ALBERT

Notes: This paper explores the conditions under which a monopolist selling a system consisting of a main component and differentiated secondary components can increase profits by allowing competition in the aftermarket for the secondary components. Opening the system in this fashion can increase profits by giving consumers an added incentive to incur the setup cost of purchasing the main component. This paper extends the second-sourcing literature by showing the explicit effects of various parameters of demand on the decision to open the system. The results show that an open system is likely to be more profitable than a closed one when demand for the system is more elastic, when secondary-component variety is more valued, and when the share of the main component in the total system budget of the consumer is high.

Notes: This paper contrasts assignments to punitive tasks and terminations as alternative incentive devices. The basic question we ask here is: does the threat of assigning employees to a punitive task allow one to attain higher effort levels than termination threats? The answer critically depends on whether employers are able or not to commit themselves not to fire. We show that in the no-commitment case the only relevant incentive device is termination threats. In contrast, when employers commit themselves not to fire, by threatening punitive task reassignments there obtain effort levels that are not implementable by termination. The implementation results are then applied to the study of incentive problems arising when investment infirm-specific human capital is unverifiable.

Notes: This paper examines some policy issues related to the interaction between internal and external corporate control mechanisms—board dismissals and takeovers—by focusing on the information aggregation and other effects related to this interaction. We model the functioning of corporate control mechanisms as an example of a multilayered principal-agent relationship in which shareholders delegate the task of monitoring management quality to the board and rely on the external takeover market to provide additional disciplining of the manager as well as of the board. This gives rise to two effects: (1) a substitution effect, whereby the takeover market partially substitutes for board dismissal of the manager, leading to greater lenience toward the manager by a board acting in the shareholders' best interest, and (2) a kick-in-the-pants effect, whereby the board is stricter with the manager because it may be dismissed by a successful acquirer who views it as lax. The interaction of these two effects leads to various implications about the behavior of boards and potential acquirers. In particular, a well-functioning internal control mechanism (the board) does not obviate the need for external control (takeovers). Moreover, somewhat counterintuitively, there may be a greater incidence of takeovers when the internal control mechanism is working well than when it is not.

Notes: I analyze the marketing strategy of an incumbent monopolist facing a threat of entry. Product quality is unknown to consumers, and the monopolist's cost is unknown to the potential entrant. The incumbent uses both price and advertising to signal cost and quality. The monopolist faces a dilemma because signaling a high quality attracts customers but requires a high price, whereas signaling low cost prevents entry but requires a low price. I characterize the unique (stable) separating equilibrium and show that dissipative advertising may be used, while it is never used if either quality or cost is known. Some equilibria may involve pooling on cost. A welfare analysis indicates that potential entry may improve welfare and that the effect of unknown quality is not always negative when it interferes with entry deterrence.

Notes: This paper examines minimum advertised price (MAP), a vertical restraint that is observed in manufacturer-retailer interactions. Under MAP, the manufacturer announces that it will reimburse retailers for a fraction of their advertising expenditures if retailers do not advertise the product at below a specified price. MAP can be considered a combination of resale price maintenance (RPM) and a cooperative advertising subsidy. Current antitrust law treats RPM as illegal per se, whereas MAP is judged according to a rule of reason. A framework is presented within with neither a minimum retail price nor a cooperative advertising subsidy is individually sufficient to enable maximization of profits in the complete manufacturer-retailer structure, but the two instruments together are. MAP is therefore a sufficient instrument for the maximization of joint profits. We argue that MAP can also be designed as a second-best instrument that replicates RPM.

Notes: The average chief executive at one of Britain's twelve regional electricity distribution companies experienced nearly a threefold salary increase in the two years following the industry privatization in 1990. It is hard to account for the tremendous pay raises with conventional explanations for executive compensation rates. They are not attributable to increases in managerial talent, because privatization brought virtually no changes in personnel at the top rank. In addition, the salary increases did not coincide with dramatic changes in firm scale, and cross-firm differences in the raises are uncorrelated with stock-market returns and other measures of firm performance. By contrast, salary increases are highly correlated with firms' potential profits (as measured by the administratively assigned price cap). The findings presented here thus provide new perspectives on the determinants of executive compensation.

Notes: Sellers of consumer durables often provide financing to customers. This paper shows that when customers desire consumption smoothing and when financial markets are imperfect, a seller can find it optimal to offer a menu of deferred-payment plans. A monopolist seller price discriminates among customers with different intertemporal income profiles by making such menu offers, and the interest rate on the seller credit can be significantly lower than the market borrowing rate. Seller financing can be an equilibrium outcome in a game where sellers and banks with market power choose payment plans and interest rates strategically.

Notes: Television networks spend about 16% of their revenues on tune-ins, which are previews or advertisements for their own shows. In this paper, we examine two questions. First, what is the informational content in advertising? Second, is this level of expenditures consistent with profit maximization? To answer these questions, we use a new and unique micro-level panel dataset on the television viewing decisions of a large sample of individuals, matched with data on show tune-in advertisements. The difference in effectiveness of advertisements between “regular” shows (about which viewers are assumed to have substantial information a priori) and “specials” (about which they have very little) reveals the value of information in advertisements and the different roles that information can play. The number of exposures for each individual is likely to be correlated with their preferences, since networks target their audiences. We address this endogeneity problem by controlling for observed, and integrating the unobserved, characteristics of individuals, and find that the estimated effects of tune-ins are still large. Finally, we find that actual expenditures on tune-ins closely match the predicted optimal levels of spending.

Notes: We discuss two contrasting styles of vertical organization of complementary activities or components in an industry: systems competition versus component competition. When firms' competencies differ, systems competition is not a perfect substitute for component competition, even with Bertmnd behavior. Costs, prices, industry profits, and the distribution of those profits among firms all differ between the two styles of organization. Moreover, firms' profit incentives do not generally guide them towards the socially efficient form of vertical organization. In duopoly, there is a bias towards open organization (component competition), but with enough firms (three or more, in an exponential example) this bias is reversed.

Notes: This paper proposes a simple test of the leader-follower model of strategic behavior. This test relates the temporal notions of leadership central to such models to the empirical methods of statistical causality. This test is performed using data from the US softwood plywood industry of the last three decades. Others have productively explored the spatial pricing practices of this industry by applying a leader-follower model. Similarly, we find that a leader-follower model explains well the temporal relations between key strategic variables (prices) in the industry. We conclude that the leader-follower model imposes meaningful restrictions on observable time-series data and that statistical causality is a useful method for testing these restrictions.

