Higher-order moments in the theory of diversifying and portfolio composition

This paper examines the role of higher-order moments in portfolio choice within an expected-utility framework. We consider two-, three-, four- and five-parameter density functions for portfolio returns and derive exact conditions under which investors would all be optimally plungers rather than diversifiers. Through comparative statics we show the importance of higher-order risk preference properties, such as riskiness, prudence and temperance, in determining plunging behaviour. Empirical estimates for the S&P500 provide evidence for the optimality of diversification.

The continuing popularity of the neighbourhood and neighbourhood governance in the transition from the 'big state' to the 'big society' paradigm

The neighbourhood in both the UK and Europe continues to dominate thinking about the quality of life in local communities, representation and empowerment, and how local services can be delivered most effectively. For several decades a series of centrally funded programmes in neighbour- hood governance have targeted localities suffering deprivation and social exclusion in England. From these much can be learnt about the strengths and limitations of a local approach to achieving multiple objectives.We review the findings of a case study of neighbourhood governance in the City of Westminster and draw on evaluations of two national programmes. In the conclusions we discuss the problems arising from multiple objectives and examine the prospects for neighbourhood governance as the national paradigm moves away from `big state' solutions towards the less-well-defined `big society' approach and the reinvention of `localism'. While the rationale for neighbourhood governance may change, the `neighbourhood' as a site for service delivery and planning remains as important now as in the past.