Facts Of Economic Life Research Articles

The Economic Impact of International Migration within The UK Economy

There is a vociferous debate regarding the extent, impact and future policy direction of international migration. This has intensified following the expansion of the European Union and the accession of the eight Central and Eastern European countries. This article explores the recent trends in net migration, looking particularly at the impact at the sectoral and regional level. It finds that foreign workers appear to have had a significant economic impact in filling skills gaps and in helping to arrest population decline in those regions where previously this had been a fact of economic life.

Max Weber

Abstract. This paper argues that Weber's outline and research program is only of limited relevance for present‐day economic sociology and heterodox economics because Weber had a rather narrow and static understanding of rationality and the economy. Uncertainty, both as a basic fact of economic life and in the interpretation of what rational action means in specific contexts, is missing in his approach. After a short discussion of the secondary literature on Weber's methodology, the paper focuses on the most important writings of Weber on methods and economics (e.g., his outline and some parts of Economy and Society). The result of our investigation is that Weber shared a rather narrow, neoclassical understanding of the Austrian variant of economics. His important construction of goal‐oriented behavior as the major methodological advice to analyze human action presupposes the idealized assumptions of perfect knowledge. His understanding of the market exchange process, price setting, and the functioning of full competition are rather conventional and elementary. Weber's genius did not materialize in the field of economics, but in his sociology of religion and law and in his sociology of domination.

Inclusion: An Introduction and Agenda for Action

We may agree in wanting inclusion, but not always on what it means. Should it mean a fundamental social good, the end-purpose of more practical concerns with poverty, unemployment, health, and education and so on? Or should inclusion be understood as one item among many, like national and class culture, religious belief, ethnicity, the distribution of wealth and income which together determine the quality of a society and its people's experience of it? Or should we understand inclusion as if exclusion is an independent disease like racial prejudice which we should cure by preaching a change of heart and founding community centres, without necessarily doing much about poverty, unemployment, the housing shortage, ghetto segregation, or any other fact of economic life? Leaving those issues in those better hands I want to talk in this Introduction about some historical changes in process in Western societies which are reshaping our political and economic problems and our options in responding to them. I may seem to have strayed in from a conference on motherhood or the river Murray but the plot arrives at inclusion in the end, in both a straight and an ironic meaning of 'in the end'. I begin with five strands of current history: * Because we learn for longer before we start to earn, and live longer after we stop earning, and are about to trade a bigger working generation for a smaller one, and a smaller retired generation for a bigger one, we will need to transfer a much higher proportion of income than ever before from our earning to our non-earning years. * We have an unfinished revolution in women's rights and children's chances that is causing stress and overwork for many women, and some bad upbringing, that needs fixing. * Through most of human history, economic growth and the reduction of poverty have depended on--among other things--freeing a creative minority from hunger and hard labor to give their time to arts and sciences, and economic and political management and leadership. That has entailed paying them more in money and kind than most of the people earn. But in the course of the twentieth century the rich countries' productivity crossed a threshold. We could now give everyone the material conditions for as much happiness as we are humanly capable of. * Partly because of that possibility, a mass of research is currently exposing the diminishing marginal utility of income, and the personal and social sources of human happiness and unhappiness. A flatter scale of inequality, ridding us of a lot of unhappy poverty and unnecessary affluence, looks more promising than ever before. * But of course that is unworldly nonsense. Its politics are plainly impossible. Or they might be, if we were not at the same time spoiling and exhausting our natural resources. The rich may not survive much longer than the poor do if they do not somehow attract mass support and dependable parliamentary majorities for fair rationing of the restrained output and incomes that effective environmental reform may well entail. It is with this last question in mind that I want to talk briefly about each of these historical changes. Income transfers over time and between people We currently have four earners for each retired person, six or seven for each public age pensioner, and the public pensions currently take three per cent of national income. Add the old people's health and other public costs, and they are still an easy burden on the earners. It is not too hard for those at work both to transfer the necessary income, and to produce the goods and services that the non-earners want to spend it on. But that must change as the baby-boomers retire, leaving fewer earners to replace them. ABS estimates that there may be two earners for each one retired 50 years from now. The Treasury estimates that to maintain current public services to the aged 20 years from now would cost 5 per cent of national income, which would have to come from additional tax or the degradation of other services. …

Nonlinearity and Low Deterministic Chaotic Behavior in Insurance Portfolio Stock Returns

