externality and literacy a note abstract kaushik basu and james foster 1998 have opened up an interesting approach to the measurement of literacy in which the phenomenon of externality has an important role to play the externality these authors examine is what one may call a material externality and they demonstrate that reckoning such an externality in the measurement of literacy provides an instrumental justification for horizontal equity the present note elucidates this link through a specific formulation of the basu foster thesis it also suggests that apart from a material externality there is also a psychic externality to be considered the psychic externality runs in a direction somewhat orthogonal to that of the material externality postulated by basu and foster and it is shown that reckoning such an externality in the measurement of literacy provides an instrumental justification for being sensitive to levels of literacy attainment in comparisons of literacy improvements in a broad sense the note suggests

price adjustment in long term contracts the case of coal in two recent papers i examined the effects of relationship specific investment on the duration of contracts negotiated between electric utilities and coal suppliers that work demonstrated that when relationshipspecific investment is important for a cost minimizing supply relationship contracts are frequently utilized that specify ex ante the terms and conditions of trade over many future years in this article i examine the characteristics of the price adjustment provisions specified in these long term coal contracts i utilize a sample of about 250 coal contracts to analyze the structure of formal price adjustment provisions in coal contracts in order to determine the factors that affect initial negotiated contract prices and to examine actual transaction price behavior over time there has been much recent theoretical work as well as some related empirical work that has focused on the benefits of long term contracts when relationship specific investments are important 2 there has also been some theoretical work that focuses on the contractual arrangements that may be chosen to mitigate opportunism problems and guard against

support for a characteristics approach evidence from the market for insecticides a procedure is developed to test the principal prediction of characteristics theory all products are priced to appear on a convex market opportunity frontier the feasibility of this testing procedure is shown by its application to the u s insecticide market during each year between 1944 and 1987 results provide the first empirical support for characteristics theory

identifying the competition we propose a utility method of identifying the set of competitors that a product faces we apply the method to the 1987 u s new automobile market

is it better to be a boy a disaggregated outlay equivalent analysis of gender bias in papua new guinea the demographic evidence of gender bias in many countries has provided an impetus for finding ways to study the status of women in developing countries because of the lack of accurate intra household data deaton 1989 introduced a method for using household expenditure data to infer discrimination in the allocation of goods between boys and girls few studies of discrimination using the method however have detected bias even though alternative indicators suggest it is a serious problem in this paper we study the case of papua new guinea a country in which there are many indicators of severe gender bias discrimination in the allocation of goods between boys and girls within households in papua new guinea is examined using deaton s outlay equivalent ratio method adding a boy to the household reduces expenditure on adult goods by as much as would a nine tenths reduction in total outlay per member but girls have no effect on adult goods expenditure the hypothesis of haddad and reardon 1993 that

poverty and household size the widely held view that larger families tend to be poorer in developing countries has influenced research and policy the scope for size economies in consumption cautions against this view we find that the correlation between poverty and size vanishes in pakistan when the size elasticity of the cost of living is about 0 6 this turns out to be the elasticity implied by a modified version of the food share method of setting scales by contrast some measures of child nutritional status indicate an elasticity of unity consideration of the weight attached to child versus adult welfare may help resolve the non robustness of demographic profiles of poverty excerpt

health as a family matter do intra household education externalities matter for maternal and child health abstract this paper is concerned with the role of education as a determinant of health care choices the central premise of the paper is that utilisation of health services is determined not solely by an individual s own education but rather by a notion of effective education which incorporates the educational attainment of other household members the paper sets out a general framework for representing intra household education externalities and proposes a number of specific hypotheses concerning the way in which the education of different household members affects health care choices these hypotheses are tested on data from mozambique focusing on maternity services child immunisations and child malnutrition we draw four major conclusions from the analysis first while maternal education seems to be the education variable of primary importance for the health service and malnutrition variables under consideration the education of other household members does have a significant and sometimes larg

contract duration and relationship specific investments empirical evidence from coal markets this paper examines the importance of specific relationship investments in determining the duration of coal contracts negotiated between coal suppliers and electric utilities data for 277 coal contracts are used to perform the analysis the results provide strong support for the view that buyers and sellers make longer commitments to the terms of future trade at the contract execution stage and rely less on repeated bargaining when relationship specific investments are more important

a modified human development index abstract this paper discusses a modified index for measuring human development the suggested index is based on the components of the human development index hdi developed by the united nations development programme undp since 1990 it discusses two categories of technical issues related to the hdi for 1995 those related to the components and those relevant to the structure of the index the data from the human development report 1995 for 174 countries are used to test the robustness of the suggested index and the results are compared to those of the hdi the new index is then used to delineate with some justification different groups of countries at various levels of human development

