rent controls and rental housing quality a note on the effects of new york city s old controls rent controls are used in many cities throughout the united states and many other countries there is a lengthy literature on the conceptual effects of rent controls this is not surprising given the size of housing in the u s asset base and the political importance attached to homeownership and quality housing it is surprising how little evidence there is on many of the supposed effects of rent controls the evidence on these impacts is relatively slim for a variety of reasons first the data needed to document some of the predicted impacts are not good for example it is difficult to measure effective maintenance inputs and it is costly to obtain any such data on a wide variety of buildings convincing ceteris paribus experiments are difficult to perform because there typically are many other factors for which it is hard to control additionally the negative theoretical implications appear to be so clear that many economists may not have felt much need to quantify the extent of the damage nevertheless there is some evidence on the influences of rent controls from studies estimating the price elasticity of the supply of structures economists have estimated the likely effect of rent controls on the supply of new structures in a city rydell et al lo and fallis and smith 3 have

measuring the affordability of home ownership typical measures of the affordability of home ownership are based on aggregate data that ignore the distribution of incomes and wealth and the range of house prices an analysis of household survey

the determinants of homeownership affordability among the sandwich class empirical findings from guangzhou china the sandwich class is an east asian term referring to the lower middle class using a large and unique micro dataset collected in guangzhou this paper examines empirically the potential determin

the dynamics of real estate prices institute of university of i business and v california at i economic research berkeley fisher center for real estate and urban economics p working paper series working paper no 88 151 the dynamics of real estate prices by these papers are preliminary in nature their purpose is to i e z i d 2f iz e ey bradford case are nottobccited ortluotedin john mq quigley any publication without the ex press permission of the author walter a haas school of business

the quasi normative approach to housing affordability the case of the czech republic the article attempts to contribute to the discussion on housing affordability and the use of affordability measures for normative purposes the approach applied in this article is based on the estimation of economic quasi norms on rent levels in rent controlled social housing by looking at total public costs at different rent levels the quasi norms determining rents could be used for estimation of quasi norms determining optimal housing affordability ratios as quasi norms are set according to an econometric simulation output they are less subjective than the usual normative decisions of policy makers this approach may have a significant relevance for some transitional countries and therefore the czech republic is used as a case study the results show that there is a relatively large scope for further increases in rents in the czech rent controlled housing sector and scientific research can be thus employed to inform rent setting and via that optimal levels of housing affordability

regional liberalisation of trade in services this paper investigates quantitatively the trade enhancing effect of regional trade agreements rtas under the general agreement on trade in services article v services rtas by applying a gravity regression analysis to four major services sectors financial business communication and transportation services while controlling for both country specific and time varying importer and exporter fixed effects the regression analysis covers bilateral imports in services consisting of 20 986 country pairs in total over six years 2000 05 our results indicate that sector specific trade creating effects of services rtas are significantly positive without incurring trade diverting effects excluding transportation services moreover we find that there is a significant cumulative effect of services rtas excluding communication services and a complementary relationship between goods and services imports in addition the trade creating effect of services rtas is stronger between developed members compared with between developed and developing countries

does religious similarity matter in international trade in services impacts of religion on trade in services were examined using gravity models with two estimation methods poisson pseudo maximum likelihood ppml to correct for heteroscedasticity and bias due to the exclusion of zero trade flow and standard heckman correction to compensate for sample selection bias we found that religious similarity contributes to increased international trade in services by establishing trust related institutions second religious pluralism variety fosters trade even more than religious similarity suggesting that in facilitating trade religious openness matters more than religious similarity third a strong dominant religion discourages trade in services whereas the presence of religious minorities encourages trade in services a highly significant inverse mill s ratio imr result indicated the presence of sample selection bias indicating that controls are necessary to prevent estimation bias this study concluded that religion is an important determining factor for trade in services positively affecting interpersonal trust and thereby reducing institutional distance between countries

an analysis of portfolio selection with background risk abstract this paper investigates the impact of background risk on an investor s portfolio choice in a mean variance framework and analyzes the properties of efficient portfolios as well as the investor s hedging behaviour in the presence of background risk our model implies that the efficient portfolio with background risk can be separated into two independent components the traditional mean variance efficient portfolio and a self financing component constructed to hedge against background risk our analysis also shows that the presence of background risk shifts the efficient frontier of financial assets to the right with no changes in its shape moreover both the composition of the hedge portfolio and the location of the efficient frontier are greatly affected by a number of background risk factors including the proportion of background assets in total wealth and the correlation between background risk and financial risk