AbstractThis article presents new empirical evidence indicating a deterministic component in the portfolio return dynamics of life‐health and property‐liability insurance company stocks. Our research is motivated by the fact that nonlinearities are a fact of economic life for many financial applications the source of which is logically apparent, yet empirical evidence of their existence is at best weak. The primary reason attributed to the weak findings of nonlinearities reported in previous research is the use of aggregate data that can hide nonlinearities at the micro level. Insurance sector stock returns are analyzed because unique institutional characteristics indicate the possibility of identifying nonlinear dynamics. Tests based on the correlation dimension partially confirm the presence of nonlinearity. However, the more powerful Brock, Dechert, and Scheinkman (BDS) statistic strongly suggests the presence of nonlinearities in the insurance stock portfolio data. The BDS statistic applied to the standardized residuals of exponential generalized auto regressive conditional heteroskedasticity (EGARCH) models strongly rejects the null of independent and identically distributed, indicating that conditional heteroskedasticity is not responsible for the presence of the nonlinear structures in the data. In addition, tests for chaos based on locally weighted regressions indicate that insurance stock portfolio returns indicate low‐complexity chaotic behavior. This is an important result since most previous research has failed to report evidence of chaotic behavior in the time series of stock returns. Important contributions of this article are the application of tests of nonlinearities and chaos to more desegregated data sets and the findings of statistically significant evidence indicating nonlinearities and low‐deterministic chaotic behavior in insurance stock portfolio returns.

RURAL DECLINE AND INNOVATION: ISSUES WITHIN ISSUES

This dispute has focussed on the loss of government, social and private services (such as hospitals, road funding, banks), globalisation (particularly with respect to international trade rules) and the impact of `economic rationalism' and national competition policy. Robert Manne has recently summarised the elements of the perceived problem (Sydney Morning Herald, April 2 2001), arguing, among other things, that the `emergence of the One Nation party ... represents, above all other things, a cry of anger from poorer country Australians and, to a lesser extent, from those who live on the fringes of the cities and the towns'. His prognosis is that the votes of the disaffected seem certain to `wash away the Howard Government' just as doubts must remain about the ability of an ALP Government to do any better. Manne's article begins with an outline of the urban-rural divide in income terms, showing higher proportions of poorer households in rural areas. He suggests -- on the basis of statistics on farm revenues in the 1950s and today -- that perhaps the most important single factor is `the long-term decline of the prosperity of the family farm'. This article and the general debate of which it is a part raise important issues for any country whose population occupies a range of environments and generates wealth from a range of activities. I would like to focus briefly on the core of the problem as identified by Manne -- namely, the decline in the prosperity of family farms -- and to examine some data relevant to this, together with the political responses it has produced and the practical choices available to both individuals and communities. I do this in the belief that the broader political and social debate (along with the cultural discussion woven through it) might well be rendered more productive if some of the underlying facts were better understood. It is true that there has been a long-term decline in the income of farming businesses. This is evident both in census statistics and -- more usefully for diagnosis -- in long-term trends in the real prices for rural commodities (real prices being simply the received prices adjusted for inflation). Most farm products show rates of decline in real price of about 3%-4% for as long as records have been kept, albeit with fluctuations around the trend, as demonstrated in the graph below. This is obviously disheartening. It means that the same amount of effort by the farmer will yield 3%-4% less buying power every year. Twenty years of this -- not even one working life span for most farmers -- means that effective income is halved. But before even thinking about possible responses to this trend, why do farmers face the problem? Is it unique? Taking the second question first, the answer must be a resounding no. For as long as data have been available -- which, in the case of some metals, means two hundred years or more -- the trends in real prices for all goods (whether minerals, farm products, consumer goods or miscellaneous widgets) and services (banking, housing, standard health treatment, and so forth) display the same pattern: a steady decline at rates of between 1% and 4% annually. Perhaps the simplest (and most important) fact of economic life is this: that the real value of practically all goods and services will decline. But why so? The primary reason is that human beings, for a variety of reasons, seek to make things more efficiently. Whether this is motivated by greed, laziness, the desire to be doing something else (perhaps fishing or going to the beach) or sunspots, it is enough to say that humans by and large achieve their goal of greater efficiency, and creatively apply this to more and more `things'. The result is that new products and services continue to be invented; and no sooner are they offered for consumption than their real price begins to decline. In this context, farm products are like any others. …

