Death Spirals Research Articles

Assessing climate change’s contribution to global catastrophic risk

Many have claimed that climate change is an imminent threat to humanity, but there is no way to verify such claims. This is concerning, especially given the prominence of some of these claims and the fact that they are confused with other well verified and settled aspects of climate science. This paper seeks to build an analytical framework to help explore climate change’s contribution to Global Catastrophic Risk (GCR), including the role of its indirect and systemic impacts. In doing so it evaluates the current state of knowledge about catastrophic climate change and integrates this with a suite of conceptual and evaluative tools that have recently been developed by scholars of GCR and Existential Risk. These tools connect GCR to planetary boundaries, classify its key features, and place it in a global policy context. While the goal of this paper is limited to producing a framework for assessment; we argue that applying this framework can yield new insights into how climate change could cause global catastrophes and how to manage this risk. We illustrate this by using our framework to describe the novel concept of possible’ global systems death spirals,’ involving reinforcing feedback between collapsing sociotechnological and ecological systems.

On the Economic Design of Stablecoins

Stablecoins are cryptocurrencies designed to trade at par with a reference asset, typically the U.S. Dollar. While they all share the same fundamental objective of maintaining stability against their reference assets, stablecoins differ substantially in terms of their economic design, quality of backing, stability assumptions and legal protections for coin holders. We surface two critical dimensions that underpin the economic design of every stablecoin: (1) the volatility of the reserve assets against the reference asset, which defines the risk profile of the stablecoin for coin holders; and (2) the degree to which the stablecoin is exposed to the risk of a death spiral. To address these risks, fiat-backed stablecoins must rely on reserves of high-quality, liquid assets and be subject to a framework that protects coin holders from credit risk, market risk, operational risk, as well as the insolvency or bankruptcy of the issuer. Although decentralized stablecoin designs eliminate the need to trust an intermediary, they are either exposed to death spirals, or highly capital inefficient, as they must be highly over-collateralized to account for the lack of an intermediary. While these trade-offs might be acceptable for narrow use cases within the cryptocurrency space, without a breakthrough in decentralized stablecoin design, they are likely to limit the usefulness of these coins for mainstream adoption.

Simulation of Quality Death Spirals based on Human Resources Dynamics.

Although the hospital managers always try to improve the quality of the medical services, sometimes their efforts might affect reversely and push the system in what is so commonly called as “the death spirals of quality.” The most important reason of falling into these spirals is the lack of a systemic thought that considers the feedback relationships between the numerous effective variables in the system performance, such as human resources service capacity. In this regard, the purpose of the present research is to design and simulate a dynamic human resources service capacity–based model to demonstrate the death spirals of quality phenomenon based on the service time per service and the possibility of error generation along with identifying the policies to cope with them. The system dynamics simulation approach is used to show the dynamics of the capacity of service from the standpoint of human resources. A model is simulated for the services of a hospital clinic as a case study. The simulation results of the designed dynamic model express that applying the desired policies for the case study can provide a good basis for fighting these spirals in a dynamic situation.

Exploring contingent convertible bond alternatives for African banks

Background: A variant of the contingent convertible bond, first proposed in 2011, is investigated: the Call Option Enhanced Reverse Convertible (COERC). Although issued as a bond, it converts to new shareholder’s equity if a bank’s market share of capital falls below a pre-specified trigger point. Aim: COERCs avoid the problems with market-based triggers (e.g. sell-offs and death spirals) due to panic and market manipulation. Banks that issue COERCs have less incentive to choose investments that may be subject to large losses and disincentive problems, associated with the replenishment of shareholder’s equity after market declines (also known as debt overhang) are also avoided. Setting: Proposed amendments to the COERC structure are suggested for the African market. Methods: The data used were simulated, stylised values for a standard COERC. No market parameters are required, such as equity or debt levels or market volatility. Details of the stylised example are provided in Table 4 and Table 5 in the ‘results and discussion’ section. Results: Both examples of floating coupons for COERCS would aid in the objective of issuing a security that is countercyclical in nature, as banks would avoid having to pay coupons in times of distress. Conclusion: In addition to the recommendations of the Basel frameworks, CoCos have been considered and proposed as an additional measure to promote counter cyclicality in terms of capital composition in banks.