non linearities and equivalence scales this paper focuses on the estimation and testing of equivalence scales in the context of a demand system with nonline ar logarithmic expenditure effects in its budget share equations the authors show that such nonlinearity enables one to identify the scal es without demographic separability restrictions on preferences and to avoid false rejection of the hypothesis that the scales are independ ent of the base utility level the empirical analysis is based on micro data drawn from the u k family expenditure survey copyright 1993 by royal economic society

your retirement and my health behavior evidence on retirement externalities from a fuzzy regression discontinuity design this paper presents evidence on intra household retirement externalities by assessing the causal effect of partner s retirement on own health behaviour in europe we identify partner s retirement effects by applying a fuzzy regression discontinuity rd framework using retirement eligibility as an exogenous instrument for partner s retirement status using data from the survey of health ageing and retirement in europe share we find that while partner s retirement increases own physical activity it also increases smoking by up to 7 cigarettes a day and increases alcohol intake by 1 2 drinks per day furthermore we find that physical activity increases only for individuals that are themselves retired pointing toward compensated effects that arise due to husband s and wife s retirement being complements similarly an increase in alcohol intake is observed only if the individuals are themselves retired and an increase in smoking is only observed if the partner is a smoker suggesting mutual positive externalities and leisure complementarities

product portfolios and the introduction of new products an example from the insecticide industry this article explores how the introduction of new products by multiproduct firms might be affected by existing goods in each firm s portfolio a logit analysis is conducted to estimate the effects of local monopoly power cost advantages and learning characteristics theory is used to determine whether the addition of a new product by a firm s existing portfolio creates the potential for local monopoly power while the chemical similarity of products has the largest effect results nonetheless indicate the empirical significance of potential monopoly power in influencing product introductions by multiproduct firms

the income earned by women impacts on welfare outcomes abstract this paper provides an updated review of the evidence on income pooling across household members income pooling is one of the main predictions of the unitary model of the household new studies come to much the same conclusion as do past studies income pooling and the unitary model are rejected the paper then looks beyond the mere rejection of the unitary model and explores some of the issues that arise first what is the progress in testing the restrictions imposed by non unitary models of the household second what are the implications of rejection of the unitary model for policy and program design finally what are some of the challenges faced by programs and policies that internalize the rejection of income pooling in terms of impact evaluation

literacy sharing assortative mating or what labour market advantages and proximate illiteracy revisited abstract this paper explores the relationship between household literacy and the labour market outcomes of illiterate household members which basu narayan and ravallion 2002 report using household income and expenditure data from bangladesh bnr attribute a considerable wage premium for proximate illiterate women in off farm employment to labour productivity gains from intra household literacy sharing this wage premium also suggests that women may be more efficient recipients of literacy externalities than men we propose that any such relationship might not be due to higher labour productivity but may have other explanations such as systematically different and unobserved attributes of illiterate females married into literate households we also pay attention to the negative selection of illiterate females into non farm wage employment which contrary to received wisdom suggests that household literacy may not be unambiguously progressive for females we propose that the widely reported finding that

household equivalence scales theory versus policy researchers agree that household equivalence scales are intended to measure the variation in income needed to bring households of different composition to the same welfare level researchers do not agree however about how the term household welfare is to be defined this article traces the historical and philosophical development of three distinct definitions when the conceptual bases of several popular methods for the estimation of equivalence scales are explored it becomes clear that advances in theoretical rigor have not always worked to bring the literature closer to answering questions of policy concern

the governance of transactions joskow s coal burning generating plants example revisited abstract in a classical paper joskow 1985 journal of law economics and organization 1 1 fall 33 80 discussed governance mechanisms for transactions between coal suppliers and electric power companies vertical integration long term and short term contracts according to the foundations of transaction cost economics vertical integration and long term contracts would be the most probable outcome when a coal burning generating plant requires durable transaction specific investments a mine mouth plant is an extreme situation this hypothesis is evaluated in the spanish context through a case study of 14 power plants located in coalfields and which have historically had poor transportation infrastructure the analysis shows that the role played by long term contracts in joskow s us example was taken in spain by state interventionist arrangements established to promote thermoelectric development in the coalfields such arrangements induced electric utilities to carry out specific investments whose only guarantee was a tacit commitment to recovery through regulation these plants would have become stranded in a pure competitive scenario so the government accepting the implicit contract argument recognised the value of these stranded investments within a highly controversial package of transition costs in the process of liberalising the electricity industry

child growth shocks and food aid in rural ethiopia this brief summarizes the results of a gender impact evaluation study entitled child growth shocks and food aid in rural ethiopia conducted between 1995 and 1996 in ethiopia the study observed the impact of food aid on child growth and shocks in communities on the child level food aid has a positive significant impact on the growth in height of children the total amount of food aid appears on average to be sufficient to offset the negative effects of plot damage on child growth given the fact there remains a massive amount of child stunting there must be large amounts of mis targeting of aid girls seem to be more resilient to shocks than boys

