Separation and hedging results with state-contingent production

A state-contingent model of production under uncertainty is developed and compared with more traditional models of production under uncertainty. Producer behaviour with both production and price risk, in the presence and in the absence of futures and forward markets, is analysed in this state-contingent framework. Conditions for the optimal hedge to be positive or negative are derived. We also show that, under plausible conditions, a risk-averse producer facing price uncertainty and the ability to hedge price risk will never willingly adopt a nonstochastic technology. New separation results, which hold in the presence of both price and production risk, are then developed. These separation results generalize Townsend's spanning results by reducing the number of necessary forward markets by one.

Potential demand for hedging by Australian wheat producers

The potential for hedging Australian wheat with the new Sydney Futures Exchange wheat contract is examined using a theoretical hedging model parametised from previous studies. The optimal hedging ratio for an 'average' wheat farmer was found to be zero under reasonable assumptions about transaction costs and based on previously published measures of risk aversion. The estimated optimal hedging ratios were found by simulation to be quite sensitive to assumptions about the degree of risk aversion. If farmers are significantly more risk averse than is currently believed, then there is likely to be an active interest in the new futures market.

Evidence-based medicine is affordable: The cost-effectiveness of current compared with optimal treatment in rheumatoid and osteoarthritis

Objective. To determine the cost-effectiveness of averting the burden of disease. We used secondary population data and metaanalyses of various government-funded services and interventions to investigate the costs and benefits of various levels of treatment for rheumatoid arthritis (RA) and osteoarthritis (OA) in adults using a burden of disease framework. Method. Population burden was calculated for both diseases in the absence of any treatment as years lived with disability (YLD), ignoring the years of life lost. We then estimated the proportion of burden averted with current interventions, the proportion that could be averted with optimally implemented cut-rent evidence-based guidelines, and the direct treatment cost-effectiveness ratio in dollars per YLD averted for both treatment levels. Results. The majority of people with arthritis sought medical treatment. Current treatment for RA averted 26% of the burden, with a cost-effectiveness ratio of $19,000 per YLD averted. Optimal, evidence-based treatment would avert 48% of the burden. with a cost-effectiveness ratio of $12,000 per YLD averted. Current treatment of OA in Australia averted 27% of the burden, with a cost-effectiveness ratio of $25,000 per YLD averted. Optimal, evidence-based treatment would avert 39% of the burden, with an unchanged cost-effectiveness ratio of $25,000 per YLD averted. Conclusion. While the precise dollar costs in each country will differ, the relativities at this level of coverage should remain the same. There is no evidence that closing the gap between evidence and practice would result in a drop in efficiency.

Modelling the population cost-effectiveness of current and evidence-based optimal treatment for anxiety disorders

Background. The present paper describes a component of a large Population cost-effectiveness study that aimed to identify the averted burden and economic efficiency of current and optimal treatment for the major mental disorders. This paper reports on the findings for the anxiety disorders (panic disorder/agoraphobia, social phobia, generalized anxiety disorder, post-traumatic stress disorder and obsessive-compulsive disorder). Method. Outcome was calculated as averted 'years lived with disability' (YLD), a population summary measure of disability burden. Costs were the direct health care costs in 1997-8 Australian dollars. The cost per YLD averted (efficiency) was calculated for those already in contact with the health system for a mental health problem (current care) and for a hypothetical optimal care package of evidence-based treatment for this same group. Data sources included the Australian National Survey of Mental Health and Well-being and published treatment effects and unit costs. Results. Current coverage was around 40% for most disorders with the exception of social phobia at 21%. Receipt of interventions consistent with evidence-based care ranged from 32% of those in contact with services for social phobia to 64% for post-traumatic stress disorder. The cost of this care was estimated at $400 million, resulting in a cost per YLD averted ranging from $7761 for generalized anxiety disorder to $34 389 for panic/agoraphobia. Under optimal care, costs remained similar but health gains were increased substantially, reducing the cost per YLD to < $20 000 for all disorders. Conclusions. Evidence-based care for anxiety disorders would produce greater population health gain at a similar cost to that of current care, resulting in a substantial increase in the cost-effectiveness of treatment.