CLOSING THOUGHTS: A GLIMPSE AT THE NEW ENGLAND OFFSHORE FISHERY IN 2061

The range of perspectives on New England offshore fishery contained in preceding articles, reflecting wide breadth of views expressed by speakers at Conference on History, Status, and Future of New England Offshore Fishery held at Connecticut College on April 16 17, 1999, is truly impressive. The written contributions parallel oral presentations, allowing reader to note marked degree of respect between two essentially distinct communities, fishers on one hand and governmental manager-scientists on other. Given nature of their respective livelihoods, these two communities often find themselves at odds with one another. A careful reading of foregoing papers leaves us with an appreciation of how much hard-earned information has been acquired over years about our coastal and offshore marine environment, about various fish populations that reside therein, and about multi-faceted fishing industry that harvests these resources. We are also left with a sense of how intrinsically complex these natural and economic systems are, and, as a consequence of their complexity, how far we have yet to go before learning enough to effectively manage these systems. Beneath respect alluded to previously, a degree of ambivalence can perhaps be detected in some of presentations by fishing industry about many of conclusions put forth by scientists, modelers, and statisticians. One whose roots are firmly in academic community is left with somewhat hollow feeling that he or she may, to some degree, be witnessing time-honored tactic of blaming messenger. We as a society will only at our peril avoid recognition of inevitable consequences of ever-increasing demand in face of limited supply. A dozen years from now, on occasion of 100th Anniversary of Connecticut College, if it hosts another conference on New England offshore fishery, will papers report that plight of this fishery was much improved in intervening decade? Will some government bureaucracy, some association of fishing industry, some community of scientists, or a combination thereof have managed to cut Gordian knot comprised of inter-twining strands of the facts of economic life and the truths of a complex ecosystem? One need not introduce implications of potential climate change, nor be a pessimist by nature, to hesitate in answering in unequivocal affirmative.

PLURALISTIC APPROACHES TO KNOWING MORE: A COMMENT ON HOSKIN AND MACVE

INTRODUCTION In the early 1990s, there emerged a growing view, popularized through the pages of important research journals such as Accounting, Organizations and Society and Critical Perspectives on Accounting, that traditional historical research was in some senses inferior to the new history.1 The term new encompassed a number of methodologies designed to produce what has become known as history. Among these methodologies, the work of Foucauldians, particularly that of Professors Hoskin and Macve, focuses on areas of particular interest to ourselves. We address their literature in some of our work2 for the following interrelated reasons. First, we found it difficult to understand the precise direction of their arguments concerning the position of accountability in the development of modern managerialism and the relationship between accountability and modern management accounting. As Funnell [ 1996] argued, language can create barriers, and we, like others, found this a factor in our inability to interpret in a meaningful manner the messages that Hoskin and Macve wished to convey. Second, we were keen to encourage an interchange of ideas between historians of different persuasions. Third, we perceived unwarranted criticisms from critical historians of traditional history.3 Fourth, certain groups of earlier researchers were categorized, in an apparently derogatory fashion, through the use of labels such as traditional, determinist, and rationalist. BOYNS AND EDWARDS' RESEARCH Our research has been predicated on the conviction that good management history should be founded on archival evidence, widely defined. We have therefore concentrated our attention on more about the use of and techniques in British business from the industrial revolution period, through the second half of the 19th century and into the 20th century, via archival-based research. If this should, at a later stage, make it possible either for ourselves or others to carry out grand theorizing, then this will reinforce our feeling that the research which we have undertaken has proved useful and contributed to knowing more. In particular, our work on 19th century British management accounting, through the analysis of archival records informed by our interpretation of contemporary texts and studies of accounting's past, has been directed at the following: to discover the practices followed by business entities and to understand the context in which particular procedures were developed and others discarded; to demonstrate that there is a form of outside human accounting that might make a serious claim to serve as an effective basis for managing a business enterprise; to test the impression conveyed, perhaps unwittingly [Boyns and Edwards, 1996, p. 40], that 19th century British developments in were the same as in the U.S.; to press the point that practices employed in Britain fit reasonably comfortably within a definition of management accounting. Here, the concern was to counter the impression conveyed by earlier Foucauldian-based analyses that the failure of businessmen to embrace meant that they were not doing management accounting. In pursuing this research agenda, we have not adopted a purely rationalist stance and have only devoted limited space to a direct consideration of the contribution of the Foucauldian school. As pointed out in Boyns et al. [1997], although we would locate ourselves within Loft's neoclassical revisionist school, we nevertheless accept that economic factors might not be the only ones influencing the adoption of particular practices or modes of at specific points in time or space. We are aware of the fact that businessmen are not atomistic profit maximizers even if control of costs became an essential fact of economic life for those businesses operating in a competitive environment [Boyns and Edwards, 1995, p. …

