Testing consumption optimality using aggregate data

The objective of this paper is to test for optimality of consumption decisions at the aggregate level (representative consumer) taking into account popular deviations from the canonical CRRA utility model rule of thumb and habit. First, we show that rule-of-thumb behavior in consumption is observational equivalent to behavior obtained by the optimizing model of King, Plosser and Rebelo (Journal of Monetary Economics, 1988), casting doubt on how reliable standard rule-of-thumb tests are. Second, although Carroll (2001) and Weber (2002) have criticized the linearization and testing of euler equations for consumption, we provide a deeper critique directly applicable to current rule-of-thumb tests. Third, we show that there is no reason why return aggregation cannot be performed in the nonlinear setting of the Asset-Pricing Equation, since the latter is a linear function of individual returns. Fourth, aggregation of the nonlinear euler equation forms the basis of a novel test of deviations from the canonical CRRA model of consumption in the presence of rule-of-thumb and habit behavior. We estimated 48 euler equations using GMM, with encouraging results vis-a-vis the optimality of consumption decisions. At the 5% level, we only rejected optimality twice out of 48 times. Empirical-test results show that we can still rely on the canonical CRRA model so prevalent in macroeconomics: out of 24 regressions, we found the rule-of-thumb parameter to be statistically signi cant at the 5% level only twice, and the habit ƴ parameter to be statistically signi cant on four occasions. The main message of this paper is that proper return aggregation is critical to study intertemporal substitution in a representative-agent framework. In this case, we fi nd little evidence of lack of optimality in consumption decisions, and deviations of the CRRA utility model along the lines of rule-of-thumb behavior and habit in preferences represent the exception, not the rule.

Testing consumption optimality using aggregate data

This paper tests the optimality of consumption decisions at the aggregate level taking into account popular deviations from the canonical constant-relative-risk-aversion (CRRA) utility function model-rule of thumb and habit. First, based on the critique in Carroll (2001) and Weber (2002) of the linearization and testing strategies using euler equations for consumption, we provide extensive empirical evidence of their inappropriateness - a drawback for standard rule- of-thumb tests. Second, we propose a novel approach to test for consumption optimality in this context: nonlinear estimation coupled with return aggregation, where rule-of-thumb behavior and habit are special cases of an all encompassing model. We estimated 48 euler equations using GMM. At the 5% level, we only rejected optimality twice out of 48 times. Moreover, out of 24 regressions, we found the rule-of-thumb parameter to be statistically significant only twice. Hence, lack of optimality in consumption decisions represent the exception, not the rule. Finally, we found the habit parameter to be statistically significant on four occasions out of 24.

Testing the optimality of aggregate consumption decisions: is there rule-of-thumb behavior?

Consumption is an important macroeconomic aggregate, being about 70% of GNP. Finding sub-optimal behavior in consumption decisions casts a serious doubt on whether optimizing behavior is applicable on an economy-wide scale, which, in turn, challenge whether it is applicable at all. This paper has several contributions to the literature on consumption optimality. First, we provide a new result on the basic rule-of-thumb regression, showing that it is observational equivalent to the one obtained in a well known optimizing real-business-cycle model. Second, for rule-of-thumb tests based on the Asset-Pricing Equation, we show that the omission of the higher-order term in the log-linear approximation yields inconsistent estimates when lagged observables are used as instruments. However, these are exactly the instruments that have been traditionally used in this literature. Third, we show that nonlinear estimation of a system of N Asset-Pricing Equations can be done efficiently even if the number of asset returns (N) is high vis-a-vis the number of time-series observations (T). We argue that efficiency can be restored by aggregating returns into a single measure that fully captures intertemporal substitution. Indeed, we show that there is no reason why return aggregation cannot be performed in the nonlinear setting of the Pricing Equation, since the latter is a linear function of individual returns. This forms the basis of a new test of rule-of-thumb behavior, which can be viewed as testing for the importance of rule-of-thumb consumers when the optimizing agent holds an equally-weighted portfolio or a weighted portfolio of traded assets. Using our setup, we find no signs of either rule-of-thumb behavior for U.S. consumers or of habit-formation in consumption decisions in econometric tests. Indeed, we show that the simple representative agent model with a CRRA utility is able to explain the time series data on consumption and aggregate returns. There, the intertemporal discount factor is significant and ranges from 0.956 to 0.969 while the relative risk-aversion coefficient is precisely estimated ranging from 0.829 to 1.126. There is no evidence of rejection in over-identifying-restriction tests.