Notes: This paper builds an economic model of the relationship between influence activity and resistance to change in organizations. I show that influence activity can create harmful barriers to change and that the influence costs of change are positively related to the firm's prospects. The model rationalizes the widely held view that firms often must endure a survival-threatening crisis before meaningful change can be achieved. I show that employees' choices of whether to engage in influence activity can depend on their beliefs as to whether the firm will choose to change its organizational form. If employees expect change, their best response is to try to affect the form of the change in their favor.

Notes: In active investment climates where firms sequentially improve each other's products, a patent can terminate either because it expires or because a non-infringing innovation displaces its product in the market. We define the length of time until one of these happens as the effective patent life, and show how it depends on patent breadth. We distinguish lagging breadth, which protects against imitation, from leading breadth, which protects against new improved products. We compare two types of patent policy with leading breadth: (1) patents are finite but very broad, so that the effective life of a patent coincides with its statutory life, and (2) patents are long but narrow, so that the effective life of a patent ends when a better product replaces it. The former policy improves the diffusion of new products, but the latter has lower R&D costs.

Notes: We characterize equilibria of a multistage game in which competing duopolists may acquire and share information in advance of choosing their financial structure which, in turn, precedes production. Given sufficient uncertainty, equilibria exist in which the efficiency and, possibly, coordination gains to acquiring and sharing perfect information are sufficient to break Brander and Lewis's (1986) result wherein both firms issue debt to their mutual disadvantage. However, more interesting may be the robustness of that result when uncertainty is low or when information is imperfect. The key insight is that the consequences of issuing debt are invariant to the level of uncertainty, given that firms can recalibrate the terms of debt to achieve the Stackelberg solution.

Notes: Two TV channels compete on programming with respect to both time schedule (continuous choice) and program profile (discrete choice), with a directional constraint concerning time schedule (viewers cannot watch TV before they get home). We show how the relative importance of program profile and time schedule, as perceived by the viewers, determines the equilibrium outcome. Furthermore, we find that there is a first-mover disadvantage in a sequential game where one channel sets its two choice variables before its rival does, and a first-mover advantage in a semise-quential game where the channels set time schedules sequentially and thereafter set program profiles simultaneously. The results are applied to the Norwegian and Danish markets for TV news, where number-two channels have challenged the incumbents.

Notes: This paper presents a disciplinary explanation for some seemingly paradoxical stylized facts from the takeover literature. Most notable among these are: (1) hostile takeovers are predicted better by industry-wide than by firm-specific performance failures; and (2) gains from a successful bid for a specific firm extend to other firms in the same industry. Our explanation is based on the idea that managerial incentives based on relative performance evaluation may induce an inefficient industry-wide equilibrium in which all firms underperform with respect to a value-maximizing firm, but no firm underperforms with respect to the industry average. A takeover can serve as a means to destroy such an inefficient industry-wide incentive equilibrium.

Notes: We investigate the role of consumer switching costs in a three-stage model in which the entrant and the incumbent firm set prices sequentially and then the consumers decide from which firm to buy. We characterize the unique subgame perfect equilibrium and find that even an entrant with a higher marginal cost may profitably invade part of the market due to the existence of switching costs. Switching costs benefit both firms but harm consumers. This model is used to understand pricing behavior in the US telecommunications industry.

Notes: This paper analyzes how firms' investment incentives are affected by yardstick competition in a situation in which the regulator is unable to commit himself to the regulatory contract before firms invest. Despite its rent-extracting property, yardstick competition does not necessarily reduce efficiency-improving investment. Considering firm-specific investment, yardstick competition is shown to increase investment incentives over individual regulation affirms. In this case, therefore, yardstick competition both reduces the regulator's informational problem ex post and strengthens the firms' investment incentives ex ante. If instead investment is industry-specific, incentives to invest are lowered by yardstick competition.

Notes: This paper derives the decision to found a nonprofit firm as the equilibrium outcome of a multistage game among individuals who would like a public good to be provided. The model predicts that if individuals will voluntarily contribute towards provision of the public good, then it is in the self-interest of the entrepreneur to impose a nondistribution constraint on herself by founding a nonprofit firm.

Notes: This paper combines agency theory and internal-labor-market theories to explain the determinants of bonus payments among a large sample of top and middle managers from Spanish firms. A distinction is made between the decision whether to pay bonus or not and the size of the bonus. The empirical evidence confirms that the two decisions are determined by different factors. The results of the analysis show a trade-off between short-term and long-term incentives (bonuses and promotion opportunities) as well as differences in the pattern of compensation policies across economic sectors and functional areas inside the firm.

Notes: Lazear recently suggested that firms that do not expect to live for a long time will hire only safe workers. Hence their worker turnover will be lower. In this paper we test this hypothesis using both the industry growth rate and industry-average age of establishments as measures of the horizon for a particular firm. We find mixed results, both at the industry level and at the establishment level. Establishments in growing industries do indeed exhibit higher churning flows, but a high average age of establishments reduces rather than increases churning.

Notes: The paper characterizes optimal renegotiation-proof rental contracts in a model with adverse selection and hidden information. It generalizes the work of Hart and Tirole (1988) to the case of time-varying valuations. The paper considers a durable-goods monopolist who serves a nonanonymous buyer with time-varying valuation for the seller's good. The buyer's valuation has a persistent and a transient component; both are private information. The paper shows that for some range of prior beliefs the seller strictly prefers leasing to selling.

Notes: This paper examines the equilibrium degree of flexibility adopted by firms competing in oligopolistic product markets in which the value of flexibility arises from the initial presence of uncertainty over consumer preferences and its eventual resolution. The equilibrium choice of flexible mode depends on the following factors: (1) the cost of switching product design in response to revealed consumer preferences, (2) the difference in the acquisition costs of the flexible and dedicated modes, and (3) the precision of the ex ante information held by the firms regarding consumer preferences. The relationship between these factors and the equilibrium choice of modes is fully characterized.

Notes: We investigate whether competition between two firms to hire managers with different abilities might affect efficiency in the product market, when a manager's effort is his/her private information. We conclude that competition for managers might lead to an improvement in efficiency in the market of the firm that attracts the most efficient manager. Competition for managers might even eliminate the productive efficiency loss due to the asymmetry of information in the firm-manager relationship.

