Is intrinsic energy efficiency reflected in the pricing of office leases?

This paper investigates whether the intrinsic energy efficiency rating of an office building has a significant impact on its rental value. A sample of 817 transactions for offices with Energy Performance Certificates (EPCs) in the UK is used to assess whether a pricing differential can be identified, depending on the energy rating. While previous analyses of this topic have typically relied on appraisal-based and/or asking rent data, the dataset used in this research contains actual contract rents as well as information on lease terms. The results indicate a significant rental premium for energy-efficient buildings. However, it is found that this premium appears to be mainly driven by the youngest cohort of state-of-the-art energy-efficient buildings. The results also show that tenants of more energy-efficient buildings tend to pay a lower service charge, but this link appears to be rather weak and limited to newer buildings. Hence, it is argued that the information contained in the EPC is still not fully taken into account in the UK commercial property market with the possible exception of both the highest and the lowest EPC ratings.

The lottery-panel task for bi-dimensional parameter-free elicitation of risk attitudes

We propose first, a simple task for the eliciting attitudes toward risky choice, the SGG lottery-panel task, which consists in a series of lotteries constructed to compensate riskier options with higher risk-return trade-offs. Using Principal Component Analysis technique, we show that the SGG lottery-panel task is capable of capturing two dimensions of individual risky decision making i.e. subjects’ average risk taking and their sensitivity towards variations in risk-return. From the results of a large experimental dataset, we confirm that the task systematically captures a number of regularities such as: A tendency to risk averse behavior (only around 10% of choices are compatible with risk neutrality); An attraction to certain payoffs compared to low risk lotteries, compatible with over-(under-) weighting of small (large) probabilities predicted in PT and; Gender differences, i.e. males being consistently less risk averse than females but both genders being similarly responsive to the increases in risk-premium. Another interesting result is that in hypothetical choices most individuals increase their risk taking responding to the increase in return to risk, as predicted by PT, while across panels with real rewards we see even more changes, but opposite to the expected pattern of riskier choices for higher risk-returns. Therefore, we conclude from our data that an “economic anomaly” emerges in the real reward choices opposite to the hypothetical choices. These findings are in line with Camerer's (1995) view that although in many domains, paid subjects probably do exert extra mental effort which improves their performance, choice over money gambles is not likely to be a domain in which effort will improve adherence to rational axioms (p. 635). Finally, we demonstrate that both dimensions of risk attitudes, average risk taking and sensitivity towards variations in the return to risk, are desirable not only to describe behavior under risk but also to explain behavior in other contexts, as illustrated by an example. In the second study, we propose three additional treatments intended to elicit risk attitudes under high stakes and mixed outcome (gains and losses) lotteries. Using a dataset obtained from a hypothetical implementation of the tasks we show that the new treatments are able to capture both dimensions of risk attitudes. This new dataset allows us to describe several regularities, both at the aggregate and within-subjects level. We find that in every treatment over 70% of choices show some degree of risk aversion and only between 0.6% and 15.3% of individuals are consistently risk neutral within the same treatment. We also confirm the existence of gender differences in the degree of risk taking, that is, in all treatments females prefer safer lotteries compared to males. Regarding our second dimension of risk attitudes we observe, in all treatments, an increase in risk taking in response to risk premium increases. Treatment comparisons reveal other regularities, such as a lower degree of risk taking in large stake treatments compared to low stake treatments and a lower degree of risk taking when losses are incorporated into the large stake lotteries. Results that are compatible with previous findings in the literature, for stake size effects (e.g., Binswanger, 1980; Antoni Bosch-Domènech & Silvestre, 1999; Hogarth & Einhorn, 1990; Holt & Laury, 2002; Kachelmeier & Shehata, 1992; Kühberger et al., 1999; B. J. Weber & Chapman, 2005; Wik et al., 2007) and domain effect (e.g., Brooks and Zank, 2005, Schoemaker, 1990, Wik et al., 2007). Whereas for small stake treatments, we find that the effect of incorporating losses into the outcomes is not so clear. At the aggregate level an increase in risk taking is observed, but also more dispersion in the choices, whilst at the within-subjects level the effect weakens. Finally, regarding responses to risk premium, we find that compared to only gains treatments sensitivity is lower in the mixed lotteries treatments (SL and LL). In general sensitivity to risk-return is more affected by the domain than the stake size. After having described the properties of risk attitudes as captured by the SGG risk elicitation task and its three new versions, it is important to recall that the danger of using unidimensional descriptions of risk attitudes goes beyond the incompatibility with modern economic theories like PT, CPT etc., all of which call for tests with multiple degrees of freedom. Being faithful to this recommendation, the contribution of this essay is an empirically and endogenously determined bi-dimensional specification of risk attitudes, useful to describe behavior under uncertainty and to explain behavior in other contexts. Hopefully, this will contribute to create large datasets containing a multidimensional description of individual risk attitudes, while at the same time allowing for a robust context, compatible with present and even future more complex descriptions of human attitudes towards risk.