On the optimality of progressive income redistribution

We compute the optimal non-linear tax policy for a dynastic economy with uninsurable risk, where generations are linked by dynastic wealth accumulation and correlated incomes. Unlike earlier studies, we find that the optimal long-run tax policy is moderately regressive. Regressive taxes lead to higher output and consumption, at the expense of larger after-tax income inequality. Nevertheless, equilibrium effects and the availability of self-insurance via bequests mitigate the impact of regressive taxes on consumption inequality, resulting in improved average welfare overall. We also consider the optimal once-and-for-all change in the tax system, taking into account the transition dynamics. Starting at the U.S. status quo, the optimal tax reform is slightly more progressive than the current system.

On the optimality of the Friedman Rule with heterogeneous agents and non-linear income taxation

We study the optimal “inflation tax” in an environment with heterogeneous agents and non-linear income taxes. We first derive the general conditions needed for the optimality of the Friedman rule in this setup. These general conditions are distinct in nature and more easily interpretable than those obtained in the literature with a representative agent and linear taxation. We then study two standard monetary specifications and derive their implications for the optimality of the Friedman rule. For the shopping-time model the Friedman rule is optimal with essentially no restrictions on preferences or transaction technologies. For the cash-credit model the Friedman rule is optimal if preferences are separable between the consumption goods and leisure, or if leisure shifts consumption towards the credit good. We also study a generalized model which nests both models as special cases.

Testosterone Therapy Differently Regulates The Anti- And Pro-inflammatory Cytokines In The Plasma And Prostate Of Rats Submitted To Chronic Ethanol Consumption (uchb).

Ethanol consumption damages the prostate, and testosterone is known by anti-inflammatory role. The cytokines were investigated in the plasma and ventral prostate of UChB rats submitted or not to testosterone therapy by ELISA and Western blot, respectively. Additionally, inflammatory foci and mast cells were identified in the ventral prostate slides stained by hematoxylin and eosin and toluidine blue, respectively. Inflammatory foci were found in the ethanol-treated animals and absent after testosterone therapy. Plasma levels of IL-6 and IL-10 were not changed while TNFα and TFG-β1 were increased in the animals submitted testosterone therapy. Regarding to ventral prostate, IL-6 did not alter, while IL-10, TNFα, and TFG-β1 were increased after testosterone therapy. Ethanol increases NFR2 in addition to high number of intact and degranulated mast cell which were reduced after testosterone therapy. So, ethanol and testosterone differentially modulates the cytokines in the plasma and prostate.

Nat2, Xrcc1 And Hogg1 Polymorphisms, Cigarette Smoking, Alcohol Consumption And Risk Of Upper Aerodigestive Tract Cancer.

To evaluate associations between polymorphisms of the N-acetyltransferase 2 (NAT2), human 8-oxoguanine glycosylase 1 (hOGG1) and X-ray repair cross-complementing protein 1 (XRCC1) genes and risk of upper aerodigestive tract (UADT) cancer. A case-control study involving 117 cases and 224 controls was undertaken. The NAT2 gene polymorphisms were genotyped by automated sequencing and XRCC1 Arg399Gln and hOGG1 Ser326Cys polymorphisms were determined by Polymerase Chain Reaction followed by Restriction Fragment Length Polymorphism (PCR-RFLP) methods. Slow metabolization phenotype was significantly associated as a risk factor for the development of UADT cancer (p=0.038). Furthermore, haplotype of slow metabolization was also associated with UADT cancer (p=0.014). The hOGG1 Ser326Cys polymorphism (CG or GG vs. CC genotypes) was shown as a protective factor against UADT cancer in moderate smokers (p=0.031). The XRCC1 Arg399Gln polymorphism (GA or AA vs. GG genotypes), in turn, was a protective factor against UADT cancer only among never-drinkers (p=0.048). Interactions involving NAT2, XRCC1 Arg399Gln and hOGG1 Ser326Cys polymorphisms may modulate the risk of UADT cancer in this population.

Androgen Therapy Reverses Injuries Caused By Ethanol Consumption In The Prostate: Testosterone As A Possible Target To Ethanol-related Disorders.

