Quality Investment Research Articles

Investments in data quality: Evaluating impacts of faulty data on asset management in power systems

Data play an essential role in asset management decisions. The amount of data is increasing through accumulating historical data records, new measuring devices, and communication technology, notably with the evolution toward smart grids. Consequently, the management of data quantity and quality is becoming even more relevant for asset managers to meet efficiency and reliability requirements for power grids. In this work, we propose an innovative data quality management framework enabling asset managers (i) to quantify the impact of poor data quality, and (ii) to determine the conditions under which an investment in data quality improvement is required. To this end, an algorithm is used to determine the optimal year for component replacement based on three scenarios, a Reference scenario, an Imperfect information scenario, and an Investment in higher data quality scenario. Our results indicate that (i) the impact on the optimal year of replacement is the highest for middle-aged components; (ii) the profitability of investments in data quality improvement depends on various factors, including data quality, and the cost of investment in data quality improvement. Finally, we discuss the implementation of the proposed models to control data quality in practice, while taking into account real-world technological and economic limitations.

Product quality and quantity with responsive pricing

In this paper, we study a firm's optimal joint product quality and quantity decisions when the consumers' utilities change with the market environment. We develop a model framework to study a monopolist firm's decisions about product quality and related production quantity planning when responsive pricing is implemented. Consumers are heterogeneous in their marginal valuations of the product quality but homogeneous in their reservation utility. Considering a utility function incorporating the reservation utility, quality, and price, consumers make their purchase decisions. We find that as the reservation utility increases or the quality valuation decreases, the optimal quantity increases. However, counterintuitively, the optimal quality decreases when the reservation utility becomes higher. Furthermore, the product quality and quantity are substitutes in the context of responsive pricing. We also investigate the optimal quality and quantity for a product line that is vertically differentiated. Compared to a firm offering a single product, a firm offering a product line is more likely to alter its quality investment decisions due to changes in reservation utility, whereas the optimal investment decisions are less sensitive to changes in quality valuation.

Quality as Determinant for Long Shelf Life and Consumer Loyalty in Nollywood Productions

Nollywood, is the Nigerian film industries that had evolved without state support, and was ranked as as the world’s second largest producers of movies by UNESCO Institute of Statistics. However, the industry has continued to incur the negative consequences of poor quality production on consumers’ patronage and shelf life of produce, in spite of abiding growth propensity. It is against this backdrop that this research was conducted to examine production quality as determinant for long shelf life and consumers’ loyalty in Nollywood movies. The study, which focuses on grassroots, employs the mixed methods research, combining interview, survey, and content analysis as methods for data collection. It argues that the abiding problem of quality in the industry, which is grounded on colonial cinematic legacies, was perpetuated by the failure of Government to align the industry as a viable sub-sector for economic growth. Thus, the study establishes that there is a direct correlation between the poor production quality, diminishing consumer loyalty and a trifling shelf life of Nigerian movies amidst the increasingly high volume of movie produce. The study concludes that piracy is the fundamental problem that militates against quality investment, which engenders compromise in production quality, and grounds poor consumer patronage and low shelf life. Therefore, the study recommends the need for Government to harness the viability of the industry by engaging needful interventions for the structuring and the development of a bankable movie industry, through legislation and implementation of policies that can stimulate, protect and sustain quality productions of the Nigerian video films.

Self-builder landlordism: exploring the supply and production of private rental housing in Dar es Salaam and Mwanza

Private rental markets accommodate a significant share of Africa’s rapidly growing urban populations. The vast majority of tenants are accommodated in rental housing supplied by private landlords. Few studies offer insights on the dynamics and logics shaping the supply and production of private rental housing in the context of African cities. This paper contributes to fill this remarkable knowledge gap with a study of the supply and production of private rental housing by self-builder households in Dar es Salaam and Mwanza, two of the largest and fastest growing cities in Tanzania. This paper examines the motivations and aspirations of self-builder landlords, the type and quality of rental housing they supply and the logics shaping their investments in housing quality and tenants’ access to services. The paper argues that housing policies should acknowledge the significance of private rental housing in accommodating growing urban populations and the contribution of small landlords, such as the self-builders in Dar es Salaam and Mwanza, in the supply and production of private rental housing. Furthermore, any policies seeking to increase the availability and quality of affordable rental housing should be informed by in-depth understanding of the perspectives of such landlords. While concerns regarding lack of protection of tenants’ rights and sub-standard accommodation are often justified, great care is needed, as policies promoting tenants’ rights or enforcing minimum standards could undermine the supply of new rental housing or make rents wholly unaffordable for the poorest tenants.

