Evaluating internal credit rating systems depending on bank size

Under a new Basel capital accord, bank regulators might use quantitative measures when evaluating the eligibility of internal credit rating systems for the internal ratings based approach. Based on data from Deutsche Bundesbank and using a simulation approach, we find that it is possible to identify strongly inferior rating systems out-of time based on statistics that measure either the quality of ranking borrowers from good to bad, or the quality of individual default probability forecasts. Banks do not significantly improve system quality if they use credit scores instead of ratings, or logistic regression default probability estimates instead of historical data. Banks that are not able to discriminate between high- and low-risk borrowers increase their average capital requirements due to the concavity of the capital requirements function

Randomised, controlled trial of effectiveness of ampicillin in mild acute respiratory infections in Indonesian children.

The recommended treatment for mild acute respiratory infections (ARI) in children is supportive care only, but many physicians, especially in developing countries, continue to prescribe antibiotic treatment because they believe it prevents progression to more severe ARI. To find out whether ampicillin treatment conferred any benefit over supportive care alone, a randomised, controlled trial was carried out among 889 children (under 5 years) with mild ARI in Indonesia. 447 were randomly allocated ampicillin (25-30 mg/kg body weight three times daily for 5 days) plus supportive care (continued breastfeeding, clearing of the nose, and paracetamol to control fever); 442 were allocated supportive care only. The treatment groups were almost identical after randomisation in terms of age, sex, level of parental education, history of measles immunisation, and fever. After 1 week the percentages cured were nearly identical (204 [46%] ampicillin; 209 [47%] control), as were the percentages of cases progressing to moderate ARI (56 [13%] vs 53 [12%]). The effect of treatment was not modified by age, sex, measles immunisation status, or the educational level of the parents. At the 2-week follow-up, the percentages cured were 62% (277) in the ampicillin group and 58% (256) in the control group; 14% of both groups had progressed to moderate ARI; and 24% (107) and 28% (123), respectively, still had mild ARI. None of the differences in outcome between the ampicillin and control groups was statistically significant. Thus, ampicillin plus supportive care offers no benefit over supportive care alone for treatment of mild ARI in young Indonesian children

MANAGING THE GREAT LAKES COMMONS: AN EVALUATION OF RECENT INSTITUTIONAL CHANGES

Resource /Energy Economics and Policy,

Bounded Sociality: Behavioural Economists' Truncated Understanding of the Social and Its Implications for Politics

Behavioural economics provides a more realistic model of man than neoclassical economics. But "behavioural economic man" likewise has his shortcomings. An important aspect is the neglect of social contingency. This article sheds light on the conceptions of the "social" invoked in different strands of behavioural economics and explores their policy implications. Based on different interpretations of the rational choice paradigm and deviations thereof, a distinction is drawn between mainstream approaches and alternative approaches to behavioural economics and within "mainstream behavioural economics" between its cognitive and its social strand. Whereas the cognitive strand of behavioural economics has quite a limited understanding of the social, which yields a narrow form of behavioural politics, the social strand offers a richer account of social variability and dynamics, which in principle leaves more room for politics. However, both approaches lay emphasis on our human nature rather than the specificities of modern culture

Between justice and truth : the legal subject in the market society

In modern society, the law contributes as much to individualization (subjectivation) as to social integration (cohesion). In this paper, these relations are explored with regard to the role of the legal subject in the market society. In a market society, the markets are no longer “embedded” in the normative order of society but society has itself adopted the logic of markets. Drawing on Michel Foucault’s Rio lectures and his governmentality lectures, I will show that within the modern ‘governmental state’ – understood both as a ‘state of law’ (Rechtsstaat) and an ‘economic state’ (Wirtschaftsstaat) – the law moves between the poles of (juridical) justice and (economic) truth. The economization of the rule of law is paralleled by an economization of the legal subject, which corresponds to a shift from the principle of jurisdiction (speaking the law) to the principle of veridiction (speaking the truth). This means nothing else than the scientization of classical notions of the law according to the criteria of modern economics. The legal subject is thus brought in line with the market citizen who – as an entity of both governance and self-governance – fits well into the market society. However, his self-concept is not only affected by the liberalization but, at the same time, also by the naturalization of the rules that the market has imported into the law.Peer reviewe

