PERT, CPM, Auditing

Introduction, 537. — Revised Section 7 and problems in its interpretation, 540. — Court interpretations with emphasis on the Brown shoe case, 543. Court interpretations and merger standards proposed by economists and lawyers, 548. — Comparison of two methods of firm growth, 553. — Policy when the effect of a merger is in doubt, 557.

Journal Article The Term Structure of Interest Rates: Comment Get access Jacob B. Michaelsen Jacob B. Michaelsen University of California, Berkeley Search for other works by this author on: Oxford Academic Google Scholar The Quarterly Journal of Economics, Volume 77, Issue 1, February 1963, Pages 166–174, https://doi.org/10.2307/1879382 Published: 01 February 1963

This report utilizes decision theory to investigate the possible benefits of better weather information to California raisin growers. A supply curve is fitted to the raisin industry and used to evaluate the importance of various factors: weather is of overwhelming importance. Subsequent analysis focuses on the most vulnerable aspect of raisin production: its dependence on early forecasts of rain in September and October when the grapes are being dried and in danger of being damaged by rain. Section 1, in the tradition of micro-economic, partial equilibrium analysis, is concerned with the value of weather information to a single grower. Only the grower focused upon is assumed to receive the better information. This assumption implies there is high value for forecasting rain three weeks in advance. A figure of 90.95 per acre is the value of perfect three week forecasts. Were this value to be realized for each bearing acre in 1960, the total value of better weather information to the raisin industry would be 20,300,000. But merely summing across firms to get industry totals may lead to a fallacy of composition: the analysis must be extended to a wider partial equilibrium framework. Section 2 examines the value of better weather information to the raisin industry as a whole. Since costs are not greatly affected by improved weather information, profit differences are closely approximated by changes in revenue. The elasticity of demand for raisins is calculated from a demand curve fitted to industry data. The inelasticity of demand causes profit to fall under the impact of better information, at least in the short run. The scope of the analysis is then extended to other industries. Using this wider viewpoint, the Conclusion examines the possibility of a simple tax that would reallocate land and labor. The presence of released resources seems to imply a clear gain for better information. However, the basis of such a gain is positive value for these resources in other uses. But the short run inelasticity of other possible products makes it clear that, at least in the short run, better weather information results in net loss. However, some relief is offered through the possibility of regulation. An Appendix examines the question of the value of inaccurate forecasts.

N EW estimates of hours and earnings indicate greater declines in hours of work and greater increases in hourly earnings the past half century than the usually used, currently available historical series show. The new estimates presented in this paper are hours of work per week in the manufacturing, railroad, bituminous, and anthracite coal mining industries, as well as hourly earnings and hourly compensation in the latter three industries. The purpose in presenting the new hours and earnings series is threefold. (1) For historical data on hours and earnings, economists generally refer to the series published by the Bureau of Labor Statistics.' The conceptual basis underlying the calculation of the Bureau's series is one of total time paid for. For the researcher who is interested in problems relating to long-run changes in the hours of work, the introduction in recent years of such practices as paid vacations, paid holidays, or payment travel time gives an upward bias to an hours-per-week series when measured on a total time paid for basis. Since these practices provide additional earnings, division by the additional hours paid for, according to the total time paid for concept, tends to cancel out these gains and thus leads to understatement of the historical increase in hourly earnings. The new series attempt to correct these biases by deducting the time accounted by these practices from the measured hours both in the calculation of hours of work per week and in the calculation of hourly earnings. (2) The new series provide annual data continuously from 1900 through 1957, thus supplying information time periods since 1900 that are not covered by the Bureau's series (Tables 1 and 2 below). (3) The comprehensive review of the historical evidence on hours of work, which was undertaken in constructing the new series, suggests that the level of the Bureau's oft-used manufacturing series is in error during the 1920's. In 1929, a bench mark year the manufacturing series presented in this paper, the new estimate of hours of work per week is 48.0; the level of the Bureau's series is 44.2 hours. The construction of the hourly compensation series extends to three more industries the compensation concept developed by Rees manufacturing, to take account of the increasing importance to employees of employer contributions to such programs as pension plans and social insurance.2 Total hourly compensation is the sum of these wage supplement payments and the direct wage payments to workers measured by average hourly earnings. The employee coverage of the new series is identical to that of the Bureau's historical series. Except the railroad series, employee coverage is limited to production workers. The employee coverage of the railroad series is somewhat broader, including all wage and salary workers except the upper echelon of management which is classified as officials, and staff 3 Tables 1 (hours) and 2 (earnings and compensation) below present the new series together with, comparative purposes, the currently official historical series of the Bureau of * This paper is adapted from Chapter II and Appendix B of my Ph.D. dissertation, Hours of Work in the United States, 1900-1957 (unpublished Ph.D. dissertation, Department of Economics, University of Chicago, 1961). My thanks are due to both H. Gregg Lewis and Albert Rees their assistance on the dissertation and their helpful suggestions on an earlier draft of this paper. 1See, e.g., U.S. Bureau of the Census, Historical Statistics of the United States, Colonial Times to 1957 (Washington, 1960), 92-3; and U.S. Bureau of Labor Statistics, Employment and Earnings Statistics the United States, 1909-60, Bull. No. 1312 (Washington, 1961), 14, 31, and 422. 2Albert Rees, New Measures of Wage-Earner Compensation in Manufacturing, 1914-57, National Bureau of Economic Research, Occasional Paper 75 (New York, 1960). 'The new series exclude only the reporting divisions (1) executives, general officers, and assistants and (2) division officers, assistants, and staff assistants. See U. S. Interstate Commerce Commission, Monthly Report of Employees, Service, and Compensation, Forms A and B.

Since 1948, the American Institute of Certified Public Accountants has published an annual edition of Accounting Trends and Techniques. This has been a most useful indicator of current accounting practices. Although the practicing accountant can thus be well aware of what others are doing, the accounting educator as a rule is aware of the current practices in accounting education at only a small handful of other educational institutions. Because of the rather limited information currently available about accounting educational practices in the nation's colleges and universities, it was felt that additional information on these subjects would be of value and interest not only to accounting educators because of their direct concern with these subjects but also to employers and training directors because of their interest in the formal accounting education which their new employees have received. There was no single elementary textbook which has had many more adoptions than others. Even the three most widely adopted texts are in use in slightly less than half of the schools surveyed.

Introduction, 372; research perspective, 373; the hospital setting, 374. — I. The organizing campaign; pre-strike developments, 374; the strike, 376; factors leading to union defeat, 379. — II. Analysis of behavior; simple correlation, 380; motivating forces, 385. — III. Conclusion, 397. — Appendix A, 402. — Appendix B, 403.