Noise trader risk and the welfare effects of privatization

Excessive volatility of asset prices like that generated in the 'noise trader' model of De Long et al. is one factor that plausibly might contribute to an explanation of the equity premium. We extend the De Long et al. model to allow for privatization of publicly-owned assets and assess the welfare effects of such privatization in the presence of excess volatility arising from noise traders' mistaken beliefs.

Cost of an emerging epidemic: an economic analysis of atrial fibrillation in the UK

Objective: To evaluate the cost of atrial fibrillation (AF) to health and social services in the UK in 1995 and, based on epidemiological trends, to project this estimate to 2000. Design, setting, and main outcome measures: Contemporary estimates of health care activity related to AF were applied to the whole population of the UK on an age and sex specific basis for the year 1995. The activities considered ( and costs calculated) were hospital admissions, outpatient consultations, general practice consultations, and drug treatment ( including the cost of monitoring anticoagulant treatment). By adjusting for the progressive aging of the British population and related increases in hospital admissions, the cost of AF was also projected to the year 2000. Results: There were 534 000 people with AF in the UK during 1995. The direct'' cost of health care for these patients was pound 244 million (similar toE350 million) or 0.62% of total National Health Service ( NHS) expenditure. Hospitalisations and drug prescriptions accounted for 50% and 20% of this expenditure, respectively. Long term nursing home care after hospital admission cost an additional pound46.4 million (similar toE66 million). The direct cost of AF rose to pound459 million (similar toE655 million) in 2000, equivalent to 0.97% of total NHS expenditure based on 1995 figures. Nursing home costs rose to pound111 million (similar toE160 million). Conclusions: AF is an extremely costly public health problem.

Cost of tobacco-related diseases, including passive smoking, in Hong Kong

Background: Costs of tobacco-related disease can be useful evidence to support tobacco control. In Hong Kong we now have locally derived data on the risks of smoking, including passive smoking. Aim: To estimate the health-related costs of tobacco from both active and passive smoking. Methods: Using local data, we estimated active and passive smoking-attributable mortality, hospital admissions, outpatient, emergency and general practitioner visits for adults and children, use of nursing homes and domestic help, time lost from work due to illness and premature mortality in the productive years. Morbidity risk data were used where possible but otherwise estimates based on mortality risks were used. Utilisation was valued at unit costs or from survey data. Work time lost was valued at the median wage and an additional costing included a value of US$1.3 million for a life lost. Results: In the Hong Kong population of 6.5 million in 1998, the annual value of direct medical costs, long term care and productivity loss was US$532 million for active smoking and US$156 million for passive smoking; passive smoking accounted for 23% of the total costs. Adding the value of attributable lives lost brought the annual cost to US$9.4 billion. Conclusion: The health costs of tobacco use are high and represent a net loss to society. Passive smoking increases these costs by at least a quarter. This quantification of the costs of tobacco provides strong motivation for legislative action on smoke-free areas in the Asia Pacific Region and elsewhere.

The cost of uniqueness in groundwater model calibration

Calibration of a groundwater model requires that hydraulic properties be estimated throughout a model domain. This generally constitutes an underdetermined inverse problem, for which a Solution can only be found when some kind of regularization device is included in the inversion process. Inclusion of regularization in the calibration process can be implicit, for example through the use of zones of constant parameter value, or explicit, for example through solution of a constrained minimization problem in which parameters are made to respect preferred values, or preferred relationships, to the degree necessary for a unique solution to be obtained. The cost of uniqueness is this: no matter which regularization methodology is employed, the inevitable consequence of its use is a loss of detail in the calibrated field. This, ill turn, can lead to erroneous predictions made by a model that is ostensibly well calibrated. Information made available as a by-product of the regularized inversion process allows the reasons for this loss of detail to be better understood. In particular, it is easily demonstrated that the estimated value for an hydraulic property at any point within a model domain is, in fact, a weighted average of the true hydraulic property over a much larger area. This averaging process causes loss of resolution in the estimated field. Where hydraulic conductivity is the hydraulic property being estimated, high averaging weights exist in areas that are strategically disposed with respect to measurement wells, while other areas may contribute very little to the estimated hydraulic conductivity at any point within the model domain, this possibly making the detection of hydraulic conductivity anomalies in these latter areas almost impossible. A study of the post-calibration parameter field covariance matrix allows further insights into the loss of system detail incurred through the calibration process to be gained. A comparison of pre- and post-calibration parameter covariance matrices shows that the latter often possess a much smaller spectral bandwidth than the former. It is also demonstrated that, as all inevitable consequence of the fact that a calibrated model cannot replicate every detail of the true system, model-to-measurement residuals can show a high degree of spatial correlation, a fact which must be taken into account when assessing these residuals either qualitatively, or quantitatively in the exploration of model predictive uncertainty. These principles are demonstrated using a synthetic case in which spatial parameter definition is based oil pilot points, and calibration is Implemented using both zones of piecewise constancy and constrained minimization regularization. (C) 2005 Elsevier Ltd. All rights reserved.

The choice of the model in inventory control and the cost of sophistication

This thesis is concerned with the inventory control of items that can be considered independent of one another. The decisions when to order and in what quantity, are the controllable or independent variables in cost expressions which are minimised. The four systems considered are referred to as (Q, R), (nQ,R,T), (M,T) and (M,R,T). Wiith ((Q,R) a fixed quantity Q is ordered each time the order cover (i.e. stock in hand plus on order ) equals or falls below R, the re-order level. With the other three systems reviews are made only at intervals of T. With (nQ,R,T) an order for nQ is placed if on review the inventory cover is less than or equal to R, where n, which is an integer, is chosen at the time so that the new order cover just exceeds R. In (M, T) each order increases the order cover to M. Fnally in (M, R, T) when on review, order cover does not exceed R, enough is ordered to increase it to M. The (Q, R) system is examined at several levels of complexity, so that the theoretical savings in inventory costs obtained with more exact models could be compared with the increases in computational costs. Since the exact model was preferable for the (Q,R) system only exact models were derived for theoretical systems for the other three. Several methods of optimization were tried, but most were found inappropriate for the exact models because of non-convergence. However one method did work for each of the exact models. Demand is considered continuous, and with one exception, the distribution assumed is the normal distribution truncated so that demand is never less than zero. Shortages are assumed to result in backorders, not lost sales. However, the shortage cost is a function of three items, one of which, the backorder cost, may be either a linear, quadratic or an exponential function of the length of time of a backorder, with or without period of grace. Lead times are assumed constant or gamma distributed. Lastly, the actual supply quantity is allowed to be distributed. All the sets of equations were programmed for a KDF 9 computer and the computed performances of the four inventory control procedures are compared under each assurnption.

Estimation of the production cost of fast pyrolysis bio-oil

A number of papers and reports covering the techno-economic analysis of bio-oil production has been published. These have had different scopes, use different feedstocks and reflected national cost structures. This paper reviews and compares their cost estimates and the experimental results that underpin them. A comprehensive cost and performance model was produced based on consensus data from the previous studies or stated scenarios where data is not available that reflected UK costs. The model takes account sales of bio-char that is a co-product of pyrolysis and the electricity consumption of the pyrolysis plant and biomass pre-processing plants. It was concluded that it should be able to produce bio-oil in the UK from energy crops for a similar cost as distillate fuel oil. It was also found that there was little difference in the processing cost for woodchips and baled miscanthus. © 2011 Elsevier Ltd.