatesector. the role and pricing of risk in the PFI is analysed.It is argued that the PFI does not value risk correctly andthat the value for money test is biased against private-sectorprovision. Policy implications are discussed, including a revampof the value for money test and the introduction of explicitassessment of the impact of potential renegotiation and othercontractual difficulties.     

Fat taxes and thin subsidies: Prices, diet, and health outcomes

“Fat taxes” have been proposed as a way of addressing food-related health concerns. In this paper, we investigate the possible effects of “thin subsidies”, consumption subsidies for healthier foods. Empirical simulations, based on data from the Continuing Study of Food Intake by Individuals, are used to calculate the potential health benefits of subsidies on certain classes of fruits and vegetables in the United States. Estimates of the cost per statistical life saved through such subsidies compare favorably with existing U.S. government programs.     

Do Ethical Consumers Care About Price? A Revealed Preference Analysis of Fair Trade Coffee Purchases

The existing literature on socially responsible purchasing relies heavily on stated preference measures elicited through surveys that utilize hypothetical market choices. This paper explores consumers' revealed purchasing behavior with regard to fair trade coffee and is apparently the first to do so in an actual market setting. In a series of experiments, we investigated differences in consumer responsiveness to relative price changes in fair trade and non‐fair trade brewed coffees. In order to minimize the hypothetical bias that may be present in some experimental settings, we conducted our experiments in cooperation with a vendor who allowed us to vary prices in an actual coffee shop. Using a choice model, we found that purchasers of fair trade coffee were much less price responsive than those of other coffee products. The demonstration of low sensitivity to price suggests that the market premiums identified by stated preference studies do indeed exist and are not merely artifacts of hypothetical settings. La littérature existante sur la consommation responsable repose fortement sur les mesures des préférences déclarées recueillies lors d'enquêtes utilisant des choix hypothétiques. Le présent article examine le comportement d'achat révélé des consommateurs concernant le cafééquitable et constitue apparemment le premier article du genre à le faire dans le contexte d'un marché réel. Au cours d'une série d'expériences, nous avons examiné les différentes réactions des consommateurs concernant les changements du prix relatif des cafés infusés équitables et classiques (non équitables). Pour minimiser le biais hypothétique qui pourrait exister dans certaines situations expérimentales, nous avons effectué nos expériences en collaboration avec un fournisseur qui nous a donné la permission de modifier les prix dans un véritable café‐restaurant. À l'aide d'un modèle de choix, nos résultats ont montré que les consommateurs de cafééquitable réagissaient beaucoup moins au prix que les consommateurs de café classique. Cette faible sensibilité au prix donne à penser que les primes de marché identifiées dans les études sur les préférences déclarées existent effectivement et qu'elles ne sont pas de simples phénomènes de situations hypothétiques.     

Financial improvement planning in local governments in Southern Africa,with special reference to Zambia

Continuing decentralisation in most developing countries increases pressure on local governments to manage more functions and services and larger budgets. In this context, financial improvement planning (FIP) is a strategy that can be used by local governments wishing to improve or ‘fine‐tune’ their financial performance, and especially by those facing serious financial difficulties. This article examines the application of FIP in the town of Kitwe, Zambia, which faces financial difficulties within a national decentralisation framework characterised by several policy and fiscal deficiencies. The article covers how an FIP framework was developed, undertaken and the resultant interventions structured. Implications regarding the role, design and techniques of FIP in local governments within a decentralisation policy framework are elaborated upon. Effective decentralisation in southern African countries requires local governments to undertake sound financial management. In turn, this requires local governments to embrace challenging local policy processes. Development of FIP techniques, and strengthening local capacity and policy to support them in local governments, should be ingredients of any country's decentralisation programme.     

Working with nurse educators' collective wisdom: implications for recruitment and retention

Very few studies have been undertaken to consider the impact of nurse education environments on faculty retention and recruitment at a time when numbers of nursing faculty are falling to significantly low levels. The purpose of this article is to deconstruct nurse educators' experience, illuminate what nurse educators think is important to a quality work environment, and offer some critical questions that lead to the potential for change. The findings of this study suggest recruitment and retention of nurse educators are best addressed by a critical reexamination of organizations. Paying attention to what nurse educators believe is a quality work environment is a starting point for the process of deconstruction and reconstruction. This study contains compelling information that speaks to nurse educators' experience in what they believe is important in their workplace.     

CEO incentives and bank risk

We investigate the relationship between CEO compensation and bank default risk predictors to determine if short-term incentives can explain recent excesses in bank risk. We investigate early warning off-site surveillance parameters and expected default frequency (EDF) as well as crisis-related risky bank activities. We find only modest evidence that CEO compensation structures promote significant firm-specific heterogeneity in bank risk measures or risky activities. Compensation elements commonly thought to be the riskiest components, unvested options and bonuses, are either insignificant or negatively correlated with common risk variables, and only positively significant in predicting the level of trading assets and securitization income.     

Canadian Health and Food: The Links between Policy, Consumers, and Industry

The concerns around the social costs associated with poor, inadequate diets and unhealthy food choices have received much attention in both the popular and academic literature recently. In response, governments are starting to direct their attention toward the interplay between public health and the food economy. We begin by reviewing some of the known links between food and health, the recommendations coming from international and domestic bodies, and the perspective of industry. We then discuss the potential role of, and justifications for, policy interventions, and note that a failure to incorporate consumer response into the policymaking process has led to suboptimal outcomes in the past. We present a qualitative overview of the possible effects of Canadian agricultural policies, as well as examples from the limited literature in this area. In much the same way that the policymaking process is subject to environmental impact assessments, agricultural and food policies need to be formulated with a health filter in place order to avoid perverse dietary outcomes. Les préoccupations entourant les coûts sociaux liés à des régimes alimentaires déficients et à des choix alimentaires nuisibles pour la santé ont reçu récemment beaucoup d'attention dans les publications populaires et scientifiques. En réponse à ces préoccupations, les gouvernements commencent à se pencher sur l'interaction entre la santé publique et l'économie de l'alimentation. Nous avons d'abord examiné quelques‐uns des liens connus entre l'alimentation et la santé, les recommandations d'organismes nationaux et internationaux et le point de vue de l'industrie. Nous avons ensuite discuté du rôle potentiel des interventions politiques, et des justifications pour ces interventions, et avons noté que le fait de ne pas intégrer la réaction du consommateur dans le processus d'élaboration des politiques a entraîné des résultats sous‐optimaux dans le passé. Nous présentons un aperçu qualitatif des répercussions possibles des politiques agricoles canadiennes ainsi que des exemples tirés de la littérature limitée dans ce domaine. Tout comme le processus d'élaboration des politiques est soumis à des évaluations de l'impact sur l'environnement, les politiques agroalimentaires doivent être élaborées en tenant compte de la santé en vue d'éviter les conséquences perverses liées à l'alimentation.