Framing-effects approach: A theoretical and methodological critique

The article deals with research on framing effects. First, I will start with classifying different approaches on framing. Subsequently, I will provide a definition of the concepts of frame, schema and framing, expand on framing research conducted so far - both theoretically and operationally. Having this equipment at hand, I will initiate a discussion on studies of framing-effects in terms of theory, methods and empirical results. This discussion leads to the conclusion that studies on framing effects are insufficiently concerned with the more recent psychological constructs and theories. In merely focusing on the activation of schemata, most studies ignore the more elaborate types of framing-effects. Therefore, several empirical questions remain unanswered and some methodical chances seem to be wasted

Is East Germany Catching Up? A Time Series Perspective

This paper assesses whether the economy of East Germany is catching up with the West German region in terms of welfare. While the primary measure for convergence and catching up is per capita output, we also look at other macroeconomic indicators such as unemployment rates, wage rates, and production levels in the manufacturingsector. In contrast to existing studies of convergence between regions of reunified Germany, our approach is purely based upon the time series dimension and is thus directly focused on the catching up process in East Germany as a region. Our testing setup includes standard ADF unit root tests as well as unit root tests that endogenously allow for a break in the deterministic component of the process. In our analysis, we find evidence of catching up for East Germany for most of the indicators. However, convergence speed is slow, and thus it can be expected that the catching up process will take further decades until the regional gap is closed.east germany, catching up, convergence, unit root tests

The Financial Crisis from a Forecaster’s Perspective

This paper analyses the recession in 2008/2009 in Germany, which is very different from previous recessions, in particular regarding its cause and magnitude. We show to what extent forecasters and forecasts based on leading indicators fail to detect the timing and the magnitude of the recession. This study shows that large forecast errors for both expert forecasts and forecasts based on leading indicators resulted during this recession which implies that the recession was very difficult to forecast. However, some leading indicators (survey data, risk spreads, stock prices) have indicated an economic downturn and hence, beat univariate time series models. Although the combination of individual forecasts provides an improvement compared to the benchmark model, the combined forecasts are worse than several individual models. A comparison of expert forecasts with the best forecasts based on leading indicators shows only minor deviations. Overall, the range for an improvement of expert forecasts during the crisis compared to indicator forecasts is relatively small.leading indicators, recession, consensus forecast, non-linearities

Three methods of forecasting currency crises: Which made the run in signaling the South African currency crisis of June 2006?

In this paper we test the ability of three of the most popular methods to forecast the South African currency crisis of June 2006. In particular we are interested in the out-ofsample performance of these methods. Thus, we choose the latest crisis to conduct an out-of-sample experiment. In sum, the signals approach was not able to forecast the outof- sample crisis of correctly; the probit approach was able to predict the crisis but just with models, that were based on raw data. Employing a Markov-regime-switching approach also allows to predict the out-of-sample crisis. The answer to the question of which method made the run in forecasting the June 2006 currency crisis is: the Markovswitching approach, since it called most of the pre-crisis periods correctly. However, the “victory” is not straightforward. In-sample, the probit models perform remarkably well and it is also able to detect, at least to some extent, out-of-sample currency crises before their occurrence. It can, therefore, not be recommended to focus on one approach only when evaluating the risk for currency crises.currency crises, forecast, predictability, signals approach, probit approach, markov regime switching approach, south africa

Should We Trust in Leading Indicators? Evidence from the Recent Recession

The paper analyzes leading indicators for GDP and industrial production in Germany. We focus on the performance of single and pooled leading indicators during the pre-crisis and crisis period using various weighting schemes. Pairwise and joint significant tests are used to evaluate single indicator as well as forecast combination methods. In addition, we use an end-of-sample instability test to investigate the stability of forecasting models during the recent financial crisis. We find in general that only a small number of single indicator models were performing well before the crisis. Pooling can substantially increase the reliability of leading indicator forecasts. During the crisis the relative performance of many leading indicator models increased. At short horizons, survey indicators perform best, while at longer horizons financial indicators, such as term spreads and risk spreads, improve relative to the benchmark.leading indicators, forecast evaluation, forecast pooling, sructural breaks

Valuing ecosystem resilience

The concept of ecosystem resilience is being increasingly discussed as a driver of biodiversity values. It implies that marginal deteriorations in ecosystem conditions can abruptly result in non-marginal and irreversible changes in ecosystem functioning and the economic values that the ecosystem generates. This challenges the traditional approach to the valuation of biodiversity, which has focused on quantifying values attached to individual species or other elements of ecosystems. As yet, little is known about the value society attaches to changes in ecosystem resilience. This paper investigates this value. A discrete choice experiment is used to estimate implicit prices for attributes used to describe ecosystem resilience using the Border Ranges rainforests in Australia as an example. We find evidence that implicit prices for the attributes describing ecosystem resilience are positive and statistically significantly different from zero.ecosystem resilience, discrete choice experiments, implicit prices, willingness to pay space, Environmental Economics and Policy,