On the optimal ratio of heavy to light chain genes for efficient recombinant antibody production by CHO cells

Monoclonal antibodies (Mab) are heterotetramers consisting of an equimolar ratio of heavy chain (HC) and light chain (LC) polypeptides. Accordingly, most recombinant Mab expression systems utilize an equimolar ratio of heavy chain (he) to light chain (lc) genes encoded on either one or two plasmids. However, there is no evidence to suggest that this gene ratio is optimal for stable or transient production of recombinant Mab. In this study we have determined the optimal ratio of hc:lc genes for production of a recombinant IgG(4) Mab, cB72.3, by Chinese hamster ovary (CHO) cells using both empirical and mathematical modeling approaches. Polyethyleneimine-mediated transient expression of cB72.3 at varying ratios of hc:lc genes encoded on separate plasmids yielded an optimal Mab titer at a hc:lc gene ratio of 3:2; a conclusion confirmed by separate mathematical modeling of the Mab folding and assembly process using transient expression data. On the basis of this information, we hypothesized that utilization of he genes at low hc:lc gene ratios is more efficient. To confirm this, cB72.3 Mab was transiently produced by CHO cells at constant he and varying lc gene dose. Under these conditions, Mab yield was increased with a concomitant increase in lc gene dose. To determine if the above findings also apply to stably transfected CHO cells producing recombinant Mab, we compared the intra- and extracellular ratios of HC and LC polypeptides for three GS-CHO cells lines transfected with a 1:1 ratio of hc:lc genes and selected for stable expression of the same recombinant Mab, cB72.3. Intra- and extracellular HC:LC polypeptide ratios ranged from 1:2 to 1:5, less than that observed on transient expression of the same Mab in parental CHO cells using the same vector. In conclusion, our data suggest that the optimal ratio of hc:lc genes used for transient and stable expression of Mab differ. In the case of the latter, we infer that optimal Mab production by stably transfected cells represents a compromise between HC abundance limiting productivity and the requirement for excess LC to render Mab folding and assembly more efficient.

A review of the use of the basic cation saturation ratio and the "ideal" soil

The use of 'balanced' Ca, Mg, and K ratios, as prescribed by the basic cation saturation ratio (BCSR) concept, is still used by some private soil-testing laboratories for the interpretation of soil analytical data. This review aims to examine the suitability of the BCSR concept as a method for the interpretation of soil analytical data. According to the BCSR concept, maximum plant growth will be achieved only when the soil’s exchangeable Ca, Mg, and K concentrations are approximately 65 % Ca, 10 % Mg, and 5 % K (termed the ‘ideal soil’). This ‘ideal soil’ was originally proposed by Firman Bear and co-workers in New Jersey (USA) during the 1940s as a method of reducing luxury K uptake by alfalfa (Medicago sativa L.). At about the same time, William Albrecht, working in Missouri (USA), concluded through his own investigations that plants require a soil with a high Ca saturation for optimal growth. Whilst it now appears that several of Albrecht’s experiments were fundamentally flawed, the BCSR (‘balanced soil’) concept has been widely promoted, suggesting that the prescribed cationic ratios provide optimum chemical, physical, and biological soil properties. Our examination of data from numerous studies (particularly those of Albrecht and Bear, themselves) would suggest that, within the ranges commonly found in soils, the chemical, physical, and biological fertility of a soil is generally not influenced by the ratios of Ca, Mg, and K. The data do not support the claims of the BCSR, and continued promotion of the BCSR will result in the inefficient use of resources in agriculture and horticulture.

Cost-effectiveness analysis of humanitarian relief interventions: visceral leishmaniasis treatment in the Sudan

Spending by aid agencies on emergencies has quadrupled over the last decade, to over US$ 6 billion. To date, cost-effectiveness has seldom been considered in the prioritization and evaluation of emergency interventions. The sheer volume of resources spent on humanitarian aid and the chronicity of many humanitarian interventions call for more attention to be paid to the issue of 'value for money'. In this paper we present data from a major humanitarian crisis, an epidemic of visceral leishmaniasis (VL) in war-torn Sudan. The special circumstances provided us, in retrospect, with unusually accurate data on excess mortality, costs of the intervention and its effects, thus allowing us to express cost-effectiveness as the cost per Disability Adjusted Life Year (DALY) averted. The cost-effectiveness ratio, of US$ 18.40 per DALY (uncertainty range between US$ 13.53 and US$ 27.63), places the treatment of VL in Sudan among health interventions considered 'very flood value for money' (interventions of less than US$ 25 per DALY). We discuss the usefulness of this analysis to the internal management of the VL programme, the procurement of funds for the programme, and more generally, to priority setting in humanitarian relief interventions. We feel that in evaluations of emergency interventions attempts could be made more often to perform cost-effectiveness analyses, including the use of DALYs, provided that the outcomes of these analyses are seen in the broad context of the emergency situation and its consequences on the affected population. This paper provides a first contribution to what is hoped to become an international database of cost-effectiveness studies of health outcome such as the DALY.

