Previous studies have found evidence for an optimal size of government with respect to GDP growth... more Previous studies have found evidence for an optimal size of government with respect to GDP growth. In this paper, I look at the impact of the size of government consumption expenditures on social welfare as measured by the Human Development Index. Utilizing dynamic GMM estimation in a panel data framework, I find that evidence for an optimal size of government with respect to social welfare.
The consumer who purchases computational power ultimately purchases a reduction in the time inter... more The consumer who purchases computational power ultimately purchases a reduction in the time interval between the initiation and the completion of work. This paper looks at computation as a commodity and the nascent industry of computational intermediation, and proposes a model for the market for computational power as distinct from the market for computers. Some interesting results emerge. The model implies that the demand for computation is discontinuous and that there is a lower limit to the quantity of computation consumers will demand that is independent of the price of power. The model identifies a range of computational powers that could be supplied by computational intermediaries but which will not be supplied by computer manufacturers, and suggests a model for pricing computation. 1 Among the entrepreneurs was a young Ross Perot who, with the founding of Electronic Data Systems, was one of the first to offer computation for rent. 2 Interactive Week, 15 January 2001, p. 74. 3 Clock-speed (i.e. cycles per second, or Hz) is frequently used as a measure for processor power in PCs. The measure is an imperfect power metric because the number of cycles required to perform a given mathematical operation varies among chip designs (this is why, for example, an 800 MHz Pentium chip is faster than an 800 MHz Celeron chip). A preferred power metric is flops (floating point operations per second). This metric directly measures the number of mathematical operations the chip performs per unit time. While a preferable metric to clock-speed, flops is also imperfect because (a) it is representative of effective speed only for operations that involve floating point calculations, and (b) the results obtained can vary depending on the type of mathematical tests performed. Throughout this paper, unless otherwise noted, the maximum sustained flops ratings are used (vs. peak flops rating) obtained from a Linpack inversion of a 1000 Â 1000 matrix. Cf. Dongarra (2002). 4 A Dell Pentium 3, 550 MHz operates at a sustained maximum power of 0.08 GF. The peak operating power-which is often quoted but rarely achieved-is 0.55 GF. Cf. The Performance Database Server, www.netlib.org.
In this paper, we attempt to integrate research on consumer information processing and the consum... more In this paper, we attempt to integrate research on consumer information processing and the consumer choice process with the goal of proposing a general framework for modeling consumer behavior in monopolistically competitive industries. Following a pattern of inductive reasoning, we posit a set of consumer behavior propositions that is consistent with observed results from context effects experiments and the phased decision-making literature. We propose that, faced with many competing brands in a monopolistically competitive environment, consumers can be said to construct consideration sets on the basis of non-compensatory rules and subsequently choose from among competing brands within a consideration set on the basis of compensatory rules. We identify five product-market characteristics that consumers use as heuristics to maximize the probability of making the optimal brand choice while minimizing the cost of acquiring and processing information about competing brands. We propose ...
Purpose: The purpose of the present work was to in-vestigate the relationship between mRNA expres... more Purpose: The purpose of the present work was to in-vestigate the relationship between mRNA expression of ERCC1 and XPB, two key genes in the nucleotide excision repair pathway, and clinical resistance of platinum-chemo-therapy in histological subtypes of epithelial ovarian cancer. Experimental Design: mRNA levels of ERCC1 and XPB in epithelial ovarian cancer specimens from 126 different individuals were assessed using reverse transcription-PCR and followed by Southern hybridization methodology. Data were analyzed by linear regression analyses and by exhaus-tive regression analyses. Results: Five different histological types of tumors were examined; serous (n 76), mucinous (n 11), clear cell (n 9), poorly differentiated (n 9), and endometroid (n 21). Numerical values for mRNA expression levels were based on internal controls for a stable comparative cell line and for -actin. Median values for ERCC1 and XPB mRNAs within clear cell tumors were, on average,>2-fold higher than the oth...
is the world's premier university source for market-oriented ideas-bridging the gap between acade... more is the world's premier university source for market-oriented ideas-bridging the gap between academic ideas and real-world problems. A university-based research center, Mercatus advances knowledge about how markets work to improve people's lives by training graduate students, conducting research, and applying economics to offer solutions to society's most pressing problems. Our mission is to generate knowledge and understanding of the institutions that affect the freedom to prosper and to find sustainable solutions that overcome the barriers preventing individuals from living free, prosperous, and peaceful lives.
