The economics of happiness : a lifetime perspective

The three studies in this thesis focus on happiness and age and seek to contribute to our understanding of happiness change over the lifetime. The first study contributes by offering an explanation for what was evolving to a ‘stylised fact’ in the economics literature, the U-shape of happiness in age. No U-shape is evident if one makes a visual inspection of the age happiness relationship in the German socio-economic panel data, and, it seems counter-intuitive that we just have to wait until we get old to be happy. Eliminating the very young, the very old, and the first timers from the analysis did not explain away regression results supporting the U-shape of happiness in age, but fixed effect analysis did. Analysis revealed found that reverse causality arising from time-invariant individual traits explained the U-shape of happiness in age in the German population, and the results were robust across six econometric methods. Robustness was added to the German fixed effect finding by replicating it with the Australian and the British socio-economic panel data sets. During analysis of the German data an unexpected finding emerged, an exceedingly large negative linear effect of age on happiness in fixed-effect regressions. There is a large self-reported happiness decline by those who remain in the German panel. A similar decline over time was not evident in the Australian or the British data. After testing away age, time and cohort effects, a time-in-panel effect was found. Germans who remain in the panel for longer progressively report lower levels of happiness. Because time-in-panel effects have not been included in happiness regression specifications, our estimates may be biased; perhaps some economics of the happiness studies, that used German panel data, need revisiting. The second study builds upon the fixed-effect finding of the first study and extends our view of lifetime happiness to a cohort little visited by economists, children. Initial analysis extends our view of lifetime happiness beyond adulthood and revealed a happiness decline in adolescent (15 to 23 year-old) Australians that is twice the size of the happiness decline we see in older Australians (75 to 86 yearolds), who we expect to be unhappy due to declining income, failing health and the onset of death. To resolve a difference of opinion in the literature as to whether childhood happiness decreases, increases, or remains flat in age; survey instruments and an Internet-based survey were developed and used to collect data from four hundred 9 to 14 year-old Australian children. Applying the data to a Model of Childhood Happiness revealed that the natural environment life-satisfaction domain factor did not have a significant effect on childhood happiness. However, the children’s school environment and interactions with friends life-satisfaction domain factors explained over half a steep decline in childhood happiness that is three times larger than what we see in older Australians. Adding personality to the model revealed what we expect to see with adults, extraverted children are happier, but unexpectedly, so are conscientious children. With the steep decline in the happiness of young Australians revealed and explanations offered, the third study builds on the time-invariant individual trait finding from the first study by applying the Australian panel data to an Aggregate Model of Average Happiness over the lifetime. The model’s independent variable is the stress that arises from the interaction between personality and the life event shocks that affect individuals and peers throughout their lives. Interestingly, a graphic depiction of the stress in age relationship reveals an inverse U-shape; an inverse U-shape that looks like the opposite of the U-shape of happiness in age we saw in the first study. The stress arising from life event shocks is found to explain much of the change in average happiness over a lifetime. With the policy recommendations of economists potentially invoking unexpected changes in our lives, the ensuing stress and resulting (un)happiness warrant consideration before economists make policy recommendations.

Effects of Mobile Phone Distraction at the Onset of Amber Light: Analysis of Driving Simulator Data

Distraction whilst driving on an approach to a signalized intersection is particularly dangerous, as potential vehicular conflicts and resulting angle collisions tend to be severe. This study examines the decisions of distracted drivers during the onset of amber lights. Driving simulator data were obtained from a sample of 58 drivers under baseline and handheld mobile phone conditions at the University of IOWA - National Advanced Driving Simulator. Explanatory variables include age, gender, cell phone use, distance to stop-line, and speed. An iterative combination of decision tree and logistic regression analyses are employed to identify main effects, non-linearities, and interactions effects. Results show that novice (16-17 years) and younger (18-25 years) drivers’ had heightened amber light running risk while distracted by cell phone, and speed and distance thresholds yielded significant interaction effects. Driver experience captured by age has a multiplicative effect with distraction, making the combined effect of being inexperienced and distracted particularly risky. Solutions are needed to combat the use of mobile phones whilst driving.

