An asset-level analysis of financial tail risks under extreme weather events

Extreme weather events pose a risk to the economic and financial system. To understand the materiality of these risks, financial institutions are beginning to conduct climate stress testing exercises. This requires climate risk models to be integrated with financial risk models. In this paper, we introduce an open, modular, and reproducible framework for the assessment of asset-level physical risk and the translation of these risks into portfolio-level impacts. The proposed framework addresses key limitations of previous research by including multiple financial transmission channels, and the incorporation of spatial correlations between weather events for bottom-up, asset-level, estimation of portfolio-level tail risks. By incorporating direct capital damages, business disruptions, and insurance coverage, we provide an overview of the direct financial impact of extreme weather events. Through an application of the framework for the assessment of flood risk to a portfolio of power firms located in India, we show that these extensions have material impacts on the risk estimates. We further show how different assumptions related to spatial correlations can lead to large under- or overestimations of portfolio-level tail risks

William A. Robson and the making of English administrative law

This article examines the role of William A. Robson (1895‐1980) in the making of English administrative law. Criticising English common lawyers who believed that the growing responsibility of officials in law‐making and dispute resolution was a symptom of ‘administrative lawlessness’ that was sapping the foundations of English liberties, Robson argued that lawyers must seek to understand forces giving rise to these practices and then work to ensure that this growing body of administrative law might function efficiently and equitably. Explaining the social philosophy that underpinned his legal method, the article reviews the remarkable range of Robson's work, indicates the breath of its ambition and assesses his achievements in shaping the legal foundations of the emerging welfare state. Only through this systematic appraisal of Robson's account of administrative law as the law of public administration, it is argued, can more recent developments in administrative practice and judicial review be set in an appropriate context

Rethinking "world wars" through a world-systems lens: a relational and contextual approach

What are the key characteristics of the current instabilities of the capitalist world-system, and how does it compare to previous periods that led to world wars? What factors are driving the similarities and differences between the present systemic chaos and earlier transitions in the world-system? What potential trajectories might the unfolding period of systemic instabilities take, and what balance of forces could emerge as dominant in shaping the world-system? Focusing on the foundational works of Wallerstein, Chase-Dunn, Goldstein, and Arrighi, this article critically re-evaluates the contemporary relevance and explanatory power of world-systems analysis. Its key contribution to world-systems literature lies in moving beyond the predominantly cyclical interpretations of world wars by integrating analytical tools, such as conceptual schemas and statistical evidence, with narrative approaches highlighting historical contingencies. Overall, contemporary systemic instabilities within the capitalist world-system are marked by the intensification of economic competition, geopolitical rivalries, and social discontent, reflecting historical patterns of systemic chaos during prior hegemonic transitions, yet distinguished by the unanticipated disruption of economic expansion since the 2010s, China’s unexpected rise alongside the fading influence Germany and Japan, the U.S.-China decoupling, the pivotal role of frontier technologies, and the fragmented character of heightened popular mobilization

Understanding the role of internal governance units in the process of social innovation: the case of shared lives plus in England

Amid increasing demand for public services and stretched resources policymakers often promote ‘social innovation’ to address these tensions. However, critics argue that social innovation may just be a ‘fashionable concept’ or ‘buzzword’ in public policy discourse and that more empirical research is needed to help improve our understanding of the actors and mechanisms that drive effective social innovations. In response this article draws upon a case study of the development of Shared Lives as an alternative national model of adult social care in England over the past 40 years. Drawing on interviews with 50 individuals carried-out between late-2021 and early-2023, including those involved in four different local schemes, we highlight the positive role played by the organisation Shared Lives Plus, which we conceptualise as an ‘internal governance unit’ (IGU), in terms of establishing and maintaining a ‘community innovation infrastructure’. However, the example of Shared Lives also illustrates the difficult challenges IGUs can face in trying to move social innovations beyond an institutional ‘niche’

Little floods everywhere: what will climate change mean for you?

The consequences of climate change are often conceptualised in terms of the changing risks of natural disasters, or as reductions in future economic output. When understood in these terms, it is all too easy to believe that one might “get lucky”—that the floods won’t affect those of us who don’t live by the waterfront, and that the heatwaves won’t affect the salaries or job security of those of us who go to work in air conditioned offices. The consequences of climate change, serious though they may be, seem far away. Contrary to this perspective, we argue that changing risk profiles, even marginal or distant changes, are likely to strain the underlying fabric of societies, and thus have profound consequences for everyone. Even for individuals who are relatively insulated from the direct physical consequences of climate change, it may well be that there is little chance of “getting lucky.” This has important implications for how we perceive and assess the benefits of climate action. We therefore call for greater efforts to understand the system-wide social consequences of increasing disaster risks

Horizontal inequity in the use of mental healthcare in Australia

AbstractFor people experiencing mental health problems, timely access to high‐quality healthcare is imperative for improving outcomes. However, limited availability of services, high out‐of‐pocket costs, insufficient health literacy and stigmatizing attitudes may mean people do not receive the necessary treatment. We analyze Australian longitudinal data to document the extent and predictors of horizontal inequity in mental healthcare use among people with a newly developed mild or moderate mental disorder. Importantly, we compare people with similar health, residing in the same area, thus controlling for differences in healthcare needs and availability of services. Results suggest that mental healthcare use is not significantly associated with household income or financial hardship. In contrast, we find significant inequities by educational attainment, with university graduates around 50% more likely to receive mental healthcare than high‐school dropouts. These findings are robust across subsamples and alternative modeling approaches, including panel data models with individual fixed‐effects. Additional explorations of the education gradient suggest a potential pathway through mental health‐specific knowledge and attitudes

Asset pricing with contrastive adversarial variational Bayes

Machine learning techniques have gained considerable attention in the field of empirical asset pricing. Conditioning on a broad set of firm characteristics, one of the most popular no-arbitrage workhorses is a nonlinear conditional asset pricing model that consists of two modules within a neural network structure, i.e., factor and beta estimates, for which we propose a novel contrastive adversarial variational Bayes (CAVB) framework. To exploit the factor structure, we employ adversarial variational Bayes that transforms the maximum-likelihood problem into a zero-sum game between a variational autoencoder (VAE) and a generative adversarial network (GAN), where an auxiliary discriminative network brings in arbitrary expressiveness to the inference model. To tackle the problem of learning indistinguishable feature representations in the beta network, we introduce a contrastive loss to learn distinctive hidden features of the factor loadings in correspondence to conditional quantiles of return distributions. CAVB establishes a robust relation between the cross-section of asset returns and the common latent factors with nonlinear factor loadings. Extensive experiments show that CAVB not only significantly outperforms prominent models in the existing literature in terms of total and predictive R-squares, but also delivers superior Sharpe ratios after transaction costs for both long-only and long-short portfolios

The battle to rebuild our social media has started

The harms of social media platforms – from the mental health of young people to their role in creating rabbit holes for isolated adults who went on to commit atrocities – are well known. But to move forward, writes Nick Couldry, we must address the root cause of these problems: the decision to delegate the design our social spaces, at the most basic level, to profit-seeking businesses