Consumer Perception of Product Risks and Benefits, 2017
This chapter argues that in many markets, consumers face a choice problem in which the marginal c... more This chapter argues that in many markets, consumers face a choice problem in which the marginal cost of obtaining additional information necessary to improve a purchase decision exceeds the marginal benefit of the improved decision. For example, in the United States there are over five-hundred different brands and variations on brands of breakfast cereal. It is likely that no consumer makes the best possible purchase decision, save by accident, because the cost of obtaining full information about the competing brands far exceeds the benefit of employing the information in decision-making. In this situation, the consumer knows that the best he can hope for is a satisfactory purchase decision as opposed to the optimal purchase decision. This problem is not restricted to low-price products. The number of brands of cars, combined with the number of options available for each brand of car, and the fact that many brand attributes (e.g., mileage, handling, reliability) can only be imperfectly measured without first-hand experience, means that automobile consumers also face the problem of limited information and are aware that they face limited information. As with breakfast cereals, most automobile consumers are aware that their purchase decision will not be the optimal decision but (they hope) will be satisfactory. The lack of information presents a risk to the consumer. Because the consumer is aware of the lack of information, the consumer will attempt to mitigate the risk through the use of heuristics. Using the number and positioning of observed brands relative to each other in the attribute space, consumers infer information about the unseen brands and so improve their purchase decisions.
The Political Economy of the Voluntary Sector: Reappraisal of the Comparative Institutional Advan... more The Political Economy of the Voluntary Sector: Reappraisal of the Comparative Institutional Advantage of Voluntary Organizations Brian E. Dollery and Joe L. Wallis Cheltenham, United Kingdom: Edward Elgar, 2004 (208 pages)
In finance, researchers use exponential discounting functions to model the difference in the valu... more In finance, researchers use exponential discounting functions to model the difference in the values of a fixed sum of money received today and the same sum received in the future. Because it is mathematically simple and (at least with regard to financial calculations) logically defensible, economic psychologists have adopted exponential discounting in describing differences in utilities gained via current and future consumption. Exponential discounting, however, assumes a constant discount rate and so is inadequate for modeling cue-based behaviors--behaviors rooted in instinctual drives, including hunger, thirst, sexual desire, pain, and fear. Researchers have found that the need for immediate gratification is more intense in the presence of cue-based stimuli, and that the desire to satisfy the need intensifies with time (Laibson, 2001; Loewenstein, 1996). These findings are inconsistent with the assumption of a constant discount rate. In the presence of cue-based stimuli, a model that erroneously assumes a constant discount rate under-predicts the degree of subjective discounting at shorter time horizons and over-predicts the degree of subjective discounting at longer time horizons. Research has suggested that alternative models that allow for a varying discount rate (for example, hyperbolic discounting) would more accurately predict time-based preferences (Angeletos et al., 2001; Caballero and Pride, 1984; Laibson, 1997, 2001; Loewenstein, 2000; Wilson and Daly, 2003). The purpose of this study is to test the hypothesis that subjective discount rates vary with time horizons when subjects make decisions in the presence of cue-based stimuli, but do not vary with time horizons when subjects make decisions in the absence of cue-based stimuli. The literature on visceral cues and emotion in decision making spans psychology and neuroscience (Damasio 1994, 1996; McClure 2004; Solomon 1980). Neuroscientists have isolated the parts of the brain that govern emotion and higher cognitive thought and reasoning (McClure et al., 2004). In decision making, a cue is anything that potentially excites a subject to action. A visceral cue is a cue that has an instinctual or emotive force to it, such as hunger, thirst, sexual desire, pain, or fear (Loewenstein, 2000). Previous studies have suggested that visceral cues activate and are governed by the striatum--the part of the brain responsible for feelings