can pay won t pay or economic principles of affordability the term afford ability has been gaining currency in housing policy debates but neither government nor academic researchers have given much consideration to defining it this paper considers what meanings have been given to the term affordability in practice and suggests a range of analytically more useful definitions it argues from economic first principles that it is more logical to use some form of residual income definition than one based on a prescribed ratio of housing costs to income most researchers have been using a ratio definition the paper then uses data from a household survey in the glasgow travel to work area in 1988 89 to examine the incidence of unaffordability of housing costs according to a variety of definitions

the impacts of borrowing constraints on home ownership in australia the analysis reported in this article incorporates direct measures of borrowing constraints into an otherwise standard model of the home ownership decision in australia borrowing constraints take into account mortgage underwriting criteria household incomes and wealth and the household s optimal level of consumption of housing services models containing borrowing constraint measures are estimated for households with heads ages 25 34 the age group that is most likely to be moving into home ownership consistent with previous findings in the us and canada borrowing constraints are significant determinants of the probability of ownership including borrowing constraints in the tenure choice model results in a reduction in the independent impacts of household income and the relative costs of owning and renting implying that in the standard model these variables are at least in part proxies for borrowing constraints as wealth is the binding constraint for most constrained renters the article concludes

economic implications of using a mean var model for portfolio selection a comparison with mean variance analysis abstract we relate value at risk var to mean variance analysis and examine the economic implications of using a mean var model for portfolio selection when comparing two mean variance efficient portfolios the higher variance portfolio might have less var consequently an efficient portfolio that globally minimizes var may not exist surprisingly we show that it is plausible for certain risk averse agents to end up selecting portfolios with larger standard deviations if they switch from using variance to var as a measure of risk therefore regulators should be aware that var is not an unqualified improvement over variance as a measure of risk

why is taiwan s homeownership rate so high with an annual growth rate of 0 62 per cent since 1980 taiwan s homeownership rate reached 88 per cent in 2007 this study explores possible causes of taiwan s high homeownership rates the instit

a model of housing tenure choice in australia abstract this paper reports the results of an econometric analysis of tenure choice in australia s two largest cities sydney and melbourne particular attention is given to assessing the significance of the user cost of owner occupied housing for tenure decisions using cross sectional data from a 1991 housing survey this study shows that including user costs in the tenure choice model results in a substantial improvement in goodness of fit but also causes the marginal probability for permanent income to become negative it is suggested that this may reflect a tendency for higher income groups in the two cities to live in inner locations where renting is more common because prices are high relative to rents

tax deductions tax credits and the homeownership rate of young urban adults in the united states the us president s advisory panel on federal tax reform has recommended changes to income tax concessions for homeowners consistent with the opinions of many economists the tax reform panel concl

an analysis of household mobility and tenure choice an empirical study of korea abstract this paper develops a model of households joint mobility tenure decisions which improves upon the sole existing model in two important ways first the probabilistic structure is appropriately framed to capture the simultaneity of the mobility and tenure decisions second the model is based more directly on utility maximization theory an additionally distinguishing characteristic of the model is the fact that all independent variables in the estimation are expressed in flow terms this is done in an effort to more truly reflect their importance in the decision making of the household the model is estimated using microlevel data from korea the coefficients and derived elasticities are consistent with expectations and korean households are found to behave in a manner similar to that in the united states this suggests that the basic motivations underlying households mobility tenure decisions are invariant across countries

insecurity and the pattern of trade an empirical investigation corruption and imperfect contract enforcement dramatically reduce international trade this paper estimates the reduction using a structural model of import demand in which insecurity acts as a hidden tax on trade we find that inadequate institutions constrain trade as much as tariffs do we also find that omission of indices of institutional quality biases the estimates of typical gravity models obscuring a negative relationship between per capita income and the share of total expenditure devoted to traded goods finally we argue that cross country variation in the effectiveness of institutions and the consequent variation in the prices of traded goods offer a simple explanation for the stylized fact that high income capital abundant countries trade disproportionately with each other

