Public sector rationing and private sector selection [paper accepted and forthcoming in Journal of Public Economic Theory]

We study the interaction between nonprice public rationing and prices in the private market. Under a limited budget, the public supplier uses a rationing policy. A private firm may supply the good to those consumers who are rationed by the public system. Consumers have different amounts of wealth, and costs of providing the good to them vary. We consider two regimes. First, the public supplier observes consumers' wealth information; second, the public supplier observes both wealth and cost information. The public supplier chooses a rationing policy, and, simultaneously, the private firm, observing only cost but not wealth information, chooses a pricing policy. In the first regime, there is a continuum of equilibria. The Pareto dominant equilibrium is a means-test equilibrium: poor consumers are supplied while rich consumers are rationed. Prices in the private market increase with the budget. In the second regime, there is a unique equilibrium. This exhibits a cost-effectiveness rationing rule; consumers are supplied if and only if their costbenefit ratios are low. Prices in the private market do not change with the budget. Equilibrium consumer utility is higher in the cost-effectiveness equilibrium than the means-test equilibrium [Authors]

Three essays in financial economics: asset pricing, optimal portfolio selection and financial integration

Executive Summary The unifying theme of this thesis is the pursuit of a satisfactory ways to quantify the riskureward trade-off in financial economics. First in the context of a general asset pricing model, then across models and finally across country borders. The guiding principle in that pursuit was to seek innovative solutions by combining ideas from different fields in economics and broad scientific research. For example, in the first part of this thesis we sought a fruitful application of strong existence results in utility theory to topics in asset pricing. In the second part we implement an idea from the field of fuzzy set theory to the optimal portfolio selection problem, while the third part of this thesis is to the best of our knowledge, the first empirical application of some general results in asset pricing in incomplete markets to the important topic of measurement of financial integration. While the first two parts of this thesis effectively combine well-known ways to quantify the risk-reward trade-offs the third one can be viewed as an empirical verification of the usefulness of the so-called "good deal bounds" theory in designing risk-sensitive pricing bounds. Chapter 1 develops a discrete-time asset pricing model, based on a novel ordinally equivalent representation of recursive utility. To the best of our knowledge, we are the first to use a member of a novel class of recursive utility generators to construct a representative agent model to address some long-lasting issues in asset pricing. Applying strong representation results allows us to show that the model features countercyclical risk premia, for both consumption and financial risk, together with low and procyclical risk free rate. As the recursive utility used nests as a special case the well-known time-state separable utility, all results nest the corresponding ones from the standard model and thus shed light on its well-known shortcomings. The empirical investigation to support these theoretical results, however, showed that as long as one resorts to econometric methods based on approximating conditional moments with unconditional ones, it is not possible to distinguish the model we propose from the standard one. Chapter 2 is a join work with Sergei Sontchik. There we provide theoretical and empirical motivation for aggregation of performance measures. The main idea is that as it makes sense to apply several performance measures ex-post, it also makes sense to base optimal portfolio selection on ex-ante maximization of as many possible performance measures as desired. We thus offer a concrete algorithm for optimal portfolio selection via ex-ante optimization over different horizons of several risk-return trade-offs simultaneously. An empirical application of that algorithm, using seven popular performance measures, suggests that realized returns feature better distributional characteristics relative to those of realized returns from portfolio strategies optimal with respect to single performance measures. When comparing the distributions of realized returns we used two partial risk-reward orderings first and second order stochastic dominance. We first used the Kolmogorov Smirnov test to determine if the two distributions are indeed different, which combined with a visual inspection allowed us to demonstrate that the way we propose to aggregate performance measures leads to portfolio realized returns that first order stochastically dominate the ones that result from optimization only with respect to, for example, Treynor ratio and Jensen's alpha. We checked for second order stochastic dominance via point wise comparison of the so-called absolute Lorenz curve, or the sequence of expected shortfalls for a range of quantiles. As soon as the plot of the absolute Lorenz curve for the aggregated performance measures was above the one corresponding to each individual measure, we were tempted to conclude that the algorithm we propose leads to portfolio returns distribution that second order stochastically dominates virtually all performance measures considered. Chapter 3 proposes a measure of financial integration, based on recent advances in asset pricing in incomplete markets. Given a base market (a set of traded assets) and an index of another market, we propose to measure financial integration through time by the size of the spread between the pricing bounds of the market index, relative to the base market. The bigger the spread around country index A, viewed from market B, the less integrated markets A and B are. We investigate the presence of structural breaks in the size of the spread for EMU member country indices before and after the introduction of the Euro. We find evidence that both the level and the volatility of our financial integration measure increased after the introduction of the Euro. That counterintuitive result suggests the presence of an inherent weakness in the attempt to measure financial integration independently of economic fundamentals. Nevertheless, the results about the bounds on the risk free rate appear plausible from the view point of existing economic theory about the impact of integration on interest rates.