of reward, pleasure, fear, and addiction (Aharon et al., 2001; Laibson, 2001; McClure et al., 2004). In contrast, the lateral prefrontal cortex is responsible for higher cognition (Aharon et al.; McClure et al.). The striatum is heavily influenced by the levels of dopamine in the brain and when stimulated by a visceral cue it causes a person to be more responsive to immediate gratification (Aharon et al.). The lateral cortex exhibits a more constant state, capable of evaluating difficult decisions, future costs and benefits, and exercising patience (Aharon et al.). Using the work pioneered in neuroscience on emotive factors, economists and psychologists have begun to work together in the study of emotive factors (which include visceral cues) and their effects on behavior and decision making (Loewenstein, 2000). Loewenstein observed that, until recently, economists have failed to include emotive factors in economic behavioral models. In assuming rationality, economic psychologists often ignore the fact that cognition is costly and that, when the cost is high enough relative to the benefit, humans will rely on non-rational approaches to decision-making (Davies & Cline, 2005). Visceral cues not only are cognitively inexpensive, but usually impact decision making at a subconscious level. Loewenstein claimed that economic models that ignore visceral cues can fail to adequately predict consumer behavior. Beginning with early childhood, humans instinctually react to different visceral drives (Bugental et al. …
This work applies previously published frameworks developed for analyzing multi-dimensional panel... more This work applies previously published frameworks developed for analyzing multi-dimensional panel data of survey forecasts to IPD forecasts from the Survey of Professional Forecasters. The paper expands on these frameworks, demonstrates that the frameworks imply the existence of new and richer measures of shocks and volatilities, and shows how these measures can be extracted from multi-dimensional forecast panels. Three distinct types of economic shocks (cumulative shocks, cross-sectional shocks, and discrete shocks) and implied volatility measures based on these shocks are calculated for IPD inflation over the period 1969 through 2004. GMM tests for forecaster biases are conducted using the expanded framework.
Proponents of estate, inheritance, and gift (EIG) taxes claim that the taxes prevent wealth from ... more Proponents of estate, inheritance, and gift (EIG) taxes claim that the taxes prevent wealth from becoming concentrated in the hands of "generational dynasties" and so help to promote economic equality. This paper presents evidence that EIG taxes can have the reverse effect-encouraging the concentration of wealth-via a greater propensity for small (versus large) businesses to be liquidated for the purpose of paying the EIG tax. This study examines business census data for 50 states over the period 1988 through 2006. Applying generalized method of moments estimation in a panel data framework, the study finds a significant negative relationship between EIG taxes and the number of small firms. The relationship steadily declines as firm size increases such that the relationship becomes positive for the largest firms.
Ethics is not a topic typically addressed by economists. Economists are positive theorists and th... more Ethics is not a topic typically addressed by economists. Economists are positive theorists and the closest they come to approaching normative issues is when maximizing multivariate utilitarian social welfare functions. Although the transition of economics from a philosophy to a science over the past three decades has been a boon to economic practice and thinking, the discipline has arguably " thrown out the baby with the bathwater, " in that few contemporary economists are comfortable discussing normative issues. Further, the filtering mechanism imposed by Ph.D. comprehensives favors students with technical and mathematical training over those with a background in philosophy and the liberal arts backgrounds. Admittedly, public finance professors do pay lip service to differing philosophical rationales for income redistribution, but one is
Previous studies have found evidence for an optimal size of government with respect to GDP growth... more Previous studies have found evidence for an optimal size of government with respect to GDP growth. In this paper, I look at the impact of the size of government consumption expenditures on social welfare as measured by the Human Development Index. Utilizing dynamic GMM estimation in a panel data framework, I find that evidence for an optimal size of government with respect to social welfare.
