dynamic adjustment process of retail store density in cointegrated panels evidence from japan using recently developed econometric techniques for testing the existence of unit roots and cointegration in panel datasets this article investigates the dynamic adjustment process of the number of retail stores per person by business type specifically the major objective of this article is to examine whether there is a long term relationship between retail store density and consumers ability to transport and store goods that is the relative costs of performing distributive tasks as suggested in previous studies relating to store density the first conclusion from this article is that a cointegration relationship exists between store density for most types of retail businesses and proxies for consumers ability to transport and store goods second the estimation results of an error correction model reveal that the density of stores dealing in convenience goods exhibits a slow adjustment speed to recover the long run equilibrium density level while the density of stores selling shopping goods show

the market value of reducing cancer risk hedonic housing prices with changing information 1 introduction market evidence on the value of a statistical life invariably consists of cross sectional evidence on risks and prices or wages at a point in time if information about the level of risk changes over time and people incorporate this information in a rational manner there will be a corresponding price response on the basis of these temporal changes one can estimate the market price risk tradeoff eliminating many confounding time invariant effects that cannot be controlled for using cross sectional data this paper examines the market response to the release of government information about the level of risk at hazardous waste sites and provides insight into the rationality of this response studies based on experimental evidence and survey data often find that individual beliefs may deviate from objective risk levels 1 people often overestimate highly publicized risks and mortality risks in the case of hazardous waste risks bias in risk beliefs often leads to considerable public reaction and pressure for site cleanups which may be an inefficient outcome by using market data one can examine whether this intense public reaction carries over to contexts in which private money is at stake government agencies frequently use information provision as a regulatory device particularly since the advent of the right to know movement of the 1980s examples of information provision efforts include the food and drug administration s requirement that many prescription drugs indude information inserts the department of housing and urban development s requirement that sellers of houses built before 1950 inform buyers about the presence of lead based paints and the environmental protection agency s epa requirement that manufacturing facilities report their annual releases of chemicals above a threshold amount for a list of over 600 substances such regulations imply a belief that citizens can learn from information about risk and rationally adjust their prior beliefs towards the objective risk level in light of the information this article provides market evidence to bolster the results of some survey studies of information transfer that suggest that individuals revise their risk beliefs in response to new information 2 the u s federal policy dealing with hazardous waste sites is known as the superfund program the most hazardous sites are targeted for cleanup and placed on a government priority roster called the national priorities list npl extension of the classic theory of compensating differentials to the housing market implies that environmental disamenities such as hazardous waste sites will reduce housing prices rosen 1974 the negative impact of hazardous waste sites on the housing prices of nearby residences is well documented for example in a previous study gayer hamilton and viscusi 2000 we used an analysis that focused on the sale of 16 928 houses from 1988 to 1993 that surround superfund sites in greater grand rapids michigan we found that before the epa released its risk report a reduction in the cancer risk from neighborhood superfund sites by the mean level of risk would increase the average value of a house by 238 in 1996 dollars 3 to estimate this willingness of residents to pay to avoid cancer risks before the release of the epa s risk report we assumed that residents prior beliefs were equal to the objectively measured risks suggested by the report thus this analysis was based on the very strong informational assumption that residents could in effect predict the results of the epa s site specific risk assessments before the release of the report the price risk tradeoff implied a value of a statistical cancer case of 51 million once the epa released its risk information the implied value of a statistical cancer case was 4 million these results suggest that after the release of the epa s risk report revealed preferences for avoiding superfund risks were consistent with surveys of the value of a statistical life in the labor market

physician induced demand for surgery following up the earlier findings by fuchs on surgeon induced demand this paper makes numerous data and econometric improvements in conducting a test of neoclassical and inducement theories a simultaneous equation model is used to estimate physician demand and equilibrium fees for surgery from a sample of 350 psus over the 1969 76 period the results provide definite support for the notion of competitive market failure particularly in large metropolitan areas other things equal fees and utilization are higher in surgeon rich areas although our estimated shift elasticities were only about one third those found by fuchs a statistically significant albeit small price elasticity of demand for surgery was also obtained in contrast to fuchs increasing monopoly and disequilibrium models are also tested without altering the basic findings where surgeons were in short supply their availability significantly affected surgery rates although a small supply effect was found in plentiful areas as well

fdi and taxation a meta study despite the continuing political interest in the usefulness of tax competition and tax coordination as well as the wealth of theoretical analyses it still remains open whether or when tax competition is harmful moreover the influence of tax differentials on multinationals decisions is still insufficiently analyzed thus economists have increasingly resorted to empirical analysis in order to gain insights on the elasticity of fdi with respect to company taxation as a result the empirical literature on taxation and international capital flows has grown to a similar abundance during the last 25 years as the respective theoretical literature its heterogeneity leads to a rising need for concise reviews on the existing empirical evidence in this paper we extend former meta analyses on fdi and taxation in three ways first we add the most recent publications unconsidered in meta analyses up to date second we apply a different methodology by using a broad set of meta regression estimators and explicitly discuss which one is most suitable for application to our meta data third we address some important issues in research on fdi and taxation to the clarification of which meta analysis can make valuable contributions these issues are mainly the influence of variables which might moderate effects of tax differentials e g public spending the implications of using aggregate fdi data as opposed to firm level information on measured tax effects the implications of bilateral effective tax rates and the possible presence of publication bias in primary research