Heterogeneous preferences and investments in energy saving measures

We investigate whether risk, time, environmental, and social preferences affect single family homeowners’ investments in energy efficient renovations and energy quality of their house using established experimental measures and questionnaires. We find that homeowners who report to be more risk taking are more likely to have renovated their house. Pro-environmental and future-oriented renovators, i.e. renovators with lower discount factors, live in homes with higher energy efficiency. Controlling for the energy efficiency of houses, we further find that energy consumption as measured by heating and energy costs are lower for future-oriented and pro-environmental individuals. Social preferences measured in a dictator and a generosity game play a mixed role for investments in energy efficiency and energy consumption.

Borrowing or crowdfunding: a comparison of poverty alleviation participation modes considering altruistic preferences

ABSTRACT In developing countries, farmers lack capital for market-oriented production and information for making informed production and sales decisions. To alleviate poverty, many enterprises, such as JD Finance, have developed crowdfunding poverty alleviation initiatives for poor farmers. In this mode, although enterprises provide a crowdfunding platform for farmers to raise production funds, farmers may incur sales losses. In this study, we investigate a fundamental question: how can we choose an optimal mode between crowdfunding and the traditional mode? Our analysis reveals that the optimal selection depends on the interaction of the consumer's willingness-to-pay and the cost coefficient for quality investment. Additionally, the degree of risk aversion, the lending rate, demand uncertainty and crowdfunding risk affect farmer selection. We demonstrate that when the scale of altruistic consumers is relatively small, the proportion of altruistic consumers and their motivation intensity are two interacting forces that steer the farmer's mode choice. Otherwise, a farmer's preferred mode choice relates only to the latter, and the former affects only the pricing strategy under the crowdfunding mode. Our study not only contributes to the emerging poverty alleviation literature but also provides managerial insights regarding the selection of the optimal mode for poverty alleviation for farmers.

Direct Interconnection and Investment Incentives for Content Quality

AbstractThis paper analyzes the effects of direct interconnection agreements in the Internet backbone on content quality investment for content providers (CPs). The model assumes that when the Internet service provider (ISP) has a vertical affiliation with one CP, the ISP directly interconnects the affiliated CP’s traffic to its network for free while collecting a direct interconnection fee from the unaffiliated CP. If the unaffiliated CP’s traffic is indirectly interconnected to the ISP’s network via a third party transit provider, its network quality is lower than that via a direct interconnection. For the CPs’ content quality investments, I find that the affiliated CP invests more in content when the rival indirectly interconnects, leading to a higher total level of content investment. Accordingly, there is a condition under which the ISP does not want to offer direct interconnection to the unaffiliated CP. However, consumers are not always worse off from this interconnection foreclosure. Thus, the regulation of a paid direct interconnection does not necessarily enhance welfare in terms of consumer surplus.

Research on Quality Investment and Pricing Decision Sequence of Complex Equipment Supply Chain Considering Manufacturer's Incentive Strategy

For the demand uncertainty of complex equipment two-stage supply chain, the influence of different quality investment and pricing decision sequence on expected revenue and demand, with the consideration of incentive strategy between manufacturers to suppliers, manufacturer determines the basic quality and compensation for suppliers, suppliers determine the parts wholesale price and quality investment, then manufacturer decides the complex equipment product price. This paper set up two quality investment and price decentralized decision sequence: a Stackelberg game model, a vertical Nash game. Conditions of suppliers decisions are obtained, and the changes of pricing, quality investment, demand and profit of supply chain members are analyzed. It shows that making quality investment and wholesale price decisions simultaneously is best for manufacturers and integrated supply chain; determining quality investment and then set the wholesale price at the same time is the best choice for the whole suppliers. For individual suppliers, there is no absolutely dominant decision-making sequence. By comparing the model and different parameters, the paper provides a management basis for improving the quality and performance of supply chain subjects.