The consumer who purchases computational power ultimately purchases a reduction in the time inter... more The consumer who purchases computational power ultimately purchases a reduction in the time interval between the initiation and the completion of work. This paper looks at computation as a commodity and the nascent industry of computational intermediation, and proposes a model for the market for computational power as distinct from the market for computers. Some interesting results emerge. The model implies that the demand for computation is discontinuous and that there is a lower limit to the quantity of computation consumers will demand that is independent of the price of power. The model identifies a range of computational powers that could be supplied by computational intermediaries but which will not be supplied by computer manufacturers, and suggests a model for pricing computation. 1 Among the entrepreneurs was a young Ross Perot who, with the founding of Electronic Data Systems, was one of the first to offer computation for rent. 2 Interactive Week, 15 January 2001, p. 74. 3 Clock-speed (i.e. cycles per second, or Hz) is frequently used as a measure for processor power in PCs. The measure is an imperfect power metric because the number of cycles required to perform a given mathematical operation varies among chip designs (this is why, for example, an 800 MHz Pentium chip is faster than an 800 MHz Celeron chip). A preferred power metric is flops (floating point operations per second). This metric directly measures the number of mathematical operations the chip performs per unit time. While a preferable metric to clock-speed, flops is also imperfect because (a) it is representative of effective speed only for operations that involve floating point calculations, and (b) the results obtained can vary depending on the type of mathematical tests performed. Throughout this paper, unless otherwise noted, the maximum sustained flops ratings are used (vs. peak flops rating) obtained from a Linpack inversion of a 1000 Â 1000 matrix. Cf. Dongarra (2002). 4 A Dell Pentium 3, 550 MHz operates at a sustained maximum power of 0.08 GF. The peak operating power-which is often quoted but rarely achieved-is 0.55 GF. Cf. The Performance Database Server, www.netlib.org.
In this paper, we attempt to integrate research on consumer information processing and the consum... more In this paper, we attempt to integrate research on consumer information processing and the consumer choice process with the goal of proposing a general framework for modeling consumer behavior in monopolistically competitive industries. Following a pattern of inductive reasoning, we posit a set of consumer behavior propositions that is consistent with observed results from context effects experiments and the phased decision-making literature. We propose that, faced with many competing brands in a monopolistically competitive environment, consumers can be said to construct consideration sets on the basis of non-compensatory rules and subsequently choose from among competing brands within a consideration set on the basis of compensatory rules. We identify five product-market characteristics that consumers use as heuristics to maximize the probability of making the optimal brand choice while minimizing the cost of acquiring and processing information about competing brands. We propose ...
Purpose: The purpose of the present work was to in-vestigate the relationship between mRNA expres... more Purpose: The purpose of the present work was to in-vestigate the relationship between mRNA expression of ERCC1 and XPB, two key genes in the nucleotide excision repair pathway, and clinical resistance of platinum-chemo-therapy in histological subtypes of epithelial ovarian cancer. Experimental Design: mRNA levels of ERCC1 and XPB in epithelial ovarian cancer specimens from 126 different individuals were assessed using reverse transcription-PCR and followed by Southern hybridization methodology. Data were analyzed by linear regression analyses and by exhaus-tive regression analyses. Results: Five different histological types of tumors were examined; serous (n 76), mucinous (n 11), clear cell (n 9), poorly differentiated (n 9), and endometroid (n 21). Numerical values for mRNA expression levels were based on internal controls for a stable comparative cell line and for -actin. Median values for ERCC1 and XPB mRNAs within clear cell tumors were, on average,>2-fold higher than the oth...
is the world's premier university source for market-oriented ideas-bridging the gap between acade... more is the world's premier university source for market-oriented ideas-bridging the gap between academic ideas and real-world problems. A university-based research center, Mercatus advances knowledge about how markets work to improve people's lives by training graduate students, conducting research, and applying economics to offer solutions to society's most pressing problems. Our mission is to generate knowledge and understanding of the institutions that affect the freedom to prosper and to find sustainable solutions that overcome the barriers preventing individuals from living free, prosperous, and peaceful lives.