Pulmonary embolism severity index and troponin testing for the selection of low-risk patients with acute symptomatic pulmonary embolism.

Summary Background: The combination of the Pulmonary Embolism Severity Index (PESI) and troponin testing could help physicians identify appropriate patients with acute pulmonary embolism (PE) for early hospital discharge. Methods: This prospective cohort study included a total of 567 patients from a single center registry with objectively confirmed acute symptomatic PE. On the basis of the PESI, each patient was classified into 1 of 5 classes (I to V). At the time of hospital admission, patients had troponin I (cTnI) levels measured. The endpoint of the study was all-cause mortality within 30 days after diagnosis. We calculated the mortality rates in 4 patient groups: group 1: PESI class I-II plus cTnI <0.1 ng mL(-1); group 2: PESI classes III-V plus cTnI <0.1 ng mL(-1); group 3: PESI classes I-II plus cTnI >/= 0.1 ng mL(-1); and group 4: PESI classes III-V plus cTnI >/= 0.1 ng mL(-1). Results: The study cohort had a 30-day mortality of 10% (95% confidence interval [CI], 7.6 to 12.5%). Mortality rates in the 4 groups were 1.3%, 14.2%, 0% and 15.4%, respectively. Compared to non-elevated cTnl, the low-risk PESI had a higher negative predictive value (NPV) (98.9% vs 90.8%) and negative likelihood ratio (NLR) (0.1 vs 0.9) for predicting mortality. The addition of non-elevated cTnI to low-risk PESI did not improve the NPV or the NLR compared to either test alone. Conclusions: Compared to cTnl testing, PESI classification more accurately identified patients with PE who are at low risk of all-cause death within 30-days of presentation.

Development of the First Disease Activity Index for Eosinophilic Esophagitis: Update on the EEsAI in 2011

Background a nd Aims: T he international E EsAI study g roupis currently developing the first activity index (EEsAI) specificfor Eosinophilic Esophagitis (EoE). Goal: To develop, evaluateand validate the EEsAI.Methods: T he d evelopment comprises three phases: 1.Selection of candidate items; 2. Evaluation of the activity indexin a f irst patient cohort; and 3. V alidation in a s econd EoEpatient cohort. Focus group interviews with patients were usedin p hase 1 to generate p atient r eported outcomes ( PRO)according to guidelines o f regulatory authorities ( FDA andEMA), whereas the section of biologic items was developed byDelphi r ounds of i nternational E oE experts from E urope andNorth America.Results: The EEsAI has a modular composition to assess thefollowing components o f EoE activity: p atient reportedoutcomes, endoscopic activity, histologic activity, laboratoryactivity, a nd quality of life. D efinitions f or all aspects o fendoscopic and histologic appearance were established byconsensus rounds among EoE experts. Symptom assessmenttools were created that take into account d ifferent foodconsistencies as w ell as f ood avoidance and specificprocessing strategies. T he EEsAI is evaluated in a c ohort ofadult EoE patients since March 2011.Conclusions: After successful validation, the EEsAI will allowto standardize outcome assessment in E oE t rials which w illlikely lead to its wide applicability.