Grief and Healing Trajectories of Drug-Death-Bereaved Parents.

We explored parents' views of the trajectories of their adult children's eventual deaths from drugs with in-depth qualitative interviews from 11 bereaved parents. Parents reported great emotional distress and high financial burdens as their children went through death spirals of increasing drug involvements. These deaths often entailed anxiety-inducing interactions with police or medical personnel, subsequent difficulties with sharing death cause information with socially significant others, and longer term problems from routine interactions. Eventually, though, many of these longer term bereaved parents reported overcoming these obstacles and developing posttraumatic growth. Openly disclosing the nature of the death seemed to be an important building block for their healing.

The death spiral: predicting death in Drosophila cohorts.

Drosophila research has identified a new feature of aging that has been called the death spiral. The death spiral is a period prior to death during which there is a decline in life-history characters, such as fecundity, as well as physiological characters. First, we review the data from the Drosophila and medfly literature that suggest the existence of death spirals. Second, we re-analyze five cases with such data from four laboratories using a generalized statistical framework, a re-analysis that strengthens the case for the salience of the death spiral phenomenon. Third, we raise the issue whether death spirals need to be taken into account in the analysis of functional characters over age, in aging research with model species as well as human data.

Rethinking Managerial Reporting

Rethinking Managerial Reporting

Education Rights and Wrongs: Publicly Funded Vouchers, State Constitutions, and Education Death Spirals

Professor Julie Mead considers whether publicly funded voucher programs “subvert” states’ ability to provide an “adequate” public education consistent with state constitutional requirements. The critical analytic move in Mead’s paper involves characterizing publicly funded voucher programs as a “discretionary option” and, in contrast, a state’s duty to adequately fund traditional public schools as a state constitutional “obligation.” Mead then argues that the growth in the number of publicly funded voucher programs and the accelerating participation rates in those programs threaten to dilute states’ abilities to meet their constitutional obligations owed to traditional public schools. Paradoxically, then, it is the interaction of voucher programs’ increased popularity and states’ increased willingness to fund them that Mead exploits to support her conclusion that: “[s]tate constitutions have clearly established that children have a genuine right to a quality education, not merely the privilege to shop for schooling in the educational marketplace.” This response analyzes Mead’s argument.

Anatomy of a Slow-Motion Health Insurance Death Spiral

Adverse selection death spirals in health insurance are dramatic and, so far, exotic economic events. The possibility of death spirals has garnered recent policy and popular attention because the pricing regulations in the Affordable Care Act (ACA) of 2010 make health plans more vulnerable to them (though some other aspects of the ACA limit them). Most death spirals tracked in the literature have involved selection against a group health plan that was dropped quickly by the employer. In this article, we empirically document a death spiral in individual health insurance that was apparently triggered by a block closure in 1981 and developed slowly because the insurer partially subsidized the block. We show that premiums rose dramatically from around the time of the block closure to at least 2009 (the last year of available data). By 2009, some, but very few, policyholders remained in the block, and premiums were roughly seven times that of a yardstick we developed. The history of this slow-moving event is directly relevant to current policy discussions because of both adverse selection in general and the particular problems induced by closing a block.

Applying contingent capital in Canada

This article discusses a financial instrument – non-viability contingent capital (NVCC) – that could help policymakers manage distress at systemically important banks, and facilitate their resolution with less risk to taxpayers. The article sets out the motivation for, and key features of, NVCC. It also considers mechanisms that could be used to mitigate the risk of death spirals, which could be associated with such a convertible instrument. As well, with reference to the major Canadian banks, the article simulates the effects of converting NVCC into equity for the dilution of common stock at non-viability, and provides rates of recovery for common shareholders and NVCC investors, based on illustrative conversion formulas.

