Consumption and Precautionary Saving: An Empirical Analysis under Both Financial and Environmental Risks

This paper studies the empirical relationship between consumption and saving under two different sources of uncertainty: financial risk and environmental risk. The analysis is carried out using time series data for six advanced economies in the period 1965-2007. The results support the theoretical conclusions that both financial risk alone and the interaction between financial and environmental risks affect consumption. Moreover, we suggest a solution to some shortcomings which concern the empirical analysis performed with one-argument utility functions. Finally, we provide new estimates of indexes of relative risk aversion and relative prudence, and relative preference of environmental quality.Consumption, Precautionary Saving, Financial Risk, Environmental Risk, Prudence, Relative Risk Aversion, Uncertainty

Pitfalls In Estimating ß-Convergence By Means Of Panel Data: An Empirical Test

This paper aims to test the conjecture advanced in a recent work by Bianchi and Menegatti (2007) that usual !convergence panel regressions may produce biased evidence, due to their inability to distinguish between actual catching-up across countries and decreasing growth rates over time within countries. The test considers different sub-groups in a dataset of 72 countries for the period 1970-2000 and introduces both human capital and proxies for technological differences into the analysis. The results confirm the conjecture that traditional evidence about - convergence may be misleading; they also show that catching-up across countries is weaker than usually claimed and that this process occurred only in some sub-groups of countries.Catching-up, Convergence, Economic Growth, Panel Estimation Techniques.

Correlated risks, bivariate utility and optimal choices

In this paper, we consider a décision-maker facing a financial risk flanked by a background risk, possibly non-financial, such as health or environmental risk. A decision has to be made about the amount of an investment (in the financial dimension) resulting in a future benefit either in the same dimension (savings) or in the order dimension (environmental quality or health improvement). In the first case, we show that the optimal amount of savings decreases as the pair of risks increases in the bivariate increasing concave dominance rules of higher degrees which express the common preferences of all the decision-makers whose two-argument utility function possesses direct and cross derivatives fulfilling some specific requirements. Roughly speaking, the optimal amount of savings decreases as the two risks become "less positively correlated" or marginally improve in univariate stochastic dominance. In the second case, a similar conclusion on optimal investment is reached under alternative conditions on the derivatives of the utility function.bivariate higher order increasing concave stochastic dominance, precautionary savings, background risk, dependence

The theory of precautionary saving: an overview of recent developments

This work reviews recent developments in the literature analyzing precautionary saving. After a description of traditional precautionary saving theory, which considers labor income risk and interest rate risk, we present different research lines which introduce a wide range of extensions and generalizations of the classical model: the contemporaneous presence of multiple risks, changes in risks of different types, multiple variables affecting household utility, preferences non-featuring risk aversion and joint decisions on many choice variables. For each of these issues, we provide specific highlights which summarize the main results obtained in the literature. Lastly, we briefly discuss the analyzes beyond the classical model

Adding independent risks in an insurance portfolio: which shape for the insurers’ preferences?

Many papers in the litterature have adopted the expected utility paradigm to analyze insurance decisions. Insurance companies manage policies by growing, by adding independent risks. Even if adding risks generally ultimately decreases the probability of insolvency, the impact on the insurer's expected utility is less clear. Indeed, it is not true that the risk aversion toward the additional loss generated by a new policy included in an insurance portfolio is a decreasing function of the number of contracts already underwritten (i.e. the "fallacy of large numbers"). In this paper, it is shown that most commonly used utility functions do not necessarily positively value the aggregation of independent risks so that they are not éligible for insurers. This casts some doubt about the conclusions drawn in the papers postulating such completely monotonic utilities for guiding insurers' choices. Finally, it is shown that the sufficient conditions for adding risks that can be found in the litterature need to be refined by restricting the domain of definition of the insurer's utility function.expected utility, compensating premium, prudence, temperance

Newcomb–Benford law and the detection of frauds in international trade

The contrast of fraud in international trade is a crucial task of modern economic regulations. We develop statistical tools for the detection of frauds in customs declarations that rely on the Newcomb–Benford law for significant digits. Our first contribution is to show the features, in the context of a European Union market, of the traders for which the law should hold in the absence of fraudulent data manipulation. Our results shed light on a relevant and debated question, since no general known theory can exactly predict validity of the law for genuine empirical data. We also provide approximations to the distribution of test statistics when the Newcomb–Benford law does not hold. These approximations open the door to the development of modified goodness-of-fit procedures with wide applicability and good inferential properties