Assessing cost-effectiveness - Mental health: introduction to the study and methods

Objective: The Assessing Cost-Effectiveness - Mental Health (ACE-MH) study aims to assess from a health sector perspective, whether there are options for change that could improve the effectiveness and efficiency of Australia's current mental health services by directing available resources toward 'best practice' cost-effective services. Method: The use of standardized evaluation methods addresses the reservations expressed by many economists about the simplistic use of League Tables based on economic studies confounded by differences in methods, context and setting. The cost-effectiveness ratio for each intervention is calculated using economic and epidemiological data. This includes systematic reviews and randomised controlled trials for efficacy, the Australian Surveys of Mental Health and Wellbeing for current practice and a combination of trials and longitudinal studies for adherence. The cost-effectiveness ratios are presented as cost (A$) per disability-adjusted life year (DALY) saved with a 95% uncertainty interval based on Monte Carlo simulation modelling. An assessment of interventions on 'second filter' criteria ('equity', 'strength of evidence', 'feasibility' and 'acceptability to stakeholders') allows broader concepts of 'benefit' to be taken into account, as well as factors that might influence policy judgements in addition to cost-effectiveness ratios. Conclusions: The main limitation of the study is in the translation of the effect size from trials into a change in the DALY disability weight, which required the use of newly developed methods. While comparisons within disorders are valid, comparisons across disorders should be made with caution. A series of articles is planned to present the results.

Cost-effectiveness of dexamphetamine and methylphenidate for the treatment of childhood attention deficit hyperactivity disorder

Objective: To analyze from a health sector perspective the cost-effectiveness of dexamphetamine (DEX) and methylphenidate (MPH) interventions to treat childhood attention deficit hyperactivity disorder (ADHD), compared to current practice. Method: Children eligible for the interventions are those aged between 4 and 17 years in 2000, who had ADHD and were seeking care for emotional or behavioural problems, but were not receiving stimulant medication. To determine health benefit, a meta-analysis of randomized controlled trials was performed for DEX and MPH, and the effect sizes were translated into utility values. An assessment on second stage filter criteria ('equity', 'strength of evidence', 'feasibility' and 'acceptability to stakeholders') is also undertaken to incorporate additional factors that impact on resource allocation decisions. Simulation modelling techniques are used to present a 95% uncertainty interval (UI) around the incremental cost-effectiveness ratio (ICER), which is calculated in cost (in A$) per DALY averted. Results: The ICER for DEX is A$4100/DALY saved (95% UI: negative to A$14 000) and for MPH is A$15 000/DALY saved (95% UI: A$9100-22 000). DEX is more costly than MPH for the government, but much less costly for the patient. Conclusions: MPH and DEX are cost-effective interventions for childhood ADHD. DEX is more cost-effective than MPH, although if MPH were listed at a lower price on the Pharmaceutical Benefits Scheme it would become more cost-effective. Increased uptake of stimulants for ADHD would require policy change. However, the medication of children and wider availability of stimulants may concern parents and the community.

Cost effectiveness of adding magnetic resonance imaging to the usual management of suspected scaphoid fractures

Objective: To determine the cost effectiveness of a magnetic resonance imaging scan (MRI) within 5 days of injury compared with the usual management of occult scaphoid fracture. Methods: All patients with suspected scaphoid fractures in five hospitals were invited to participate in a randomised controlled trial of usual treatment with or without an MRI scan. Healthcare costs were compared, and a cost effectiveness analysis of the use of MRI in this scenario was performed. Results: Twenty eight of the 37 patients identified were randomised: 17 in the control group, 11 in the MRI group. The groups were similar at baseline and follow up in terms of number of scaphoid fractures, other injuries, pain, and function. Of the patients without fracture, the MRI group had significantly fewer days immobilised: a median of 3.0 (interquartile range 3.0-3.0) v 10.0 (7-12) in the control group (p = 0.006). The MRI group used fewer healthcare units (median 3.0, interquartile range 2.0-4.25) than the control group (5.0, 3.0-6.5) (p = 0.03 for the difference). However, the median cost of health care in the MRI group ($594.35 AUD, $551.35-667.23) was slightly higher than in the control group ($428.15, $124.40-702.65) (p = 0.19 for the difference). The mean incremental cost effectiveness ratio derived from this simulation was that MRI costs $44.37 per day saved from unnecessary immobilisation (95% confidence interval $4.29 to $101.02). An illustrative willingness to pay was calculated using a combination of the trials measure of the subjects' individual productivity losses and the average daily earnings. Conclusions: Use of MRI in the management of occult scaphoid fracture reduces the number of days of unnecessary immobilisation and use of healthcare units. Healthcare costs increased non-significantly in relation to the use of MRI in this setting. However, when productivity losses are considered, MRI may be considered cost effective, depending on the individual case.