Whole-body substrate metabolism is associated with disease severity in patients with non-alcoholic fatty liver disease

Objectives In non-alcoholic fatty liver disease (NAFLD), hepatic steatosis is intricately linked with a number of metabolic alterations. We studied substrate utilisation in NAFLD during basal, insulin-stimulated and exercise conditions, and correlated these outcomes with disease severity. Methods 20 patients with NAFLD (mean±SD body mass index (BMI) 34.1±6.7 kg/m2) and 15 healthy controls (BMI 23.4±2.7 kg/m2) were assessed. Respiratory quotient (RQ), whole-body fat (Fatox) and carbohydrate (CHOox) oxidation rates were determined by indirect calorimetry in three conditions: basal (resting and fasted), insulin-stimulated (hyperinsulinaemic–euglycaemic clamp) and exercise (cycling at an intensity to elicit maximal Fatox). Severity of disease and steatosis were determined by liver histology, hepatic Fatox from plasma β-hydroxybutyrate concentrations, aerobic fitness expressed as , and visceral adipose tissue (VAT) measured by computed tomography. Results Within the overweight/obese NAFLD cohort, basal RQ correlated positively with steatosis (r=0.57, p=0.01) and was higher (indicating smaller contribution of Fatox to energy expenditure) in patients with NAFLD activity score (NAS) ≥5 vs <5 (p=0.008). Both results were independent of VAT, % body fat and BMI. Compared with the lean control group, patients with NAFLD had lower basal whole-body Fatox (1.2±0.3 vs 1.5±0.4 mg/kgFFM/min, p=0.024) and lower basal hepatic Fatox (ie, β-hydroxybutyrate, p=0.004). During exercise, they achieved lower maximal Fatox (2.5±1.4 vs. 5.8±3.7 mg/kgFFM/min, p=0.002) and lower (p<0.001) than controls. Fatox during exercise was not associated with disease severity (p=0.79). Conclusions Overweight/obese patients with NAFLD had reduced hepatic Fatox and reduced whole-body Fatox under basal and exercise conditions. There was an inverse relationship between ability to oxidise fat in basal conditions and histological features of NAFLD including severity of steatosis and NAS

The interactions between insulin and androgens in progression to castrate resistant prostate cancer

An association between the metabolic syndrome and reduced testosterone levels has been identified, and a specific inverse relationship between insulin and testosterone levels suggests that an important metabolic crosstalk exists between these two hormonal axes; however, the mechanisms by which insulin and androgens may be reciprocally regulated are not well described. Androgen-dependant gene pathways regulate the growth and maintenance of both normal and malignant prostate tissue, and androgen-deprivation therapy (ADT) in patients exploits this dependence when used to treat recurrent and metastatic prostate cancer resulting in tumour regression. A major systemic side effect of ADT includes induction of key features of the metabolic syndrome and the consistent feature of hyperinsulinaemia. Recent studies have specifically identified a correlation between elevated insulin and high-grade PCa and more rapid progression to castrate resistant disease. This paper examines the relationship between insulin and androgens in the context of prostate cancer progression. Prostate cancer patients present a promising cohort for the exploration of insulin stabilising agents as adjunct treatments for hormone deprivation or enhancers of chemosensitivity for treatment of advanced prostate cancer.

Spatial and temporal analysis of Barmah Forest virus disease in Queensland, Australia

