A major conceptual error in the standard BLS and Lebergott unemployment estimates for 1930-43 is reported. Emergency workers (employees of government contracyclical programs such as WPA) were counted as unemployed on a normal-jobs-to-be-created instead of job-seekers unemployment definition. For 1933-41, the corrected unemployment levels are reduced by 2-3.5 million people and the rates by 4-7 percentage points. The corrected data show strong movement toward the natural unemployment rate after 1933 and are very well explained by an anticipations-search model using annual full-time earnings.

In a recent article, Edward B. Deakin and Michael H. Granof " demonstrated how regression analysis, coupled with Bayesian statistical procedures, can be used to provide the auditor with assistance in selecting those accounts for investigation that are most likely to result in significant audit findings. The article encourages audit model development and experimentation by independent auditors with the application of these and other techniques which make use of additional information. The independent auditor's ultimate concern with respect to a reported account balance of a client, is whether it is "fairly presented." Suppose that the auditor has evaluated the design of an internal control subsystem and has conducted tests of compliance of system operation with system design. Substantive tests include analytical review of significant ratios and trends and resulting investigation of unusual fluctuations and questionable items and tests of details of transactions and balances. Without the refinement, the sample sizes required after using regression analysis to revise priors often will be substantially smaller than the 163 required under classical, unrestricted random sampling.

The article focuses on the decision flexibility of decision makers, which is an alternative decision criterion. In complex decision situations, organizational decision makers often are required to elect and implement a specific decision alternative, so that over time the organization best moves towards its goals. Best may depend upon realization of anticipated states of nature and availability of future decision alternatives. When there is risk involved in either the availability of future decision alternatives or occurrences of states of nature, maximization of expected payoff might be used to guide the selection of a particular decision alternative. However, in environmentally dynamic situations, decision makers may seek an alternative criterion, which authors call decision flexibility. A flexible decision is one, which maximizes the probability of achieving a managerially selected output cutoff. A number of researchers found that in complex decision situations, decision-maker selections differed from those, which would be selected using the expectation model. In an attempt to understand the variation between results of the model and the observed decision behavior, utility theory and subjective probability estimation have been introduced into the expectation model.

Parents can transmit income and wealth to their offspring directly through bequests and gifts of financial assets. Parents can augment a child's skills and traits through the provision of, for example, education, diet and doctors. Biological parents also supply the genetic endowments which provide skills useful in the labor market. Although practically a virgin territory, it is important to estimate the effects of genetic endowments and common (mostly family) environment on earnings and on other indices of individual attainment in order to gauge the effectiveness of programs designed to improve equality of opportunity. Also if genetics and common environment are not controlled for, biased estimates of regression coefficients of observable variables, such as years of education, often are obtained.

Results of earlier transcendental logarithmic (translog) production function are challenged on the basis of the limited time-series used. The same methodology is applied to a pool of international manufacturing data to test whether long-run price elasticities can be generated with intercountry samples. Both the time-series and international cross-section methods agree that there is some elasticity of substitution between energy demand and non-energy inputs and that energy forecasting should not be based on the assumption that substitutions between energy and nonenergy inputs are trivial. The international method finds, however, that capital and energy are substitutes rather than complements in the long-run and that there is a difference between short-run and long-run effects of substitution. 29 references. (DCK)

Richard A. Cohn, Donald R. Lessard, Recent Research on Indexation and the Housing Market, The Journal of Finance, Vol. 31, No. 2, Papers and Proceedings of the Thirty-Fourth Annual Meeting of the American Finance Association Dallas, Texas December 28-30, 1975 (May, 1976), pp. 403-413

We estimate economies of scale for U.S. firms producing electric power. Cross-section data for 1955 and 1970 are analyzed using the translog cost function. We find that in 1955 there were significant scale economies available to nearly all firms. By 1970, however, the bulk of U.S. electricity generation was by firms operating in the essentially flat area of the average cost curve. We conclude that a small number of extremely large firms are not required for efficient production and that policies designed to promote competition in electric power generation cannot be faulted in terms of sacrificing economies of scale.