people s opium religion and economic attitudes since max weber there has been an active debate on the impact of religion on people s economic attitudes much of the existing evidence however is based on cross country studies in which this impact is confounded by differences in other institutional factors we use the worldvalues surveys to id entify the relationship between intensity of religious beliefs and economic attitudes controlling for country fixed effects we study several economic attitudes towardcooperation the government working women legal rules thriftiness andthe market economy we also distinguish across religious denominations differentiating on whether a religion is dominant in a country we find that on average religious beliefs are associated with good economic attitudes where good is defined as conducive to higher per capita income andgrowth yet religious people tendto be more racist andless favorable with respect to working women these effects differ across religious denominations overall we find that christian religions are more positively associatedwith attitudes conducive to economic growth r 2003 elsevier science b v all rights reserved jel classification a1 e0 n4 z1

beyond expected utility subjective risk aversion and optimal portfolio choice under convex shortfall risk measures abstract we conduct a decision theoretic analysis of convex shortfall risk measures regarding their flexibility to represent subjective risk aversion and discuss the implications for the choice of optimal portfolios as convex shortfall risk measures are closely related to the expected utility functional we draw upon the expected utility framework as our benchmark first we show that unlike expected utility convex shortfall risk measures do always represent constant absolute risk aversion this constitutes a significant limitation when changing initial wealth of e g investors is relevant interestingly though it is exactly this limitation that provides additional degrees of freedom in representing subjective risk aversion beyond expected utility when initial wealth is fixed as e g in returned based portfolio selection models in the tradition of markowitz 1952 second we apply convex shortfall risk measures to the standard portfolio problem between a riskless and a risky asset we provide a procedure that allows inferring the optimal portfolios under convex shortfall risk measures from certain optimal expected utility portfolios the procedure incorporates the additional degrees of freedom in modeling subjective risk aversion and thus allows more flexible and realistic portfolios compared to expected utility third we address the optimal portfolio choice between a riskless and a risky asset in the presence of an additional background risk again we prove a correspondence result between optimal portfolios under convex shortfall risk measures and expected utility and obtain more flexible and realistic portfolios compared to expected utility we also compare the optimal risky investments without and with background risk and provide a necessary and sufficient condition for a reduction of the risky investment

expected shortfall spectral risk measures and the aggravating effect of background risk or risk vulnerability and the problem of subadditivity abstract we analyze spectral risk measures srms including its most popular representative expected shortfall es with respect to gollier and pratt 1996 s concept of risk vulnerability we find that srms and risk vulnerability are mutually exclusive owing to the property of subadditivity while subadditivity is commonly regarded as the axiomatic cornerstone of srms risk vulnerability by contrast prevails if and only if superadditivity holds the lack of risk vulnerability yields questionable predictions in portfolio problems srm decision makers who split their wealth between a risk free and a risky asset do constantly opt for an increase in the risky investment when their deterministic background wealth is complemented by some additional background risk the more general setting where background wealth is already random and then becomes more risky is not as clear cut any srm decision maker may both increase or decrease the risky investment depending on the concrete instance of the portfolio problem however when random background wealth and the risky asset are jointly normally distributed srm decision makers will again unambiguously increase their risky investment we further conduct a data analysis and discuss possible implications of the findings for regulatory risk management

is australia s home ownership rate really stable an examination of change between 1975 and 1994 australia has exhibited a remarkably stable home ownership rate of 70 per cent for over thee decades however this paper questions whether this rate is sustainable decomposition techniques based on tenure choice models are used to provide evidence of changing homeownership patterns in australia between 1975 and 1994 the results indicate a distinct change in home ownership propensities which is neither uniform across age groups nor uniform for different household types with both the same and with different levels of income a number of tentative explanations are proposed each of which provides the basis for further research on the factors affecting household tenure decisions this is essential if the potential for a significant decline in home ownership is to be seen as a matter of concern

towards an accurate description of affordability this paper draws upon the poverty literature and examines the desirable properties of a descriptive statistic of affordability namely that it should satisfy three axioms monotonicity transfer and transfer sensitivity the descriptive statistics of headcounts and averages do not satisfy these three axioms and policies using these statistics as allocative tools may be misallocating resources the paper advocates the use of a foster greer thorbecke statistic fgt examples of different hypothetical households are used to show the contradictory results that can be obtained by using the current statistics as a case study the paper compares regional affordability rankings in england by looking at the fgt headcount and mean values of the rent income ratio using the 1995 96 existing tenants survey

