Persons' expectations regarding their ultimate life span provide a tractable empirical opportunity to test for rational expectations. To the extent people only utilize information from "current life tables, " they underestimate the more relevant ultimate life expectancy that results from on-going improvements in mortality experience not reflected in these tables. The expectations observed in the authors' empirical work are not consistent with rational-expectations models. All available information about life expectancies and their trends were not used by the surveyed households in forming life-span expectations. This deficiency precludes correct estimation of the ultimate life expectancy necessary for informed life-cycle choices.

The information value of central bank announcements of projected future money growth is shown to depend both on the accuracy of the announcements and the extent to which the announcements themselves are anticipated by the public. The authors construct a new data set on internal Federal Reserve money projections. These projections, which are kept secret while they are in force, are comparable in many important respects to publicly announced Bank of Japan money projections. Using a derivative of the law of iterated projections, the authors estimate the information value of disclosure on the part of the Bank of Japan and the cost of secrecy on the part of the Federal Reserve. They find that the value of the information provided by the Bank of Japan has been small in terms of reducing money surprises, but that disclosure by the Federal Reserve would have significantly reduced money surprises in the United States.

This paper investigates interstate variation in income inequality. By avoiding inequality indices and focusing directly on the Lorenz curve, the authors provide a more general explanation of the differences in inequality. They find that mean family income, the standard deviation of years of schooling, per capita educational expenditure, and property income are robust predictors of inequality. Of particular interest is their finding that, ceteris paribus, higher per capita education expenditures tend to be associated with states that have income inequality which is greater than the U.S. average.

Thomas P. Frazier, Matthew S. Goldberg, Thomas R. Gulledge, Jr., Department of Defense Profit Policy and Capital Investment in the Military Aircraft Industry, The Review of Economics and Statistics, Vol. 74, No. 3 (Aug., 1992), pp. 394-403