theories of the price and quantity of physician services a synthesis and critique abstract in the traditional neoclassical model of supply and demand prices determine the allocation of economic resources the difficulty in applying this model to physician services is the rationing of resources directly by physicians themselves eliminating the allocative function of prices welfare consequences are appropriately judged in terms of efficiency and equity not departures from the structural relationships implied by supply and demand as interpreted here both competitive theories and target income theories of this market imply that physicians consider both their own welfare and the welfare of their patients in their decision making all consumer benefits and all producer costs are internalized by physicians they consequently have an incentive to obtain the maximum possible social benefit from the resources at their disposal to the extent that they are implicitly allowed to share in the resulting social gains the distributions of gains between patients and physicians is determined by professional ethics within bounds imposed by competitive forces

interrupted work careers depreciation and restoration of human capital the quantitative effects and even the existence of a human capital depreciation phenomenon have been a subject of controversy in the recent literature prior work however was largely cross sectional and the longitudinal dimension if any was retrospective using longitudinal panel data on married women in nls we have now established that real wages at reentry are indeed lower than at the point of labor force withdrawal and the decline in wages is greater the longer the interruption another striking finding is a relatively rapid growth in wages after the return to work this rapid growth appears to reflect the restoration or repair of previously eroded human capital the phenomenon of depreciation and restoration is also visible in data for immigrants to the united states however while immigrants eventually catch up with and often surpass natives returnees from the nonmarket do not fully restore their earnings potential

a review of wta wtp studies abstract willingness to accept wta is usually substantially higher than willingness to pay wtp these constructs have been studied for roughly 30 years and with a wide variety of goods this paper reviews those studies we find that the less the good is like an ordinary market good the higher is the ratio the ratio is highest for non market goods next highest for ordinary private goods and lowest for experiments involving forms of money a generalization of this pattern holds even when we account for differences in survey design ordinary goods have lower ratios than non ordinary ones we also find that ratios in real experiments are not significantly different from hypothetical experiments and that incentive compatible elicitation yields higher ratios

the income effect and supplier induced demand evidence from primary physician services in norway a much debated issue within the health economic literature is whether physicians can induce demand for their services the relationship between physicians nonpractice income and supply of primary physician services in norway is examined it is argued that if inducement exists physicians with a low nonpractice income who work in municipalities where competition for patients is high compensate for lack of patients by inducing demand this model is adapted to the institutional setting of the norwegian primary physician services where there is a fixed fee schedule the analyses were performed on a large set of data encompassing all primary care physicians in norway who are remunerated per item of treatment data on output in practice were merged with information about nonpractice income from the tax forms of the physician and her his spouse in municipalities with high physician density nonpractice income had no effect on the number of consultations per physician or on the number of treatment items

determinants of foreign direct investment in spain this study utilizes panel data as a means of examining the determinants of foreign direct investment fdi in spain data that are taken in the period 1993 2002 are used in order to estimate the determinants of fdi at the sectoral level by differentiating the manufacturing sectors and at the regional level the analysis investigates the sectoral regional and macroeconomic variables that have successfully attracted fdi inflows from those that have not empirical results suggest that the differential between labour productivity and the cost of labour has been an important determinant of fdi in spain during the period 1993 2002 factors related to demand the evolution of human capital the export potential of the sectors and certain macroeconomic determinants that measure the differential between spain and the european union average also play a very important role in attracting flows of fdi certain policy issues that are relevant to the results are also discussed

carcinogen regulation risk characteristics and the synthetic risk bias why does the government regulate different kinds of risks economists usually trace the motivation for the regulation to the existence of some form of market failure in such instances it will be desirable to regulate substances for which the benefits of the regulation exceed the costs which will potentially be the case if there is some inadequacy in the market the restrictive legislative mandates of regulatory agencies in some cases prohibit basing regulations on a balancing of benefits and costs and at the very least seldom encourage such balancing 1 as a result one would expect the benefits of regulatory efforts to play a greater role in regulatory decisions than do the costs 2 this pattern is exemplified by the high implicit values per statistical life that have been observed for u s regulatory efforts 3 regulatory agencies consequently tend to be risk oriented in their policy approach what this characterization neglects is that even within the context of emphasizing risks regulatory agencies may not be making balanced decisions the risk level consists of two principal components the probability of an adverse outcome and the number of people affected the probability depends on the potency of the exposure the frequency of the exposure and similar kinds of parameters regulatory agencies are generally concerned with the risk particularly with respect to the potency of the chemicals in contrast the number of people exposed to the risk plays a much less prominent role in regulatory decisions the standard regulatory policy trigger is typically linked to a probability of an adverse outcome as opposed to an expected body count the u s environmental protection agency superfund program is a case in point in that effort the focus is on the risks posed by different pathways by which populations could be exposed to the hazard in the course of the detailed policy analysis prepared for each superfund site epa never assesses the size of the population exposed to the risk moreover there is not even an assessment of the probability that a future population will be exposed to the risk the presence of a risk with a potential exposure to a future population is sufficient to trigger government action extrapolation from this experience to other instances would lead one to expect that the probability of cancer or some other adverse health outcome would be the driving force behind regulatory decisions however even this characterization may be overly broad in this paper i will explore the decision to regulate natural and synthetic chemicals to what extent are regulatory decisions driven by the severity of the risk as opposed to the character of the risk exposure the striking result is that the risk severity dlavs a very small role instead tdiscussants maureen cropper world bank don kenkel pennsylvania state university tyler cowen george mason university

the location of foreign direct investment an empirical analysis in this piece of research those factors are analysed which determine the choice of location for fdi the analysis is conducted using two models a multicountry model containing seven industrializ

global economic integration in developing countries the role of corruption and human capital investment globalization is multifaceted and involves the interaction among businesses services governments and societies beyond national borders as a result the flow of foreign direct investment fdi international trade in goods and services and the economic interdependence of the nations of the world have been increasing at the same time much attention has been paid to the effect of corruption prevalent within many cultures and societies and its impact on the economies especially developing economies this paper examines the relationship between human capital investment the level of national corruption and the global economic integration gei of a nation in developing countries based on the data collected from over 60 countries and building on the fdi and human capital theories it was found that human capital investment and corruption are related to gei it was also found that the level of corruption moderates the relationship between human capital investment and gei of developing economies the findings of the study can help to deepen our understanding of gei and have practical implications for developing countries in terms developing human capital which plays a critical role in today s knowledge based economy

