Retirement Flexibility and Portfolio Choice

This paper explores the interaction between retirement flexibility and portfolio choice in an overlapping-generations model. We analyse this interaction both in a partial-equilibrium and general-equilibrium setting. Retirement flexibility is often seen as a hedge against capital-market risks which justifies more risky asset portfolios. We show, however, that this positive relationship between risk taking and retirement fl exibility is weakened - and under some conditions even turned around - if not only capital-market risks but also productivity risks are considered. Productivity risk in combination with a high elasticity of substitution between consumption and leisure creates a positive correlation between asset returns and labour income, reducing the willingness of consumers to bear risk. Moreover, it turns out that general-equilibrium effects can either increase or decrease the equity exposure, depending on the degree of substitutability between consumption and leisure.retirement (in)fl exibility;portfolio allocation;risk;intratemporal substitution elasticity

A note on solving large-scale zero-one programming problems

A heuristic for solving large-scale zero-one programming problems is provided. The heuristic is based on the modifications made by H. Crowder et al. (1983) to the standard branch-and-bound strategy. First, the initialization is modified. The modification is only useful if the objective function values for the continuous and the zero-one programming problems are close to each other. Given the initialization, the branch-and-bound method is stopped when a feasible solution to the problem is found. The heuristic also uses the reduced costs to fix non-basic variables to 1 or 0. An example taken from achievement test construction illustrates the efficiency of the proposed heuristic. Several test construction problems were implemented and solved by the proposed heuristic for item banks with 400 items. Modifications were introduced in the LANDO computer program. A table illustrates that the central processing unit times for solving the zero-one programming problem were close to the times needed to solve the continuous problem

Implementations of the branch-and-bound method for test construction problems

Item banks, large sets of test items, can be used for the construction of achievement tests. Mathematical programming models have been proposed for the selection of items from an item bank for a test. These models make automated test construction possible. However, to find an optimal or even an approximate optimal solution to a test construction model can be time consuming. This paper shows how test construction models, and in particular the Maximin Model, are solvable by the program MPSX/370 V2. This program offers the user several implementations of the branch-and-bound method, which can be used for solving test construction models. Several implementations are compared. The results show that test construction models are solvable in a practical amount of time if the user applies the options offered by the program in an intelligent way. An appendix describes the Extended Control Language (ECL) computer program

Achievement test construction using 0-1 linear programming

In educational testing the work of professional test agencies has shown a trend towards item banking. Achievement test construction is viewed as selecting items from a test item bank such that certain specifications are met. As the number of possible tests is large and practice usually imposes various constraints on the selection process, a mathematical programming approach is obvious. In this paper it is shown how to formulate achievement test construction as a 0¿1 linear programming problem. A heuristic for solving the problem is proposed and two examples are given. It is concluded that a 0¿1 linear programming approach fits the problem of test construction in an appropriate way and offers test agencies the possibility of computerizing their services

Methods and models for the construction of weakly parallel tests

Several methods are proposed for the construction of weakly parallel tests [i.e., tests with the same test information function (TIF)]. A mathematical programming model that constructs tests containing a prespecified TIF and a heuristic that assigns items to tests with information functions that are equal are important components of these methods. Numerical examples demonstrate that tests can be constructed quickly and that the heuristic produces good results. However, the heuristic is not applicable for every set of practical constraints (e.g., constraints with respect to test administration time, test composition, or dependencies between items). Index terms: item banking, heuristics, mathematical programming, test construction, weakly parallel tests

The construction of two-stage tests

Although two-stage testing is not the most efficient form of adaptive testing, it has some advantages. In this paper, linear programming models are given for the construction of two-stage tests. In these models, practical constraints with respect to, among other things, test composition, administration time, and inter-item dependencies play an important role. Research indicates that two-stage tests can be constructed both sequentially and simultaneously. Models based on the maximin model for test construction developed by W. J. van der Linden and E. Boekkooi-Timminga (1989) are formulated for the sequential case, with constraints specified at test and subtest levels. It is assumed that a bank of items calibrated under the item response model is available and that "information" is used in accordance with G. H. Fischer's information model. The maximin design is used in order to select the items that maximize the information in the test, while the resulting test information function still has the desired shape. The paper concludes that simultaneous test construction has the disadvantage of having a large number of variables; hence, constraints must be considered

One-year transitional programme increases knowledge to level sufficient for entry into the fourth year of the medical curriculum

BACKGROUND: To cope with a lack of doctors and in anticipation of the Bachelor-Master structure for Medicine, several Dutch universities offer graduate entry programmes for students with degrees in areas related to Medicine. The graduate entry programme is a four-year programme: after a transition period of one year students enroll in the fourth year of the regular six-year training programme. AIM: The research questions in this study were (1) whether and when graduate entry students' knowledge reached a level comparable to that of regular medical students and (2) whether there were differences in knowledge levels between graduate entry students with a university or HBO (college) degree. METHODS: The progress test results of ninety graduate entry students who were enrolled in the transitional programme between 2002 and 2004 were compared to those of regular third-year students. RESULTS: Initially, graduate entry students scored significantly lower on the progress tests, but differences disappeared within a year. No differences were found between graduate entry students with a university or HBO degree. CONCLUSIONS: The results of this study indicate that the increase in knowledge after a one-year transitional period is sufficient to enroll students with related degrees in the fourth year of the regular medical training programme

Algorithms for computerized test construction using classical item parameters

Recently, linear programming models for test construction were developed. These models were based on the information function from item response theory. In this paper another approach is followed. Two 0-1 linear programming models for the construction of tests using classical item and test parameters are given. These models are useful, for instance, when classical test theory has to serve as an interface between an IRT-based item banking system and a test constructor not familiar with the underlying theory