Death spiral issues in emerging market: A control related perspective

This paper studies the motive of issuing floating-priced convertibles or warrants, known as death spirals, in a country where private benefit of control is high. Using a total of 199 death spiral issuances by public firms listed in the Korea Stock Exchange during 1998–2006, we find a number of pieces of empirical evidence that are less consistent with the conventional last resort financing hypothesis, but rather consistent with the control enhancing or control transferring hypothesis. First, abnormal returns subsequent to death spiral issuance is negative, but more so in poorly governed firms. Second, operating performance of chaebol issuers are not necessarily low at the time of the issue nor does it deteriorate over time, but they still prefer to issue death spirals over traditional fixed-priced hybrid securities. Third, we do not observe subsequent changes in the controlling shareholder in more than 60% of the issuers and these firms exhibit superior operating performance at the time of the issue compared to other death spiral or non-death spiral issuers. Fourth, proportional ownership of the controlling party in these firms does not decrease, while the number of shares held by family members other than the controlling shareholder increases. Finally, in approximately half of these firms, at least one member of the controlling party holds hybrid securities that can later be converted into voting shares.

Who's Doing the Work, and Whose Work are We Doing?

The sign-of-the-times word in the title of this readers' forum is negotiating. In the 1980s, 1990s, and even earlier in the millennium, I suspect we'd have used the term resisting, and I am reluctant to jettison it, especially when--writing in late November 2011--we are witnessing a reinvigorated protest movement occupying key symbolic spaces and the interstices of virtual culture. Occupying carries the time-honoured connotation of working from within, and I hope that negotiating retains that meaning too. The term negotiating also may reflect a recognition that the changing conditions of the academic workplace are impossible to resist in the sense of turning them back altogether. What once appeared a specific, albeit long-running, crisis in the academic job market, we now know, was only a seismic shimmer signaling the earthquake to come, triggered by the shifting tectonic plates of global capital. We stand on an altered terrain of short-cycle economic climbs and crashes, dislocated and migrant labour pools, and mass unemployment that is structural rather than periodic. Work--academic work is no exception--is increasingly downsized, outsourced, un-unionized, de-professionalized, proletarianized, and largely part-time in status and pay if not in hours. In the last few years, I have been trying, if only in a limited way, to understand the impact of this new situation on stipendiary/sessional employment, a topic to which I'll return, somewhat parabolically, in a moment. And here is a parable, in keeping with the pre-holiday season in which I write. Our department has a lounge for staff and faculty, with a fair traffic in graduate students although they have their own lively space as well. People sometimes leave treats near the coffee machine, and this week someone contributed a tray of oatmeal and chocolate chip cookies, topped with one large festive cookie with red frosting and coloured sprinkles. During the course of the week, I observed this tray with increasing fascination. No one would take the frosted cookie--indeed, people had to shift it to get to the plainer biscuits beneath--and when we locked up for the weekend, there it remained in its sprinkly splendour. That no one ate it--surely someone wanted to?--seems oddly symbolic of the values of the community we call English: responsibility and community-mindedness, with a dash of self-abnegation. In the seasonal tally of the naughties and the nices, people in English departments must get very few lumps of coal. As a fairly new administrator, I've been pleasantly surprised how easily people agree to requests (although a from a colleague who is operating on automatic pilot, eyes glazed from end-of-term marking, may not count as informed consent). But I also am aware that the ethos of yes that characterizes our discipline--the meeting and mentoring, reviewing and networking--is increasingly difficult to maintain. We spend our days in a workplace with frozen resources and chopped services, new mandates for accountability and measurability, pressure to inaugurate and expand graduate programs, and the inflated demands of short-stay administrators (mission creep? Surely it should be mission sprint.) We all know the toll this takes, in the forms of chronic fatigue syndrome and repetitive strain injuries, missed writing deadlines, free-floating guilt, and a flattened or foreshortened intellectual life. I wonder if we all imagine ourselves, in our secret heart of hearts, as an academic Aeneas, battling improbable odds. The Angel in the House might be more like When there were cookies, she took the plain one: when there was a committee, she sat on it. The late November context that forms these reflections finds new PhDs competing for twenty-three tenure-track positions available in Canada. While more may be added, the fact that there are fewer postings now than at the low-point in 2009-10 following the economic downturn (and endowment death spirals) is a quick indicator that underhiring to the tenure track is becoming normalized. …