Chronic ethanol consumption leads to reproductive damages, since it can act directly in the tissues or indirectly, causing a hormonal imbalance. Prostate is a hormone-dependent gland and, consequently, susceptible to ethanol. The potential of testosterone therapy in the ethanol-related disorders was investigated in the prostate microenvironment. UChB rats aged 90 days were divided into 2 experimental groups (n=20): C: drinking water only and EtOH: drinking 10% (v/v) ethanol at >2 g/kg body weight/day+water. At 150 days old, 10 rats from each group received subcutaneous injections of testosterone cypionate (5 mg/kg body weight) diluted in corn oil every other day for 4 weeks, constituting T and EtOH+T, while the remaining animals received corn oil as vehicle. Animals were euthanized at 180 days old, by decapitation. Blood was collected to obtain hormone concentrations and ventral prostate was dissected and processed for light microscope and molecular analyses. Ventral prostate weight, plasma testosterone and DHT and intraprostatic testosterone concentrations were increased after testosterone treatment. Plasma estradiol level was reduced in the EtOH+T. Inflammatory foci, metaplasia and epithelial atrophy were constantly found in the prostate of EtOH and were not observed after hormonal therapy. No differences were found in the expression of AR, ERβ and DACH-1. Additionally, testosterone treatment down-regulated ERα and increased the e-cadherin and α-actinin immunoreactivities. Testosterone was able to reverse damages caused by ethanol consumption in the prostate microenvironment and becomes a possible target to be investigated to ethanol-related disorders.

Cola beverage consumption delays alveolar bone healing: a histometric study in rats

Epidemiological studies have suggested that cola beverage consumption may affect bone metabolism and increase bone fracture risk. Experimental evidence linking cola beverage consumption to deleterious effects on bone is lacking. Herein, we investigated whether cola beverage consumption from weaning to early puberty delays the rate of reparative bone formation inside the socket of an extracted tooth in rats. Twenty male Wistar rats received cola beverage (cola group) or tap water (control group) ad libitum from the age of 23 days until tooth extraction at 42 days and euthanasia 2 and 3 weeks later. The neoformed bone volume inside the alveolar socket was estimated in semi-serial longitudinal sections using a quantitative differential point-counting method. Histological examination suggested a decrease in the osteogenic process within the tooth sockets of rats from both cola groups, which had thinner and sparser new bone trabeculae. Histometric data confirmed that alveolar bone healing was significantly delayed in cola-fed rats at three weeks after tooth extraction (ANOVA, p = 0.0006, followed by Tukey's test, p < 0.01). Although the results of studies in rats cannot be extrapolated directly to human clinical dentistry, the present study provides evidence that cola beverage consumption negatively affect maxillary bone formation.

Drug consumption among medical students in São Paulo, Brazil: influences of gender and academic year

OBJECTIVE: To analyze alcohol, tobacco and other drug use among medical students. METHOD: Over a five-year period (1996-2001), we evaluated 457 students at the Universidade de São Paulo School of Medicine, located in São Paulo, Brazil. The students participated by filling out an anonymous questionnaire on drug use (lifetime, previous 12 months and previous 30 days). The influence that gender and academic year have on drug use was also analyzed. RESULTS: During the study period, there was an increase in the use of illicit drugs, especially inhalants and amphetamines, among the medical students evaluated. Drug use (except that of marijuana and inhalants) was comparable between the genders, and academic year was an important influencing factor. DISCUSSION: Increased inhalant use was observed among the medical students, especially among males and students in the early undergraduate years. This is suggestive of a specific behavioral pattern among medical students. Our findings corroborate those of previous studies. CONCLUSION: Inhalant use is on the rise among medical students at the Universidade de São Paulo School of Medicine. Because of the negative health effects of illicit drug use, further studies are needed in order to deepen the understanding of this phenomenon and to facilitate the development of preventive measures.