asymmetries in ordered strength of preference models implications of focus shift for discrete choice preference estimation this paper explores potential focus shift asymmetries in an ordered strength of preference model applied to contingent choice data a focus shift occurs when respondents weight factors differently when assessing preference for an accepted scenario than they do when assessing preference for a rejected scenario and may imply that respondents do not refer to a single underlying preference function using data drawn from a survey which addressed preferences for watershed management the model results identified focus shift asymmetries in the ordered strength of preference model the paper discusses implications for policy survey design and discrete choice preference estimation

analysis of determinants of the inflow of foreign direct investment to poland part i theoretical considerations this study contains an analysis of the main determinants of the inflow of foreign direct investment to poland this article is the first of the two parts of the cycle and covers theoretical considerations regarding the determinants of foreign direct investment serving as the introduction to the second empirical part in which the research results will be discussed this study focused on determining the cause and effect relationship between the scale of inflow of foreign direct investment and selected macroeconomic parameters of the economy based on the theories and results from previous research a model was developed in which the variables and the nature of their relationship were determined the model is based on four latent exogenous variables describing fdi determinants and one latent endogenous variable describing fdi inflow in the article structural equation modeling was indicated as a method for analyzing the factors conditioning the inflow of foreign direct investment the proposed research concept will allow supplementing and extending the analysis of fdi determinants in poland

demand inducement and the physician patient relationship the physician patient relationship is a paradigm for any expert client relationship the physician both diagnoses the patient s illness and recommends a treatment this dual role gives the physician incentive to recommend treatments whose costs outweigh their medical benefits these socially inefficient treatments correspond to the notion of physician induced demand the level of inducement chosen by the physician is shown to depend on the price and potential medical benefits of treatment and the relative diagnostic skills of physician and patient this model offers several testable hypotheses some of which are confirmed by related studies

a test of the theory of reference dependent preferences eight alternative methods of eliciting preferences between money and a consumption good are identified two of these are standard willingness to accept and willingness to pay measures these methods differ with respect to the reference point used and the dimension in which responses are expressed the loss aversion hypothesis of tversky and kahneman s theory of reference dependent preferences predicts systematic differences between the preferences elicited by these methods these predictions are tested by eliciting individuals preferences for two private consumption goods the experimental design is incentive compatible and controls for income and substitution effects the theory s predictions are broadly confirmed

risk self protection and ex ante economic value abstract we develop three propositions about the ex ante value of reduced risk if there is a continuous outcome distribution and if self protection influences outcome probability and severity then 1 unobservable utility terms cannot be eliminated from the ex ante value expressions 2 knowledge of the convexity or the nonconvexity of dose response functions is insufficient to sign changes in these expressions and 3 self protection expenditures need not be a lower bound measure of these expressions therefore many restrictions applied in recent empirical work on the economic value of risk changes are not immediately transferable to settings where endogenous risks prevail

identification of supplier induced demand in the health care sector this paper explores the issues and pitfalls encountered when attempting to test empirically the hypothesis that physician hospital or any other input supply level induces increasing demand for health services in the strict sense of demand shift and through that increased demand for the input in question evidence is presented which suggests that an empirical test of the supplier induced demand sid hypothesis of the type traditionally performed may not in fact be feasible with cross sectional aggregate data such as is usually used

what drives the capital flows into brics economies understanding what drives the capital flows has important policy implications for countries in managing the direction and magnitude of such flows this paper empirically investigates the main drivers of capital flows into the fast growing brics countries in the backdrop of their growing inward capital flows employing a fully balanced panel for the period 1995 2015 we focus on among others the hitherto commonly untested variables sovereign credit ratings economic freedom and ease of doing business ranking of these countries in searching for the relevant interaction and causality among the drivers of capital flows we employ the panel granger causality test to arrive at the policy implications the results suggest that market size is a significant driver of capital flows in addition to infrastructure economic freedom in the host countries ease of doing business ranking and sovereign credit ratings are the main drivers in the long run growth of capital flows

subjective versus technical risk estimates do risk communication policies increase consistency abstract this paper reports the first comparison of subjective and technical risk estimates for a real source of risk exposure to radon the analysis also considers the effects of the information framing for this comparison of risk estimates the results suggest that the framing of the risk explanations does affect how individuals adjusted their subjective risk perceptions in response to differences in the amount and duration of their radon exposures thus our findings support the need to describe the role of cognitive factors involved in processing risk information within economic models of the formation of risk perceptions

consumer health information and the demand for medical care this paper is an empirical investigation of consumer health information using a new direct measure of information the econometric approach treats both information and physician visits as endogenous variables when estimating the demand for medical care the results show that information increases the probability that a consumer uses medical care but that conditional on use the quantity of care consumed is not related to information the results contradict specific implications of models where physicians can create or induce demand for their own services several results suggest that poorly informed consumers tend to underestimate the productivity of medical care in treating illness copyright 1990 by mit press