Modelling methodology and forecast failure

We analyse by simulation the impact of model-selection strategies (sometimes called pre-testing) on forecast performance in both constant-and non-constant-parameter processes. Restricted, unrestricted and selected models are compared when either of the first two might generate the data. We find little evidence that strategies such as general-to-specific induce significant over-fitting, or thereby cause forecast-failure rejection rates to greatly exceed nominal sizes. Parameter non-constancies put a premium on correct specification, but in general, model-selection effects appear to be relatively small, and progressive research is able to detect the mis-specifications.

Idiosyncratic volatility and the pricing of poorly-diversified portfolios

This article examines the role of idiosyncratic volatility in explaining the cross-sectional variation of size- and value-sorted portfolio returns. We show that the premium for bearing idiosyncratic volatility varies inversely with the number of stocks included in the portfolios. This conclusion is robust within various multifactor models based on size, value, past performance, liquidity and total volatility and also holds within an ICAPM specification of the risk–return relationship. Our findings thus indicate that investors demand an additional return for bearing the idiosyncratic volatility of poorly-diversified portfolios.

Interregional migration 'wage premia': the case of creative and science and technology graduates in the UK

We analyze the migration behavior of graduates from UK universities with a focus on the salary benefits they receive from the migration process. We focus on sequential interregional migration and specifically examine the case of Science, Technology, Engineering and Mathematics (STEM) and Creative subject graduates. Our analysis differs from previous studies in that it accounts explicitly for migrant selectivity through propensity score matching, and it also classifies graduates into different migration behavior categories. Graduates were classified according to their sequential migration behavior first from their pre-university domicile to university and then from university to first job post-graduation. Our results show that ‘repeat migration’, as expected, is associated with the highest wage premium (around 15%). Other migration behaviors are also advantageous although this varies across different types of graduates. Creative graduates, for instance, do not benefit much from migration behaviors other than repeat migration. STEM graduates, on the contrary, benefit from both late migration and staying in the university area to work.

Prospettive economiche di mercato della produzione ortofrutticola biologica. Indagine sul gradimento dei consumatori

The aims of the present study are to explore the willingness to pay a tax for the abolition of the use of pesticides as well as a premium price per kilo for organically grown fruit. An investigation was carried out in the region of Emilia-Romagna both by means of face to face questionnaires administered randomly in large supermarkets and via the World Wide Web. The results of econometric estimates show that consumers in this region appear to be particularly sensitive to the ban of pesticides and willing to pay higher prices for such products.