Consumer Perception of Product Risks and Benefits, 2017
This chapter argues that in many markets, consumers face a choice problem in which the marginal c... more This chapter argues that in many markets, consumers face a choice problem in which the marginal cost of obtaining additional information necessary to improve a purchase decision exceeds the marginal benefit of the improved decision. For example, in the United States there are over five-hundred different brands and variations on brands of breakfast cereal. It is likely that no consumer makes the best possible purchase decision, save by accident, because the cost of obtaining full information about the competing brands far exceeds the benefit of employing the information in decision-making. In this situation, the consumer knows that the best he can hope for is a satisfactory purchase decision as opposed to the optimal purchase decision. This problem is not restricted to low-price products. The number of brands of cars, combined with the number of options available for each brand of car, and the fact that many brand attributes (e.g., mileage, handling, reliability) can only be imperfectly measured without first-hand experience, means that automobile consumers also face the problem of limited information and are aware that they face limited information. As with breakfast cereals, most automobile consumers are aware that their purchase decision will not be the optimal decision but (they hope) will be satisfactory. The lack of information presents a risk to the consumer. Because the consumer is aware of the lack of information, the consumer will attempt to mitigate the risk through the use of heuristics. Using the number and positioning of observed brands relative to each other in the attribute space, consumers infer information about the unseen brands and so improve their purchase decisions.
The Political Economy of the Voluntary Sector: Reappraisal of the Comparative Institutional Advan... more The Political Economy of the Voluntary Sector: Reappraisal of the Comparative Institutional Advantage of Voluntary Organizations Brian E. Dollery and Joe L. Wallis Cheltenham, United Kingdom: Edward Elgar, 2004 (208 pages)
In finance, researchers use exponential discounting functions to model the difference in the valu... more In finance, researchers use exponential discounting functions to model the difference in the values of a fixed sum of money received today and the same sum received in the future. Because it is mathematically simple and (at least with regard to financial calculations) logically defensible, economic psychologists have adopted exponential discounting in describing differences in utilities gained via current and future consumption. Exponential discounting, however, assumes a constant discount rate and so is inadequate for modeling cue-based behaviors--behaviors rooted in instinctual drives, including hunger, thirst, sexual desire, pain, and fear. Researchers have found that the need for immediate gratification is more intense in the presence of cue-based stimuli, and that the desire to satisfy the need intensifies with time (Laibson, 2001; Loewenstein, 1996). These findings are inconsistent with the assumption of a constant discount rate. In the presence of cue-based stimuli, a model that erroneously assumes a constant discount rate under-predicts the degree of subjective discounting at shorter time horizons and over-predicts the degree of subjective discounting at longer time horizons. Research has suggested that alternative models that allow for a varying discount rate (for example, hyperbolic discounting) would more accurately predict time-based preferences (Angeletos et al., 2001; Caballero and Pride, 1984; Laibson, 1997, 2001; Loewenstein, 2000; Wilson and Daly, 2003). The purpose of this study is to test the hypothesis that subjective discount rates vary with time horizons when subjects make decisions in the presence of cue-based stimuli, but do not vary with time horizons when subjects make decisions in the absence of cue-based stimuli. The literature on visceral cues and emotion in decision making spans psychology and neuroscience (Damasio 1994, 1996; McClure 2004; Solomon 1980). Neuroscientists have isolated the parts of the brain that govern emotion and higher cognitive thought and reasoning (McClure et al., 2004). In decision making, a cue is anything that potentially excites a subject to action. A visceral cue is a cue that has an instinctual or emotive force to it, such as hunger, thirst, sexual desire, pain, or fear (Loewenstein, 2000). Previous studies have suggested that visceral