Long-term return reversals-Value and growth or tax? UK evidence

This paper examines (i) whether value-growth characteristics have more power than past performance in predicting return reversals; and (ii) whether typical rational behaviour such as incentives to delay paying capital gain taxes can better explain long-term reversals than past performance. We find that value-growth characteristics generally provide better explanations for long-term stock returns than past performance. The evidence also shows that winners identified by capital gains dominate past performance winners in predicting reversals in the cross-sectional comparison. However, in the time-series analysis, when returns on capital gain winners are adjusted by the Fama and French (1996) risk factors, the predictive power of capital gain winners disappears. Our results show that capital gain winners are heavily featured as growth stocks. Return reversals in capital gain winners potentially reflect market price corrections for growth stocks. We conclude that investors’ incentives to delay paying capital gain taxes cannot fully rationalise long-term reversals in the UK market. Our results also imply that the long-term return pattern potentially reflects a mixture of investor rational and irrational behaviour.

Europe's New Border Tax.

Instead of abolishing internal border controls in 1993, the European Union (EU) replaced them with VAT and statistical requirements that appear to be just as onerous. For Dutch businesses, the compliance costs of the new requirements are, on average, 5 per cent of the value of their intra-EU trade. The figure is probably higher for other EU Member States. Obviously, the costs constitute a (differentiated) border tax that impedes intra-EU trade. The article analyses the determinants of the compliance costs, as well as their effect on intra-EU trade intensity. The article submits that the differential compliance costs violate the non-discrimination provisions of the EC Treaty. Suggestions are made to reduce them.

Average household income, crime, and smoking behaviour in a local area: The Finnish 10-Town study

Social environments, like neighbourhoods, are increasingly recognised as determinants of health. While several studies have reported an association of low neighbourhood socio-economic status with morbidity, mortality and health risk behaviour, little is known of the health effects of neighbourhood crime rates. Using the ongoing 10-Town study in Finland, we examined the relations of average household income and crime rate measured at the local area level, with smoking status and intensity by linking census data of local area characteristics from 181 postal zip codes to survey responses to smoking behaviour in a cohort of 23,008 municipal employees. Gender-stratified multilevel analyses adjusted for age and individual occupational status revealed an association between low local area income rate and current smoking. High local area crime rate was also associated with current smoking. Both local area characteristics were strongly associated with smoking intensity. Among ever-smokers, being an ex-smoker was less likely among residents in areas with low average household income and a high crime rate. In the fully adjusted model, the association between local area income and smoking behaviour among women was substantially explained by the area-level crime rate. This study extends our knowledge of potential pathways through which social environmental factors may affect health. (c) 2007 Elsevier Ltd. All rights reserved.

Residential consumption of gas and electricity in the U.S.: The role of prices and income

We study the residential demand for electricity and gas, working with nationwide household-level data that cover recent years, namely 1997-2007. Our dataset is a mixed panel/multi-year cross-sections of dwellings/households in the 50 largest metropolitan areas in the United States as of 2008. We estimate static and dynamic models of electricity and gas demand. We find strong household response to energy prices, both in the short and long term. From the static models, we get estimates of the own price elasticity of electricity demand in the -0.860 to -0.667 range, while the own price elasticity of gas demand is -0.693 to -0.566. These results are robust to a variety of checks. Contrary to earlier literature (Metcalf and Hassett, 1999; Reiss and White, 2005), we find no evidence of significantly different elasticities across households with electric and gas heat. The price elasticity of electricity demand declines with income, but the magnitude of this effect is small. These results are in sharp contrast to much of the literature on residential energy consumption in the United States, and with the figures used in current government agency practice. Our results suggest that there might be greater potential for policies which affect energy price than may have been previously appreciated. (C) 2011 Elsevier B.V. All rights reserved.

