Do Households Have Rational Expectations on Future Consumption? Evidence from the Finnish Consumer Survey

Ever since its initial introduction some fifty years ago, the rational expectations paradigm has dominated the way economic theory handles uncertainty. The main assertion made by John F. Muth (1961), seen by many as the father of the paradigm, is that expectations of rational economic agents should essentially be equal to the predictions of relevant economic theory, since rational agents should use information available to them in an optimal way. This assumption often has important consequences on the results and interpretations of the models where it is applied. Although the rational expectations assumption can be applied to virtually any economic theory, the focus in this thesis is on macroeconomic theories of consumption, especially the Rational Expectations–Permanent Income Hypothesis proposed by Robert E. Hall in 1978. The much-debated theory suggests that, assuming that agents have rational expectations on their future income, consumption decisions should follow a random walk, and the best forecast of future consumption level is the current consumption level. Then, changes in consumption are unforecastable. This thesis constructs an empirical test for the Rational Expectations–Permanent Income Hypothesis using Finnish Consumer Survey data as well as various Finnish macroeconomic data. The data sample covers the years 1995–2010. Consumer survey data may be interpreted to directly represent household expectations, which makes it an interesting tool for this particular test. The variable to be predicted is the growth of total household consumption expenditure. The main empirical result is that the Consumer Confidence Index (CCI), a balance figure computed from the most important consumer survey responses, does have statistically significant predictive power over the change in total consumption expenditure. The history of consumption expenditure growth itself, however, fails to predict its own future values. This indicates that the CCI contains some information that the history of consumption decisions does not, and that the consumption decisions are not optimal in the theoretical context. However, when conditioned on various macroeconomic variables, the CCI loses its predictive ability. This finding suggests that the index is merely a (partial) summary of macroeconomic information, and does not contain any significant private information on consumption intentions of households not directly deductible from the objective economic variables. In conclusion, the Rational Expectations–Permanent Income Hypothesis is strongly rejected by the empirical results in this thesis. This result is in accordance with most earlier studies conducted on the topic.

Texts "Con and Pro" : The Early Modern Medical Controversy over Tobacco

The habit of "drinking smoke" , meaning tobacco smoking, caused a true controversy in early modern England. The new substance was used both for its alleged therapeutic properties as well as its narcotic effects. The dispute over tobacco continues the line of written controversies which were an important means of communication in the sixteenth and seventeenth century Europe. The tobacco controversy is special among medical controversies because the recreational use of tobacco soon spread and outweighed its medicinal use, ultimately causing a social and cultural crisis in England. This study examines how language is used in polemic discourse and argumentation. The material consists of medical texts arguing for and against tobacco in early modern England. The texts were compiled into an electronic corpus of tobacco texts (1577 1670) representing different genres and styles of writing. With the help of the corpus, the tobacco controversy is described and analyzed in the context of early modern medicine. A variety of methods suitable for the study of conflict discourse were used to assess internal and external text variation. The linguistic features examined include personal pronouns, intertextuality, structural components, and statistically derived keywords. A common thread in the work is persuasive language use manifested, for example, in the form of emotive adjectives and the generic use of pronouns; the latter is especially pronounced in the dichotomy between us and them. Controversies have not been studied in this manner before but the methods applied have supplemented each other and proven their suitability in the study of conflictive discourse. These methods can also be applied to present-day materials.

Production of Carcinogenic Acetaldehyde by Oral Microbiome

Oral cancer is the seventh most common cancer worldwide and its incidence is increasing. The most important risk factors for oral cancer are chronic alcohol consumption and tobacco smoking, up to 80 % of oral carcinomas are estimated to be caused by alcohol and tobacco. They both trigger an increased level of salivary acetaldehyde, during and after consumption, which is believed to lead to carcinogenesis. Acetaldehyde has multiple mutagenic features and it has recently been classified as a Group 1 carcinogen for humans by the International Agency for Research on Cancer. Acetaldehyde is metabolized from ethanol by microbes of oral microbiota. Some oral microbes possess alcohol dehydrogenase enzyme (ADH) activity, which is the main enzyme in acetaldehyde production. Many microbes are also capable of acetaldehyde production via alcohol fermentation from glucose. However, metabolism of ethanol into acetaldehyde leads to production of high levels of this carcinogen. Acetaldehyde is found in saliva during and after alcohol consumption. In fact, rather low ethanol concentrations (2-20mM) derived from blood to saliva are enough for microbial acetaldehyde production. The high acetaldehyde levels in saliva after alcohol challenge are explained by the lack of oral microbiota and mucosa to detoxify acetaldehyde by metabolizing it into acetate and acetyl coenzymeA. The aim of this thesis project was to specify the role of oral microbes in the in vitro production of acetaldehyde in the presence of ethanol. In addition, it was sought to establish whether microbial metabolism could also produce acetaldehyde from glucose. Furthermore, the potential of xylitol to inhibit ethanol metabolism and acetaldehyde production was explored. Isolates of oral microbes were used in the first three studies. Acetaldehyde production was analyzed after ethanol, glucose and fructose incubation with gas chromatography measurement. In studies I and III, the ADH enzyme activity of some microbes was measured by fluorescence. The effect of xylitol was analyzed by incubating microbes with ethanol and xylitol. The fourth study was made ex vivo and microbial samples obtained from different patient groups were analyzed. This work has demonstrated that isolates of oral microbiota are able to produce acetaldehyde in the presence of clinically relevant ethanol and glucose concentrations. Significant differences were found between microbial species and isolates from different patient groups. In particular, the ability of candidal isolates from APECED patients to produce significantly more acetaldehyde in glucose incubation compared to healthy and cancer patient isolates is an interesting observation. Moreover, xylitol was found to reduce their acetaldehyde production significantly. Significant ADH enzyme activity was found in the analyzed high acetaldehyde producing streptococci and candida isolates. In addition, xylitol was found to reduce the ADH enzyme activity of C. albicans. Some results from the ex vivo study were controversial, since acetaldehyde production did not correlate as expected with the amount of microbes in the samples. Nevertheless, the samples isolated from patients did produce significant amounts of acetaldehyde with a clinically relevant ethanol concentration.