Barmah Forest virus (BFV) disease is one of the most widespread mosquito-borne diseases in Australia. The number of outbreaks and the incidence rate of BFV in Australia have attracted growing concerns about the spatio-temporal complexity and underlying risk factors of BFV disease. A large number of notifications has been recorded continuously in Queensland since 1992. Yet, little is known about the spatial and temporal characteristics of the disease. I aim to use notification data to better understand the effects of climatic, demographic, socio-economic and ecological risk factors on the spatial epidemiology of BFV disease transmission, develop predictive risk models and forecast future disease risks under climate change scenarios. Computerised data files of daily notifications of BFV disease and climatic variables in Queensland during 1992-2008 were obtained from Queensland Health and Australian Bureau of Meteorology, respectively. Projections on climate data for years 2025, 2050 and 2100 were obtained from Council of Scientific Industrial Research Organisation. Data on socio-economic, demographic and ecological factors were also obtained from relevant government departments as follows: 1) socio-economic and demographic data from Australian Bureau of Statistics; 2) wetlands data from Department of Environment and Resource Management and 3) tidal readings from Queensland Department of Transport and Main roads. Disease notifications were geocoded and spatial and temporal patterns of disease were investigated using geostatistics. Visualisation of BFV disease incidence rates through mapping reveals the presence of substantial spatio-temporal variation at statistical local areas (SLA) over time. Results reveal high incidence rates of BFV disease along coastal areas compared to the whole area of Queensland. A Mantel-Haenszel Chi-square analysis for trend reveals a statistically significant relationship between BFV disease incidence rates and age groups (ƒÓ2 = 7587, p<0.01). Semi-variogram analysis and smoothed maps created from interpolation techniques indicate that the pattern of spatial autocorrelation was not homogeneous across the state. A cluster analysis was used to detect the hot spots/clusters of BFV disease at a SLA level. Most likely spatial and space-time clusters are detected at the same locations across coastal Queensland (p<0.05). The study demonstrates heterogeneity of disease risk at a SLA level and reveals the spatial and temporal clustering of BFV disease in Queensland. Discriminant analysis was employed to establish a link between wetland classes, climate zones and BFV disease. This is because the importance of wetlands in the transmission of BFV disease remains unclear. The multivariable discriminant modelling analyses demonstrate that wetland types of saline 1, riverine and saline tidal influence were the most significant risk factors for BFV disease in all climate and buffer zones, while lacustrine, palustrine, estuarine and saline 2 and saline 3 wetlands were less important. The model accuracies were 76%, 98% and 100% for BFV risk in subtropical, tropical and temperate climate zones, respectively. This study demonstrates that BFV disease risk varied with wetland class and climate zone. The study suggests that wetlands may act as potential breeding habitats for BFV vectors. Multivariable spatial regression models were applied to assess the impact of spatial climatic, socio-economic and tidal factors on the BFV disease in Queensland. Spatial regression models were developed to account for spatial effects. Spatial regression models generated superior estimates over a traditional regression model. In the spatial regression models, BFV disease incidence shows an inverse relationship with minimum temperature, low tide and distance to coast, and positive relationship with rainfall in coastal areas whereas in whole Queensland the disease shows an inverse relationship with minimum temperature and high tide and positive relationship with rainfall. This study determines the most significant spatial risk factors for BFV disease across Queensland. Empirical models were developed to forecast the future risk of BFV disease outbreaks in coastal Queensland using existing climatic, socio-economic and tidal conditions under climate change scenarios. Logistic regression models were developed using BFV disease outbreak data for the existing period (2000-2008). The most parsimonious model had high sensitivity, specificity and accuracy and this model was used to estimate and forecast BFV disease outbreaks for years 2025, 2050 and 2100 under climate change scenarios for Australia. Important contributions arising from this research are that: (i) it is innovative to identify high-risk coastal areas by creating buffers based on grid-centroid and the use of fine-grained spatial units, i.e., mesh blocks; (ii) a spatial regression method was used to account for spatial dependence and heterogeneity of data in the study area; (iii) it determined a range of potential spatial risk factors for BFV disease; and (iv) it predicted the future risk of BFV disease outbreaks under climate change scenarios in Queensland, Australia. In conclusion, the thesis demonstrates that the distribution of BFV disease exhibits a distinct spatial and temporal variation. Such variation is influenced by a range of spatial risk factors including climatic, demographic, socio-economic, ecological and tidal variables. The thesis demonstrates that spatial regression method can be applied to better understand the transmission dynamics of BFV disease and its risk factors. The research findings show that disease notification data can be integrated with multi-factorial risk factor data to develop build-up models and forecast future potential disease risks under climate change scenarios. This thesis may have implications in BFV disease control and prevention programs in Queensland.

Flexing some muscle: strategy and outcomes in the Queensland health and fitness industry

In 1993, contrary to the trend towards enterprise bargaining, and despite an employment environment favouring strong managerial prerogative, a small group of employers in the Queensland commercial health and fitness industry sought industrial regulation through an industry-specific award. A range of factors, including increased competition and unscrupulous profiteers damaging the industry’s reputation, triggered the actions as a business strategy. The strategic choices of the employer group, to approach a union to initiate a consent award, are the inverse of behaviours expected under strategic choice theory. This article argues that organizational size, collective employer action, focus on industry rather than organizational outcomes and the traditional industrial relations system providing broader impacts explain their atypical behaviour.