Notes: I reconsider the implementation of efficient cost and quality efforts when health-care providers may refuse services to consumers, and introduce a mechanism that is a combination of prospective payment and cost reimbursement. Conditions are derived for the prospective payment level and the margin above cost reimbursement for the implementation of efficient efforts.

Notes: This note analyzes the incentives for cost reduction that different payment policies provide to profit-maximizing health-care providers. Ching-to Albert Ma (1994) proposes a reimbursement mechanism that seeks to induce first-best cost reduction by using a combination of cost reimbursement and prospective payment in a model where higher effort on the part of the health-care provider reduces treatment costs. This note shows that a mechanism of this type, generally, will not result in first-best cost reduction. However, such a mechanism is optimal when the payer has efficiency and distributional concerns.

Notes: I investigate how different sources of information influence the diffusion of pharmaceutical innovations. In prescription-drug markets, both advertising and scientific information stemming from clinical trials can affect physicians' prescription choices. Using novel indices of clinical-research output, I find that both marketing and scientific evidence directly influence the diffusion process in the antiulcer-drug market, with marketing having a more pronounced influence. I also find evidence that clinical outputs are important drivers of firms' marketing efforts, affecting sales indirectly. Taken together, the direct and indirect effects of science on demand imply strong private incentives for clinical research. I conclude that product-market competition in the pharmaceutical industry is shaped by both advertising rivalries and scientific rivalries. Moreover, drug advertising may perform an important informative function.

Notes: The paper studies the effects of bundling on the bidding strategies and seller revenues in auctions when the bidders have common values for the objects. Bundling of objects before the auction reduces the problem of the winner's curse, and the bidders bid more aggressively. This does not mean that a bundled auction is always better for the seller's revenue. Indeed, there is another effect that makes the bundled auction preferable (from the seller's standpoint) if and only if the number of bidders is small. While this is the only effect present in an independent-private-values model, it does not vanish when bidders have pure common values for the objects. The paper concludes that a bundled auction is unambiguously better for the seller than separate auctions when the number of bidders is small.

Notes: There are a growing body of theoretical work, wide anecdotal evidence, and a few large-scale empirical studies supporting the view that business firms quite rarely change their organizational structure, a phenomenon usually referred to in the literature as structural inertia. The present paper aims to analyze empirically the determinants of structural inertia and organizational change. As far as we know, this work constitutes the first attempt to directly address such issues through econometric estimates based on a large, longitudinal dataset at plant level. For this purpose, we consider changes of the organizational structure within a sample composed of 438 Italian manufacturing plants observed from 1975 to 1996. More precisely, we specify and test a duration model of the likelihood of an individual plant changing the number of hierarchical tiers after a spell r, provided that no change has occurred up to T. We also analyze the direction of change, distinguishing increases from decreases of the number of managerial layers. We consider a set of plant- and industry-specific explanatory variables that are expected to induce or oppose organizational change. The findings show that the adoption of advanced manufacturing technologies and new human-resources management practices favors organizational change. On the contrary, the presence of sunk costs and the extent of influence activities figure prominently in explaining structural inertia of business organizations.

Notes: A simple model of open source software (as typified by the GNU-Linux operating system) is presented. Individual user-programmers decide whether to invest their own effort to develop a software enhancement that will become a public good if so developed. The effect of changing the population size of user-programmers is considered; finite and asymptotic results are given. Welfare results are presented. It is shown that whether development will increase when applications have a modular structure depends on whether the developer base exceeds a critical size. Potential explanations of several stylized facts are given, including why certain useful programs don't get written.

Notes: This paper examines the effect of memory loss on the continuity of behavior. We consider a player (individual or firm) who remembers previous actions but not underlying rationales. In a stable environment, relative to a full-recall scenario, memory loss increases the probability of following old policies (inertia). In a volatile environment, memory loss can decrease this probability (impulsiveness). The model provides a memory-loss explanation for some documented psychological biases, implies that inertia and organizational routines should be more important in stable environments than in volatile ones, and provides empirical implications relating memory and environmental variables to economic decisions.

Notes: Syndication arises when venture capitalists jointly invest in projects. We model and test two possible reasons for syndication: project selection, as an additional venture capitalist provides an informative second opinion; and complementary management skills of additional venture capitalists. The central question is whether venture capitalists are engaged primarily in selection or in managerial value added. These alternatives imply contrasting predictions about comparative returns to syndicated and standalone investments. Our empirical analysis, using Canadian data, finds that syndicated investments have higher returns, favoring the value-added interpretation. We also discuss risk sharing and project scale as possible reasons for syndication.

Notes: In the context of an employment relationship, I present an argument suggesting that it is more efficient for the boss to own the productive assets. The idea is that a conflict between productivity and depreciation is internalized if the player deciding what an asset is used for also has residual claims. An empirical test finds evidence consistent with this. By asking whether the boss should own the assets, the paper reverses the reasoning from the literature in which it is argued that the owner has power and thus is the boss.

Notes: Cooperative equilibria can be supported in a repeated game when players use trigger strategies. This paper tests how well trigger strategies explain behavior in two-person experimental games. Reducing payoffs for choices larger than the Cournot level induces smaller average outputs, behavior generally consistent with trigger strategy models. Reducing payoffs for choices well above the Cournot level will not affect behavior if actions are consistent with a trigger strategy involving longer-lived, less intense punishment phases (the grim-reaper strategy), but would matter for trigger strategies with short-lived but intense punishment phases. Results show that behavior is most consistent with the former.

Notes: Knickerbocker (1973) introduced the notion of oligopolistic reaction to explain why firms follow rivals into foreign markets. We develop a model that incorporates central features of Knickerbocker's story—oligopoly, uncertainty, and risk aversion—to establish the conditions required to generate follow-the-leader behavior. We find that rival foreign investment will make risk-neutral firms less inclined to move abroad once its rivals have done so. We show that Knickerbocker's prediction relies on risk aversion and derive an expression for the minimum amount of risk aversion needed to generate oligopolistic reaction.

Notes: Horizontal mergers between firms that have different costs are examined. Owners can transfer technology to an acquired firm and decide whether to consolidate or operate their firms as separate entities in the product market. Thus mergers can exhibit both efficiencies and a market-power effect. The prices of target firms are determined via a bargaining game. An equilibrium sequence of mergers entails the largest firm targeting the next largest rival firm. Initially, this sequence of mergers with technology transfers involves no consolidations and improves welfare. Ultimately, the acquisitions lead to consolidation and may decrease total welfare.

Notes: This note corrects Proposition 3 of Chang (1998).