Death Spiral Issues in Emerging Market: A Control Related Perspective

This paper studies the motive of issuing floating-priced convertibles or warrants, known as death spirals, in a country where the private benefit of control is high. Using a total of 199 death spiral issuances by public firms listed in the Korea Stock Exchange during 1998-2006, we find a number of pieces of empirical evidence that are less consistent with the last-resort financing hypothesis, but rather consistent with the control enhancing or control transferring hypothesis. First, operating performance of death spiral issuers are not necessarily poor at the time of the issue, nor do they deteriorate over time following the issue. Second, we do not observe subsequent changes in the controlling shareholder in more than 60% of the issuers and these firms exhibit superior operating performance at the time of the issue compared to other death spiral or non-death spiral issuers. Third, this same set of firms do not experience a decrease in proportional ownership by the controlling party, while family members other than the controlling shareholder experience the most pronounced increases in the number of shares held. Finally, in approximately half of these firms, at least one member of the controlling party holds hybrid securities that can be later converted into the firm’s voting shares.

The Relationship between Hospital Cost Inefficiency and Debt Ratings

Rationale: US Hospitals rely heavily on debt financing to fund major capital investment. Hospital efficiency is at least partly determined by the amount and quality of plant and equipment it uses. As such, a hospital's access to capital and credit rating may be related to its efficiency. Objectives: This paper measures the relationship between hospital efficiency, debt issuance and debt ratings. It further explores the direction of these relationships. Methodology: Prior research indicates the possibility of a debt death spiral, wherein inefficient organizations suffer lower credit ratings which reduce their access to capital, making it harder to purchase new equipment that could make them more efficient, effectively perpetuating and deepening the cycle. Using information on US hospitals and their bond issuance decisions, this study attempts to determine if there is evidence of such death spirals. This study collects information on approximately 1,600 US hospitals, linking it to bond issuance and Medicare Cost Report data. A Heckman correction for selection is implemented because some hospitals may choose not to issue bonds. Stochastic frontier analysis is used to estimate hospital cost inefficiency. The independent variables include outputs (admissions, outpatient visits, inpatient days in non-acute care units and teaching activities), input prices (price of capital and area wage rate), and product mix adjusters (Medicare case mix index, outpatient surgery mix, risk adjusted mortality rate, the use of high-tech services and the portion of emergency outpatient visits). Inefficiency effects variables include ownership status, Herfindahl-Hirshman Index, payer mix, network affiliation, HMO penetration, bond insurance and bond rating. While technically a cross-sectional analysis, this study uses data that includes hospital bond issues lagged as much as three years behind the study period. As such, it explores the relationship between past period bond rating and current period productivity. Since higher bond ratings are associated with lower interest expense, this may enable hospitals to invest more in capital, which will help improve efficiencies. Alternatively, hospitals might have to earn those higher ratings with prior period efficiency. Results Higher bond ratings are associated with lower cost inefficiency. There is also a positive association between issuance and efficiency, indicating that hospitals that have issued debt recently have seen lower cost inefficiency. This study also finds that inefficiency increases with the passage of time since the last bond issuance, introducing at least two possible explanations. It could indicate that the efficiency benefits of capital expansion are short-lived, lasting just a few years. Alternatively, such findings would also occur if hospitals sought to improve efficiency prior to issuance in order to earn better ratings.

Death spiral convertibles

Floating-priced convertibles, known as death spirals, are privately held convertible securities with a conversion price set at a discount from the average of past stock prices in a look-back period. The issuance of floating-priced convertibles is followed by significant negative abnormal returns. The results are consistent with the faulty contract hypothesis that argues that the contract design encourages short-selling by the convertible holders and other professional short sellers. However, the results are also consistent with the last-resort financing hypothesis that argues that the stock price declines because the stock is overvalued at the time of the issue.

The rise and fall of plant species: a population biologist's perspective

The rise and fall of plant species: a population biologist's perspective