Peter Asch

Racetrack betting and informed behavior

Abstract Horse racing data permit interesting tests of attitudes toward risk. The present paper studies a new sample of racetrack results from Atlantic City, New Jersey. The questions examined are: (1) Are the market odds the best data for predicting the order of finish? (2) Do horses go off at odds that reflect their true probability of winning? (3) Is there any evidence that late bettors have better information than early bettors? It is found that market odds predict the order of finish well, but that ‘favorites’ are good bets and ‘long shots’ are poor ones. The data suggest that there does exist an ‘informed’ class of bettors and that bettors are on the whole neither risk neutral nor risk averse.

Does the minimum drinking age affect traffic fatalities

Since the mid-1970s numerous states have raised their minimum legal drinking age in an effort to reduce alcohol-related traffic accidents. This study examines determinants of a variety of traffic fatality rates at the state level for 1978, with particular attention to drinking age and drinking experience. The legal drinking age has no perceptible influence on fatalities, but inexperience in drinking is an apparent risk factor independent of age. The findings suggest that the effectiveness of higher drinking ages as a safety policy tool probably has been overstated.

Characteristics of Collusive Firms

DESPITE the fact that collusion among American firms has been actively prosecuted under the antitrust laws for many years, little is known about the effects of this policy. Such ignorance is partly attributable to the problems that accompany empirical investigation. It is, quite simply, difficult to isolate the effects of any mode of business conduct on observable market phenomena. A second source of ignorance is the per se illegality of collusion under the Sherman Act. Since the existence of the offensive conduct is virtually the sole issue considered by United States courts, exploration of surrounding circumstances has been minimal. This paper attempts to shed some light by examining evidence on the characteristics of collusive firms during the period 1958-67.

TRAFFIC SAFETY EFFECTS OF SOBRIETY CHECKPOINTS AND OTHER LOCAL DWI PROGRAMS IN NEW JERSEY

We examined the efficacy of three Driving While Intoxicated (DWI) programs in New Jersey from 1980 through 1985, using covariance analysis of county data. Road blocks, the major component of the Strike Force program, were associated with a drop of 10-15 per cent in the single vehicle nighttime crash rate and showed a relatively stable effect over time. DWI Task Force, an education program, was associated with a 6-10 per cent total decline in the crash rate and declining impact over time. SOBER, another education program, was associated with a small effect in the first year and little or no effect thereafter.

Risk compensation and the effectiveness of safety belt use laws: a case study of New Jersey

This paper investigates the effectiveness of New Jerseys mandatory belt use law (MUL) by testing specifically for: (1) a safety effect, and (2) a risk-compensation effect that could offset (in part) any safety impact. The main findings are that injury severity declined significantly in the 22 months following implementation of the MUL; but that accident frequency increased significantly. The increase in accidents may be explained only partially by increased driving mileage. These findings suggest that the real safety effect of the law may have been diluted by risk-compensating behavior.

Market Efficiency in Racetrack Betting: Further Evidence and a Correction

AbstractWe recently reported (Asch, Malkiel, and Quandt 1984) the results of simulated betting strategies based on logit analysis of racetrack betting data. Morning line odds, final odds, and marginal odds (defined as the odds implied by the moneys wagered during the last few minutes prior to each race) were used to predict the winning probability of each horse in a race; and a variety of strategies involving bets on the highest-probability horses was attempted. Our main conclusions were that we were unable to devise profitable strategies for win betting but that such strategies could be employed in place and show betting.

Monopoly and external costs: An application of second-best theory to the automobile industry☆

Abstract A monopoly that creates external costs poses a classic second-best problem: Whereas optimal allocation would be achieved by both removal of the monopoly and correction of the externality, it cannot be presumed that either action taken alone would improve welfare. It is shown that the desirability of pursuing either policy in isolation depends on the relative size of the external cost and the monopolists price-cost margin. The analysis is applied to the automoblie manufacturing industry. Under current estimates of pollution damage and price-cost margin, industry output is suboptimal. Whereas this finding may not be translated directly into policy recommendations, it suggests that some skepticism about internalizing pollution costs is justified unless such action is accompanied by an appropriate reduction in monopoly power.

The Free-Rider Paradox: Theory, Evidence, and Teaching

The free-rider problem involves extreme empirical implications, and, as long as instructors continue to assert that narrow self-interest is the sole motivator of rational behavior, thoughtful students may not take this issue and the related economic analysis seriously.

Food safety regulation: is the Delaney clause the problem or symptom?

The Delaney ‘anticancer’ amendment to the Food, Drug, and Cosmetic Act of 1938 is a prominent example of ‘zero risk’ legislation. The relevant clauses prohibit a finding of safety for any relevant substance found to induce cancer in humans or animals. It is argued that the Delaney approach to safety regulation is not only misguided, but that relaxation of the law - for example, to permit substances that pose ‘insignificant’ cancer risks - would produce only marginal improvement in regulation. A major shift in regulation that permits some form of cost-benefit analysis is the only way to move toward rational policy choices.

The Incidence of Automobile Pollution Control

The incidence of a vehicle tax to reduce automobile pollution is examined over all affected groups: consumers, stockholders, pollution sufferers, and government expenditure beneficiaries. Gains and losses are estimated under alter native assumptions about industry pricing. The net effect of the tax is regressive if government expenditure benefits are distributed neutrally. Under different expenditure assumptions the tax effect becomes progressive, but the results suggest that a tax on emissions rather than vehicles may be more equitable as well as more efficient.