Rising longevity, education, savings, and growth

This paper examines the impact of declines in adult mortality on growth in an overlapping generations model. With public education and imperfect annuity markets, a decline in mortality affects growth through three channels. First, it raises the saving rate and thereby increases the rate of physical capital accumulation. Second, it reduces accidental bequests, lowers investment, and thereby lowers the rate of physical capital accumulation. Third, it may lead the median voter to increase the tax rate for public education initially but lower the tax rate in a later stage. Starting from a high mortality rate as found in many Third World populations, the net effect of a decline in mortality is to raise the growth rate. However, starting from a low mortality rate such as is found in most industrial populations, the net effect of a further decline in mortality is to reduce the growth rate. The findings appear consistent with recent empirical evidence. (C) 2002 Elsevier Science B.V All rights reserved.

Detection of fruit and the selection of primate visual pigments for color vision

Primates have X chromosome genes for cone photopigments with sensitivity maxima from 535 to 562 nm. Old World monkeys and apes (catarrhines) and the New World ( platyrrhine) genus Alouatta have separate genes for 535-nm ( medium wavelength; M) and 562-nm ( long wavelength; L) pigments. These pigments, together with a 425-nm ( short wavelength) pigment, permit trichromatic color vision. Other platyrrhines and prosimians have a single X chromosome gene but often with alleles for two or three M/L photopigments. Consequently, heterozygote females are trichromats, but males and homozygote females are dichromats. The criteria that affect the evolution of M/L alleles and maintain genetic polymorphism remain a puzzle, but selection for finding food may be important. We compare different types of color vision for detecting more than 100 plant species consumed by tamarins ( Saguinus spp.) in Peru. There is evidence that both frequency-dependent selection on homozygotes and heterozygote advantage favor M/L polymorphism and that trichromatic color vision is most advantageous in dim light. Also, whereas the 562-nm allele is present in all species, the occurrence of 535- to 556-nm alleles varies between species. This variation probably arises because trichromatic color vision favors widely separated pigments and equal frequencies of 535/543- and 562-nm alleles, whereas in dichromats, long-wavelength pigment alleles are fitter.

Image scoring and cooperation in a cleaner fish mutualism

Humans are highly social animals and often help unrelated individuals that may never reciprocate the altruist's favour(1-5). This apparent evolutionary puzzle may be explained by the altruist's gain in social image: image-scoring bystanders, also known as eavesdroppers, notice the altruistic act and therefore are more likely to help the altruist in the future(5-7). Such complex indirect reciprocity based on altruistic acts may evolve only after simple indirect reciprocity has been established, which requires two steps. First, image scoring evolves when bystanders gain personal benefits from information gathered, for example, by finding cooperative partners(8-10). Second, altruistic behaviour in the presence of such bystanders may evolve if altruists benefit from access to the bystanders. Here, we provide experimental evidence for both of the requirements in a cleaning mutualism involving the cleaner fish Labroides dimidiatus. These cleaners may cooperate and remove ectoparasites from clients or they may cheat by feeding on client mucus(11,12). As mucus may be preferred over typical client ectoparasites(13), clients must make cleaners feed against their preference to obtain a cooperative service. We found that eavesdropping clients spent more time next to 'cooperative' than 'unknown cooperative level' cleaners, which shows that clients engage in image-scoring behaviour. Furthermore, trained cleaners learned to feed more cooperatively when in an `image-scoring' than in a 'non-image-scoring' situation.

On labour market dualism in the Lewis model: A comment

In a special issue of this journal commemorating the 50th anniversary of W. Arthur Lewis's (The Manchester School, Vol. 28 (1954), No. 2, pp. 139-191) seminal paper, the Lewis model is treated as a model of labour market dualism (Fields, The Manchester School, Vol. 72 (2004), No. 6, pp. 724-735). This interpretation is flawed for a number of reasons. First, it overemphasizes the role ascribed by Lewis to intersectoral earnings differentials in his original model. Second, it fails to acknowledge that a major shortcoming of the model was its inability to account for the widening intersectoral earnings differential observed across a wide range of developing economies. For Lewis himself this was one of the 'major theoretical puzzles of the period' (1979, p. 150). Third, it ignores Lewis's subsequent revision of the model (Lewis, The Manchester School, Vol. 47 (1979), No. 3, pp. 211-229) that, ironically, incorporates a dual labour market to resolve this puzzle. However, for Lewis the critical issue was dualism within the modern sector, not, as Fields understands it, labour market dualism between the modern and traditional sectors. Fields's appreciation of the contribution of the Lewis model to understanding the process of wage determination in developing economies is therefore misplaced.

The risk premium for equity: implications for resource allocation, welfare and policy

Analysis of the equity premium puzzle has focused on private sector capital markets. The object of this paper is to consider the welfare and policy implications of each of the broad classes of explanations of the equity premium puzzle. As would be expected, the greater the deviation from the first-best outcome implied by a given explanation of the equity premium puzzle, the more interventionist are the implied policy conclusions. Nevertheless, even explanations of the equity premium puzzle consistent with a general consumption-based asset pricing model have important welfare and policy implications.

The impact of target board recommendations in Australian takeovers

This paper examines the impact of targe board recommendations on the probability of the bid being successful in the Australian takeovers context. Specifically, we model the success rate of the bid as a binary dependent variable and target board recommendations or the board hostility as our key independent variable by using logistic regression framework. Our model also includes bid structures and conditions variables (such as initial bid premium, bid conditions, toehold, and interlocking relationship) and bid events (such as panel and bid duration) as our control variables. Overall, we find board hostility has statistically significant negative effect on the success rate of the bid and almost all control variables (except for the initial bid premium) are statistically significant with the correct sign. That is, we find toehold, the percentage of share required to make the bid becomes successful, and the unconditional bid have positive impact on the success rate of the bid, at least as predictive determinants prior to the release of any hostile recommendation. Consistent with Craswell (2004), we also find the negative relation between interlocking relationship and the success rate of the bid. Our finding supports that from target investors’ point of view, interlock is consistent with the negative story of self interest by directors. Finally, like Walking (1985), we find that the initial bid premium does not have influence on the success rate of the bid. Hence our results reinstate Walking’s bid premium puzzle in Australian context.