household energy use applying behavioural economics to understand consumer decision making and behaviour household energy conservation has emerged as a major challenge and opportunity for researchers practitioners and policymakers consumers also seem to be gaining greater awareness of the value and need for sustainable energy practices particularly amid growing public concerns over greenhouse gas emissions and climate change yet even with adequate knowledge of how to save energy and a professed desire to do so many consumers still fail to take noticeable steps towards energy efficiency and conservation there is often a sizeable discrepancy between peoples self reported knowledge values attitudes and intentions and their observable behaviour examples include the well known knowledge action gap and value action gap but neither is household energy consumption driven primarily by financial incentives and the rational pursuit of material interests in fact people sometimes respond in unexpected and undesirable ways to rewards and sanctions intended to shift consumers cost benefit calculus in favour of sustainable behaviours why is this so why is household energy consumption and conservation difficult to predict from either core values or material interests by drawing on critical insights from behavioural economics and psychology we illuminate the key cognitive biases and motivational factors that may explain why energy related behaviour so often fails to align with either the personal values or material interests of consumers understanding these psychological phenomena can make household and community responses to public policy interventions less surprising and in parallel can help us design more cost effective and mass scalable behavioural solutions to encourage renewable and sustainable energy use among consumers

understanding household energy use decision making and behaviour in guinea conakry by applying behavioural economics abstract for decades generalized frauds have left the electrical sector of guinea with an entirely defective financial scheme as a developing nation guinea s electricity consumption has been relatively low for a long time although it has been increasing recently due to increasing power generation the growth in power capacity is due to the construction of two new dams kaleta dam 240 mw which is already operational and souapiti dam 550 mw which is still under construction taking into account that the country has so far been without electricity there is a need to assess and predict consumer behaviour before the full completion of these projects the aim of this study is to make the household and community reactions to public policy interventions less surprising however even sufficient knowledge of how to conserve energy and a stated desire to do so many consumers still fail to take perceptible measures to increase energy efficiency and conservation why is this so by focusing on crucial insights from behavioural economics and psychology we highlight the incentive factors the basic cognitive biases and the psychological phenomena that cause this disconnect understanding these factors can help us to design sustainable energy use among consumers in guinea conakry

risk perception in psychology and economics abstract the concept of rationality has been basic to most economic analysis its content has been successively refined over the generations as applied to the static world of certainty it has turned out to be a weak hypothesis not easily refuted and therefore not very useful as an explanation though not literally a tautology but recent decades have seen the development of stronger versions applied to a world in which time and uncertainty are real among its most important manifestations have been criteria for consistency in allocation over time the expected utility hypothesis of behavior under uncertainty and what may be termed the bayesian hypothesis for learning that is the consistent use of conditional probabilities for changing beliefs on the basis of new information these hypotheses have been used widely in offering explanations of empirically observed behavior though as not infrequently in economics the theoretical development has gone much further than the empirical implementation these hypotheses have also been used increasingly in normative analysis as a component of benefit cost studies therefore frequently referred to as benefit risk studies the value of reducing mortality rates from diseases for example has been studied by assuming that choice of occupations is made inter alia by comparing wage differences with mortality differences

the effect of foreign direct investment on the urban wage in china an empirical examination how does foreign direct investment fdi affect the wage levels of cities in a host country this paper uses a panel dataset of chinese cities to examine the impact of inward fdi on the urban real wage the results suggest that the existence of fdi has a significant and positive effect on urban real wages and that this impact remains significant after controlling for other city characteristics cross city variation of fdi intensity is one important factor contributing to intercity wage inequality

risk risk versus standard gamble procedures for measuring health state utilities contingent valuation cv has been widely used to measure the potential benefits derived from different policy decisions however doubt now exists about the validity of the cv method and alternative approaches to benefit valuation have been proposed the paper reports on the results of a study which was designed to test the viability of two of the most prominent of the alternatives the risk risk rr and standard gamble sg approaches if individual preferences are consistent with the axioms of von neumann morgenstern expected utility theory eut then the two methods should generate the same interval scales for any given set of health states however the results show that sg utilities are substantially higher than rr ones thus casting doubt on these axioms the paper discusses alternatives to eut which might better expalin the discrepancies found it also considers whether the results might be explained in terms of status quo bias and or by the relative difficulty of rr questions the results presen

an investigation of the rationality of consumer valuations of multiple health risks after developing a conceptual analysis of consumer valuation of multiple risks we explore both economic and cognitive hypotheses regarding individual risk taking using a sample of over 1 500 consumers our study ascertains risk dollar tradeoffs for the risks associated with using an insecticide and a toilet bowl cleaner we observe the expected positive valuation of risk reductions and find empirical support for a diminishing in the valuation of risk reduction as the extent of the risk reduction increases we also find evidence of certainty premiums for the total elimination of one risk but no strong evidence of additional certainty premiums for the elimination of multiple risks strong reference risk effects are evident as increases in risk were valued much more greatly than were decreases

a new test for supplier inducement and application to the canadian market for dental care abstract the hypothesis that dentists do not induce demand for their services is tested using reduced form estimates of the price elasticity of demand if demand is autonomous shifts in supply for whatever reason should generate equivalent estimates provided access costs change proportionately with shifts in supply if demand inducement is present demand can appear to be very elastic or very inelastic depending on what is causing the shift in supply each of three applications of this test conducted in the context of jointly estimated fee and quantity equations using annual canadian data for 1956 1989 rejects the no inducement hypothesis

comorbidities and the willingness to pay for health improvements we show that the willingness to pay for health improvements increases with the severity and probability of occurrence of comorbidities this result which is obtained under mild restrictions on the shape of the utility function has important implications for cost benefit studies applied to health care in particular it implies that the discrimination of the elderly believed to be implicit in cost benefit analysis is less of a problem than commonly thought

parental behavior and the value of children s health a health production approach data on individual children and on sibling pairs are used to examine how family resource allocations affect children s health and to estimate willingness to pay for reduced acute illness in children results highlight the importance of accounting for the endogeneity of child health and suggest that children with greater stocks of health capital whose parents invest in preventive and remedial medical care experience fewer days of illness estimated willingness to pay to avoid one day of illness induced school loss is about 100 to 150 a range broadly consistent with limited prior evidence but sub stantially more than unit values applied in recent policy analyses all else equal willingness to pay is higher among single parents and for uninsured children and the estimated income elasticity is only 0 14 implied aggregate benefits of reductions in children s sick time associated with air pollution control may be substantial