Notes: It is often claimed that (i) managers work too hard on operational issues and do not spend enough effort on strategic activities, and (ii) something can be done about this by introducing nonfinancial performance measures, as for instance with a balanced scorecard. We give an explanation for both claims in a formal model. The distortion toward operational effort arises because with financial performance measures strategic effort can only be rewarded in the future. But renegotiation-proof long-term compensation plans entail too weak variable components in the future. This problem can be reduced by introducing performance measures that help to disentangle strategic and operational effects.

Notes: Central to so many accounts of post-war Japan, the keiretsu corporate groups lacked economic substance from the start. Conceived by Marxists committed to locating “domination” by “monopoly capital,” they found an early audience among western scholars searching for evidence of culture-specific group behavior in Japan. By the 1990s, they had moved into mainstream economic studies, and keiretsu dummies appeared in virtually all econometric regressions of Japanese industrial or financial structure. Yet the keiretsu began as a figment of the academic imagination, and they remain that today. Regardless of the keiretsu definition used, cross-shareholdings within the “groups” were trivial, even during the years when keiretsu ties were supposedly strongest. Neither does membership proxy for “main bank” ties. Econometric studies basing “keiretsu dummies” on the available rosters produce predictably haphazard and unstable results. In the end, the only reliably robust results are the artifacts of the sample biases created by the definitions themselves.

Notes: We use survey data and field research to investigate the effects of employee involvement practices on outcomes for blue-collar workers in the auto-supply industry. We find these practices raise wages by 3–5%. The causal mechanism linking involvement and wages appears to be most consistent with efficiency-wage theories, and least consistent with compensating differences. We find no evidence that employee involvement affects plants' survival or employment growth.

Notes: The modern corporation is characterized both by a separation of ownership from management and by managerial incentives that often include strategic elements in addition to the standard incentive elements. Despite the importance of these two features in the agency and corporate-governance literatures, they are absent in the treatment of the firm in the patent-licensing literature. The analysis in this paper shows how, by simply taking into account these two features of the modern corporation, it is possible to offer a new explanation for the use of royalties in licensing agreements.

Notes: This paper introduces a theory of network incentives in managed health care. Participation in the plan's network confers an economic benefit on providers; in exchange, the plan expects compliance with its protocols. The network sets a target for the number of outpatient visits in an episode of care. A provider failing to satisfy the target may be penalized by the plan's attempt to direct patients to other providers within its network. There is an equilibrium in which every provider in the network uses the target. We test the theory by observing behavior of providers before and after the introduction of managed mental health care in a large, employed population. Managed care consisted of price reductions, utilization review, and creation of a network. Quantity per episode of care fell sharply after initiation of managed care. We identify a network effect in our empirical work. The results indicate that in this case, network incentives account for most of the quantity reduction due to managed care.

Notes: In this field-based study, we interview top- and middle-level managers at Insteel Industries and conduct statistical analysis of firm-level data in order to shed light on whether activity-based costing (ABC) provides new information to managers and whether activity-based management (ABM) significantly influences product and customer-related decisions. We find that after the ABC analysis, Insteel undertook a number of process improvements that resulted in significant cost savings. Additionally, Insteel displayed a higher propensity to discontinue or increase prices of products and discontinue customers that were found comparatively unprofitable in the ABC study. Thus we provide empirical evidence that ABC influences both strategic and operational managerial decisions.

Notes: Managed care organizations control costs through restrictions on patient access to specialized services, oversight of treatment protocols, and financial incentives for providers. We investigate possible effects of such practices on the care patients receive by studying frequencies of in-hospital complications. We find significant differences in complication rates between managed care and fee-for-service patients. We investigate the sources of this variation by comparing probabilities of complications among patients with different types of managed care coverage and patients treated in different hospitals. For several patient categories, the differences in outcomes we find appear to arise not from differential treatment of patients within hospitals or from heterogeneity in patients, but from variations in care across hospitals that tend to treat patients with different insurance types.

Notes: One of the mechanisms that are implemented in the cost containment movement in the health care sectors in western countries is the definition, by the third-party payer, of a set of preferred providers. The insured patients have different access rules to such providers when ill. The rules specify the copayments patients must pay when using an out-of-plan care provider. This paper studies the competitive process among providers in terms of both prices and qualities. Competition is influenced by the status of providers as in-plan or out-of-plan care providers. Also, there is a moral hazard of provider choice related to the trade-off between freedom to choose and the need to hold down costs. It is possible to achieve the first-best allocation by an appropriate definition of the reimbursement scheme when decisions on prices and qualities are taken simultaneously (as in primary health care sectors). In contrast, some type of regulation is needed to achieve the optimal solution when decisions are sequential (as in specialized health care sectors). We also derive normative conclusions on how price controls should be implemented in some European Union member states.

Notes: If an illness is not contractible, then even partially insured consumers demand treatment for it when the benefit is less than the cost, a condition known as moral hazard. Traditional health insurance, which controls moral hazard with copayments (demand management), can result in either a deficient or an excessive provision of treatment relative to ideal insurance. In particular, treatment for a low-probability illness is deficient if illness per se has little effect on the consumer's marginal utility of income and if the consumer's price elasticity of expected demand for treatment is large relative to the risk-spreading distortion when these are evaluated at a copayment that brings forth the ideal provision of treatment. Managed care, which controls moral hazard with physician incentives, can either increase or decrease treatment delivery relative to traditional insurance, depending on whether demand management results in deficient or excessive treatment.

Notes: This paper asserts that brand pharmaceutical firms (those mostly involved in the invention and production of new drugs) engage in a set of complementary activities that are different from those of generic pharmaceutical firms (those that primarily make off-patent medicines). Complementarities of the Milgrom-Roberts variety within, but not across, these two kinds of firms make it more efficient for pharmaceutical firms to specialize in either brand or generic production. Using FDA data, I show that this is indeed the case. I then examine the firms that produce both types of drugs to see if there are market-level strategic synergies between brand and generic products. I find generic entrants that belong to a corporation that owns the brand in the market are (1) not more likely to enter, (2) not more likely to be approved faster, and (3) not more likely to deter other generics from entering. Thus the advantage, or synergy, from mixing brand and generic activities in one corporation must arise elsewhere in the operations of the firm. If not, the integrated pharmaceutical firm is not the most efficient organizational form for the production of ethical drugs.