Environmental value and valuation over time

Time and value are related concepts that influence human behaviour. Although classical topics in human thinking throughout the ages, few environmental economic non-market valuation studies have attempted to link the two concepts. Economists have estimated non-market environmental values in monetary terms for over 30 years. This history of valuation provides an opportunity to compare value estimates and how valuation techniques have changed over time. This research aims to compare value estimates of benefits of a protected natural area. In 1978, Nadgee Nature Reserve on the far south coast of New South Wales was the focus of the first application of the contingent valuation method in Australia. This research aims to replicate that study using both the original 1978 contingent valuation method questionnaire and sampling technique, as well as state of the art non-market valuation tools. This replication will provide insights into the extent and direction of changes in environmental values over time. It will also highlight the impact on value estimates of methodological evolution. These insights will help make allocating resources more efficient.Environmental values, temporal variability, non-market valuation, contingent valuation method, choice experiments, incentive compatibility, natural resource management., Environmental Economics and Policy, Land Economics/Use,

Effects of alternative elicitation formats in discrete choice experiments

An elicitation format prevalently applied in DCE is to offer each respondent a sequence of choice tasks containing more than two choice options. However, empirical evidence indicates that repeated choice tasks influence choice behavior through institutional learning, fatigue, value learning, and strategic response. The study reported in this paper employs a split sample approach based on field surveys using a single binary elicitation format with a majority vote implementation as the baseline to expand the research on effects of sequential binary DCE formats. We provide evidence for effects caused by institutional learning and either strategic behavior or value learning after respondents answered repeated choice questions. However, we did not find any indications for strategic behavior caused by awareness of having multiple choices. The choice between a sequential and a single elicitation format may thus imply a trade-off between decreased choice accuracy and potentially increased strategic behavior due to an incentive incompatible mechanism. Further research is needed to explore strategic behavior induced by incentive incompatible elicitation formats using alternative approaches that are not compromised by a confounded baseline, that facilitate the differentiation between value learning and strategic behavior, and that allow the use of less restrictive model specifications. Such research should also investigate the effects of varying incentives induced by the order in which choice questions are presented to respondents.discrete choice experiments, split sample approach, elicitation format, incentive compatibility, strategic behavior, learning effects, panel mixed logit models, Environmental Economics and Policy,

Ordering effects and strategic response in discrete choice experiments

This study explores ordering effects and response strategies in repeated binary discrete choice experiments (DCE). Mechanism design theory and empirical evidence suggest that repeated choice tasks per respondent introduce strategic behavior. We find evidence that the order in which choice sets are presented to respondents may provide strategic opportunities that affect choice decisions (‘strategic response’). The findings propose that the ‘strategic response’ does not follow strong cost-minimization but other strategies such as weak cost-minimization or good deal/ bad deal heuristics. Evidence further suggests that participants, as they answer more choice questions, not only make more accurate choices (‘institutional learning’) but may also become increasingly aware of and learn to take advantage of the order in which choice sets are presented to them (‘strategic learning’).discrete choice experiments, incentive compatibility, mixed logit models, ordering effects, repeated binary choice task, response strategies, Environmental Economics and Policy,

Effects of alternative elicitation formats in discrete choice experiments

An elicitation format prevalently applied in discrete choice experiments (DCEs) offers each respondent a sequence of choice tasks. Each choice task contains more than two choice options. Empirical evidence shows, however, that repeated choice tasks influence choice behaviour through institutional learning, fatigue, value learning and strategic response. The study reported in this paper uses a split sample approach. This approach was based on field surveys using a single binary elicitation format. To expand the research on effects of sequential binary DCE formats, a majority vote baseline was used. We present evidence for effects caused by institutional learning, and by either strategic behaviour or value learning, after respondents answered repeated choice questions. However, we did not find any indications for strategic behaviour in respondents caused by their awareness of having multiple choices. The decision to use a sequential or a single elicitation format may therefore imply a trade-off between decreased choice accuracy and potentially increased strategic behaviour in respondents. This trade-off is due to an incentive incompatible mechanism. Further research is needed to explore strategic behaviour induced by incentive incompatible elicitation formats, using alternative approaches that are not compromised by a confounded baseline, that facilitate the differentiation between value learning and strategic behaviour, and that allow the use of less restrictive model specifications. Such research should also investigate the effects of varying incentives induced by the order in which choice questions are presented to respondents.discrete choice experiments, split sample approach, elicitation format, incentive compatibility, strategic behaviour, learning effects, panel mixed logit models, Environmental Economics and Policy, Research Methods/ Statistical Methods,