supplier induced demand a disequilibrium test this paper tests the hypothesis of market disequilibrium and supplier induced demand in the market for physicians services using canadian data from the period prior to the introduction of national health insurance the results support the hypothesis of disequilibrium with rapid upward adjustment of fees in the face of excess demand and extremely slow downward adjustment of fees in response to excess supply they do not support the hypothesis that physicians induced demand in the face of an excess supply of services

information asymmetry and international strategic alliances abstract this paper examines how information asymmetry affects cross border strategic alliance formation by us firms over the period 2000 2008 we construct a measure information costs based on both geographical distance and the proportion of worldwide gdp the partner s home country represents consistent with our expectations we find an inverse association between information costs and cross border strategic alliances when considering the proportion of alliances formed with publicly quoted overseas partners we find this is unaffected by the level of information costs but rather the level of stock market development tax rate and general economic conditions information costs are however significantly negatively related to alliances with overseas private organizations our results offer clear support for the on going importance of information asymmetry in corporate decision making

a further analysis of the physician inducement controversy this article extends several recent contributions that have compared the physician induced demand hypothesis to the theory of a monopoly where advertising is included as a decision variable by introducing a standard profit maximizing model with inducement it derives the conditions for the optimum level of inducement to show that the controversy over inducement is directly related to the elasticity of demand for the physician s services in particular inducement is likely to be prevalent only where the individual physician has a high degree of monopoly power as measured by its elasticity of demand it will disappear entirely as competitive conditions are approached furthermore the article argues that a physician s level of induced output is likely to diminish and not increase as others have suggested following increases in physician supply

identification of physician induced demand whether market failure exists in the health care sector because physicians induce demand in their own self interest has not been clearly addressed because of identification problems a model is developed which includes the patient s financial burden as a limiting factor on demand inducement new data from a national survey are used to test the demand inducement hypothesis and identify physician initiated expenditures when individual health insurance and other factors are held constant additional corroboration of the physician induced demand hypothesis is found but the magnitude of the effect is very small and is statistically significant only for more discretionary expenditures

u s foreign direct investment in latin america and the caribbean a case of remittances and market size abstractthis article investigates the effect of remittances on u s foreign direct investment fdi flows to latin america and the caribbean lac it covers 26 countries for the period 1983 2010 the results show a positive and significant impact of remittances on u s fdi flows however this effect depends upon the level of gross domestic product gdp per capita of the host country on average the results show that increasing remittances by one standard deviation increases u s fdi flows by 0 44 percent a year also host country demand positively affects u s fdi flows which supports the market size hypothesis

a clarification of theories and evidence on supplier induced demand for physicians services this article both simplifies and extends the literature on physician induced demand it shows that inducement should be expected in all imperfectly competitive markets that are also characterized by incomplete agency relationships more important it argues that confusion over the extent of the inducement phenomenon has been created by several contributions that fail to distinguish between the effects of changes in physician population ratios on changes in the individual physician s output and the effects on per capita utilization in particular it demonstrates that by confounding units of analysis the major empirical results found in recent articles by rossiter and wilensky are contradicted by their model their evidence however together with findings from other studies are reinterpreted to suggest that physicians are even more constrained than is generally believed in being able to induce increases in demand

income effects and the value of health although valuations of risk should increase with income hedonic wage studies have not been well suited to assessing this relationship using survey data on consumer valuations of product safety this paper analyzes the role of income effects for several utility functions the methodology developed in this paper assesses the effect of income on the certainty equivalent value of the health effect income elasticities range from 0 18 to 0 39 and on the risk money tradeoff for small changes in risk income elasticities range from 0 17 to 0 38 health status is a normal economic good

measurement of consumer patient preferences using a hybrid contingent valuation method this study introduces a hybrid two stage contingent valuation method applied to asthma treatment respondents are initially offered a choice between hypothetical medications implying a tradeoff between safety and efficacy stage two elicits willingness to pay wtp for an improvement along a single risk dimension estimates of the value of asthma control based on the initial risk tradeoff stage range from approximately us 1400 to us 2100 per year assuming a us 6 million value of life analysis of the second stage wtp responses yield estimates for the value of a statistical life of approximately us 9 million and for asthma control of approximately us 2200 per year

alarmist decisions with divergent risk information receipt of multiple sources of risk information ideally should foster sounder decisions under uncertainty this paper s original survey results for environmental risks suggest that the learning process is reasonable in many respects bur it does not accord with a rational bayesian learning model divergent risk assessments from different sources produce extreme violations of rationality as there is inordinate weight on the high risk assessment this alarmist reaction holds for both government and industry information sources this phenomenon may account for the commonly observed phenomenon of public overreaction to highly publicised risks

natural disasters and foreign direct investment the world s population has witnessed the concurrence of two powerful global trends an unprecedented growth in foreign direct investment fdi and an increase in natural disasters since investment decisions are based on an evaluation of expected risks and returns we consider whether fdi decisions are influenced by natural disasters we do so by considering the relation between fdi in 94 countries between 1984 and 2004 and the number of disasters striking those countries across a variety of empirical tests that control for two way fixed effects we find natural disasters to be negatively and statistically significantly associated with a country s fdi