Notes: This paper addresses the following subjects: biotechnology and consumers, concern about risks, consumer acceptance, labelling of foods produced using biotechnology, the legal approach to consumer protection, and consumer protection policies relating to biotechnology products in the European Union, the United States, Turkey and global institutions such as the Convention for Biological Diversity (CBD) and the World Trade Organisation (WTO). It is likely that biotechnology will gain ground much more rapidly in the twenty-first century than in the past. Despite rapid, detailed and precise advances in gene technology, its applications have not been the received with a great deal of consumer enthusiasm. Consumers have approached genetically modified foods with considerable apprehension and opposition. Consumer concerns about bioengineered food products focus on the questions of human health, environmental and social risks and benefits. The most important stages in the process of marketing new foods produced using biotechnology are to demonstrate user need and consumer acceptance. Generally, the technical complexity of biotechnology makes it difficult for consumers to understand details of the product and the specific attributes of biotechnology applications. Scientific uncertainty, the nature of consumer concerns and general reluctance to accept biotechnology products, increase the importance of consumer protection. Legal protection is a very important factor in the solution of new social problems related to technological advances. More specifically, consumer and environmental law support consumer protection related to foods produced with biotechnology. The basic principles of consumer law can be re-formulated as consumer rights. Environmental law is a new phenomenon, but precautionary principles and public participation in decision-making for environmental law are relevant to consumer protection relating to bioengineered food products.

Notes: Many variables have been proposed as additions to the theory of planned behaviour structure, and evidence exists to support the value of a measure of ethical obligation and self-identity. Furthermore, some research has suggested that ethical obligation may serve as an antecedent to attitude as well as intention. This paper presents findings from a large scale survey that highlights the usefulness of ethical obligation and self-identity in the prediction of intention. Additionally, the role of both these variables in the prediction of attitude is also suggested. This is examined within the ‘ethical’ context of fair trade grocery purchases. Methodological implications for further research are discussed.

Notes: This paper first presents evidence from Spain on the relationship between the labour situation of both spouses within the family and the time dedicated to the care of the children, the elderly and the infirm. Second, it analyses the effect that government benefits for such care would have on the labour market and on household poverty. The results show that while Spanish society has advanced in the incorporation of women into the labour market, most of them still have to assume total responsibility for housework and the care of the children, the elderly and the infirm. Against this background, we find that benefits would decrease female participation in the labour market and the number of hours worked, while they would also contribute towards reducing poverty.

Notes: The curriculum that pupils are taught within the classroom environment can either be reinforced or weakened by what goes on in the rest of the school environment. The study focused on pupils aged 11–12 years, to establish if healthy eating theory was put into practice in the school environment. The research encompassed three areas within the school: the pupils who are the recipients of the theory; the teacher who teaches them the importance of food and cooking skills; and the providers of food within the school environment. Three different post-primary schools located within the Coleraine area of Northern Ireland were used.

Notes: Focus group interviews were carried out at 12 preschools. The aim was to investigate children's perceptions and experiences of food, and the possibility of using focus group techniques with children aged 3–5 years. A total of 103 children participated. The children associated food and eating with rules and norms. Most children described these rules and norms as well as what they were and were not allowed to do. They knew very well the difference between acceptable and non-acceptable mealtime behaviour, and were especially aware of what they were not allowed to do. When children were asked to rate foods they ‘disliked’, they spoke instead about their favourite foods. They did not categorize food as good or bad, as adults often do, but as ‘food’ and ‘non-food’, for example, sweets were not food. The method used in this study, the focus group interview, was judged to be a useful tool for exploring how children think about and jointly reflect upon food.

Notes: The Food Standards Agency was set up in April 2000 to protect the health of the public and the interests of consumers in relation to food. Its principal purpose is to put the consumer first. But what does this mean in practice? The Agency is finding ways to help consumer organizations and consumer representatives contribute more effectively to its work. However, consumer organizations cannot hope to represent the full range of consumer perspectives, and so the Agency is keen to reach out to individual consumers using a variety of innovative mechanisms. This article will describe why the Agency was established and how it achieves its main objective of putting the consumer first. It will discuss how the Agency is developing and testing new ways of working to ensure that the consumer perspective is fully accounted for when developing and evaluating policies, including setting up an influential new Consumer Committee. It will go on to highlight a number of recent innovative consumer consultations and structures that have been established to involve consumers in Agency policy making. It will discuss these processes and how the lessons that have been learnt are informing future Agency strategies. The article will then describe how the Agency protects consumers through effective risk communication strategies and how its Annual Consumer Attitudes Survey will help it measure success so that it can continue to set new stand-ards in putting consumers first in relation to food.

Notes: Despite the increased documentation of consumers’ purchases of organic food products, the motivations for such purchases are relatively under-researched. An individual’s choice of food products can be linked clearly to ethical stances, but ethical choices can also vary from individual to individual, from industry to industry and among countries. Consequently, this paper investigates the degree to which ethical beliefs influence Scottish consumer perceptions, beliefs, attitudes and purchasing decisions, with regard to organic dairy products. Consumer purchasing motivations are revealed as being self-interest-centred (i.e. better tasting, safer), rather than altruistic. Therefore, to achieve future market development, organic dairy producers cannot rely upon the minority of hardcore green consumers to sustain growth, but must aim to modify perceptions and attitudes of larger consumer segments by implementing educational marketing campaigns that reinforce the ethical, environmental and societal benefits of organic production.

Notes: Physically disabled women today have to face the inconvenience of shopping for their own as well as their families’ clothes and the inability of finding fashionable clothes that fit any disability. A total of 40 physically disabled women between the ages of 21 years and 60 years were interviewed on the problems they experienced when shopping for fashionable clothes that fit their disabilities. A total of 40 clothing shops were observed to get information on the extent to which the shops cater for the needs of the physically disabled consumer. Results from the interviews showed that the majority of physically disabled female clothing consumers experienced major problems in finding fashionable clothes that fit their disabilities. It was also clear that these women experienced problems with unusable access routes, unsuitable parking lots, display racks that are too high, spaces between racks that are too narrow, inadequate space in fitting rooms and a lack of assistance in shops. The observations were compared with the complaints the women had and it was found that these women had not overestimated their problems.

Notes: Three denim jeans products from the same manufacturer with differentiated pricing and labels (antiqued, sandblasted, and stonewashed) were used to determine the relationship between price and quality. Both qualitative and quantitative procedures were used to analyse the garments. All three jeans were made of twill weave with 3 × 1 repeat. Both structural and performance characteristics were compared using standardized tests. Analysis of variance was used to compare the selected structural and performance characteristics among the three jeans products. Tukey’s HSD tests were used for post hoc multiple comparisons for three jeans. The findings revealed that despite the fact that all three jeans products were from the same store, and that the fabrics used the same weave, degree and direction of twist, the jeans differed significantly for several structural and performance characteristics. Several possibilities for future research were explored.