Intellectual capital: The new wealth of organizations

This work argues that knowledge has become the most important fact of economic life. It is the chief ingredient of what is bought and sold, the raw material people work with. In the new economy, intellectual capital - not natural resources, machinery or financial capital - has become the one indispensable asset of corporations. The volume shows how the emergence of the information age has changed the nature of wealth, and it offers new ways of looking at what companies do and how to lead them. In an economy based on knowledge, intellectual capital - the untapped, unmapped knowledge of organizations - has become a company's most useful tool. It is found in: the talent of the people who work there; the loyalty of the customers it serves and learns from; the value of its brands, copyrights, patents and other intellectual capital; and the collective knowledge embodied in its systems, management techniques and history - vital assets that are rarely managed and almost never managed skilfully. Readers should learn how to discover and map the human, structural and customer assets that are the knowledge based of a corporation; how General Electric, Hewlett-Packard, McKinsey, Merck & Co manage intellectual capital to improve performance; how intellectual capital can dramatically increase profitability; why the information economy demands new principles of managing people and working with customers; and how the knowledge economy affects readers personally, in their career, and how to capitalize on the opportunities it presents.

The high price of money: an interpretation of world interest rates

The argument of this monograph is that, contrary to prevailing opinion, high interest rates are not a fact of economic life. The authors argue that this is a conventional assumption rooted in the expectations of financial markets. World economic evidence from the last 20 years indicates that conscious policies are, in fact, capable of altering interest rates in the short term, without heavy costs. Such policies must be devised and pursued if we are to come out of recession.

Reality Bites: News Exposure and Economic Opinion

Reality Bites: News Exposure and Economic Opinion

Companions without Vows: Relationships among Eighteenth-Century British Women (review)

REVIEWS 319 play of voices in the letters, the pleasure in the other's—and one's own—divided self) can be found in Poulet, Seylaz, Wohlfarth, Thody, or any number of more recent critics. Remarkably, however, only one source is cited, aside from Versini's edition: Michel Delon's study of italics in the characters' correspondence. That Bayard reformulates the ironic reversals of submission and mastery in Laclos's story rather elegantly in terms of prise and emprise (both words mean "hold," and allow for a play between active and passive connotations) will do little to lessen the annoyance of any reader even slightly familiar with earlier scholarship. It is hard to believe Bayard is unaware of this work, and even if he arrived at his own insights independently, he should at least have made some attempt to situate himself within the ongoing critical conversation about Les Liaisons. It is certainly odd that a study that focuses so much on the illusion of exteriority that blinds Laclos's heroes should reproduce that illusion so blatantly. It might be objected that Bayard is not a literary critic but a clinician exploring his response as an analytic experiment. (Some of his remarks suggest this, although no information is provided on his affiliation. Is this by any chance the same Pierre Bayard who some years ago wrote suggestive monographs on Armance and La Peau de chagrin!) But this is hardly an excuse. Le Paradoxe du menteur is a well-written, clearly organized, and intelligent book. Had the author been willing to compromise the "integrity" of his response by engaging with other commentators, it would have been a more welcome one. Patrick Coleman University of California, Los Angeles Betty Rizzo. Companions without Vows: Relationships among EighteenthCentury British Women. Athens: University of Georgia Press, 1994. ? + 439pp. US$55.00. ISBN 0-8203-1541-9. Betty Rizzo's new book not only explores an idea that needed to be written about: it does so in a comprehensive and thoroughly readable fashion. Her conception of "companionate relationships" moves well past recent scholarly exploration of female friendship and provides an opportunity to re-examine the ideology of tyranny that Mary Wollstonecraft analysed so capably at the end of the century. Rizzo locates the roots of that late eighteenth-century political debate as she examines the socioeconomics behind women's relationships and contextualizes them in terms of both tyranny and benevolvence . She develops her thesis by way of both biographical studies and the fiction of such writers as Sarah Fielding, Frances Burney, and Sarah Scott This is really a study about the abuse of power, and the author helps us see that women were quite as capable of such abuses as men: that the term "toadeater"—first used to demonstrate political spinelessness—was soon appropriated to describe the humble companion provides some evidence in the popular mind of the link between political and domestic tyranny. Rizzo theorizes that the companionate relationship followed the same paradigm as marriage. Like marriage, companionate relationships demonstrated a great range of human behaviour, from the tyranny Frances Burney experienced at the hands of Elizabeth Juliana Schwellenburg at the court of Queen Charlotte to the deep friendship between Sarah Scott and Lady Bab Montagu that resulted in the establishment of a Utopian community in Batheaston. Because, as Rizzo notes, "the power to define tyranny for a culture rests with the empowered" (p. 12), we can expect to have to search carefully to find the ways women 320 EIGHTEENTH-CENTURY FICTION 7:3 exerted the power they in fact possessed. Again, here was a fact not lost on Mary Wollstonecraft when she labelled pernicious the ways that women, denied political power and education, use sexuality to manipulate men; she pleads for women to gain power over themselves, not over others, a plea difficult to fulfil when the harsh economic facts of life intruded upon any woman, single or married. In fact, the cost to a woman of being on her own was very high: a ten-thousand-pound dowry might yield a good fortune, but even that would not amount to the five-hundreda -year that Virginia Woolf later described as the minimum for freedom...