parental altruism and the value of avoiding acute illness are kids worth more than parents abstract a model describing parents preferences to relieve their own and their children s acute illnesses is estimated using stated preference data estimated marginal rates of substitution mrs between child and parent illness are about two indicating that parents value children s illness attributes twice as highly as their own the mrs is larger for younger children falls toward unity as the child approaches adulthood and appears to reflect parental altruism rather than parent child differences in initial health or illness costs intra family allocations may compensate for chronic health impairments parents willingness to pay to avoid own or child illness increases with income declines with fertility increases at a decreasing rate with duration and number of symptoms and depends on perceived discomfort and activity restrictions current methods of assessing morbidity benefits of environmental regulations may understate substantially the value of children s health particularly in african american families

the effect of national corporate responsibility environment on japanese foreign direct investment we examine the relationship between japanese foreign direct investment fdi and the national corporate responsibility ncr environment in host countries using corporate social responsibility and international business theories based on data from the japanese government s ministry of finance accountability and other sources we find that the level of ncr has a positive relationship with fdi inflow for developing countries the relationship for developed countries is negative but not statistically significant the underlying host country development stage moderates the relationship the results can help deepen understanding of fdi behaviors and have practical implications for host countries in terms of attracting fdi

predicting buyer seller pricing disparities numerous studies have shown that compensation demanded cd to give up a commodity often greatly exceeds willingness to pay wtp to obtain the same commodity even in incentive compatible experiments that penalize strategic misrepresentation observed cd wtp disparities are too large to be reconciled with traditional assumptions of economic rationality a prospect theory based behavioral framework for predicting cd and wtp is proposed which produces five distinct transaction encoding rules any one of which can in principle apply to a buyer or a seller according to this framework cd wtp gaps occur when buyers and sellers encode the prospective transaction differently and gaps can occur in multiple ways and vary in size depending on encoding the transaction encoding framework was tested in two experiments in experiment 1 model fits to subjects cd and wtp for lottery tickets were consistent with the hypothesis that buyers and sellers encode transaction problems differently moreover the quite large observed cd wtp gaps were explained fully by encoding when differences between buyers and sellers encoding processes were taken into account their estimated utility value and probability weighting functions did not differ the present framework and results show that the widely cited endowment effect is but one of several ways in which loss aversion can give rise to cd wtp gaps consistent with this broadened perspective experiment 2 demonstrated cd wtp gaps in the absence of an endowment effect and in the absence of rational economic causes the transaction encoding framework 1 provides a structured approach for predicting and testing the effects of a variety of task factors on pricing behavior and transaction outcomes and 2 reveals the useful property that in many cases the ratio cd wtp can be interpreted as a direct measure of the degree of loss aversion

corporate tax rates and foreign direct investment in the united states a significant research effort has been directed at establishing the determinants of foreign direct investment fdi with taxation policy identified as an important factor however the empirical literature has been limited in several respects with most work focused exclusively on host country tax regimes this paper seeks to extend the boundaries of fdi empirical inquiry by using a panel of nine investing tax exemption and tax credit countries over the period 1982 2000 constituting more than 85 of total us fdi inflows and incorporating home country tax rates to analyse two as yet unanswered questions first are corporate income tax rates an important determinant of fdi in the us secondly do investors from tax credit countries differ significantly in their tax response relative to those from tax exemption countries

formation of risk beliefs joint production and willingness to pay to avoid skin cancer this paper uses a survey of risk beliefs about skin cancer to provide new evidence on how people view risky situations empirical results presented are based on a measure of risk beliefs held at the time of the survey key findings are that risk beliefs about skin cancer account for factors including skin type complexion and sunlight exposure history also the connection between risk beliefs and willingness to pay is explored by using reservation prices for a sun protection product a new method for treating joint production in a household production framework is developed to support this analysis copyright 1996 by mit press

institutions and inflows of foreign direct investment a fuzzy set analysis this study addresses the essential question of causal complexity and diversity related to the influence of institutions on the direct investments fdi of multinational enterprises using a relatively new methodological approach of fuzzy set analysis and 47 host countries from the period 1999 to 2003 the paper analyses how and why countries with different degrees of membership in different institutional constraints either attract or do not attract fdi the findings show that institutional factors have diverse influences similar institutions may even be associated with different outcomes if different regional categories of countries are examined countries may neither be attractive nor unattractive owing to the presence or absence of a single institutional factor instead the outcome usually results from a combination of institutional conditions moreover there typically are several possible paths to a specific outcome the study confirms some of the propositions of previous theory but most importantly it explains why earlier research has provided conflicting conclusions related to institutional factors the study also offers an approach for future international business research to apply fuzzy set methods and develop mid range theories

utility based measures of health mates the scope of this debate is inherently limited market estimates can provide information only on the average rate of trade off of income for risks these trade offs are also pertinent only to marginal changes in risk important policy questions such as the benefits of nonmarginal changes in risks or the benefits of risk reductions in heterogenous populations cannot be adequately explored with results from market settings the increased availability of survey data has brought these and many other questions regarding individual valuation of health risks within the range of answerable inquiries in a standard survey setting consumers are faced with a series of hypothetical choices for which subjects give a probability or an income value that makes them indifferent between the lotteries an es

altruism fertility and the value of children health policy evaluation and intergenerational welfare abstract this paper accounts for the value of children and future generations in the evaluation of health policies this is achieved through the incorporation of altruism and fertility in a value of life type of framework we are able to express adults willingness to pay for changes in child mortality and also to incorporate the welfare of future generations in the evaluation of current policies our model clarifies a series of puzzles from the literature on the value of life and on intergenerational welfare comparisons we show that by incorporating altruism and fertility into the analysis of the recent u s experience the estimated welfare gain of a young adult from reductions in mortality easily doubles