measuring poverty and differences in family composition the equivalence scales used to adjust for differences in family composition when measuring poverty exhibit considerable variation this paper suggests an alternative approach that allows for differences in social judgements regarding the treatment of different types of family and examines the relation with the choice of poverty measure the resulting dominance criteria cannot provide a complete ranking but allow the extent of disagreement to be identified their application is illustrated by the example of changes in child benefits copyright 1992 by the london school of economics and political science

shared literacy and employment in the nonfarm sector this article empirically examines the external effect of family literacy on the earnings of illiterate workers considering recent findings that rural nonfarm sectors in developing countries are becoming more important in determining the welfare of households this article tests two hypotheses 1 an illiterate person living with literate members i e a proximate illiterate person is more likely to find a job in the nonfarm sector than is an illiterate person living with no literate person i e an isolated illiterate person and 2 wage income of a proximate illiterate worker is higher than that of an isolated illiterate worker the empirical results suggest that proximate illiterate persons earn higher wages than isolated illiterate persons because they are more likely to be employed in the nonfarm sector

the performance of long term contracts further evidence from coal markets this article extends my previous work on price adjustment in long term coal contracts to cover a period in which the nominal market prices for coal were below the prices specified in the preexisting long term contracts two related sets of questions are explored first did actual transactions prices for coal delivered pursuant to old contracts follow contractual pricing formulas leading to higher rather than lower prices or did they adapt quickly to changing market conditions second what were the relative roles offormal contractual provisions voluntary renegotiation and breach of contractual promises in determining actual transactions prices quantities and the durability of contractual relations it appears that actual transactions prices for coal delivered pursuant to old contracts were rigid downward following written contractual provisions rather than changes in current market values changing economic conditions led to an increase in renegotiation breach and litigation but the vast majority of existing long term contracts endured through the market downturn without major changes in prices or quantities from those previously agreed to by contract the threat of legal sanctions appears to have played an important role in sustaining contractual promises

a cost benefit analysis of female primary education as a means of reducing hiv aids in tanzania this article uses panel data related to 20 tanzania regions and 8 years to estimate the direct and indirect effects of female primary education on hiv aids rates a recursive framework for education income and infections is employed based on two autoregressive equations that allow us to obtain dynamic estimates of effectiveness we find that the indirect effect working through changes in income outweighs the direct positive effect of education on infections implying that female education can be effective as an intervention to lower the disease in tanzania the estimates of effectiveness are then utilized to carry out a cost benefit analysis of the education expenditures the human capital approach is used to measure the benefits irrespective of the timing of the benefits and costs and the discount rate alternatives we consider our best estimates result in positive net benefits with benefit cost ratios in the range 1 3 2 9 this article was completed with the financial assistance provided by the

literacy and intrahousehold externalities abstract the size of the intrahousehold externality created when a literate household member provides literacy services to illiterate members is estimated in this paper using a model of children s height for age in papua new guinea this externality appears to be large these results support the use of a new measure of literacy developed by basu and foster 1998 to take account of the gains when illiterates live in households where at least one person is literate regional rankings change when the new measure of literacy is used suggesting that policies guided by the usual measure of adult literacy may overlook an important pathway for human development

tenure security resource endowments and tree growing evidence from the amhara region of ethiopia we analyze roles of tenure insecurity and household endowments in explaining tree growing in ethiopia where farmers cannot sell or mortgage land and factor markets are imperfect unlike most other studies we use panel data and examine determinants of the decision and intensity of tree growing unlike other studies we compare the decision to keep trees and the decision to plant in the recent past the results suggest that land tenure insecurity influences the decision to grow trees but not the number of trees households grow household endowments time and location also explain tree growing by farmers

prices infrastructure household characteristics and child height household survey data from brazil matched with information collected at the municipio county level are used to examine the relation between parental characteristics primarily education community infrastructure and services and child height data are drawn from 2 sources informacoes basicas municipais 1974 is a periodic survey of 4000 municipios on infrastructure health and education services estudo nacional da despesa familiar 1974 75 is a household survey covering 37000 children under age 8 on income expenditure anthropometry and socio demographic characteristics local food price indices were derived from these data child height is significantly affected by local infrastructure particularly modern sewerage and piped water in urban areas and electricity in rural settings these effects are stronger for children over 2 those of better educated mothers and those in households spending more higher prices for dairy products and sugar are linked to lower urban child height and higher fish prices to lower rural child height significantly for children of illiterate mothers higher prices for meat and rice are associated with taller height possible because men usually eat these foods mothers with elementary schooling can counteract the effects of food prices on child height number of teachers is positively related to height in rural children numbers of nurses and of hospital beds is associated with shorter children suggesting that large hospitals locate in poor urban areas this study has succeeded in identifying some public investments that affect child health