parental wealth and first time homeownership a cohort study of family background and young adults housing situation in sweden this paper investigates whether family background seems to have any influence on first time homeownership recent studies have indicated that it has become more difficult to become established in the housing market and such situations may increase the importance of parental wealth in this study parental wealth is estimated as family background information on parents homeownership father s socioeconomic status and single parenting unique cohort data for three birth cohorts suggest that there is a significant cohort effect in young adults tenure decision furthermore the results imply that parents homeownership has become a more important predictor of the transition to first time homeownership for those young adults facing increasing problems in the housing market

estimating the gravity model without gravity using panel data this article examines the effects of zero trade on the estimation of the gravity model using both simulated and real data with a panel structure which is different from the more conventional cross sectional structure we begin by showing that the usual log linear estimation method can result in highly deceptive inference when some observations are zero as an alternative approach we suggest using the poisson fixed effects estimator this approach eliminates the problems of zero trade controls for heterogeneity across countries and is shown to perform well in small samples

are people risk vulnerable we report on a within subject experiment with substantial monetary incentives designed to test whether or not people are risk vulnerable in the experiment subjects face the standard portfolio choice problem in which the investor has to allocate part of his wealth between one safe asset and one risky asset we elicit risk vulnerability by observing each subject s portfolio choice in two different contexts that differ only by the presence or absence of an actuarially neutral background risk our main result is that most of the subjects are risk vulnerable 81 chose a less risky portfolio when exposed to background risk more precisely 47 invested a strictly smaller amount in the risky asset whereas 34 were indifferent furthermore contrasting the predictions provided by competing decision theoretic models we conclude that expected utility theory best fits our experimental data this paper was accepted by uri gneezy behavioral economics

car dependence and housing affordability an emerging social deprivation issue in london this paper investigates the combined problem of high car dependence and housing affordability in view of likely continued volatility in oil prices and hence higher petrol and diesel prices and rising house prices household budgets are likely to be stretched where there are high levels of car dependency and housing unaffordability with little flexibility for rising costs in either or both of these a composite car dependence and housing affordability cdha index is developed using indices of oil vulnerability related to car travel and housing affordability greater london is used as the case study with 2001 and 2011 data analysed at the level of lower super output areas and presented using geographic information system and r statistical software the findings reveal that there are high levels of composite car dependence and housing price vulnerability in many suburban areas across greater london adding to the previous areas of social deprivation found mainly in east london the composite cdha i

portfolio selection with mental accounts and background risk abstract das et al 2010 develop a model where an investor divides his or her wealth among mental accounts with motives such as retirement and bequest nevertheless the investor ends up selecting portfolios within mental accounts and an aggregate portfolio that lie on the mean variance frontier importantly they assume that the investor only faces portfolio risk in practice however many individuals also face background risk accordingly our paper expands upon theirs by considering the case where the investor faces background risk our contribution is threefold first we provide an analytical characterization of the existence and composition of the optimal portfolios within accounts and the aggregate portfolio second we show that these portfolios lie away from the mean variance frontier under fairly general conditions third we find that the composition and location of such portfolios can differ notably from those of portfolios on the mean variance frontier

determinants of democracy a panel study of over 100 countries from 1960 to 1995 finds that improvements in the standard of living predict increase in democracy as measured by a subjective indicator of electoral rights the propensity for democracy rises with per capita gdp primary schooling and a smaller gap between male and female primary attainment for a given standard of living democaracy tends to fall with urbnization and with a greater reliance on natrual resources democracy has little relation to country size but rises with the middle class share of income the apparently strong relation of democracy to colonial heritage mostly disappears when the economic variables are held constant similarly the allowance for these economic variables weakens the interplay between democracy and religious affiliation however negative effects from muslim and non religious affiliations remain intact

heterogeneous background risks and portfolio choice evidence from micro level data we construct a set of household level background risk variables to capture the covariance structure of three nonfinancial assets and two financial assets these risks are in general statistically significant and economically important for a household s stock market participation and stockholdings a one standard deviation increase in background risks reduces the participation probability by 11 and the stockholdings to wealth ratio by 4 the volatilities of labor income housing value and business income reduce a household s participation and stockholdings a household with labor income highly correlated with stock bond returns is less more likely to invest in stock