Green investment choice in a duopoly market with quality competition

Motivated by the fact that green investment and quality investment have become two vital long-term strategic tools for firms to improve their reputations and market competitiveness, this paper develops a game-theoretical model to study green investment choice decisions of two horizontally differentiated firms in the presence of quality competition. Given that the firms’ optimal green investment decisions do not always align with the environmental optimal objective, we further examine the motivation of government subsidy for green investment and the optimal subsidy programs. Three main findings are highlighted as follows. First, the internal relationship between green investment and quality investment plays a key role in firms’ green investment choices. Specifically, when green investment and quality investment are substitutes, no firm decides to make green investments, whereas when green investment and quality investment are complements, whether a firm makes a green investment depends on the green investment efficiency. Interestingly, with a moderate high green investment efficiency, the two ex-ante symmetric firms implement different technology investment strategies. Second, although green investment always benefits to curb total carbon emissions, a firm switching to green technologies does not always reduce its own emissions. Third, through different subsidy programs, the government can encourage firms to make green investments. When the subsidy is sufficiently high, the two firms can achieve a win-win outcome through green investments.

High fertility level in Sub-Saharan Africa: implication for reaping and optimizing demographic dividend

Africa region remains the continent with the highest total fertility rate among other major regions of the world such as Europe, North America, Asia and Latin America and Oceania. This paper examines the determinants of high fertility in sub-Saharan Africa; it also determines the policy implication for reaping and optimizing demographic dividend. Secondary data sources were employed in achieving the set objectives. This paper submitted that determinants such as age at first marriage; high child mortality; low female education; gender preference; and limited birth spacing were the determinants of high fertility in Africa. For Africa to harness the demographic dividend, certain policy implications such as investment in child survival and health programmes; investment in quantity and quality of education; multi-sectoral approaches and meeting infrastructural development; enhance job market and enact and enforce laws to prevent early marriage among other policy programmes must be embraced. The paper concludes that there is high fertility in sub-Saharan Africa because of the in-built population momentum of the populace. Also, fertility must be reduced significantly if sub-Saharan Africa must reap and optimize the promising dividend. This paper, therefore, recommends that all government in Africa continent should come up with and implement effective population policy that will help to reduce high fertility level.

Competitive environmental sourcing strategies in supply chains

This paper studies retailers' environmental sourcing strategies in supply chains by taking into consideration environmental quality investment and consumers' environment awareness. We attempt to identify the equilibrium sourcing strategies in two scenarios: with and without supplier competition, respectively. We find that environmental sourcing always arises, and the suppliers' incentives are also in line with the retailers’ sourcing strategies in equilibrium. However, adding more environmental sourcing channels does not necessarily benefit consumers and the whole society. Interestingly, retailers have better incentives to select environmental sourcing channels when supplier competition is present. In fact, even without risk consideration, we show that retailers should diversify procurement by choosing different suppliers, which better promotes environmental sourcing and enhances consumer welfare, if the synergy effect is weak or environmental investment is sufficiently inefficient. We also examine the supplier-initiated sourcing strategies and find that the equilibrium strategies depend upon factors including the synergy effect and environmental investment efficiency.

Hotels competition based on online ranking position

Electronic word of mouth (eWOM) information has become extremely relevant for the reputation of hotels and is a key variable in terms of their capacity to set prices and improve their occupancy rate. However, overall ratings have a bias towards high values; luxury hotels concentrate on a few ranges of values in terms of their rating, making it more difficult for consumers to differentiate among these hotels. In this context, the ranking position that is unique for each hotel is an additional source of information for potential consumers, and it can have a direct impact on the hotel managers’ capacity for setting higher prices. This research proposes a theoretical model of vertical differentiation that adds the ranking position as a part of demand function and analyses the optimum strategy in terms of quality investment and prices for hotels in a given destination. The model is empirically tested using a sample of 102 hotels from the city of Barcelona. Our results suggest that the ranking position has a direct effect on higher prices and that this effect is more important and significant than the effects of rating value or the number of stars on prices.

Salience in a simple transport market

Psychologists have long since recognized that consumers have limited cognitive ability, and that this prevents them from weighing up all product attributes when making a choice. More recently, a new framework for consumer choice has been developed which takes account of this, by assuming that consumers are drawn to salient features of a product. We apply the framework of salient thinking to a simple transport market in which passengers may attach different weights to the utility of the trip (its comfort and/or duration) and the fare. We find the optimal fare structure in this market, and investigate under which conditions operators use their pricing schedule to focus passengers’ attention on fare, and when they direct attention towards trip duration or comfort. Furthermore, we address the quality investments made by operators compared to a rational benchmark. Quality enhancement in this model is increasing in the unit cost of providing the service. We finally discuss the implications of the theory of consumer choice, and the competitive model for transport markets compared to the predictions of a rational model. This leads to several testable situations which could give implications for policy makers and transport firms.