Validation of a food frequency questionnaire to assess the consumption of carotenoids, fruits and vegetables among adolescents: the method of triads

The aim of this study was to validate the intake of carotenoids, fruits and vegetables estimated by the Food Frequency Questionnaire for Adolescents (FFQA) using the method of triads. Blood samples were collected from 80 elementary school adolescents to assess serum levels of β-carotene. Partial correlation coefficients (r) were calculated between an estimated intake of carotenoids, fruits and vegetables and the serum levels of β-carotene. Validity coefficients were calculated using the method of triads. With the exception of carotenoids, partial r from the food frequency questionnaire (FFQ) were greater than those of the 24-hour recall (24hR). The fruit/vegetable group showed the highest partial r for the FFQ (r = 0.235) and the 24hR (r = 0.137). The highest validity coefficient was obtained for the vegetable group, as assessed by the FFQ (r = 0.873). On average, the validity coefficient values for the FFQ were greater than those obtained for the 24hR or the β-carotene serum levels. The FFQA is an accurate tool for estimating the intake of carotenoids, fruits and vegetables in this population group.

Discrepancies among ecological, household, and individual data on fruits and vegetables consumption in Brazil

Information on fruits and vegetables consumption in Brazil in the three levels of dietary data was analyzed and compared. Data about national supply came from Food Balance Sheets compiled by the FAO; household availability information was obtained from the Brazilian National Household Budget Survey (HBS); and actual intake information came from a large individual dietary intake survey that was representative of the adult population of São Paulo city. All sources of information were collected between 2002 and 2003. A subset of the HBS, representative of São Paulo city, was used in our analysis in order to improve the quality of the comparison with actual intake data. The ratio of national supply to household availability of fruits and vegetables was 2.6 while the ratio of national supply to actual intake was 4.0. The discrepancy ratio in the comparison between household availability and actual intake was smaller, 1.6. While the use of supply and availability data has advantages, as lower cost, must be taken into account that these sources tend to overestimate actual intake of fruits and vegetables.

Diet and cancer in Northeast Brazil: evaluation of eating habits and food group consumption in relation to breast cancer

Realizou-se um estudo do tipo caso-controle de base hospitalar no Município de João Pessoa, Paraíba, Brasil. Participaram 183 indivíduos (89 casos e 94 controles) na faixa etária entre 30 e 80 anos, com pareamento por idade. O consumo alimentar de casos e controles foi avaliado por alimentos e grupos de alimentos categorizados em tercis de consumo. A estimativa dos valores da odds ratio (OR) e intervalos de confiança de 95% (IC95%) foi realizada por regressão logística múltipla não-condicional. O consumo de frutas e sucos, feijão e leite e derivados apresentou uma forte associação com a redução no risco de câncer de mama. O consumo de carnes vermelhas e de carnes fritas esteve positivamente associado ao risco de câncer de mama (carne vermelha - OR = 4.30; IC95%: 1,74-10,67; p = 0,00). Não foi observada associação entre o consumo dos grupos de vegetais e embutidos com o câncer de mama. Carne vermelha e carnes fritas podem ser fatores de risco, e o consumo de frutas, feijão e leite e derivados pode atuar como protetor do câncer de mama

Body Mass Index, Cigarette Smoking, and Alcohol Consumption and Cancers of the Oral Cavity, Pharynx, and Larynx: Modeling Odds Ratios in Pooled Case-Control Data

study-specific results, their findings should be interpreted with caution

Randomized, controlled trial promotes physical activity and reduces consumption of sweets and sodium among overweight and obese adults

The present study sought to assess the impact of an intervention to reduce weight and control risk factors of noncommunicable chronic diseases in overweight or obese adults who are users of primary and secondary healthcare units of the public health system of Pelotas, Brazil. We hypothesized that individuals who received an educational intervention regarding how to lose weight and prevent other noncommunicable chronic disease risk factors through nutrition would lose weight and acquire active habits during leisure time more frequently than individuals under regular care. Two hundred forty-one participants from the Nutrition Outpatient Clinic of the Medical Teaching Hospital of the Federal University of Pelotas, Brazil, aged 20 years or older and classified as overweight or obese were randomly allocated to either the intervention group (IG; n = 120) or control group (CG; n = 121). The IG received individualized nutritional care for 6 months, and the CG received individualized usual care of the health services. Intention-to-treat analyses showed that at 6 months, mean fasting glycemia and daily consumption of sweet foods and sodium were reduced, and the time spent on physical leisure activity was increased in IG. Analysis of adherence to the protocol of the study revealed that individuals from IG had lost more in body weight, waist circumference, and fasting glucose compared to the CG. Leisure time physical activity increased in IG. Individuals adhered equally to the dietetic recommendations, irrespective of the nutrition approach that was used