the socioeconomic impact of shared appreciation mortgages on borrowers empirical evidence from south australia shared appreciation mortgages sams realign traditional incentives in the lender borrower relationship by substituting future capital gains for interest income this makes them a potentially innovative solution to affordability and other homeownership crises taxation and regulatory barriers have impeded sam development limiting empirical studies of their impact on households this has not been the case in south australia where state government implementation of sams has made available a unique and detailed dataset of low income sam financed households examining this population it is found that sam borrowers benefit from increased budgetary expenditure on discretionary items following take up while simultaneously saving on some non discretionary items relative to a control sample furthermore sam homeownership also seems associated with increased borrower levels of neighbourhood satisfaction and community involvement overall these results indicate that sam financed homeownership leads to changes in borrower behaviour and deserves further consideration by the housing industry and research community

factors affecting trade in services evidence from panel data in the course of economic development nations have typically progressed through stages in which agriculture then manufacturing and finally services predominate concerns around the sustainabili

quantifying the decision to become a first time home buyer becoming a first time homebuyer is quantified in two stages using household data a renter demand curve is estimated to calculate the consumer surplus gain from moving into housing consumption equilibrium probit is used to estimate the probability of becoming a first time homebuyer the model suggests that overcoming the transactions cost of buying and the gain from housing consumption equilibrium are important to the decision renting is explained by current housing demand through income and family size buying for the first time is explained by factors which reduce transactions costs such as assets marital status and education disequilibrium in rental housing consumption is also important the results further suggest that permanent income is not important to the decision

background risk and university endowment funds abstract this paper tests the effect of background risk on university endowment portfolios where background risk is defined as the volatility of universities nonfinancial income the results show that higher background risk is associated with lower portfolio standard deviations universities with higher background risk invest significantly more in fixed income and less in alternative assets a 1 standard deviation increase in background risk increases the allocation to fixed income by approximately 15 relative to the mean there is also evidence that wealthier highly selective universities hold riskier portfolios

dynamic properties of energy affordability measures measures of affordability are applied in practice e g to assess the affordability of energy services water or housing they can be interpreted as measures of deprivation in a specific domain of consumption the large body of literature on affordability measure has little overlap with the existing literature on poverty measurement a comprehensive assessment of the response of affordability measures as a result of changes in the distribution of income or expenditure is missing this paper aims to fill this gap by providing a conceptual discussion on the dynamics of energy affordability measures several types of measures are examined in a microsimulation framework to assess their dynamic properties our results indicate that some measures exhibit odd dynamic behavior this includes measures used in practice such as the low income high cost measure and the double median of expenditure share indicator odd dynamic behavior is attributed to definitions made with respect to higher moments of the expenditure distribution definitions that rely on a percentage share of expenditure relative to income or an absolute or relative income poverty line fare well from a dynamic perspective

energy affordability and the benefits system in italy abstract in this paper we discuss a number of ways to define and measure the affordability of energy consumption and we examine the emergence of energy poverty in italy in the period from 1998 to 2011 the paper examines the eligibility criteria for claiming the benefits available to support energy consumption for vulnerable families and it identifies the potential beneficiaries the study assesses the appropriateness of the eligibility criteria by comparing the population targeted by the policy with the population actually facing affordability problems a simulation exercise using the hypothetical scenario most likely to result in energy benefits being made available shows that regardless of the affordability index adopted the provision of state energy benefits has little impact on fuel poverty

some stronger measures of risk aversion in the small and the large with applications the arrow pratt measures of risk aversion for von neumann morgenstern utility functions have become workhorses for analyzing problems in the microeconomics of uncertainty they have been used to characterize the qualitative properties of demand in insurance and asset markets to examine the properties of risk taking in taxation models and to study the interaction between risk and life cycle savings problems to name just a few applications equally importantly they have generated the linear risk tolerance class of utility functions which has provided canonical examples in such diverse areas as portfolio theory and the theory of teams despite these successes there have been a number of areas for which the results have been weaker than hoped it is natural to use the risk aversion measures to compare the behavior of individuals in risky choice situations for example consider the individual portfolio choice problem in a two asset world with a riskless asset and a risky asset if individual a has a uniformly higher arrow pratt coefficient of risk aversion than individual b then b will always choose a portfolio combination with more wealth invested in the risky asset but suppose that both assets are risky now there is no obvious sense in which the more risk averse individual can be said to hold a less risky portfolio but it seems strange that such a simple alteration should destroy the analytics which support the basic intuition similarly consider the basic insurance problem if one individual a is more risk averse than another b in the arrow pratt sense it follows that a will pay a larger premium to insure against a random loss than will b typically though an individual evaluates partial rather than total insurance that is only some gambles can be insured against and others must be retained in this case even when the gambles which are retained are independent from those which are insured it is no longer true that the individual whose arrow pratt measure of risk aversion is higher will pay a larger insurance premium the situation is no better when we consider comparative statics exercises for a single individual decreasing absolute risk aversion in the sense of arrow and