Empirical tests of labor-market equilibrium: An evaluation

For good reason there is widespread professional interest in the theory of unemployment. Unemployment in OECD countries is at an all-time postwar high. The unemployment rate in France has increased each year for the past 14 years. Mean durations of unemployment have increased in the United States over the past decade. The data indicate that measured unemployment is an important fact of economic life. However, the causes of the rise in unemployment are not clearly understood.

The Relative/Absolute Nature of Knowledge and Economic Analysis

Central to economic analysis are assumptions and hypotheses concerning the extent and nature of the knowledge held by individuals. In this respect it is a noticeable feature of realist' accounts that they tend to focus upon the pervasiveness of uncertainty as an undeniable fact of economic life. (Nonrealist, or instrumentalist accounts, in contrast, tend to assume that agents have perfect information, correct foresight, rational expectations, and so on.) It is also apparent that this realist focus upon uncertainty tends to give rise to a concentration of attention upon those situations in which (possibly numerically measurable) probabilistic knowledge is thought to be available. Clearly such accounts are important. Nevertheless, I wish to suggest that such a restricted choice of focus for the realist is not entirely satisfactory, since, in particular, it tends to lead to a neglect of the widespread observation that feelings of certainty and claims to truth are also pervasive in human society. I want to suggest, moreover, that if we are to account for the latter observation (and economists concerned with realism of analysis surely need to) then various arguments and conclusions have to be taken on board which, in turn, appear to bear consequentially upon the nature and conduct of economic analysis in general. Section I below discusses such possible limitations of existing realist accounts of agent knowledge in some detail. The suggested route for responding to, and resolving, apparent problems which involves the argument that aspects of knowledge can have a relative as well as an absolute character is described in sections II and III; and the various analytical consequences of the account there set out are discussed in section IV. Section V contains concluding comments and touches upon ways in which the proposed account might be appraised and rnade operational.

An agenda for improving physician reimbursement.

In his commentary, The Pediatrician as a Wage Earner, Dr Nazarian has expressed a concern well-known to all pediatricians. And, although most of us were aware of the economic facts of life before entering pediatrics, we were idealistic and/or altruistic enough that we ignored or at least minimized those facts. Subsequently, with long hours and hard work, most of us have managed to receive adequate monetary compensation, as well as extraordinary personal satisfaction—so much so that, if we had it to do over again, we would make the same choices. Having said this, I would hasten to add that I think many physicians, particularly those dealing with procedural specialties, although equally dedicated, talented, and altruistic, receive an unconscionable income as a result of excessive charges.

An Agenda for Improving Physician Reimbursement

In his commentary, "The Pediatrician as a Wage Earner," Dr Nazarian has expressed a concern well-known to all pediatricians. And, although most of us were aware of the economic facts of life before entering pediatrics, we were idealistic and/or altruistic enough that we ignored or at least minimized those facts. Subsequently, with long hours and hard work, most of us have managed to receive adequate monetary compensation, as well as extraordinary personal satisfaction—so much so that, if we had it to do over again, we would make the same choices. Having said this, I would hasten to add that I think many physicians, particularly those dealing with procedural specialties, although equally dedicated, talented, and altruistic, receive an unconscionable income as a result of excessive charges.

Comment

Despite the Government's exhortations to industry to stabilise prices, the economic facts of life show that the paint industry is faced with mounting costs of a wide range of raw materials, which are likely to result in increased prices for paints in the near future. Unlike many industries, raw materials account for some 60% of the manufactured costs of paint and surface coatings.