Association between ambient ultraviolet radiation and risk of esophageal cancer

OBJECTIVES: Ecological studies have suggested an inverse relationship between latitude and risks of some cancers. However, associations between solar ultraviolet radiation (UVR) exposure and esophageal cancer risk have not been fully explored. We therefore investigated the association between nevi, freckles, and measures of ambient UVR over the life-course with risks of esophageal cancers. METHODS: We compared estimated lifetime residential ambient UVR among Australian patients with esophageal cancer (330 esophageal adenocarcinoma (EAC), 386 esophago-gastric junction adenocarcinoma (EGJAC), and 279 esophageal squamous cell carcinoma (ESCC)), and 1471 population controls. We asked people where they had lived at different periods of their life, and assigned ambient UVR to each location based on measurements from NASA's Total Ozone Mapping Spectrometer database. Freckling and nevus burden were self-reported. We used multivariable logistic regression models to estimate the magnitude of associations between phenotype, ambient UVR, and esophageal cancer risk. RESULTS: Compared with population controls, patients with EAC and EGJAC were less likely to have high levels of estimated cumulative lifetime ambient UVR (EAC odds ratio (OR) 0.59, 95% confidence interval (CI) 0.35-0.99, EGJAC OR 0.55, 0.34-0.90). We found no association between UVR and risk of ESCC (OR 0.91, 0.51-1.64). The associations were independent of age, sex, body mass index, education, state of recruitment, frequency of reflux, smoking status, alcohol consumption, and H. pylori serostatus. Cases with EAC were also significantly less likely to report high levels of nevi than controls. CONCLUSIONS: These data show an inverse association between ambient solar UVR at residential locations and risk of EAC and EGJAC, but not ESCC.

Fourier Lucas-Kanade Algorithm

In this paper we propose a framework for both gradient descent image and object alignment in the Fourier domain. Our method centers upon the classical Lucas & Kanade (LK) algorithm where we represent the source and template/model in the complex 2D Fourier domain rather than in the spatial 2D domain. We refer to our approach as the Fourier LK (FLK) algorithm. The FLK formulation is advantageous when one pre-processes the source image and template/model with a bank of filters (e.g. oriented edges, Gabor, etc.) as: (i) it can handle substantial illumination variations, (ii) the inefficient pre-processing filter bank step can be subsumed within the FLK algorithm as a sparse diagonal weighting matrix, (iii) unlike traditional LK the computational cost is invariant to the number of filters and as a result far more efficient, and (iv) this approach can be extended to the inverse compositional form of the LK algorithm where nearly all steps (including Fourier transform and filter bank pre-processing) can be pre-computed leading to an extremely efficient and robust approach to gradient descent image matching. Further, these computational savings translate to non-rigid object alignment tasks that are considered extensions of the LK algorithm such as those found in Active Appearance Models (AAMs).

Examination of distracted driving and yellow light running : analysis of simulator data

Driving on an approach to a signalized intersection while distracted is particularly dangerous, as potential vehicular conflicts and resulting angle collisions tend to be severe. Given the prevalence and importance of this particular scenario, the decisions and actions of distracted drivers during the onset of yellow lights are the focus of this study. Driving simulator data were obtained from a sample of 58 drivers under baseline and handheld mobile phone conditions at the University of Iowa - National Advanced Driving Simulator. Explanatory variables included age, gender, cell phone use, distance to stop-line, and speed. Although there is extensive research on drivers’ responses to yellow traffic signals, the examination has been conducted from a traditional regression-based approach, which does not necessary provide the underlying relations and patterns among the sampled data. In this paper, we exploit the benefits of both classical statistical inference and data mining techniques to identify the a priori relationships among main effects, non-linearities, and interaction effects. Results suggest that novice (16-17 years) and young drivers’ (18-25 years) have heightened yellow light running risk while distracted by a cell phone conversation. Driver experience captured by age has a multiplicative effect with distraction, making the combined effect of being inexperienced and distracted particularly risky. Overall, distracted drivers across most tested groups tend to reduce the propensity of yellow light running as the distance to stop line increases, exhibiting risk compensation on a critical driving situation.