Cognitive functioning in subjects with recent-onset psychosis from a low-middle-income environment: Multiple-domain deficits and longitudinal evaluation

Cognitive deficits are a key feature of recent-onset psychosis, but there is no consensus on whether such deficits are generalized or confined to specific domains. Besides, it is unclear whether cognitive deficits: a) are found in psychotic patients in samples from outside high-income countries; and b) whether they progress uniformly over time in schizophrenia and affective psychoses. We applied 12 tests organized into eight cognitive domains, comparing psychosis patients (n = 56, time from initial contact = 677.95+/-183.27 days) versus healthy controls (n = 70) recruited from the same area of Sao Paulo, Brazil. Longitudinal comparisons (digit span and verbal fluency) were conducted between a previous assessment of the subjects carried out at their psychosis onset, and the current follow-up evaluation. Psychosis patients differed significantly from controls on five domains, most prominently on verbal memory. Cognitive deficits remained detectable in separate comparisons of the schizophrenia subgroup and, to a lesser extent, the affective psychosis subjects against controls. Longitudinal comparisons indicated significant improvement in schizophrenia, affective psychoses, and control subjects, with no significant group-by-time interactions. Our results reinforce the view that there are generalized cognitive deficits in association with recent-onset psychoses, particularly of non-affective nature, which persist over time. (C) 2009 Elsevier Ireland Ltd. All rights reserved.

Identifying Economically Vulnerable Groups as the Economic Crisis Emerged

A frequent refrain during recent debates on welfare cuts and tax increases has related to the need to "protect the vulnerable". However, it is far from clear that a consensus exists on which individuals or groups are to be included under this heading with a consequent lack of clarity for the policy implications of pursuing this goal. In this paper, operating with a conception of social exclusion that incorporates notions of dynamics and multidimensionality, we make use of EU-SILC 2008 data for Ireland to clarify the distinction between income poverty and economic vulnerability. We then proceed to consider the relationship between these outcomes and multiple deprivation, financial pressures and perceptions of recent and future economic prospects. Our analysis is then extended to compare patterns of risk for poverty and vulnerability in relation to key socio-economic groups. Finally, we will consider the relationship between poverty and vulnerability and the distribution of welfare dependence. Our analysis suggests that the vulnerable but non-poor group may need to be a key focus of policy attention in the future.

Income, deprivation and economic stress in the enlarged European Union

At risk of poverty indicators based on relative income measures suggest that within the enlarged EU societies located at quite different points on a continuum of affluence have similar levels of poverty. Substantial differences in levels of income between societies do not in themselves invalidate this approach. However, the relative income approach fails to capture the fact that, if countries are grouped in terms of level of GDP, between economic cluster differences in life-style deprivation are sharper at lower income levels. Support for the argument relating to restricted reference groups is found in relation to the contrast between the twelve most affluent EU countries and all others. The limitations of relative income poverty lines have little to do with the process of enlargement as such. Instead the major problem involves the weak association between income and deprivation in the more affluent countries. However, as a consequence of such difficulties, such indicators do not provide entirely meaningful comparisons of levels of disadvantage across economic clusters. The current analysis, rather than supporting the alternative of a focus on absolute income or an EU wide poverty line, suggests that we should take the argument for adopting a multidimensional approach to the measurement of poverty more seriously.

Welfare regimes and household income packaging in the European Union

This paper uses harmonized data for the member states of the European Union to analyse household income packaging from a 'welfare regimes' perspective. Using data from the third wave of the ECHP, it looks at how the role of welfare transfers in the income package varies across countries and welfare regimes, and assesses whether this is consistent with the predictions of welfare regime theory, having first elaborated some specific hypotheses in that regard. It finds that when one focuses on averages across countries categorized into regimes, many of these hypotheses about the role of transfers are in broad terms borne out by the evidence. However, when one focuses on individual countries rather than regime averages the picture is a good deal more complex and consistency with the range of hypotheses more limited. It is essential that this variation across countries is taken into account in interpreting and using welfare regime theory and typologies.