estimation of state dependent utility functions using survey data surveys of individual s risk dollar trade offs illuminate not only the local trade off rates but also can be used to address more fundamental questions about the structure of utility functions this largely unexplored empirical area is investigated by developing an econometric technique to estimate utility functions based on survey data on risk dollar trade offs for minor health effects the empirical tests indicate that for all but one of the temporary health effects considered consumers treat injuries as tantamount to a drop in income implying that the health impact does not alter the structure of the utility function in a fundamental way copyright 1991 by mit press

valuing the incremental benefits of groundwater protection when exposure levels are known both economic theory and psychological research indicate that benefit functions for reductions in health risk exposures may be conditional on current exposures using nitrates found in household wells it is demonstrated that perceptions of health risks across exposure levels are affected by the individual s current exposure level thus providing support for a conditional benefits function approach functions of conditional incremental benefits are estimated from a contingent valuation study of households that had been informed of their water test results incremental benefits reach a peak at an intermediate level of nitrates and then decline possible explanations for this non convexity are provided

physician induced demand for childbirths a controversial technique for testing the hypothesis that physicians induce demand involves two stage least squares tsls regression analysis of cross section data on physician supply and utilization this paper tests the power of tsls by applying it where there is at most only a trivial amount of demand inducement the demand for childbirths we find evidence of inducement of childbirths calling into question the validity of the tsls approach this unlikely finding may be traced to at least two factors the first stage regression is not identified and the second stage regression does not adequately address border crossing

exploring the regional distribution of inbound foreign direct investment in the uk in theory and practice evidence from a five region study fallon g and cook m exploring the regional distribution of inbound foreign direct investment in the uk in theory and practice evidence from a five region study regional studies this paper examines the main factors that attract inbound foreign direct investment fdi at the uk regional level using econometric data from five sample uk regions the south east the west midlands the north west wales and scotland broadly representing the country s regional economic divide the findings indicate that regional and national but not european union level factors linked to several underlying strategic determinants help determine the regional distribution of inbound foreign direct investment and its inter regional variation the paper concludes that governmental policy makers at the national and regional levels can have an important role to play in drawing targeted foreign direct investment inflows to the uk regions fallon g et cook m examiner la distribution regionale de l ide au royaume uni en the

the effect of corruption on japanese foreign direct investment in an effort to reduce risk and uncertainty we hypothesize that investors avoid countries where high corruption exists we investigate this issue by examining the relationship of levels of perceived corruption on japanese foreign direct investment fdi in both industrialized and emerging economies the analysis presented utilizes a sample of 29 546 investments in 59 countries results suggest that in emerging nations where comprehensive legal and regulatory frameworks do not exist to effectively curtail fraudulent activity corruption serves to reduce fdi managers need to consider the level of perceived corruption in their assessment of any market prior to potential investment

estimates of the demand for medical care under different functional forms we estimate price and income elasticities from a linear log linear and the almost ideal demand model with and without an adjustment for selectivity bias in an effort to show that special attention should be paid to the underlying assumptions of consumer behaviour when estimating a medical care demand model the literature on medical care utilization is extended by incorporating two major components of spending as separate demands in a system of medical care spending we find that estimates of elasticities vary depending on the functional form of the estimating equation thus questioning the usefulness for policy purposes of single estimates of elasticities

are risk regulators rational evidence from hazardous waste cleanup decisions a large literature in economics and social science focuses on how people reason about risks reactions of individuals to risk frequently depart from behavior predicted by full information variants of expected utility theory risk regulators are human and are subject to political pressures that are reflective of people s attitudes toward risk as a result the public policies they espouse may reflect errors in judgment about risk many biases stem from misperceptions of risk individuals overestimate small probabilities overestimate the risks associated with highly publicized dangers and have preferences over the manner not just the magnitude in which risks arise environmental risks associated with hazardous waste sites may be particularly prone to such errors since they involve small risks that are highly publicized indeed the general public ranks hazardous waste sites as the leading environmental risk a growing literature also analyzes how the decisions of risk regulators depart from choices predicted in a standard benefit cost framework as roger g noll and james e krier 1990 point out since regulators are both human and political their decisions may reflect risk biases regulators may exhibit these biases as individuals and because their constituents will express regulatory demands based on risk perceptions risk regulators may take into account the identity of the parties exposed to risk the level of scrutiny by interest groups the nature of congressional representation of affected constituents and the degree of political activity by potentially exposed individuals 3 errors in risk perceptions and risk decisions cause individuals to diverge from expected utility maximization similar errors by policy makers and the influence of risk politics cause regulators to diverge from social welfare maximization this paper examines decisions made by federal and state regulators at hazardous waste sites addressed by the superfund program to determine how their decisions diverge from those predicted by expected utility theory and benefitcost analysis we analyze whether risk perceptions and politics influence two decisions central to the how clean is clean debate at superfund sites the selection of chemical cleanup targets and the expenditure of remediation funds at these contaminated sites we also explore the interactive influence of risk perception factors and political demands previous research on the regulation of chemical risks in standard setting indicates that decisions reflect evidence of risk biases and responsiveness to political factors in assessing the determinants of the epa s decision to cancel pesticide registration maureen l cropper et al 1992 found that the epa was more likely to cancel a pesticide in instances featuring higher risks to the maximally exposed individual user lower benefits associated with continued use of the pesticide higher values of intervention by environmental groups mea viscusi harvard law school harvard university cambridge ma 02138 hamilton sanford institute of public policy duke university durham nc 27708 we have benefited from the comments from two referees and the excellent research assistance of jason bell kristen blann jahn hakes and robert malme research support was provided under cooperative agreement no cr 823604 01 from the u s environmental protection agency office of policy planning and evaluation dr alan carlin and dr suzanne giannini spohn served as contract officers all views and errors expressed are our own l see u s environmental protection agency epa 1987 for a report on this survey evidence 2 this theme is also articulated in richard j zeckhauser and viscusi 1990 noll 1989 provides a more general assessment of the interaction between political concerns and regulatory policy which is a central theme of this paper 3political factors have long played a prominent role in local hazardous waste policies see among others linda cohen 1981 howard kunreuther and douglas easterling 1990 1992 and kunreuther and rajeev gowda 1990

