Knowledge that Transforms

W HILE debate rages on, it seems only a matter of time before some form of national health insurance becomes a reality. Aside from the central questions regarding coverage, financing, and eligibility, an important issue involves the administration of such an insurance program. A recent analysis of 13 proposed national health insurance bills found that 10 of the bills include the existing industry to one degree or another.' This strategy makes sense because of the expertise and machinery that presently exist within the health insurance industry. If such a strategy is adopted, the fundamental problem of allocating the administrative responsibility remains. There is wide disparity in the average costs of administration among the insuring organizations. Ideally, designation of responsibility for administering any national health insurance program should be based upon efficiency considerations. To the extent that economies of scale are present within the administrative function of existing health insurers, centralization in one or a few hands can be justified. In contrast, if economies of scale are not present, administrative responsibility should be decentralized on efficiency grounds. The purpose of the present paper is to examine the administrative cost experience of the commercial health insurers in an effort to determine whether economies of scale exist.

IN spite of the interest in advertising, research in the field has not been very impressive. The reason for this is simply that problems presented in marketing and advertising are often unique, and their satisfactory solutions require the development and synthesis of their own body of theory. This body is lacking.1 In Australia, in particular, advertising has not attracted a large amount of research. This is mainly because of the slowness with which marketing has been accepted as a separate subject of study in our universities, the lack of official statistical information on advertising, and the reluctance of Australian companies to disclose information on their marketing promotion efforts and expenses. The aim of this study is to analyse the marketing competitive behaviour of eight consumer goods producers, which economists and marketing analysts claim to be advertising heavily in Australia (Metwally, 1973a). In particular we estimate the magnitude of advertising expenditure consistent with the object of profit maximisation, and compare it with the actual expenditure of some dominant firms producing those commodities. In section I, we develop a mathematical model of demand similar to that of Dorfman and Steiner (1961). Section II considers the form of functional relationship that exists between sales, price and advertising. In section III different econometric models of competitive interdependence are compared and evaluated. Finally in section IV, the findings and their main implications on promotional competition are discussed. I

There has been disagreement in recent years' about the merits of empirical studies, pioneered by Ridker and Henning (R-H) in this Review,2 measuring the relationship between property values and air pollution within a metropolitan area. In these studies multiple regressions of property values on air pollution and other housing characteristics, and sometimes on income, are performed for crosssectional data within a metropolitan area. Unfortunately, the debate has centered on the prediction of changes in aggregate property values in response to changes in overall pollution levels. This has obscured the central issue, which is the measurement of the costs of pollution from the point of view of willingness-to-pay.3 Where the discussion has touched on this question, it has failed to recognize a straightforward argument by which the use of these empirical studies for cost-benefit analysis can be justified. Anderson and Crocker (A-C) and Polinsky and Shavell (P-S) both use the unrealistically strong assumption of identical tastes to argue that the regression can identify the parameters of a demand curve.4 Freeman (1971, p. 416) correctly points out that, in the real world, such a regression cannot isolate demand from supply elements; but he apparently does not realize how much information can be culled from the properties of the resulting equilibrium situation.5

F. Gerard Adams, Carl G. Brooking, Norman J. Glickman, On the Specification and Simulation of a Regional Econometric Model: A Model of Mississippi, The Review of Economics and Statistics, Vol. 57, No. 3 (Aug., 1975), pp. 286-298

EDUCATION may have productive value in agriculture both because it may enable a farmer to produce more output with given inputs of other factors and because it may help him in obtaining and using information for managerial decisions on the purchasing of factor inputs and the choice of products to produce.' This study deals with the second of these two roles: it attempts to measure the influence of education on the cost-efficiency with which farmers combine various broadly defined inputs. The data refer to counties in Indiana, Illinois, Iowa and Missouri and were taken from the 1959 and 1964 U.S. Censuses of Agriculture. Section II sets out the basic model and section III describes the data, the estimation methods and the results obtained. Section 5 of the Appendix gives further details of the data used. The most important finding is that, at a given scale of production, farmers with above average levels of education managed to operate significantly nearer than average to the theoretically estimated point of minimum cost. This finding is consistent with the results of a study by Huffman (1972).