Notes: This paper investigates the magnitude of the mismeasurement that occurs when only a few education categories are used in the construction of a constant quality index for labor input. By employing a very comprehensive data set it is found that the error resulting from the omission of information on education is relatively small. The empirical results are thus supportive of the current state of practice of constructing indices of constant quality labor input.

Notes: This paper demonstrates a methodology for constructing asset accounts for a commercial fishery in which the stock, harvest, and effort level are out of sustainable equilibrium. The paper adopts the framework used by the U.S. Department of Commerce Bureau of Economic Analysis in its preliminary 1993 Integrated Economic and Environmental Accounts and follows methodologies recommended by the National Research Council committee constituted to review those efforts. The accounts were constructed for the period 1985 to 1995 for the Atlantic sea scallop fishery, a significant commercial fishery, using information obtained with the cooperation of the National Marine Fisheries Service from existing databases constructed for management purposes. No significant additional data collection was required for the purpose of this study. Differences between the net rent and user cost values of the stocks over this period indicate the inefficient exploitation of immature scallop populations.

Notes: Ann Chadeau died in April this year after a long illness. She was 58. Ann was an active member of our Association for many years, serving on the Editorial Board from 1985 to 1990 and on the Council from 1995 to 2000. All those who knew her will be saddened at the loss both for her warm and outgoing personality as well as for her professional abilities.

Notes: This paper investigates the effect of finding work by one of the household members on the probability of escaping from poverty in the Netherlands. For households with non-active heads, finding work by the head of the household is the most important (investigated) event connected with exiting poverty, nearly a third of all poverty endings. However, finding a job by the head of the household does not guarantee one leaving poverty. In practice, the success rate yields 25 percent. A multivariate analysis shows that finding a job by the head of the household increases the chance of leaving poverty with 22 percent points. So, some exits from poverty are a result of other factors or are due to selectivity of the job-finders. This difference is much larger when partners or (adult) children find jobs.

Notes: The formidable expansion in the scope of the United Nations International Comparison Project has brought into evidence limitations of the methodology used in the first three phases. The author considers that there are two indispensable conditions needed to give renewed impetus to the ICP: (a) the objectives must be redefined, and (b) the methodology must be built on an entirely new basis. He considers the broad lines of such an evolution to be the following.(a) The objective of volume comparison must be kept distinct from that of purchasing power comparison, given that both the basic material and the formulae to be used at the aggregate level differ in the two cases.(b) At the basic heading level, it is proposed, for both volume and purchasing power comparisons, to replace the multilateral approach by a “minimum scale” binary and unilateral approach, and to use the EKS method. This will make possible an improvement in the accuracy of the estimates, a reduction in the overall costs, and a drastic reduction in execution time. What is more, it would be possible to regionalize the worldwide comparison, in the sense that the results of the basic heading comparisons already obtained at the regional level for regional purposes can be used as an input in the framework of the worldwide comparison. At the aggregate level, in the framework of volume comparison, it is proposed that a constant price procedure in the spatial sense should continue to be used. It is, however, proposed that the prices of the set of countries (GK) be replaced by a structure of common “equi-distant” prices (G). This would permit the elimination of the significant systematic distortions observed in the comparison between rich and poor countries in the first three phases of ICP. What is more, this gives maximum stability to results obtained for the same countries at different geographical levels. By using a set of common “equi-distant” quantities, the same advantage can be obtained in the purchasing power comparison.

Notes: Income redistribution studies on the macro–economic level have been undertaken in Denmark for the years 1938–39, 1949, 1955, and 1963. By use of national accounts figures and all other available statistics, it was on certain assumptions possible to distribute public sector income and expenditure by income groups.A quite different approach is used in a Danish redistribution study on the micro-economic level for 1971, which relies solely on the comprehensive data from the family budget survey for that year. Unfortunately this study only relates to employee households.This paper deals with the 1963 and 1971 studies. First it describes and discusses the differences in methodology between the two studies and indicates some ideas for future studies in this field in Denmark. In the following sections some main results of the two studies are given, briefly for the 1963 study and more comprehensively for the 1971 study. The studies show the great and growing strength of the policy of redistribution through public sector income and expenditure in Denmark.It is the opinion of the authors that the appearance of redistribution studies based on comprehensive family budget surveys makes for a substantial improvement of redistribution figures, and that the purely micro-level frame of reference makes it possible to interpret the results in a more satisfactory way than before. Furthermore, the appearance of detailed input-output based national accounts data should bring about further improvements in redistribution figures through better data on indirect taxes and subsidies as well as supporting data which are necessary to link the micro and macro levels in a consistent way.

Notes: It is often discussed that inflation introduces a substantial, arbitrary and regressive redistribution of income and wealth under even mild inflation. But after a quarter century of experience with inflation in postwar Japan, very little is known about these costs of inflation on an empirical basis. Due to the complexity of the evaluation of the redistributional impact on Japan, the present paper analyzes the effects of inflation on individuals or groups as wage earners, debtors and creditors, taxpayers, and holders of real estate.The main results of the present investigation suggest that the Japanese inflation for 1955–75 did not seem to introduce much inequality in the income (flow) account in the economy, but that the inequality between households has appeared more in the wealth (stock) account, especially between the house-owner groups and non-house-owner groups. These observations are mainly derived from the following investigations; (i) the wage lag hypothesis about inflation, even if not wrong, does not seem acceptable when applied to the entire period (1955–75) as well as to each of the five sub-periods; (ii) there has been a substantial transfer of real purchasing power from households to non-financial corporations, and, to a lesser extent, to government entities in the debtor-creditor redistribution; (iii) among households, the most substantial redistribution takes place from the non-houseowners to houseowners with land, because of the huge amount of capital gains from the rapid increase in the price of real estate relative to the prices of other assets or the consumer price index, except for the last three years of rampaging inflation.