From Social Rights to Economic Incentives? The Moral (Re)construction of Welfare Capitalism

The notion of "welfare capitalism" refers to a political-economic regime that integrates the functions of a capitalist market economy with the functions of a democratic welfare state. The term is commonly used by Esping-Andersen (1990) in The Three Worlds of Welfare Capitalism, but it is also linked to Marshall's (1950, p.14) idea of three generations of rights, which all form part of modern citizenship: civil rights, political rights, and social rights. The question that this chapter seeks to address is how social rights, which Esping-Andersen and Marshall understood as the apex of the democratic welfare state, remain bound to the logic of the capitalist market economy. Employing the perspective of the economic sociology of law, it will be argued that the transformation of welfare capitalism over the last few decades has led to a reinterpretation of social rights in the light of economic incentives. To make this point, changes in the financial structure of the welfare state, both on its revenue and expenditure side, will be connected with changes in the moral discourse on citizens' rights and duties, which is increasingly informed by economic arguments. The chapter first outlines the analytical framework that connects the language of social rights with the concept of welfare capitalism. In the perspective of the economic sociology of law, scholarship in comparative and critical political economy can be fruitfully integrated and related with the moral-economy approach, which is particularly suited to document a loss of entitlements, or accustomed social rights. The following analysis is divided into two parts. The chapter first turns to the revenue side of the welfare state and explores the moral economy of taxation, emphasising changes over time and across different welfare regimes. What we can, by and large, observe, is a move from "contribution tax" to "exchange tax", or a renegotiation between social rights and property rights. The chapter then proceeds to discuss the expenditure side of the welfare state and the moral economy of debt, again focusing on the overall patterns of development. Accordingly, we are not only witnessing a transition "from welfare to workfare" but also "from welfare to debtfare", which replaces unconditional social rights or welfare benefits with activation in the labour market and the credit market. The chapter concludes by interpreting the above developments in the light of the social contract, or social compromise, underlying welfare capitalism

Unravelling the European Community of Debt

(no abstract available

ALTERNATIVE PRICE SPECIFICATION FOR MUNICIPAL WATER DEMANDS: AN EMPIRICAL TEST

Based on data from 92 Minnesota cities, the analyses shows that neither marginal price or average price appear as the better predictor of demand. The price elasticity of demand ranges from -. 17 for marginal price in the linear model to -.27 for average price in the log linear model. It appears from the analysis that many consumers are unaware of the marginal price of their water. Thus utilities should simplify their pricing structures and present consumers with an easy to understand costs of water such as the cost of six hours of lawn watering.Demand and Price Analysis, Public Economics,

Bounded Sociality: Behavioural Economists' Truncated Understanding of the Social and Its Implications for Politics

Behavioural economics provides a more realistic model of man than neoclassical economics. But "behavioural economic man" likewise has his shortcomings. An important aspect is the neglect of social contingency. This article sheds light on the conceptions of the "social" invoked in different strands of behavioural economics and explores their policy implications. Based on different interpretations of the rational choice paradigm and deviations thereof, a distinction is drawn between mainstream approaches and alternative approaches to behavioural economics and within "mainstream behavioural economics" between its cognitive and its social strand. Whereas the cognitive strand of behavioural economics has quite a limited understanding of the social, which yields a narrow form of behavioural politics, the social strand offers a richer account of social variability and dynamics, which in principle leaves more room for politics. However, both approaches lay emphasis on our human nature rather than the specificities of modern culture

Transnational Law and Economic Sociology

(no abstract available