Planning for productivity

In the 1980s the subject of productivity will receive increasing attention as the old macro economic policies are replaced by micro economic policies. Everyone in various ways will discover the changes which will be involved in learning the real economic facts of life. The need to improve productivity and business performance is urgent and yet it is an area which is being neglected by management.

Expansion or Contraction of Social Security: Serious Side Effects

During its first three decades of operation, the Social Security program was almost unanimously approved of by the populace and the press. The benefits were many times as large as actuarially purchasable from the contribu tions paid. The administration was efficient and prompt. How ever, in the 1970s, the situation considerably changed: finan cial problems arose—both over the short range and the long range—and the administration deteriorated. The press be came critical and cried "crisis." Many feared that the program was bankrupt and that benefit promises would not be kept. Accordingly, proposals were made to contract the system, despite considerable expansionist pressure for increasing benefits. Good and compelling reasons exist to maintain the program at about its present relative level, neither to expand or contract it. Further, its financing should continue to be solely through direct, visible payroll taxes, and not, as many propose, by designated, but unrelated, taxes or from general revenues. Financing the program indirectly is deceptive at best, because the American public would then believe that somebody other than themselves would be paying for a sub stantial portion of the cost. The simple facts of economic life are that all taxes are paid by people and that, although dif ferent taxes might appear to have different incidences, it is impossible to determine whether this is actually so.

Training in the economic facts of life

Perhaps the biggest challenge facing the training movement today is the current assumption that society would function better if only there was a wider understanding of how it works. This understanding needs to be acquired at one level by employees and at another level by the general public. In our March issue we have already highlighted the pioneering efforts of SB Modules Ltd with their sound‐tape training pack designed to communicate the simple facts about how the money moves in a business. There seems to be developing a general conviction that more information has to flow about the performance of employing organisations. This means not only their current efficiency in producing wealth and profit but also their ability to provide security for employees, and a good service for customers while following a sound policy of environmental responsibility. The growing awareness of this need to be better informed is to be noted not only in the UK but in all countries in one form or another.

Inflation Accounting: What Will General Price Level Adjusted Income Statements Show?

The most significant and persistent complaint about published financial statements in recent years has been that they do not recognize the economic facts of life. Inflation is a reality throughout the world, yet its effects go unrecognized in financial statements prepared in accordance with generally accepted accounting principles in the United States and in most of the other countries of the Western World. Inflation distorts all financial statements, but primary attention in the many public discussions of this topic is usually focused on the way inflation affects reported income. This article analyzes the likely income statement effects of recording inflation adjustments. Two different approaches to adjusting for inflation have been suggested in the accounting literature. One substitutes for the recorded historical cost data of each of the items in the financial statements the current cost. The other adjusts the recorded historical cost data for changes in the value of the monetary unit since each item was acquired. The former deals with specific price changes of individual items, the latter with changes in the general price level. Since most adjustments are made by the use of price indexes, the first approach relies on indexes of specific prices, the second on an index of the general price level. The appendix of this article explains and illustrates the essentials of both approaches. The current cost approach is conceptually superior (and presents more meaningful statements) in our view, but the general price-level approach has received authoritative support because of its greater objectivity and auditability. In both the United States and the United Kingdom, the authoritative accounting bodies are currently considering the question of general price-level adjusted financial statements and may issue pronouncements requiring their publication in the near future. In both countries, the general pricelevel statements would be supplemental to the conventional unadjusted historical cost statements. 1 Since general price-level adjusted statements are likely to be the only adjustments for inflation with official sanction, the rest of the body of this article is concerned with the effect of such adjustments on reported earnings. (Some of the results of using current cost adjustments are illustrated in the appendix.) In the remaining sections we analyze the effects of general price-level adjustments on the 30 Sidney Davidson, Arthur Young Professor of Accounting, University of Chicago, is currently on leave as a Fellow of the Center for Advanced Study in the Behavioral Sciences, Stanford, California. Roman L. Weil is Mills B. Lane Professor of Industrial Management, Georgia Institute of Technology. The authors thank Christine Ciarfalia and Samy Sidky for their research assistance and the Ford Foundation Faculty Research Fund of the Graduate School of Business of the University of Chicago and the National Science Foundation for research support. They thank Richard M. Cyert, Yuji Ijiri, and Mary Peeler for various kinds of help. 1. Footnotes appear at end of article. (Pp. 83-84)