Effectiveness of brown planthopper predators: Population suppression by two species of spider, Pardosa pseudoannulata (Araneae, Lycosidae) and Araneus inustus (Araneae, Araneidae)

The most abundant natural enemies found in Cambodian rice field are spiders, mostly Araneus inustus and Pardosa pseudoannulata. These two hunting and wolf spider, respectively, are believed to actively contribute to brown planthopper (BPH) population control. However, how much each species attacks prey in Cambodian field condition is unknown. We conducted field experiments in Cambodia during the wet season at two locations, a famner's fields at Takeo and at CARDI, using both field cages and natural conditions. Cages were sprayed with insecticide to remove all pre-existing insects in the cages and then washed after 10 days to reduce insecticide residue. Results confirmed BPH inside the cage were killed by the insecticide. A known BPH population was reared inside the cages starting with 3 pairs of adults. Temporary cages were removed after counting second instar BPH and permanent cages were left in place. Spiders were released into the cages for 15 days. In permanent cages either two individual A. inustus or P. pseudoannulata were allowed to feed on BPH prey. Both spider species have the same killing ability in dense prey populations, but predation is higher for Pardosa at low prey density. In uncaged field environments (where more than just BPH prey are available) with a spider/BPH ratio 1:3 to 1:11 BPH mortality was 78–91%. Within 15 days in permanent cages spiders caused 100% BPH mortality at an average predator/prey ratio of 1:5 to 1:14. At a ratio of 1:18 or higher there was some BPH survival in cages.

Load-unload response ratio and accelerating moment/energy release critical region scaling and earthquake prediction

The main idea of the Load-Unload Response Ratio (LURR) is that when a system is stable, its response to loading corresponds to its response to unloading, whereas when the system is approaching an unstable state, the response to loading and unloading becomes quite different. High LURR values and observations of Accelerating Moment/Energy Release (AMR/AER) prior to large earthquakes have led different research groups to suggest intermediate-term earthquake prediction is possible and imply that the LURR and AMR/AER observations may have a similar physical origin. To study this possibility, we conducted a retrospective examination of several Australian and Chinese earthquakes with magnitudes ranging from 5.0 to 7.9, including Australia's deadly Newcastle earthquake and the devastating Tangshan earthquake. Both LURR values and best-fit power-law time-to-failure functions were computed using data within a range of distances from the epicenter. Like the best-fit power-law fits in AMR/AER, the LURR value was optimal using data within a certain epicentral distance implying a critical region for LURR. Furthermore, LURR critical region size scales with mainshock magnitude and is similar to the AMR/AER critical region size. These results suggest a common physical origin for both the AMR/AER and LURR observations. Further research may provide clues that yield an understanding of this mechanism and help lead to a solid foundation for intermediate-term earthquake prediction.

The role of gender in the construction and evaluation of feedback effectiveness

This study investigated factors that influence managers’ conceptions and subordinates’ perceptions of effective feedback. A social rules perspective was used to operationalize male and female managers’ conceptions of effective negative feedback. In the first study, 68 male and female managers identified their optimal strategies for providing feedback to subordinates. Male and female managers endorsed different goals and tactics for giving negative feedback, particularly in terms of levels of participation and directness. In the second study, 116 male and female subordinates evaluated the comparative effectiveness and difficulty of these and other standard approaches to feedback. The female manager strategy was evaluated by both men and women as generally more task and relationship effective but not more difficult to enact.

Optimal debt, endogenous fertility, and human capital externalities in a model with altruistic bequests

and human capital externalities. Because of such externalities, education investment is too low and fertility is too high. While education subsidies are the conventional means to deal with these problems, we show that the optimal policy also comprises debt even when distortionary taxes are used. The reason is that debt tips the usual trade-off between children's quantity and quality in favor of the latter by increasing the bequest cost of children. The optimal debt-output ratio exceeds 10% for plausible parameterization. (C) 2002 Elsevier B.V. All rights reserved.

The transform likelihood ratio method for rare event simulation with heavy tails

We present a novel method, called the transform likelihood ratio (TLR) method, for estimation of rare event probabilities with heavy-tailed distributions. Via a simple transformation ( change of variables) technique the TLR method reduces the original rare event probability estimation with heavy tail distributions to an equivalent one with light tail distributions. Once this transformation has been established we estimate the rare event probability via importance sampling, using the classical exponential change of measure or the standard likelihood ratio change of measure. In the latter case the importance sampling distribution is chosen from the same parametric family as the transformed distribution. We estimate the optimal parameter vector of the importance sampling distribution using the cross-entropy method. We prove the polynomial complexity of the TLR method for certain heavy-tailed models and demonstrate numerically its high efficiency for various heavy-tailed models previously thought to be intractable. We also show that the TLR method can be viewed as a universal tool in the sense that not only it provides a unified view for heavy-tailed simulation but also can be efficiently used in simulation with light-tailed distributions. We present extensive simulation results which support the efficiency of the TLR method.