Nicolas Spulber, Kamran Moayed Dadkhah, The Pioneering Stage in Input-Output Economics: The Soviet National Economic Balance 1923-24, After Fifty Years, The Review of Economics and Statistics, Vol. 57, No. 1 (Feb., 1975), pp. 27-34

EMPIRICAL studies tend to confirm the existence of a male-female wage differential based on sex. However, the proportion of the differential attributable to discrimination differs widely, reflecting the problems of adjusting for differences in experience, education, training, absenteeism, and turnover as well as differences in the occupational distribution of females. In the U. S., studies by Fuchs (1971), Cohen (1971) and Oaxaca (1973) imply a proportionate, unadjusted male-female wage differential (Win Wf)/Wf, of about 50%o-80%. Differences in such factors as experience, education, training, absenteeism and turnover account for about half of the gross wage differential. Most of the remaining half is attributed to females being employed in low-wage occupations, a factor not controlled for in their analyses. Sanborn (1964) does adjust for the occupational distribution of females and estimates a differential of approximately 15% within an occupation. Studies by McNulty (1967) and Buckley (1971) also indicate male wages to exceed female wages by about 20%o within select, narrowly-defined occupations (but not within the same establishment). They attribute about half of this differential to females being concentrated in low-wage establishments.

SINCE 1954 nearly all vestiges of legal segregation of public schools in the South have been eliminated. But, at the same time, the suburbanization of households in Southern cities has contributed to the de facto resegregation of some schools. Just as the Tiebout hypothesis (1956) suggests that households locate according to their preferences regarding local public goods, there is some evidence to indicate that preferences for segregated schools may have contributed to this resegregation. Glantz and Delaney (1973) found that, by one measure, metropolitan residential segregation increased more during the 1960's in Southern metropolitan areas -where city schools were substantially desegregated than in the Northern metropolitan areas studied. And for some organizations, a primary reason for supporting recently ordered metropolitan desegregation plans which would effectively combine city and suburban school systems is the belief that desegregation of city schools alone merely contributed to white flight from the city.' But, because there are other factors which may also cause suburbanization of whites, such as employment decentralization and the growth of Negro ghettos, it is not clear whether school desegregation has had an independent effect on the demand for housing by households. This paper presents an analysis of housing prices to determine whether desegregation has an independent effect on the price paid by whites for housing. Since the supply of housing is relatively inelastic in the short run, an effect of this kind would support the hypothesis that desegregation affects households' demand for housing. While shifts in demand will result primarily in price effects in the short run, quantity changes and locational rearrangement will be most important in the long run. In order to determine if shifts in demand have accompanied desegregation, this paper will examine such price effects. The metropolitan area studied is Atlanta, Georgia, a Southern city which experienced school desegregation and apparent white flight during the 1960's. In 1960, a year before desegregation was begun, 37.2 % of the students in the city school system were Negro. By 1970 this figure was 67.1%. During the decade the proportion of Negro families in the city rose from 34.0% to 47.7%o. These changes reflect a number of different locational trends, one of the most important of which was a rapid growth in the city's Negro population. In order to assess the independent effect of school desegregation on housing demand, it is above all necessary to separate the effect of school racial composition from that of neighborhood racial composition, as well as other supply and demand factors affecting housing prices. The analysis presented in this paper uses data on housing prices and characteristics drawn from 1960 and 1970 census tract reports for Atlanta. The comparatively rapid end to de jure segregation in that city during the decade of the 1960's provides a unique opportunity to separate the effects of neighborhood and school integration. The empirical analysis supports the hypothesis that school desegregation does have a significant effect on housing prices, independent of neighborhood racial change. Section I discusses the use of housing prices in determining the effect of public service characteristics on housing demand. Sections II and III describe the data and the empirical findings. Section IV summarizes the analysis. Received for publication December 3, 1973. Revision acaccepted for publication July 30, 1974. * I am grateful to Professors Martin Feldstein, John Kain, Richard Freeman, and Gregory Ingram, members of the public finance and urban economics seminars at Harvard, and referees for this Review for comments on earlier drafts of this paper. Financial support was provided by the Ford Foundation. 1 See, for example, the testimony of William L. Taylor, Director of the Center for National Policy Review in hearings before the Senate Select Committee on Equal Educational Opportunity, November 30, 1971, p. 10475 or Junie Brown, City School Case: No End in Sight, Atlanta Journal-Constitution, December 31, 1972, pp. IA, 6A.