cues activate and are governed by the striatum--the part of the brain responsible for feelings of reward, pleasure, fear, and addiction (Aharon et al., 2001; Laibson, 2001; McClure et al., 2004). In contrast, the lateral prefrontal cortex is responsible for higher cognition (Aharon et al.; McClure et al.). The striatum is heavily influenced by the levels of dopamine in the brain and when stimulated by a visceral cue it causes a person to be more responsive to immediate gratification (Aharon et al.). The lateral cortex exhibits a more constant state, capable of evaluating difficult decisions, future costs and benefits, and exercising patience (Aharon et al.). Using the work pioneered in neuroscience on emotive factors, economists and psychologists have begun to work together in the study of emotive factors (which include visceral cues) and their effects on behavior and decision making (Loewenstein, 2000). Loewenstein observed that, until recently, economists have failed to include emotive factors in economic behavioral models. In assuming rationality, economic psychologists often ignore the fact that cognition is costly and that, when the cost is high enough relative to the benefit, humans will rely on non-rational approaches to decision-making (Davies & Cline, 2005). Visceral cues not only are cognitively inexpensive, but usually impact decision making at a subconscious level. Loewenstein claimed that economic models that ignore visceral cues can fail to adequately predict consumer behavior. Beginning with early childhood, humans instinctually react to different visceral drives (Bugental et al. …
This work applies previously published frameworks developed for analyzing multi-dimensional panel... more This work applies previously published frameworks developed for analyzing multi-dimensional panel data of survey forecasts to IPD forecasts from the Survey of Professional Forecasters. The paper expands on these frameworks, demonstrates that the frameworks imply the existence of new and richer measures of shocks and volatilities, and shows how these measures can be extracted from multi-dimensional forecast panels. Three distinct types of economic shocks (cumulative shocks, cross-sectional shocks, and discrete shocks) and implied volatility measures based on these shocks are calculated for IPD inflation over the period 1969 through 2004. GMM tests for forecaster biases are conducted using the expanded framework.
Proponents of estate, inheritance, and gift (EIG) taxes claim that the taxes prevent wealth from ... more Proponents of estate, inheritance, and gift (EIG) taxes claim that the taxes prevent wealth from becoming concentrated in the hands of "generational dynasties" and so help to promote economic equality. This paper presents evidence that EIG taxes can have the reverse effect-encouraging the concentration of wealth-via a greater propensity for small (versus large) businesses to be liquidated for the purpose of paying the EIG tax. This study examines business census data for 50 states over the period 1988 through 2006. Applying generalized method of moments estimation in a panel data framework, the study finds a significant negative relationship between EIG taxes and the number of small firms. The relationship steadily declines as firm size increases such that the relationship becomes positive for the largest firms.
Ethics is not a topic typically addressed by economists. Economists are positive theorists and th... more Ethics is not a topic typically addressed by economists. Economists are positive theorists and the closest they come to approaching normative issues is when maximizing multivariate utilitarian social welfare functions. Although the transition of economics from a philosophy to a science over the past three decades has been a boon to economic practice and thinking, the discipline has arguably " thrown out the baby with the bathwater, " in that few contemporary economists are comfortable discussing normative issues. Further, the filtering mechanism imposed by Ph.D. comprehensives favors students with technical and mathematical training over those with a background in philosophy and the liberal arts backgrounds. Admittedly, public finance professors do pay lip service to differing philosophical rationales for income redistribution, but one is
Proceedings from a conference at Ohio University, November 2013, sponsored by the George Washingt... more Proceedings from a conference at Ohio University, November 2013, sponsored by the George Washington Forum in American Ideas
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Papers by Antony Davies