Evidence-based Economic Policy - Three Essays in Applied Microeconometrics

Over thirty years ago, Leamer (1983) - among many others - expressed doubts about the quality and usefulness of empirical analyses for the economic profession by stating that "hardly anyone takes data analyses seriously. Or perhaps more accurately, hardly anyone takes anyone else's data analyses seriously" (p.37). Improvements in data quality, more robust estimation methods and the evolution of better research designs seem to make that assertion no longer justifiable (see Angrist and Pischke (2010) for a recent response to Leamer's essay). The economic profes- sion and policy makers alike often rely on empirical evidence as a means to investigate policy relevant questions. The approach of using scientifically rigorous and systematic evidence to identify policies and programs that are capable of improving policy-relevant outcomes is known under the increasingly popular notion of evidence-based policy. Evidence-based economic policy often relies on randomized or quasi-natural experiments in order to identify causal effects of policies. These can require relatively strong assumptions or raise concerns of external validity. In the context of this thesis, potential concerns are for example endogeneity of policy reforms with respect to the business cycle in the first chapter, the trade-off between precision and bias in the regression-discontinuity setting in chapter 2 or non-representativeness of the sample due to self-selection in chapter 3. While the identification strategies are very useful to gain insights into the causal effects of specific policy questions, transforming the evidence into concrete policy conclusions can be challenging. Policy develop- ment should therefore rely on the systematic evidence of a whole body of research on a specific policy question rather than on a single analysis. In this sense, this thesis cannot and should not be viewed as a comprehensive analysis of specific policy issues but rather as a first step towards a better understanding of certain aspects of a policy question. The thesis applies new and innovative identification strategies to policy-relevant and topical questions in the fields of labor economics and behavioral environmental economics. Each chapter relies on a different identification strategy. In the first chapter, we employ a difference- in-differences approach to exploit the quasi-experimental change in the entitlement of the max- imum unemployment benefit duration to identify the medium-run effects of reduced benefit durations on post-unemployment outcomes. Shortening benefit duration carries a double- dividend: It generates fiscal benefits without deteriorating the quality of job-matches. On the contrary, shortened benefit durations improve medium-run earnings and employment possibly through containing the negative effects of skill depreciation or stigmatization. While the first chapter provides only indirect evidence on the underlying behavioral channels, in the second chapter I develop a novel approach that allows to learn about the relative impor- tance of the two key margins of job search - reservation wage choice and search effort. In the framework of a standard non-stationary job search model, I show how the exit rate from un- employment can be decomposed in a way that is informative on reservation wage movements over the unemployment spell. The empirical analysis relies on a sharp discontinuity in unem- ployment benefit entitlement, which can be exploited in a regression-discontinuity approach to identify the effects of extended benefit durations on unemployment and survivor functions. I find evidence that calls for an important role of reservation wage choices for job search be- havior. This can have direct implications for the optimal design of unemployment insurance policies. The third chapter - while thematically detached from the other chapters - addresses one of the major policy challenges of the 21st century: climate change and resource consumption. Many governments have recently put energy efficiency on top of their agendas. While pricing instru- ments aimed at regulating the energy demand have often been found to be short-lived and difficult to enforce politically, the focus of energy conservation programs has shifted towards behavioral approaches - such as provision of information or social norm feedback. The third chapter describes a randomized controlled field experiment in which we discuss the effective- ness of different types of feedback on residential electricity consumption. We find that detailed and real-time feedback caused persistent electricity reductions on the order of 3 to 5 % of daily electricity consumption. Also social norm information can generate substantial electricity sav- ings when designed appropriately. The findings suggest that behavioral approaches constitute effective and relatively cheap way of improving residential energy-efficiency.

Development of the first disease activity index for eosinophilic esophagitis: update on the EEsAI in 2012

Background and Aims: The international E EsAI s tudy g roup is currently d eveloping the first activity index ( EEsAI) specific for E osinophilic Esophagitis (EoE). G oal: T o develop, e valuate and validate the EEsAI. Methods: T he development c omprises three p hases: 1. Selection of c andidate items ( completed); 2. Evaluation of t he activity index i n a first patient cohort (in progress, p atient recruitment completed); and 3. Validation in a s econd EoE patient cohort. F ocus group interviews with patients were used in p hase 1 to g enerate patient r eported outcomes (PRO) according to g uidelines o f regulatory authorities (FDA a nd EMA), whereas the section of biologic items was developed by Delphi rounds o f international E oE experts from E urope and North America. Results: T he EEsAI has a modular c omposition to a ssess the following components o f EoE activity: p atient r eported outcomes, e ndoscopic activity, histologic activity, laboratory activity, a nd quality of l ife (QoL). Definitions for a ll aspects o f endoscopic and histologic appearance were e stablished by consensus r ounds a mong E oE experts. S ymptom a ssessment tools were c reated that t ake into account d ifferent food consistencies as w ell as f ood avoidance and specific processing strategies. The EEsAI i s currently e valuated in a cohort of a dult EoE patients since M arch 2 011 (patient recruitment completed). Conclusions: The EEsAI standardizes outcome assessment in EoE t rials. T he collaboration with i nternational E oE e xperts a s well as f ollowing o f the guidelines f rom regulatory authorities will lead to its wide applicability.

Estimation of percentage body fat in 6- to 13-year-old children by skinfold thickness, body mass index and waist circumference.

We evaluated the accuracy of skinfold thicknesses, BMI and waist circumference for the prediction of percentage body fat (PBF) in a representative sample of 372 Swiss children aged 6-13 years. PBF was measured using dual-energy X-ray absorptiometry. On the basis of a preliminary bootstrap selection of predictors, seven regression models were evaluated. All models included sex, age and pubertal stage plus one of the following predictors: (1) log-transformed triceps skinfold (logTSF); (2) logTSF and waist circumference; (3) log-transformed sum of triceps and subscapular skinfolds (logSF2); (4) log-transformed sum of triceps, biceps, subscapular and supra-iliac skinfolds (logSF4); (5) BMI; (6) waist circumference; (7) BMI and waist circumference. The adjusted determination coefficient (R² adj) and the root mean squared error (RMSE; kg) were calculated for each model. LogSF4 (R² adj 0.85; RMSE 2.35) and logSF2 (R² adj 0.82; RMSE 2.54) were similarly accurate at predicting PBF and superior to logTSF (R² adj 0.75; RMSE 3.02), logTSF combined with waist circumference (R² adj 0.78; RMSE 2.85), BMI (R² adj 0.62; RMSE 3.73), waist circumference (R² adj 0.58; RMSE 3.89), and BMI combined with waist circumference (R² adj 0.63; RMSE 3.66) (P < 0.001 for all values of R² adj). The finding that logSF4 was only modestly superior to logSF2 and that logTSF was better than BMI and waist circumference at predicting PBF has important implications for paediatric epidemiological studies aimed at disentangling the effect of body fat on health outcomes.