conditional value at risk spectral risk measures and non diversification in portfolio selection problems a comparison with mean variance analysis abstract we study portfolio selection under conditional value at risk and as its natural extension spectral risk measures and compare it with traditional mean variance analysis unlike the previous literature that considers an investor s mean spectral risk preferences for the choice of optimal portfolios only implicitly we explicitly model these preferences in the form of a so called spectral utility function within this more general framework spectral risk measures tend towards corner solutions if a risk free asset exists diversification is never optimal similarly without a risk free asset only limited diversification is obtained the reason is that spectral risk measures are based on a regulatory concept of diversification that differs fundamentally from the reward risk tradeoff underlying the mean variance framework

equity and efficiency aspects of rent control an empirical study of new york city modem rent controls arose during world war ii to deal with the war related influx into urban areas since then numerous cities have either considered adopted or eliminated rent controls the policy debate about the desirability of rent controls continues unabated and becomes particularly acute when high inflation rates drive up rents rapidly rent controls have both efficiency and distributional consequences the economics literature has produced theoretical insights about the inefficiencies created by rent controls this literature is frequently cited by opponents of rent controls who argue that the efficiency costs of rent controls are manifested in a decaying housing stock and altered mobility patterns proponents of rent control invariably argue that the distributional impacts of rent controls outweigh efficiency costs considering the large number of cities that have investigated or adopted rent controls relatively little empirical research documents either the efficiency or distributional effects of rent controls the most notable exceptions are the studies of new york city by de salvo 3 olsen 13 and roistacher 15 and the studies of los angeles by rydell et al 16 and fallis and smith 4 more recently linneman lo and marks 12 have further examined ramifications of rent controls in new york city and vancouver this paper fills some gaps in knowledge about the effects of rent controls we examine rent controls in new york city in 1968 using the new york city housing and vacancy survey 2 the paper extends the work of olsen 13 although there are important differences in both the questions addressed and methodology used this paper examines in detail the distributional consequences of rent controls for new york city residents both

assessing the accessibility of the homeownership market in this paper an examination is made of the accessibility of the homeownership market using measures that include both supply and demand characteristics of regional housing markets these measures are applied empirically on an extensive dataset that covers the dutch housing market the analysis quantifies the extent to which the position of first time buyers on the homeownership market has weakened over time and identifies the driving factors of this change it is found that smaller portions of the housing market are becoming affordable due to financial constraints of young households however more importantly first time buyers today need to contend with a much larger group of competing bidders on every house that suits their financial situation than ever before

explaining the spatial variation in homeownership rates results for german regions lerbs o w and oberst c a explaining the spatial variation in homeownership rates results for german regions regional studies this paper employs cross sectional data on ninety six german regions to investigate the interregional variability of homeownership rates among the explanatory variables the analysis includes important regional housing market indicators as well as regional socio demographic composition urbanization and labour market performance an estimation strategy is chosen which accounts for different forms of spatial dependence between the regional units it is found that regional differences in the relative price of owning versus renting and the affordability of owner occupied housing play a key role in explaining why homeownership rates vary so substantially across the country the results indicate significant neighbourhood effects for several variables

decision making with expected shortfall and spectral risk measures the problem of comparative risk aversion abstract we analyze spectral risk measures with respect to comparative risk aversion following arrow 1965 and pratt 1964 for deterministic wealth and ross 1981 for stochastic wealth we argue that the arrow pratt concept per se well matches with economic intuition in standard financial decision problems such as willingness to pay for insurance and simple portfolio problems different from the literature we find that the widely applied spectral arrow pratt measure is not a consistent measure of arrow pratt risk aversion instead the difference between the antiderivatives of the corresponding risk spectra is valid within the framework of ross we show that the popular subclasses of expected shortfall and exponential and power spectral risk measures cannot be completely ordered with respect to ross risk aversion thus for all these subclasses the concept of ross risk aversion is not generally compatible with arrow pratt risk aversion but induces counter intuitive comparative statics of its own compatibility can be achieved if asset returns are jointly normally distributed the general lesson is that these restrictions have to be considered before spectral risk measures can be applied for the purpose of optimal decision making and regulatory issues