Stated willingness-to-pay for organic fruit and pesticide ban: an evaluation using both web-based and face-to-face interviewing

Income growth in highly industrialised countries has resulted in consumer choice of foodstuffs no longer being primarily influenced by basic factors such as price and organoleptic features. From this perspective, the present study sets out to evaluate how and to what extent consumer choice is influenced by the possible negative effects on health and environment caused by the consumption of fruit containing deposits of pesticides and chemical products. The study describes the results of a survey which explores and estimates consumer willingness to pay in two forms: a yearly contribution for the abolition of the use of pesticides on fruit, and a premium price for organically grown apples guaranteed by a certified label. The same questionnaire was administered to two samples. The first was a conventional face-to-face survey of customers of large retail outlets located around Bologna (Italy); the second was an Internet sample. The discrete choice data were analysed by means of probit and tobit models to estimate the utility consumers attribute to organically grown fruit and to a pesticide ban. The research also addresses questions of validity and representativeness as a fundamental problem in web-based surveys.

Massive Open Online Courses and sustainability

Massive Open Online Courses (MOOCs) have become very popular among learners millions of users from around the world registered with leading platforms. There are hundreds of universities (and other organizations) offering MOOCs. However, sustainability of MOOCs is a pressing concern as MOOCs incur up front creation costs, maintenance costs to keep content relevant and on-going support costs to provide facilitation while a course is being run. At present, charging a fee for certification (for example Coursera Signature Track and FutureLearn Statement of Completion) seems a popular business model. In this paper, the authors discuss other possible business models and their pros and cons. Some business models discussed here are: Freemium model – providing content freely but charging for premium services such as course support, tutoring and proctored exams. Sponsorships – courses can be created in collaboration with industry where industry sponsorships are used to cover the costs of course production and offering. For example Teaching Computing course was offered by the University of East Anglia on the FutureLearn platform with the sponsorship from British Telecom while the UK Government sponsored the course Introduction to Cyber Security offered by the Open University on FutureLearn. Initiatives and Grants – The government, EU commission or corporations could commission the creation of courses through grants and initiatives according to the skills gap identified for the economy. For example, the UK Government’s National Cyber Security Programme has supported a course on Cyber Security. Similar initiatives could also provide funding to support relevant course development and offering. Donations – Free software, Wikipedia and early OER initiatives such as the MIT OpenCourseware accept donations from the public and this could well be used as a business model where learners could contribute (if they wish) to the maintenance and facilitation of a course. Merchandise – selling merchandise could also bring revenue to MOOCs. As many participants do not seek formal recognition (European Commission, 2014) for their completion of a MOOC, merchandise that presents their achievement in a playful way could well be attractive for them. Sale of supplementary material –supplementary course material in the form of an online or physical book or similar could be sold with the revenue being reinvested in the course delivery. Selective advertising – courses could have advertisements relevant to learners Data sharing – though a controversial topic, sharing learner data with relevant employers or similar could be another revenue model for MOOCs. Follow on events – the courses could lead to follow on summer schools, courses or other real-life or online events that are paid-for in which case a percentage of the revenue could be passed on to the MOOC for its upkeep. Though these models are all possible ways of generating revenue for MOOCs, some are more controversial and sensitive than others. Nevertheless unless appropriate business models are identified the sustainability of MOOCs would be problematic.

The probability of sale and price premiums in withdrawn auctioned properties

This paper examines the impact of the auction process of residential properties that whilst unsuccessful at auction sold subsequently. The empirical analysis considers both the probability of sale and the premium of the subsequent sale price over the guide price, reserve and opening bid. The findings highlight that the final achieved sale price is influenced by key price variables revealed both prior to and during the auction itself. Factors such as auction participation, the number of individual bidders and the number of bids are significant in a number of the alternative specifications.