Notes: Preliminary estimates of the total incomes system of accounts (TISA) are provided for 1959 and 1969. They extend conventional accounts to include all consumption services produced by government and households as well as by enterprises, but define household purchases of durable and semi-durable goods as investment. Acquisitions of capital throughout the economy, intangible as well as tangible, and not only in the business sector, are included in capital accumulation along with, for tangible capital, net revaluations, that is capital gains net of increases in the general price level. Imputations are offered for non market consumption and capital accumulation, most prominently in unpaid household work and education. Much of government output, particularly police services and defense, is recalculated as intermediate, along with expenses related to work, while media services, treated by the United States Bureau of Economic Analysis (BEA) as business purchases of intermediate product, enter into TISA consumption. Subsidies are included in the value of product, as are services of volunteers and imputations for the underpayment of military conscripts and of jurors. Separate accounts are offered for the national income and product, business, nonprofit institutions, government enterprises, government and households.The ratios of BEA to TISA Net National Product were 81.4 percent and 76.5 percent in 1959 and 1969, respectively. BEA national income was 74.1 percent of the corresponding TISA net national income in 1959 and 69.6 percent in 1969, reflecting a greater per annum rate of growth of TISA net national income, 7.49 percent, as against 6.82 percent for the corresponding BEA national income.BEA gross private domestic investment, restricted to business acquisitions of tangible capital at original cost, was estimated as only approximately 22 percent of comprehensive TISA gross domestic capital formation in 1959 and some 20 percent in 1969. The BEA net private domestic investment growth rate of 7.32 percent per annum from 1959 to 1969 may be compared with a TISA net domestic capital formation growth rate of 9.42 percent.

Notes: The paper is concerned with the concept, definition and measurement of a service. Although services are often dismissed as immaterial goods, they are not special kinds of goods and belong in a quite different logical category from goods. The search for appropriate units of quantity in which to measure services is not an idle metaphysical pursuit. Without quantity units there can be no prices, and most economic theory becomes irrelevant. Indeed, large parts of economic theory may be irrelevant to the analysis of services anyway, precisely because they are not goods which can be exchanged among economic units. Services are as important as goods in modern developed economies and they need to be identified and quantified properly if the measurement of economic growth and inflation is to have any meaning for the economy as a whole. The concept of a service is explained in some detail in the paper, and various ways in which services can be classified for purposes of economic analysis are elaborated. The distinction between private and public goods, or rather between private and collective services, is re-examined in the light of the general concept of a service proposed in the paper. Externalities are shown to be simply special kinds of services.

Notes: This article examines several hypotheses concerning the stochastic nature of year to year variations in individual incomes in light of newly available microdata on individual earnings. In particular, the models of Solow (1951), Champernowne (1953), and Rutherford (1955) are examined in some detail, and their predictions as to changes to be expected in the distribution of individual incomes are tested. The author concludes that the distributions arrived at using these models are not very similar either to each other or to the actual distribution of earnings. Thus, he believes that as an “explanation” of earnings dynamics stochastic process models are unsatisfactory. He further criticizes these models on the grounds that they foster a bias toward the belief in the inevitability, and perhaps desirability, of the current distribution of earnings.

Notes: This paper investigates the relation between schooling and earnings across and within occupations. Across occupations earnings are positively related to mean education. Within occupations the variance in schooling levels is generally substantial, but within two thirds of the occupations no relation between schooling and earnings is observed, while in the remaining third the pattern of sensitivity varies considerably. The sensitivity of earnings to education is greater for white males than white females and substantially greater for whites than blacks. When the white sample is divided into age cohorts, the degree of sensitivity of earnings to schooling is found to be greater for younger cohorts than older ones, except for the youngest cohort in 1970. In the conclusion, a structural interpretation of the distribution of earnings is proposed to account for the findings.

Notes: The historical background and present methodology used in compiling the U.K. official estimates of the stock of fixed capital are described. Mention is made of the possibility that with the development of commercial accounting direct estimates of capital stock may be derived from enterprise accounts at some future time. For the present, however, an indirect perpetual inventory approach is followed. Some of the deficiencies of the present estimates are discussed including the effects of possible biases in the life-length assumptions, price indices and the treatment of secondhand assets. Estimates of gross capital stock are given analysed by industry group of ownership and by type of asset.Some conceptual issues are discussed in relation to user requirements, including the distinction between the stock of capital and the flow of services from it.The authors conclude that little can be done to improve the perpetual inventory estimate of fixed capital in the U.K. without devoting more resources to the collection and analysis of new information, particularly on the service lives of fixed assets, the extent of leasing and the transfer of assets between industries.

Notes: This paper is concerned with the theoretical problems of devising indexes of quality change and with some of the practical problems of constructing such indexes from market data, relating these to the various attempts to construct such indexes in the past. The general conclusion is that, while quality is inherently ordinal, there are three different indexes which might be taken as “measures” of quality change. If changes are sufficiently small, the values of all three indexes will coincide and then, only, can we consider any one of them to be an unambiguous measure of the change.

Notes: This paper assesses the effects of including wealth and the variability of income on the incidence of poverty and the degree of income inequality in Israel. A special survey, which includes data on the wealth and income of a national sample of Israeli families in 1963–64 and 1964–65, allows us to go beyond measures based on current income alone.The first section reviews earlier studies of poverty in Israel. The next section looks at poverty and inequality in terms of current income, current wealth, and a combined measure of income and wealth. The combined measure is the Hansen-Weisbrod measure (HW), which equals income plus the annuity value of wealth, assuming all wealth is just consumed at the time of death. It is interesting that, in spite of the much higher wealth inequality than income inequality, the HW measure was slightly more equally distributed than income. This result occurred because the annuity component made up a low share of the total HW measure and the correlation between income and wealth was well under 1. Although overall inequality and poverty were similar for income and HW measures, the incidence of poverty by subgroup depended on the measure used.The final section presents a dynamic view of poverty and inequality. Year-to-year changes in poverty were substantial. Because of the use of a relative poverty concept and the rise in real incomes, the real income poverty line rose by 15 percent between 1963 and 1964. Still, of those in income poverty in 1963, 37 percent managed to escape poverty in 1964. The paper shows how the degree to which poverty was stable or transitory varied substantially by age and country of origin.

Notes: Using data from the Luxembourg Income Study, I study the sensitivity of cross-national income poverty comparisons to the method in which poverty is measured. Absolute poverty comparisons that keep the purchasing power at the poverty line constant across countries lead to conclusions that differ from relative poverty comparisons in which the real value of the poverty line varies with average income. The absolute poverty ranking of countries also varies as the real value of the poverty line is lowered. Cross-national differences in household characteristics are largely irrelevant in explaining poverty differences.