Investigation of the airborne submicrometer particles emitted by dredging vessels using a plume capture method

This paper presents a method for investigating ship emissions, the plume capture and analysis system (PCAS), and its application in measuring airborne pollutant emission factors (EFs) and particle size distributions. The current investigation was conducted in situ, aboard two dredgers (Amity: a cutter suction dredger and Brisbane: a hopper suction dredger) but the PCAS is also capable of performing such measurements remotely at a distant point within the plume. EFs were measured relative to the fuel consumption using the fuel combustion derived plume CO2. All plume measurements were corrected by subtracting background concentrations sampled regularly from upwind of the stacks. Each measurement typically took 6 minutes to complete and during one day, 40 to 50 measurements were possible. The relationship between the EFs and plume sample dilution was examined to determine the plume dilution range over which the technique could deliver consistent results when measuring EFs for particle number (PN), NOx, SO2, and PM2.5 within a targeted dilution factor range of 50-1000 suitable for remote sampling. The EFs for NOx, SO2, and PM2.5 were found to be independent of dilution, for dilution factors within that range. The EF measurement for PN was corrected for coagulation losses by applying a time dependant particle loss correction to the particle number concentration data. For the Amity, the EF ranges were PN: 2.2 - 9.6 × 1015 (kg-fuel)-1; NOx: 35-72 g(NO2).(kg-fuel)-1, SO2 0.6 - 1.1 g(SO2).(kg-fuel)-1and PM2.5: 0.7 – 6.1 g(PM2.5).(kg-fuel)-1. For the Brisbane they were PN: 1.0 – 1.5 x 1016 (kg-fuel)-1, NOx: 3.4 – 8.0 g(NO2).(kg-fuel)-1, SO2: 1.3 – 1.7 g(SO2).(kg-fuel)-1 and PM2.5: 1.2 – 5.6 g(PM2.5).(kg-fuel)-1. The results are discussed in terms of the operating conditions of the vessels’ engines. Particle number emission factors as a function of size as well as the count median diameter (CMD), and geometric standard deviation of the size distributions are provided. The size distributions were found to be consistently uni-modal in the range below 500 nm, and this mode was within the accumulation mode range for both vessels. The representative CMDs for the various activities performed by the dredgers ranged from 94-131 nm in the case of the Amity, and 58-80 nm for the Brisbane. A strong inverse relationship between CMD and EF(PN) was observed.

Assessing the potential of mathematics textbooks to promote deep learning

Curriculum documents for mathematics emphasise the importance of promoting depth of knowledge rather than shallow coverage of the curriculum. In this paper, we report on a study that explored the analysis of junior secondary mathematics textbooks to assess their potential to assist in teaching and learning aimed at building and applying deep mathematical knowledge. The method of analysis involved the establishment of a set of specific curriculum goals and associated indicators, based on research into the teaching and learning of a particular field within the mathematics curriculum, namely proportion and proportional reasoning. Topic selection was due to its pervasive nature throughout the school mathematics curriculum at this level. As a result of this study, it was found that the five textbook series examined provided limited support for the development of multiplicative structures required for proportional reasoning, and hence would not serve well the development of deep learning of mathematics. The study demonstrated a method that could be applied to the analysis of junior secondary mathematics in many parts of the world.

Repeating patterns : strategies to assist young students to generalise the mathematical structure

This paper focuses on very young students' ability to engage in repeating pattern tasks and identifying strategies that assist them to ascertain the structure of the pattern. It describes results of a study which is part of the Early Years Generalising Project (EYGP) and involves Australian students in Years 1 to 4 (ages 5-10). This paper reports on the results from the early years' cohort (Year 1 and 2 students). Clinical interviews were used to collect data concerning students' ability to determine elements in different positions when two units of a repeating pattern were shown. This meant that students were required to identify the multiplicative structure of the pattern. Results indicate there are particular strategies that assist students to predict these elements, and there appears to be a hierarchy of pattern activities that help students to understand the structure of repeating patterns.

School libraries, teacher-librarians and their contribution to student literacy development in Gold Coast schools