the normative economics of health care finance and provision whereas in many countries the crisis in medical care has been seen in terms of excess spending on health services in the uk it has been seen at least by most of those who manage and work in the nhs as a crisis of underfunding this has come about as the result of the government s successful attempts to restrain the rate of growth of real spending on the nhs which in turn reflects the government s belief that its principal effective weapon against what it perceives to be inefficiency in the nhs is to challenge management itself reformed and to some extent liberated by systematic financial squeezes the same concern has given rise to a host of proposals for reform of the nhs most of which involve a much greater role for private insurance private finance of other kinds such as out of pocket payments and private provision of health care itself

optimal antibiotic usage with resistance and endogenous technological change the use of antibiotics poses an impure public goods problem their utilization jointly generates a positive private characteristic that is the health of the individual who consumes the drug and a negative public characteristic that is the reduction in susceptibility that renders the drug less effective over time the authors use an expected utility model to explicitly identify these characteristics in a dynamic setting from a social planner perspective the trade off between present and future use of a drug and the allocation of resources to the development of new drugs is discussed results suggest that the optimal policy would limit the number of people treated with an existing antibiotic through time also the model indicates that short bursts of high level investment in research and development are optimal when the research process is certain while a steady increase in investment over time is warranted when the discovery process is uncertain

are individuals bayesian decision makers there has been increasing interest in whether normative models of individual choice under uncertainty accord with actual behavior these concerns have been much greater than in other economic contexts because of the particularly severe demands such decisions place on the rationality of the decision maker the limitations of these decisions have widespread consequences as they provide the rationale for many governmental efforts to regulate the risks people face here i explore the issues raised by a bayesian decision framework focusing particularly on my analyses of worker and consumer behavior

the global economy as instituted process the case of central and eastern europe i argue that economic globalization indicated by the tremendous rise in world foreign direct investment fdi in recent decades is not driven simply by investor considerations of economic risk and return but is significantly shaped by the construction of demand for foreign capital by receiving states states signal this demand through the levels of formal and substantive legitimacy they grant to fdi they institutionalize globalization in formal rule as a normatively desirable development strategy states substantiate this commitment by providing domestic and foreign actors with ideational and organizational resources to facilitate fdi to illustrate this argument i use the case of central and eastern europe which was largely closed to global capital before the collapse of communism analyses of quantitative and qualitative data show that substantive legitimacy granted to fdi by host states more than formal regulations determined the size of foreign capital flows into postsocialist countries in the

willingness to pay and compensation demanded experimental evidence of an unexpected disparity in measures of value aside from possible income effects measures of the maximum amounts people will pay to avoid a loss and the minimum compensation necessary for them to accept it are generally assumed to be equivalent unexpectedly wide variations between these sums however have been noted in survey responses to hypothetical options this paper reports the results of a series of experiments that confronted people with actual money payments and cash compensations the results indicate that the compensation measure of value seems to exceed significantly the willingness to pay measure which would appear to call into some question various rules of entitlement damage assessments and interpretations of indifference curves

firm and country level trade offs and contingencies in the evaluation of foreign investment the semiconductor industry 1994 2002 this paper examines the joint impact of firm and country level factors on the international plant location decisions of semiconductor firms from 1994 2002 we find that these factors interact to influence the location decisions of firms investing abroad in a given host country firms with more advanced technological capabilities are more likely to make investments in countries with greater technological sophistication but not in politically hazardous countries where they face greater expropriation hazards firms with less advanced technology are more willing to accept a trade off between country level political hazards and technological sophistication firms also trade off own versus other firm experience as sources of critical knowledge regarding the foreign investment environment

a new meta analysis on the wtp wta disparity abstract this study reports a new meta analysis of papers that elicit willingness to pay wtp and willingness to accept compensation wta measures of value for the same good we investigate the effects of type of good and several survey design features on the wtp wta disparity measured as the logarithm of the ratio of mean wta to mean wtp confirming horowitz and mcconnell s 2002 pioneering meta analysis we find the disparity is smaller for ordinary private goods than for public and non market goods that it is not solely an artifact of using hypothetical transactions or other weak experimental or survey methods and that it is smaller for studies using student subjects in addition we find that the disparity is smaller when subjects have experience valuing the good in real markets or through repeated experimental trials in contrast to horowitz and mcconnell we find the disparity is significantly smaller in studies using incentive compatible elicitation mechanisms the disparity is smaller in more recent studies an effect that is attributable only in part to changes in study characteristics

the role of responsibility in strategic risk taking we explore play between groups where one member of each 2 person group dictates the play of that group and is therefore responsible for the payoff of the other group member we compare this to play when the game is the same but each person is playing only for herself consistent with the principle of responsibility alleviation described by charness charness g 2000 responsibility and effort in an experimental labor market journal of economic behavior and organization 42 375 384 we find that a sense of responsibility for the welfare of others has an effect while the issue of responsibility does not appear to influence the decisions of 2 3 of the population almost 90 percent of the remaining 1 3 of the population plays a less risky strategy when choosing for a group than when playing only for herself

values of gains and losses reference states and choice of measure the available empirical evidence continues to suggest that people commonly value losses more and often much more than otherwise commensurate gains consequently current practice of using the wtp measure for all changes is often likely to lead to misleading assessments of welfare changes the reference dependence of preferences implies instead that while the wtp measure is appropriate for gains the value of both positive and negative changes in the domain of losses will usually be more accurately assessed with the wta measure