Notes: Using longitudinal data which include real estate wealth, financial assets as well as consumer durables, changes in the distribution of wealth in Sweden are related to major changes in asset prices and in incentives to hold various assets in the 1980s and the beginning of the 1990s. Our analysis of the mobility of wealth indicates that decile mobility is higher in Sweden than in the U.S., while the analysis of who is gaining and who is loosing shows results similar to those of previous studies.

Notes: We demonstrate that the criteria put forward by Atkinson and Bourguignon (1987) can be satisfactorily applied to the analysis of poverty even when the demographic composition of society and the definition of poverty change over time. We show that they provide both sufficient and necessary conditions for any robust conclusions concerning the changes in welfare and poverty. We apply these criteria to a set of data tracking annual income distribution movements in France from 1977 to 1994. The Atkinson and Bourguignon criteria posit that recent changes in poverty are a function of macroeconomic fluctuations in activity.

Notes: This study focuses on the role of foreign-born households in Canada's asset market. An empirical analysis of wealth accumulation is conducted for a large sample of Canadian households circa 1977–84. This study period reflects a change in Canada's immigration policy which resulted in immigration Rows switching from Europe to Asia. A life-cycle framework is used to examine wealth accumulation behaviour of the foreign-born vis-à-vis Canadian-born households. The empirical results confirm the existence of an inverted ‘U’-shaped wealth-age profile for both Canadian and immigrant households. However, the 1977 results show that the rate of wealth accumulation is higher for the immigrant household than the Canadian-born household in pre-retirement years, while the 1984 results reveal the opposite. After retirement, the rate of wealth dissipation is slower for Canadians than for foreign-born households. Only the 1984 results indicate that public social security wealth displaces household savings for both the Canadian-born and the foreign-born by a small amount. Finally, an immigrant household exhibits a stronger transfer motive within a family than a Canadian-born household regardless of year tested.

Notes: This paper investigates the importance of increases in the productivity of producing capital in estimates of the profit rate decline which occurred in the United States during the period 1950–90. We find that, when profit rate measures take into account the increasing productivity of producing capital stock (as measured by the embodied labor required to produce it), the observed decline is about one-half that found using conventional measures of profit. This finding has important implications for interest rate and investment policies.

Notes: A number of rather traditional problems relating to the estimation of the national accounts have been raised in the recent literature. This paper examines five of these problems from the point of view of a government statistician working within certain time and resource constraints. Credibility, comprehensibility, theoretical validity, cost and analytical usefulness are the criteria which should aid in deciding how to treat such matters as the extension of the boundaries of economic production, proposed changes in the categorization of both final and intermediate expenses, the treatment of “total” welfare and estimation relating to the so-called underground economy.

Notes: Book review in this article:JAMES MEADE: Stagflation Vol 1: Wage Fixing. George Allen & Unwin LA.

Notes: In 1997, the Labour Party was elected in the UK with few explicitly articulated ideas about social security reforms. This paper reviews the large number of subsequent reforms to social security, and argues that some consistent themes have emerged. A commitment to keep to the tight spending plans of the previous, Conservative, administration left little scope for increases in benefit spending during the first two years in office. Since that time, increases in the generosity of some social security programmes have been directed towards achieving certain goals. An emphasis on encouraging paid work has been a consistent theme, whilst aims of reducing poverty rates for children and pensioners have been emphasised since 1999. Spending to achieve these goals has often been directed through means-tested programmes, and there has been a related weakening of the link between paid National Insurance contributions and benefit entitlements. It remains to be seen whether reforms to the process of income assessment will increase take-up.

Notes: Australian governments have recently moved from cash accounting to accrual accounting. Accrual accounting has been accompanied at the national government level by the introduction of a new key fiscal policy measure: the ‘fiscal balance’. This paper explains and evaluates this new fiscal measure. It concludes that, given the present fiscal policy of the Australian government, fiscal balance is a superior fiscal policy measure to the ‘cash’ budget balance measure which it replaced. However, from the alternative ‘golden rule’ policy standpoint, fiscal balance is not a meaningful fiscal policy measure — although its stock counterpart, net financial liabilities, certainly is.

Notes: This paper deals with local fiscal equalisation in Austria. The system of intergovernmental relations in Austria includes different regulations in order to equalise differences in the fiscal capacity of the municipalities. This leads to so-called ‘compensation effects’, because additional revenues from a local government's own tax are (at least partly) compensated by losses from equalisation grants. This paper carries out a detailed analysis of these compensation effects. It is shown that they create strong fiscal disincentives for the local governments: on average, 55 per cent of additional revenues from the communal tax (which is the most important of a local government's own taxes) are compensated by losses of equalisation grants. In extreme cases, local governments can lose up to 144 per cent of the additional tax yields collected. These local governments would be better off if they made no effort to increase their tax base.

Notes: This symposium arises from a one-day conference held at the Institute for Fiscal Studies on 22 May 2002. The papers presented on that day considered the social security reforms during the first term of the Labour government from a number of perspectives. The three articles published here — and the further three that will follow in Part II of the symposium — are drawn from a broader range of disciplines than is usual for Fiscal Studies papers.

Notes: British public investment has declined sharply both as a share of GDP and as a share of government spending since the 1970s. Only part of this decline is explained by privatisation, which transferred some public investment to the private sector. More important was the very large and permanent reduction in public house-building between the mid-1970s and the early 1980s. Between the late 1980s and the early 1990s, the rate of public investment recovered somewhat, but after that time it declined again, reaching a record low in 1999. The most recent decline in public investment has affected a range of central government programmes, and it has not been significantly offset by investment under the Private Finance Initiative. The government now plans to increase investment spending, although levels look set to remain low by historical standards for some time to come.

Notes: The analysis of the distributional impact of fiscal policy proposals often requires information on household expenditures and incomes. It is unusual to have one data source with information on both and this problem is generally overcome with statistical matching of independent data sources. In this paper Grade Correspondence Analysis (GCA) is investigated as a tool to improve the matching process. GCA draws out the relationships between the common variables to enable the sample to be partitioned into more homogeneous groups, prior to matching. An evaluation is conducted using the UK Family Expenditure Survey, which is unusual in containing both income and expenditure at a detailed level of disaggregation. Imputed expenditures are compared with actual expenditures through the use of indirect tax simulations. The most successful methods are then employed to enhance data from the Family Resources Survey and the synthetic dataset is used as a microsimulation model database.

Notes: Book reviewed in this article:Angus Maddison, The World Economy, A Millennial Perspective