The role and contribution of treatment and imaging modalities in global cervical cancer management: survival estimates from a simulation-based analysis

Cervical cancer is the fourth most common cancer among women worldwide, causing more than 300 000 deaths globally each year. In addition to screening and prevention, effective cancer treatment is needed to reduce cervical cancer mortality. We discuss the role of imaging in cervical cancer management and estimate the potential survival effect of scaling up imaging in several different contexts. Using a previously developed microsimulation model of global cancer survival, we estimated stage-specific cervical cancer 5-year net survival in 200 countries and territories. We evaluated the potential survival effect of scaling up treatment (chemotherapy, surgery, radiotherapy, and targeted therapy), and imaging modalities (ultrasound, x-ray, CT, MRI, PET, and single photon emission CT [SPECT]) to the mean level of high-income countries, both individually and in combination. We estimate global cervical cancer 5-year net survival as 42·1% (95% uncertainty interval [UI] 33·8-48·5). Among individual imaging modalities, expanding MRI would yield the largest 5-year survival gains globally (data are absolute percentage point increase in survival 0·6, 95% UI 0·1-2·1), scaling up ultrasound would yield the largest gains in low-income countries (0·5, 0·0-3·7), expanding CT and x-ray would have the greatest effect in Latin America (0·8, 0·0-3·4) and Oceania (0·4, 0·0-3·2), and expanding PET would yield the largest gains in high-income countries (0·2, 0·0-0·8). Scaling up SPECT did not show major changes in any region. Among individual treatment modalities, scaling up radiotherapy would yield the largest absolute percentage point gains in low-income countries (5·2, 0·3-13·5), and expanding surgery would have the largest effect in lower-middle-income countries (7·4, 0·3-21·1) and upper-middle-income countries (0·8, 0·0-2·9). Estimated survival gains in high-income countries were very modest. However, the gains from expanding any single treatment or imaging modality individually were small across all income levels and geographical settings. Scaling up all treatment modalities could improve global 5-year net survival to 52·4% (95% UI 44·6-62·0). In addition to expanding treatment, improving quality of care could raise survival to 57·5% (51·2-63·5), and the cumulative effect of scaling up all imaging modalities together with expanded treatment and quality of care could improve 5-year net survival for cervical cancer to 62·5% (57·7-67·8). Comprehensive scale-up of treatment, imaging, and quality of care could substantially improve global cervical cancer 5-year net survival, with quality of care and imaging improvements each contributing about 25% of the total potential gains. These findings suggest that a narrow focus on the availability of treatment modalities could forgo substantial survival gains. Investments in imaging equipment, personnel, and quality of care efforts will also be needed to successfully scale up cervical cancer treatment worldwide. Harvard T H Chan School of Public Health and National Cancer Institute.

Competition Among Proprietary and Open-Source Software Firms: The Role of Licensing in Strategic Contribution

In enterprise software markets, firms are increasingly using services-based business models built on open-source software (OSS) to compete with established, proprietary software firms. Because third-party firms can also strategically contribute to OSS and compete in the services market, the nature of competition between OSS constituents and proprietary software firms can be complex. Moreover, their incentives are likely influenced by the licensing schemes that govern OSS. We study a three-player game and examine how open-source licensing affects competition among an open-source originator, an open-source contributor, and a proprietor competing in an enterprise software market. In this regard, we examine (1) how quality investments and prices are endogenously determined in equilibrium, (2) how license restrictiveness impacts equilibrium investments and the quality of offerings, and (3) how license restrictiveness affects consumer surplus and social welfare. Although some in the open-source community often advocate restrictive licenses such as the GNU General Public License because it is not always in the best interest of the originator for the contributor to invest greater development effort, such licensing can actually be detrimental to both consumer surplus and social welfare when it exacerbates this incentive conflict. We find such an outcome in markets characterized by software providers with similar development capabilities yet cast in favor of the proprietor. In contrast, when these capabilities either become more dispersed or remain similar but tilt in favor of open source, a more restrictive license instead encourages greater effort from the OSS contributor, leads to higher OSS quality, and provides a larger societal benefit. This paper was accepted by Chris Forman, information systems.