This is the first research focusing on Gold Coast school libraries and teacher- librarians. It presents a detailed picture of library provision and staffing at a representative group of 27 government and non-government schools at the Gold Coast. It shows links between employment of a teacher-librarian and higher NAPLAN reading and writing scores. And it presents the principals’ generally positive views about teacher-librarians’ contribution to reading and literacy at their schools. The findings respond in part to the recent government inquiry’s call (House of Representatives, 2011) for research about the current staffing of school libraries in Australia, and the influence of school libraries and teacher-librarians on students’ literacy and learning outcomes. While the study has focused on a relatively small group of school libraries, it has produced a range of significant outcomes: • An extensive review of international and Australian research showing impacts of school libraries and teacher-librarians on students’ literacy and learning outcomes • Findings consistent with international research showing: - An inverse relationship between lower student to EFT library staff ratio and higher school NAPLAN scores for reading and writing - Schools that employ a teacher-librarian tend to achieve school NAPLAN scores for respective year levels that are higher than the national mean It is anticipated that the study’s findings will be of interest to education authorities, school leadership teams, teacher-librarians, teachers and researchers. The findings provide evidence to: • inform policy development and strategic planning for school libraries that respond to the literacy development needs of 21st century learners • inform school-based management of school libraries • inform curriculum development and teacher-librarian practice • support further collaborative research on a State or national level • enhance conceptual understandings about relationship(s) between school libraries, teacher-librarians and literacy/information literacy development • support advocacy about school libraries, teacher-librarians and their contribution to literacy development and student learning in Australian schools SLAQ President Toni Leigh comments: “It is heartening to see findings which validate the critical role teacher-librarians play in student literacy development and the positive correlation of higher NAPLAN scores and schools with a qualified teacher-librarian. Also encouraging is the high percentage of school principals who recognise the necessity of a well resourced school library and the positive influence of these libraries on student literacy”. This research arises from a research partnership between School Library Association of Queensland (SLAQ) and Children and Youth Research Centre, QUT. Lead researcher: Dr Hilary Hughes, Children and Youth Research Centre, QUT Research assistants: Dr Hossein Bozorgian, Dr Cherie Allan, Dr Michelle Dicinoski, QUT SLAQ Research Reference Group: Toni Leigh, Marj Osborne, Sally Fraser, Chris Kahl and Helen Reynolds Reference: House of Representatives. (2011). School libraries and teacher librarians in 21st century Australia. Canberra: Commonwealth of Australia. http://www.aph.gov.au/Parliamentary_Business/Committees/House_of_Representatives_Committees?url=ee/schoollibraries/report.htm

Measuring mechanical properties of tendon in vivo

Introduction: Understanding the mechanical properties of tendon is an important step to guiding the process of improving athletic performance, predicting injury and treating tendinopathies. The speed of sound in a medium is governed by the bulk modulus and density for fluids and isotropic materials. However, for tendon,which is a structural composite of fluid and collagen, there is some anisotropy requiring an adjustment for Poisson’s ratio. In this paper, these relationships are explored and modelled using data collected, in vivo, on human Achilles tendon. Estimates for elastic modulus and hysteresis based on speed of sound data are then compared against published values from in vitro mechanical tests. Methods: Measurements using clinical ultrasound imaging, inverse dynamics and acoustic transmission techniques were used to determine dimensions, loading conditions and longitudinal speed of sound for the Achilles tendon during a series of isometric plantar flexion exercises against body weight. Upper and lower bounds for speed of sound versus tensile stress in the tendon were then modelled and estimates derived for elastic modulus and hysteresis. Results: Axial speed of sound varied between 1850 to 2090 m.s−1 with a non-linear, asymptotic dependency on the level of tensile stress in the tendon 5–35 MPa. Estimates derived for the elastic modulus ranged between 1–2 GPa. Hysteresis derived from models of the stress-strain relationship, ranged from 3–11%. These values agree closely with those previously reported from direct measurements obtained via in vitro mechanical tensile tests on major weight bearing tendons. Discussion: There is sufficiently good agreement between these indirect (speed of sound derived) and direct (mechanical tensile test derived) measures of tendon mechanical properties to validate the use of this non-invasive acoustic transmission technique. This non-invasive method is suitable for monitoring changes in tendon properties as predictors of athletic performance, injury or therapeutic progression.

Conservatism, disclosure and the cost of equity capital

This study seeks insights into the economic consequences of accounting conservatism by examining the relation between conservatism and cost of equity capital. Appealing to the analytical and empirical literatures, we posit an inverse relation. Importantly, we also posit that the strength of the relation is conditional on the firm’s information environment, being the strongest for firms with high information asymmetry and the weakest (potentially negligible) for firms with low information asymmetry. Based on a sample of US-listed entities, we find, as predicted, an inverse relation between conservatism and the cost of equity capital, but further, that this relation is diminished for firms with low information asymmetry environments. This evidence indicates that there are economic benefits associated with the adoption of conservative reporting practices and leads us to conclude that conservatism has a positive role in accounting principles and practices, despite its increasing rejection by accounting standard setters.