FTO genotype is associated with phenotypic variability of body mass index.

There is evidence across several species for genetic control of phenotypic variation of complex traits, such that the variance among phenotypes is genotype dependent. Understanding genetic control of variability is important in evolutionary biology, agricultural selection programmes and human medicine, yet for complex traits, no individual genetic variants associated with variance, as opposed to the mean, have been identified. Here we perform a meta-analysis of genome-wide association studies of phenotypic variation using ∼170,000 samples on height and body mass index (BMI) in human populations. We report evidence that the single nucleotide polymorphism (SNP) rs7202116 at the FTO gene locus, which is known to be associated with obesity (as measured by mean BMI for each rs7202116 genotype), is also associated with phenotypic variability. We show that the results are not due to scale effects or other artefacts, and find no other experiment-wise significant evidence for effects on variability, either at loci other than FTO for BMI or at any locus for height. The difference in variance for BMI among individuals with opposite homozygous genotypes at the FTO locus is approximately 7%, corresponding to a difference of ∼0.5 kilograms in the standard deviation of weight. Our results indicate that genetic variants can be discovered that are associated with variability, and that between-person variability in obesity can partly be explained by the genotype at the FTO locus. The results are consistent with reported FTO by environment interactions for BMI, possibly mediated by DNA methylation. Our BMI results for other SNPs and our height results for all SNPs suggest that most genetic variants, including those that influence mean height or mean BMI, are not associated with phenotypic variance, or that their effects on variability are too small to detect even with samples sizes greater than 100,000.

Body mass index and risk of head and neck cancer in a pooled analysis of case-control studies in the International Head and Neck Cancer Epidemiology (INHANCE) Consortium.

BACKGROUND: Head and neck cancer (HNC) risk is elevated among lean people and reduced among overweight or obese people in some studies; however, it is unknown whether these associations differ for certain subgroups or are influenced by residual confounding from the effects of alcohol and tobacco use or by other sources of biases. METHODS: We pooled data from 17 case-control studies including 12 716 cases and the 17 438 controls. Odds ratios (ORs) and 95% confidence intervals (CIs) were estimated for associations between body mass index (BMI) at different ages and HNC risk, adjusted for age, sex, centre, race, education, tobacco smoking and alcohol consumption. RESULTS: Adjusted ORs (95% CIs) were elevated for people with BMI at reference (date of diagnosis for cases and date of selection for controls) 25.0-30.0 kg/m(2) (0.52, 0.44-0.60) and BMI >/=30 kg/m(2) (0.43, 0.33-0.57), compared with BMI >18.5-25.0 kg/m(2). These associations did not differ by age, sex, tumour site or control source. Although the increased risk among people with BMI 25 kg/m(2) was present only in smokers and drinkers. CONCLUSIONS: In our large pooled analysis, leanness was associated with increased HNC risk regardless of smoking and drinking status, although reverse causality cannot be excluded. The reduced risk among overweight or obese people may indicate body size is a modifier of the risk associated with smoking and drinking. Further clarification may be provided by analyses of prospective cohort and mechanistic studies.

Prevalence of overweight in the Seychelles: 15 year trends and association with socio-economic status.

We assessed the 15-year trends in the distribution of body mass index (BMI) and the prevalence of overweight in the Seychelles (Indian Ocean, African Region) and the relationship with socio-economic status (SES). Three population-based examination surveys were conducted in 1989, 1994 and 2004. Occupation was categorized as 'labourer', 'intermediate' or 'professional'. Education was also assessed in 1994 and 2004. Between 1989 and 2004, mean BMI increased markedly in all sex and age categories (overall: 0.16 kg m(-2) per calendar year, which corresponds to 0.46 kg per calendar year). The prevalence of overweight (including obesity, BMI >or= 25 kg m(-2)) increased from 29% to 52% in men and from 50% to 67% in women. The prevalence of obesity (BMI >or= 30 kg m(-2)) increased from 4% to 15% in men and from 23% to 34% in women. Overweight was associated inversely with occupation in women and directly in men in all surveys. In multivariate analysis, overweight was associated similarly (direction and magnitude) to occupation and education. In conclusion, the increasing prevalence of overweight and obesity over time in all age, sex and SES categories suggests large-scale changes in societal obesogenic factors. The sex-specific association of SES with overweight suggests that prevention measures should be tailored accordingly.