The Permanent Income Hypothesis: A Test on Czech Privatisation

Since the late eighties, economists have been regarding the transition from command to market economies in Central and Eastern Europe with intense interest. In addition to studying the transition per se, they have begun using the region as a testing ground on which to investigate the validity of certain classic economic propositions. In his research, comprising three articles written in English and totalling 40 pages, Mr. Hanousek uses the so-called "Czech national experiment" (voucher privatisation scheme) to test the permanent income hypothesis (PIH). He took as his inspiration Kreinin's recommendation: "Since data concerning the behaviour of windfall income recipients is relatively scanty, and since such data can constitute an important test of the permanent income hypothesis, it is of interest to bring to bear on the hypothesis whatever information is available". Mr. Hanousek argues that, since the transfer of property to Czech citizens from 1992 to 1994 through the voucher scheme was not anticipated, it can be regarded as windfall income. The average size of the windfall was more than three month's salary and over 60 percent of the Czech population received this unexpected income. Furthermore, there are other reasons for conducting such an analysis in the Czech Republic. Firstly, the privatisation process took place quickly. Secondly, both the economy and consumer behaviour have been very stable. Thirdly, out of a total population of 10 million Czech citizens, an astonishing 6 million, that is, virtually every household, participated in the scheme. Thus Czech voucher privatisation provides a sample for testing the PIH almost equivalent to a full population, thus avoiding problems with the distribution of windfalls. Compare this, for instance with the fact that only 4% of the Israeli urban population received personal restitution from Germany, while the number of veterans who received the National Service Life Insurance Dividends amounted to less than 9% of the US population and were concentrated in certain age groups. But to begin with, Mr. Hanousek considers the question of whether the public percieves the transfer from the state to individual as an increase in net wealth. It can be argued that the state is only divesting itself of assets that would otherwise provide a future source of transfers. According to this argument, assigning these assets to individuals creates an offsetting change in the present value of potential future transfers so that individuals are no better off after the transfer. Mr. Hanousek disagrees with this approach. He points out that a change in the ownership of inefficient state-owned enterprises should lead to higher efficiency, which alone increases the value of enterprises and creates a windfall increase in citizens' portfolios. More importantly, the state and individuals had very different preferences during the transition. Despite government propaganda, it is doubtful that citizens of former communist countries viewed government-owned enterprises as being operated in the citizens' best interest. Moreover, it is unlikely that the public fully comprehended the sophisticated links between the state budget, state-owned enterprises, and transfers to individuals. Finally, the transfers were not equal across the population. Mr. Hanousek conducted a survey on 1263 individuals, dividing them into four monthly earnings categories. After determining whether the respondent had participated in the voucher process, he asked those who had how much of what they received from voucher privatisation had been (a) spent on goods and services, (b) invested elsewhere, (c) transferred to newly emerging pension funds, (d) given to a family member, and (e) retained in their original form as an investment. Both the mean and the variance of the windfall rise with income. He obtained similar results with respect to education, where the mean (median) windfall for those with a basic school education was 13,600 Czech Crowns (CZK), a figure that increased to 15,000 CZK for those with a high school education without exams, 19,900 CZK for high school graduates with exams, and 24,600 CZK for university graduates. Mr. Hanousek concludes that it can be argued that higher income (and better educated) groups allocated their vouchers or timed the disposition of their shares better. He turns next to an analysis of how respondents reported using their windfalls. The key result is that only a relatively small number of individuals reported spending on goods. Overall, the results provide strong support for the permanent income hypothesis, the only apparent deviation being the fact that both men and women aged 26 to 35 apparently consume more than they should if the windfall were annuitised. This finding is still fully consistent with the PIH, however, if this group is at a stage in their life-cycle where, without the windfall, they would be borrowing to finance consumption associated with family formation etc. Indeed, the PIH predicts that individuals who would otherwise borrow to finance consumption would consume the windfall up to the level equal to the annuitised fraction of the increase in lifetime income plus the full amount of the previously planned borrowing for consumption. Greater consumption would then be financed, not from investing the windfall, but from avoidance of future repayment obligations for debts that would have been incurred without the windfall.

Injuries to permanent teeth. Part 3: Therapy of root fractures

Diagnostic and therapeutic interventions following dental injuries are not part of the routine practice in the dental office. Quite often, these patients are emergency cases who seek treatment after normal office hours. The objective of this and the future papers is to present the current treatment concepts in dental traumatology at the School of Dental Medicine, University of Berne. The fruitful cooperation in the field of dental traumatology between the Department of Oral Surgery and Stomatology, and the Department of Conservative Dentistry (including pediatric dentistry and endodontology), is based on the interdisciplinary approach that has been established four years ago. Following discussion and evaluation of such treated cases, and considering current clinical and experimental studies, the said concepts have been worked out. The present paper describes the therapeutic approach for root fractures.

Guidelines for the management of traumatic dental injuries. II. Avulsion of permanent teeth

Avulsion of permanent teeth is the most serious of all dental injuries. The prognosis depends on the measures taken at the place of accident or the time immediately after the avulsion. Replantation is the treatment of choice, but cannot always be carried out immediately. An appropriate emergency management and treatment plan is important for a good prognosis. Guidelines are useful for delivering the best care possible in an efficient manner. The International Association of Dental Traumatology (IADT) has developed a consensus statement after a review of the dental literature and group discussions. Experienced researchers and clinicians from various specialties were included in the group. In cases in which the data did not appear conclusive, recommendations were based on the consensus opinion of the IADT board members. The guidelines represent the current best evidence based on literature research and professional opinion. In this second article of three, the IADT Guidelines for management of avulsed permanent teeth are presented.

Guidelines for the management of traumatic dental injuries. I. Fractures and luxations of permanent teeth

Crown fractures and luxations occur most frequently of all dental injuries. An appropriate treatment plan after an injury is important for a good prognosis. Guidelines are useful for delivering the best care possible in an efficient manner. The International Association of Dental Traumatology (IADT) has developed a consensus statement after a review of the dental literature and group discussions. Experienced researchers and clinicians from various specialties were included in the group. In cases where the data did not appear conclusive, recommendations were based on the consensus opinion of the IADT board members. The guidelines represent the current best evidence, based on literature research and professional opinion. In this first article of three, the IADT Guidelines for management of fractures and luxations of permanent teeth will be presented.

[Injuries to permanent teeth--Part 4: Therapy of crown fractures]

Diagnostic and therapeutic interventions following dental injuries are not part of the routine practice in the dental office. Quite often, these patients are emergency cases who seek treatment after normal office hours. The objective of this and the future papers is to present the current treatment concepts in dental traumatology at the School of Dental Medicine, University of Berne. The fruitful cooperation in the field of dental traumatology between the Department of Oral Surgery and Stomatology, and the Department of Conservative Dentistry (including pediatric dentistry and endodontology) is based on the interdisciplinary approach that has been established five years ago. Following discussion and evaluation of such treated cases, and considering current clinical and experimental references, the said concepts have been worked out. The present paper describes the therapeutic concepts of crown fractures.