A Note on Endogenous Market Structure under Heterogeneous Firms*

Industries, such as semiconductors and biotechnology, are characterized by heterogeneous research productivity and vertically differentiated products. In this note, I relax the assumption of symmetric R&D costs in Sutton [1998] and derive the lower bounds to market concentration when entry and R&D investments in product quality are jointly determined. I show that the lower bound to concentration depends on the degree of vertical differentiation, which is a function of market size and quality choices. My findings imply that empirical applications that fail to account for differences in quality will be biased towards the null hypothesis of exogenous entry costs otherwise.

Life-long testosterone and antiandrogen treatments affect the survival and reproduction of captive male red-legged partridges (Alectoris rufa)

Sexual steroids can play an important role as life-history organizers. In males, high circulating testosterone levels induce physiological/behavioral costs and benefits, leading to trade-offs. However, studies simultaneously testing the impact of these levels in both fitness components (survival and fecundity) during lifetime are scarce and limited to wild birds. To determine the mortality causes or hormonal manipulation impacts on male fertility is, nonetheless, a difficult task in free-ranging animals that could be easier in captivity. We longitudinally monitored captive red-legged partridges (Alectoris rufa) and exposed males to high exogenous testosterone levels, anti-androgens, or a control treatment during each breeding period throughout their lives. Theory predicts that individuals maintaining high androgen levels should obtain higher fitness returns via reproduction, but suffer reduced longevity. Testosterone-treated male partridges, accordingly, lived shorter compared to controls, since they were more prone to die from a natural bacterial infection. However, the same birds seemed to have a lower capacity to fertilize eggs, probably due to endocrine feedback reducing testicular mass. These results show that exogenous testosterone can exert unpredicted effects on fitness parameters. Therefore, caution must be taken when drawing conclusions from non-fully controlled experiments in the wild. Males treated with the androgen-receptor blocker flutamide did not outlive controls as predicted by the life-history trade-off theory, but their mates laid eggs with higher hatching success. The latter could be due to mechanisms improving sperm quality/quantity or influencing maternal investment in egg quality. Testosterone receptor activity/amount could thus be as relevant to fitness as testosterone levels.Significance statementIt has repeatedly been hypothesized that high testosterone levels induce a cost in terms of reduced lifetime reproductive success. This can be due to reduced fecundity or via shorter lifespan. This is, however, only supported by a handful of studies, mostly in wild birds. We tested this in captive male red-legged partridges, which allowed us to determine reproductive success and mortality causes. We increased testosterone levels or blocked its action with antiandrogens throughout life. High testosterone levels reduced the survival by making birds more prone to die by infection. The eggs produced by their mates also showed lower hatching success, a probable manipulation artifact that should be considered in avian studies in the wild. Interestingly, the androgen-receptor blocker flutamide increased lifetime hatching success compared to controls, suggesting that androgen receptor amounts/activity are even more relevant to fitness than testosterone levels.

An empirical nexus between economic growth, energy utilization, trade policy, and ecological footprint: a continent-wise comparison in upper-middle-income countries.

This study investigates the causal connection between economic growth, foreign direct investment, primary and renewable energy utilization, trade openness, and ecological footprint for 33 upper-middle-income countries (UMICs) from Africa, Asia, Europe, and America during the period from 1994 to 2017. Initially, first- as well as second-generation panel unit root tests are applied to check the integration order after confirming the cross-sectional dependency and heterogeneity. Four different tests (FMOLS, DOLS, FGLS, and AMG) are applied to estimate the long-run elasticity, whereas Dumitrescu and Hurlin (D-H) non-causality test is used to test growth, conservation, and feedback hypothesis. Results show negative relationship of economic growth on ecological footprint in Africa and Europe; renewable energy utilization in Asia, Europe, and America; and trade openness in Asia. Moreover, the results revealed an adverse impact of trade openness on ecological footprint in case of Africa and America. Furthermore, the results of D-H panel non-causality test confirm the growth hypothesis for economic growth to ecological footprint in Africa, Asia, and Europe; foreign direct investment to ecological footprint in Africa and Asia; primary energy utilization to ecological footprint in Asia; renewable energy utilization to ecological footprint in America; and trade openness to ecological footprint in Africa, Asia, and America. Furthermore, the feedback hypothesis was confirmed between economic growth and ecological footprint in Asia and Europe; foreign direct investment and ecological footprint in Africa and Asia; renewable energy utilization and ecological footprint for America; and trade openness and ecological footprint for Asia and America. Finally, in context to efficient policy implications, it is suggested to associate the economic growth with clean energy and environment-friendly technologies by expanding the share of renewable energy in America and economic growth in Africa and Europe. Furthermore, Asian policy makers need to focus on foreign direct investment and trade openness by using green energy to overcome the environmental degradation. Impulsion with these findings, the central authorities of UMICs need to focus on more investments in environmental quality not only through foreign direct investment but also exchanging their clean energy technologies through trade policies such as tax exemption, feed-in tariffs, and subsidies. Government of these countries ought to upgrade the conventional capital which will ultimately improve the human lives by providing clean environment.

