Tapen Sinha

Prospect theory and the risk return association: Another look

Abstract In a seminal study, Fiegenbaum (1990) attempted to set down parameters of relationship between risk and return for firms and related it to ‘two piece von-Neumann Morgenstern utility function’ first explored empirically by Fishburn and Kochenberger (1979). I re-examine the estimated relationship. Specifically, I perform a meta-analysis of the above and below median returns to show that the relationship between risk and return is weaker above median than below median. I also show that the relationship between below median returns and above median returns is very small exhibiting compartmentalization of decision making by the firms similar to individual decision makers.

An Exploration of the Long-Run Relationship between Saving and Investment in the Developing Economies: A Tale of Latin American Countries

Note: The following is a description of the paper and not the actual abstract. Following the study of Feldstein and Horioka in 1980, economists have been studying the relationship between saving and investment with renewed vigor. Most of the recent studies have studied the relationship in the context of capital mobility in the industrialized countries. However, even though data are now available for developing countries, there are hardly any studies which focus on developing countries. Our paper studies the relationship for the following ten Latin American countries: Colombia, Dominican Republic, Ecuador, El Salvador, Guatemala, Honduras, Jamaica, Mexico, Panama and Venezuela. We use the cointegration methodology. Our results show that only for four countries, Ecuador, Honduras, Jamaica and Panama, there is a long-run relationship between saving and investment. The other six countries may face macroeconomic instability in the long run because of the divergence between saving rate and investment rate.

Pension Reform in Latin America and Its Lessons for International Policymakers

Pension Reform in Latin America and Its Lessons for International Policymakers, by Tapen Sinha, 2000, Norwell, Mass.: Kluwer Academic Publishers Reviewer: Ian Webb, International Insurance Foundation, Washington, DC. Tapen Sinha, professor in the Department of Actuarial, Statistical, and Mathematical Studies at the Instituto Tecnologico Autonomo de Mexico (ITAM), has put together an informative and probing reference book on pension reform in Latin America. The book is divided into six chapters, which offer in turn a historical view of Latin America, a review of existing alternative models of social security around the world, a comparison of recent pension reforms in Latin America, an in-depth look at theoretical arguments used to support the privatization of a pension system, a review of pension terminology with cross-reference to country examples, and concluding observations on the privatization experiment and debate. The first chapters overview of the economic, social, and demographic histories of Latin American countries includes an interesting account of the development of social security provisions in these countries and a modest statistical appendix. The second chapter begins to address the central issues of the book-evaluating the Latin American experiment, a pension reform that emphazises second and third pillars in a world dominated by first pillar pay-as-you-go systems. In this chapter Sinha scrutinizes claims that privatization can lead to reduced labor market distortions, improved compliance, the development of financial markets, higher aggregate savings, a replacement of nearly bankrupt pay-as-you-go social security systems, and the engendering of parallel reforms in broader economic areas. The chapter ends with an introduction to some mathematical models that allow partial and general equilibrium analyses of pay-as-you-go and fully funded pension systems. The third chapter gives a country by country description of Latin Americas reformed pension systems. While there is an unmistakable general model which all countries follow, the differences between them are substantial enough to, in effect, create an experiment in diversity. Sinhas observations highlight the ways in which the success of each countrys reform may depend on its experimentation with the general model. The reader is allowed to draw initial impressions of the performance of these systems in the region using recent statistics provided on rates of return of private pension funds, rates of participation in private and public systems, and management fees across fund providers. …

Who is that Masked Person: The Use of Face Masks on Mexico City Public Transportation During the Influenza a (H1N1) Outbreak

This article examines three issues: (1) the use, over time, of facemasks in a public setting to prevent the spread of a respiratory disease for which the mortality rate is unknown; (2) the difference between the responses of male and female subjects in a public setting to unknown risks; and (3) the effectiveness of mandatory and voluntary public health measures in a public health emergency. The use of facemasks to prevent the spread of respiratory diseases in a public setting is controversial. At the height of the influenza epidemic in Mexico City in the spring of 2009, the federal government of Mexico recommended that passengers on public transport use facemasks to prevent contagion. The Mexico City government made the use of facemasks mandatory for bus and taxi drivers, but enforcement procedures differed for these two categories. Using an evidence-based approach, we collected data on the use of facemasks over a 2-week period. In the specific context of the Mexico City influenza outbreak, these data showed mask usage rates mimicked the course of the epidemic and gender difference in compliance rates among metro passengers. Moreover, there was not a significant difference in compliance with mandatory and voluntary public health measures where the effect of the mandatory measures was diminished by insufficiently severe penalties, the lack of market forces to create compliance incentives and sufficient political influence to diminish enforcement. Voluntary compliance was diminished by lack of trust in the government.

An aggregate import demand function for greece

This study estimates the aggregate import demand function for Greece using annual data for the period 1951–92. There are two methodological novelties in this paper. The authors find that the variables used in the aggregate import demand function are not stationary but are cointegrated. Thus, a long-run equilibrium relationship exists among these variables during the period under study. The price elasticity is found to be close to unity in the long run. The cross-price elasticity is also found to be close to unity. Import demand is found to be highly income elastic in the long run. This implies that with economic growth, ceteris paribus, the trade deficit for Greece is likely to get worse.

Relationship between latitude and melanoma incidence: international evidence

We investigate the relationship between latitude and incidence of melanoma among Whites in different age groups using data from different continents. Relevant data for Whites were obtained for 59 regions around the world. A statistical analysis was carried out using regional dummy variables to eliminate spurious statistical correlation due to clustering. Simple correlation between latitude and incidence of melanoma is strongly negative for almost all age groups. However, once the regional dummies were introduced in the analysis, the relation between latitude and incidence rates disappeared for all age groups but the explanatory power of the regression equation increased substantially.

The Effects of Survival Probabilities, Transactions Cost and the Attitude Towards Risk on the Demand for Annuities

Uncertain lifetimes induce two different types of insurance markets: (a) annuity, and (b) life insurance. The annuity market differs crucially from the life insurance market in two important respects: (1) The demand for (term) life insurance will be generated by a bequest motive; (2) the demand for life insurance will be positive if the decision-maker (dm) chooses to borrow against future income streams. On the other hand, intertemporal decision making with uncertain lifetimes alone is a strong enough motivation for the existence of an annuity market. In this paper, we shall investigate how survival probabilities (and longevity), transactions cost and attitude towards risk affect the demand for annuities. Some of the results are counter-intuitive. These results need not carry over to the life insurance market because of the fundamental differences between an annuity and the life insurance. The paper is organized as follows: section II lays out the basic two period framework in which the analysis is carried out in section III. Section IV concludes with a discussion of our results and directions for future research.

Bayesian interpolation of unequally spaced time series

A comparative analysis of time series is not feasible if the observation times are different. Not even a simple dispersion diagram is possible. In this article we propose a Gaussian process model to interpolate an unequally spaced time series and produce predictions for equally spaced observation times. The dependence between two observations is assumed a function of the time differences. The novelty of the proposal relies on parametrizing the correlation function in terms of Weibull and Log-logistic survival functions. We further allow the correlation to be positive or negative. Inference on the model is made under a Bayesian approach and interpolation is done via the posterior predictive conditional distributions given the closest

Bancassurance in India: Who is Tying the Knot and Why

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