Non-invasive diagnostic tests for Helicobacter pylori infection

BACKGROUND: Helicobacter pylori (H pylori) infection has been implicated in a number of malignancies and non-malignant conditions including peptic ulcers, non-ulcer dyspepsia, recurrent peptic ulcer bleeding, unexplained iron deficiency anaemia, idiopathic thrombocytopaenia purpura, and colorectal adenomas. The confirmatory diagnosis of H pylori is by endoscopic biopsy, followed by histopathological examination using haemotoxylin and eosin (H & E) stain or special stains such as Giemsa stain and Warthin-Starry stain. Special stains are more accurate than H & E stain. There is significant uncertainty about the diagnostic accuracy of non-invasive tests for diagnosis of H pylori. OBJECTIVES: To compare the diagnostic accuracy of urea breath test, serology, and stool antigen test, used alone or in combination, for diagnosis of H pylori infection in symptomatic and asymptomatic people, so that eradication therapy for H pylori can be started. SEARCH METHODS: We searched MEDLINE, Embase, the Science Citation Index and the National Institute for Health Research Health Technology Assessment Database on 4 March 2016. We screened references in the included studies to identify additional studies. We also conducted citation searches of relevant studies, most recently on 4 December 2016. We did not restrict studies by language or publication status, or whether data were collected prospectively or retrospectively. SELECTION CRITERIA: We included diagnostic accuracy studies that evaluated at least one of the index tests (urea breath test using isotopes such as13C or14C, serology and stool antigen test) against the reference standard (histopathological examination using H & E stain, special stains or immunohistochemical stain) in people suspected of having H pylori infection. DATA COLLECTION AND ANALYSIS: Two review authors independently screened the references to identify relevant studies and independently extracted data. We assessed the methodological quality of studies using the QUADAS-2 tool. We performed meta-analysis by using the hierarchical summary receiver operating characteristic (HSROC) model to estimate and compare SROC curves. Where appropriate, we used bivariate or univariate logistic regression models to estimate summary sensitivities and specificities. MAIN RESULTS: We included 101 studies involving 11,003 participants, of which 5839 participants (53.1%) had H pylori infection. The prevalence of H pylori infection in the studies ranged from 15.2% to 94.7%, with a median prevalence of 53.7% (interquartile range 42.0% to 66.5%). Most of the studies (57%) included participants with dyspepsia and 53 studies excluded participants who recently had proton pump inhibitors or antibiotics.There was at least an unclear risk of bias or unclear applicability concern for each study.Of the 101 studies, 15 compared the accuracy of two index tests and two studies compared the accuracy of three index tests. Thirty-four studies (4242 participants) evaluated serology; 29 studies (2988 participants) evaluated stool antigen test; 34 studies (3139 participants) evaluated urea breath test-13C; 21 studies (1810 participants) evaluated urea breath test-14C; and two studies (127 participants) evaluated urea breath test but did not report the isotope used. The thresholds used to define test positivity and the staining techniques used for histopathological examination (reference standard) varied between studies. Due to sparse data for each threshold reported, it was not possible to identify the best threshold for each test.Using data from 99 studies in an indirect test comparison, there was statistical evidence of a difference in diagnostic accuracy between urea breath test-13C, urea breath test-14C, serology and stool antigen test (P = 0.024). The diagnostic odds ratios for urea breath test-13C, urea breath test-14C, serology, and stool antigen test were 153 (95% confidence interval (CI) 73.7 to 316), 105 (95% CI 74.0 to 150), 47.4 (95% CI 25.5 to 88.1) and 45.1 (95% CI 24.2 to 84.1). The sensitivity (95% CI) estimated at a fixed specificity of 0.90 (median from studies across the four tests), was 0.94 (95% CI 0.89 to 0.97) for urea breath test-13C, 0.92 (95% CI 0.89 to 0.94) for urea breath test-14C, 0.84 (95% CI 0.74 to 0.91) for serology, and 0.83 (95% CI 0.73 to 0.90) for stool antigen test. This implies that on average, given a specificity of 0.90 and prevalence of 53.7% (median specificity and prevalence in the studies), out of 1000 people tested for H pylori infection, there will be 46 false positives (people without H pylori infection who will be diagnosed as having H pylori infection). In this hypothetical cohort, urea breath test-13C, urea breath test-14C, serology, and stool antigen test will give 30 (95% CI 15 to 58), 42 (95% CI 30 to 58), 86 (95% CI 50 to 140), and 89 (95% CI 52 to 146) false negatives respectively (people with H pylori infection for whom the diagnosis of H pylori will be missed).Direct comparisons were based on few head-to-head studies. The ratios of diagnostic odds ratios (DORs) were 0.68 (95% CI 0.12 to 3.70; P = 0.56) for urea breath test-13C versus serology (seven studies), and 0.88 (95% CI 0.14 to 5.56; P = 0.84) for urea breath test-13C versus stool antigen test (seven studies). The 95% CIs of these estimates overlap with those of the ratios of DORs from the indirect comparison. Data were limited or unavailable for meta-analysis of other direct comparisons. AUTHORS' CONCLUSIONS: In people without a history of gastrectomy and those who have not recently had antibiotics or proton ,pump inhibitors, urea breath tests had high diagnostic accuracy while serology and stool antigen tests were less accurate for diagnosis of Helicobacter pylori infection.This is based on an indirect test comparison (with potential for bias due to confounding), as evidence from direct comparisons was limited or unavailable. The thresholds used for these tests were highly variable and we were unable to identify specific thresholds that might be useful in clinical practice.We need further comparative studies of high methodological quality to obtain more reliable evidence of relative accuracy between the tests. Such studies should be conducted prospectively in a representative spectrum of participants and clearly reported to ensure low risk of bias. Most importantly, studies should prespecify and clearly report thresholds used, and should avoid inappropriate exclusions

New results on the relationship among risk aversion, prudence and temperance

This note studies the relationships between different aspects of agent’s preferences toward risk. We show that, under the assumptions of non-satiation and bounded marginal utility, prudence implies risk aversion (imprudence implies risk loving) and that temperance implies prudence (intemperance implies imprudence). The implications of these results for comparing risks in the cases of increase in risk, increase in downside risk and increase in outer risk are discussed

Prudence and Different Kinds of Prevention

This paper examines the effect of prudence on the optimal choices of advance and contemporaneous prevention in a context where the two kinds of prevention are used together. We show that, under some conditions on the probability of loss occurrence, prudence tends to increase advance prevention and to reduce contemporaneous prevention, while imprudence tends to do the opposite. Further results on the effect of prudence/imprudence on agents’ optimal behavior are provided