Sustainable tourism development: A dynamic model incorporating resident spillovers

The ongoing debate on over-tourism shows that developing more sustainable forms of tourism is not only relevant for environmental reasons but it would also create important spillovers benefitting residents within the economic and social domain of sustainability. Based on this broad idea, we develop a theoretical model of sustainable tourism considering the well-being of locals incorporating external effects and trade-offs with less sustainable forms of tourism. We employ a dynamic model of resident well-being, where utility is derived from consumption, tourism quality (e.g. better restaurants, hiking trails), and the number of tourists visiting. A benevolent regional government maximizes the representative resident’s well-being by choosing the rate of consumption, the number of tourists visiting (e.g. number of beds), and the rate of investment in tourism quality. Our results depend crucially on the initial number of tourists and state of tourism quality. Suppose the initial state of tourism quality is below its long-run optimum. If initial visitor numbers are small so that increasing them raises residents’ well-being directly through consumption (i.e. more tourism supply and cultural exchange raises resident’s marginal utility of consumption), the optimal strategy is to invest in tourism quality and to increase the number of tourists over time, as quality changes. If initial visitor numbers are large, increasing them further reduces the resident’s marginal utility from consumption (e.g. booked-out restaurants, crowed hiking trails, etc.) and the optimal strategy is to increase tourism quality over time but to reduce the quantity of visitors. Our general finding is that quantity and quality may move in tandem or in opposite direction, depending on current state and residents’ preferences. If over-tourism means that residents’ well-being is negatively affected by an increasing number of visitors, the model suggests that ongoing investment in tourism quality while reducing numbers will maximize residents’ well-being. We show that the first-best optimum, achieved in a centrally planned economy, can be replicated in a decentralized economy by using time-varying tax rates. This ensures that (i) the steady state of the first-best optimum is reached and that (ii) the speed of convergence to steady state is socially optimal.

Schooling is Not Learning - the Impact of the Learning-Adjusted Years of Schooling on Growth in a Dynamic Panel Data Framework

Schooling is not the same as learning. Nonetheless, many cross-country studies still use the mean school years, that is, a purely quantitative measure, to control for human capital. Thus, they ignore that the learning outcomes of two countries can differ dramatically even if they have the same average years of schooling. The concept of the learning-adjusted years of schooling (LAYS), introduced by the World Bank in 2018, tries to mitigate this problem by combining quantitative and qualitative components of education. However, so far, the impact of the LAYS has only been analyzed in a cross-sectional framework, ignoring several potential problems such as endogeneity, omitted variable bias, unobserved country heterogeneity, and measurement error. Our paper is the first to provide a country-level LAYS database covering up to 5 periods. Analyzing the impact of the LAYS on growth within a dynamic panel data framework (using system GMM estimation methods) enables us to take advantage of the time series variation in the data and to control for the problems listed above. We find that the LAYS have a highly significant positive impact on economic growth, even when controlling for institutional quality, investment ratios, trade openness, and government expenditures. Moreover, we compare the LAYS measure to the traditional measures of education. Our findings suggest that the LAYS appear to be a better predictor of economic outcome than the standard educational measures. Finally, we also investigate the interrelationship between institutional quality and human capital. Our evidence suggests that human capital and ‘good’ institutions serve as substitutes in the growth process, meaning that the positive effect of the LAYS on growth is smaller in countries where institutions are already strong than in countries with poorly functioning institutions. Our results are robust for many different specifications and have important policy implications, since investments in human capital and institutional quality are both costly measures, especially for developing countries.