Consumer attitudes to injurious pecking in free range egg production

Free range egg producers face continuing problems from injurious pecking (IP) which has financial consequences for farmers and poor welfare implications for birds. Beak trimming has been practised for many years to limit the damage caused by IP, but with the UK Government giving notification that they intend to ban beak trimming in 2016, considerable efforts have been made to devise feasible housing, range and management strategies to reduce IP. A recent research project investigated the efficacy of a range of IP reducing management strategies, the mean costs of which came to around 5 pence per bird. Here, the results of the above project’s consumer survey are presented: consumers’ attitudes to free range egg production are detailed showing that, whilst consumers had a very positive attitude towards free range eggs, they were especially uninformed about some aspects of free range egg production. The contingent valuation technique was used to estimate the price premium consumers would be prepared to pay to ensure that hens do not suffer from IP: this was calculated as just over 3% on top of the prevailing retail price of free range eggs. These findings reinforce other studies that have found that whilst consumers are not generally well-informed about certain specific welfare problems faced by animals under free range conditions, they are prepared to pay to improve animal welfare. Indeed, the study findings suggest that producers could obtain an additional price premium if they demonstrate the welfare provenance of their eggs, perhaps through marketing the eggs as coming from birds with intact beaks. This welfare provenance issue could usefully be assured to consumers by the introduction of a mandatory, single, accredited EU-wide welfare-standards labelling scheme.

What role for nuclear power in Japan after Fukushima?

This chapter brings a human security lens to bear on the energy-mix question in post-Fukushima Japan. In particular, two of the four elements of human security identified in the 1994 Human Development Report (HDR), prevention and people-centeredness, are mobilized. We trace developments in Japan’s post-Fukushima nuclear politics through the demise of DPJ rule to the advent of the LDP government, and evaluate the current nuclear energy strategy of the Abe administration. Using a human security framework, we consider the economic security dimension of the arguments for and against the use of nuclear power, and weigh the result of this consideration against a concern with the six other elements of human security identified in the 1994 HDR. We conclude that the risks and threats to human security engendered by the use of nuclear energy outweigh any benefits that could reasonably be argued to accrue from its use. The notion of prevention, so central to the concept of human security, performs a further ‘trumping’ function, in leading us to put a premium on the downside risk of the use of nuclear energy.

Productivity and the international firm: dissecting heterogeneity

Higher productivity of multinational firms and exporters has been widely documented in the literature, but the sources of this heterogeneity are still a black box. Using an original dataset on Italian firms, we show that higher total factor productivity of international firms can be to some extent explained by higher R&D intensity and managerial capabilities. However, our results suggest that heterogeneity is more in the slope than in the constant of the production function. In particular, allowing international firms to have different return to labour and capital inputs, we are able to account for their entire productivity premium. This has implications for both labour and capital market reforms.

Impact of externalities on sustainable development: evidence from public-private partnerships in Kazakhstan and Russia

Purpose – This paper aims to investigate the influence of public-private partnerships (PPPs) on social and economic conditions in Kazakhstan and Russia from a public economics perspective, namely, through the lens of a market failure and PPPs’ negative externalities. Design/methodology/approach – Drawing on the concept of a market failure and using the externalities perspective, the paper investigates whether partnerships are instrumental in solving market problems, which is illustrated by the evidence from ongoing PPP projects in Kazakhstan and Russia. Findings – Results show that citizens face expansion of monopolistic trends in the service provision and decreased availability of public services. Additionally, the government support to partnerships recreates a negative externality in the form of a higher risk premium on loan interest rates that banks use to finance PPPs. The partnerships’ impact on sustainable development often appears detrimental, as they significantly intensify the struggle between sub-national governments for increased transfers from the national budget. Practical implications – The government agencies must incorporate the appraisal of the PPP externalities and their effects on the society in the decision-making regarding the PPP formation. Originality/value – The authors suggest that, although government is interested in PPPs’ positive externalities, in reality many negative externalities may offset the positive spillover effects. As a result, the partnerships’ contributions to economic and social sustainability remain controversial. Extending the value-for-money concept to incorporate the assessment of PPP externalities might significantly enhance the partnership conceptualisation by more comprehensive and accurate assessment of PPPs’ economic and social value.

Jump and variance risk premia in the S&P 500

We analyze the risk premia embedded in the S&P 500 spot index and option markets. We use a long time-series of spot prices and a large panel of option prices to jointly estimate the diffusive stock risk premium, the price jump risk premium, the diffusive variance risk premium and the variance jump risk premium. The risk premia are statistically and economically significant and move over time. Investigating the economic drivers of the risk premia, we are able to explain up to 63 % of these variations.