IN the area of international trade, there have been a number of studies designed to explain imports and exports disaggregated by commodities.' These studies, however, all concentrate on the trading patterns of industrial countries and there has been very little in the way of a systematic analysis of the imports and exports by types of commodities for developing countries. There is, of course, an obvious reason for ignoring these countries, and that has to do with the availability, or rather paucity, of adequate data; this data problem is most pronounced in the area of prices of disaggregated imports and exports. Although it is generally believed that the trading patterns of developing countries differ from those of the developed, an empirical examination would be necessary to determine the extent of such a difference. The purpose of this paper is to study the behavior of the imports of Venezuela at both the aggregated and disaggregated levels during the period 1953-1972. Data on imports at a disaggregated level have recently been made available for Venezuela for a nine-commodity breakdown;2 the data include the value and price for each of these categories on an annual basis, as well as the price of the domestic competing product. These nine categories cover some 80% of the total Venezuelan imports. The results of this study should provide information on the behavior of different types of import goods and on the nature and extent of the bias involved in estimates of elasticities based only on aggregate imports.

THEORISTS of the American labor movement long have argued over the causes of fluctuations in union membership and the prospects for future union growth. For a number of years, the hypothesis of Commons (1932) and Perlman (1966), which related union expansion to the business cycle, was the most widely accepted explanation of the fluctuations in union membership. the years, a number of critics such as Dunlop (1948), Shister (1953), and Bernstein (1954) challenged the business cycle hypothesis on the grounds that American unionism is too complex and diffuse a social phenomenon to be understood in such simple terms. They contended that a multicausal system (including the cycle) is necessary to account for the rise of trade unionism. Although union theorists have frequently provided statistical data that are consistent with their inferences concerning the major factors influencing union growth, prior to the study by Ashenfelter and Pencavel (1969) their hypotheses had not been tested on an empirical plane which could disprove the suggested causal relationship between such factors and union growth. Ashenfelter and Pencavel (A-P) used multiple regression analysis to estimate a single behavioral relationship, including social and political as well as economic variables, capable of explaining the growth of American trade unions membership in the period 1900-1960. Although the model of A-P apparently has identified the determinants of union growth, there is some question as to whether the model has equally identified the determinants of future union growth. In econometric time-series analysis, it is assumed that differential periods of time are homogeneous, except for differences in the explicit variables of the system that are measured, and for differences in random effects. Over long sweeps of time, this assumption may become very tenuous.' This issue lies at the heart of the recent debate among the so-called saturationists and the school concerning the future prospects of the rate of growth of the American labor movement.2 The saturationists argue that significant changes have occurred within the structure and composition of the American labor force which have caused the past determinants of union growth to be inoperable in the future.3 Proponents of the historical approach challenge the general validity of the influence of structural factors on the comparative propensity of workers to join unions. Taft (1963) contends that the saturationists argument assumes propensities and psychological attitudes which have not been proven. In fact, actual experience has shown these assumptions to be baseless, and not a scintilla of evidence has been presented to justify these conclusions. They maintain the labor movement increases its size in two ways at a modest pace over long spans of time and in sharp spurts at infrequent intervals, ... . and that the slow growth of unionism in the post World War II period easily can be fit into the theory.4 The debate between the saturationists and the school has not yet been resolved. The level of actual union membership has increased by 4,300,000 or 25.4% for the period 1953-1970, but the level of real union membership, as measured by the per cent of nonagricultural employment organized, has declined from 34.1 to 30.1. The recent success of the labor movement in organizing some difficult structural groups such as government employ-