Opportunity Cost Research Articles

Paramilitary Conflict in Colombia: A Case Study of Economic Causes of Conflict Recidivism

Following the peace accord on 26 September 2016 between the Colombian government and the Colombian Revolutionary Armed Forces (FARC), significant structural issues persisted in Colombia, such as state fragility, land distribution challenges, and rural impoverishment, all of which jeopardized sustainable peace. Previous disarmament events indicated potential shifts in violence and recidivism rates among ex-combatants. This paper aims to determine the likelihood that, in the post-conflict era with FARC, these ex-combatants would rearm themselves into new criminal factions. Employing a methodology by Paul Collier, the study utilized logit, probit, and panel data models with both fixed and random effects to evaluate the recidivism risk at the municipal level. A 1% increase in per capita municipal income decreased conflict probability due to the increased opportunity cost of disrupting economic endeavors. Conversely, 1% increases in potential conflict benefits from tax revenue and natural resource proceeds raised the probability of conflict by 40% and 17%, respectively. Key results indicate that economic advancement, as measured by per capita income, reduced the duration of paramilitary presence, whereas revenue from taxes and natural resources extended it at the municipal level in Colombia.

Choosing Wisely: Applying Value-Based Economic Principles to Population Science Research Investment.

Scientific research requires a substantial investment of time, effort, and money by researchers and funders. The funding that would be needed for all meritorious proposals far exceeds available resources. Major funding organizations use a multistep process for allocating research dollars that follows and extends beyond scientific peer review with considerations including mission priority, budget, and potential duplication of past or ongoing research activities. At the level of programmatic review, the process tends to be less proscribed than scientific review, but considerations relate to and are akin to basic value-driven economic principles. We propose a framework that encompasses the elements of programmatic review and provide examples of how the economic principles of opportunity costs, diminishing marginal productivity, sunk costs, economic optimization, return on investment, and option value apply to both research planning and funding decisions. Examples use cancer control population science research, as the nature of observational and interventional research involves large population studies (large sample size, recruitment, and often long-duration follow-up costs) which demand a high level of resource utilization; the same principles can be applied throughout medical and population health research. Awareness of the aspects of programmatic review and context to focus discussion regarding funding decisions may help guide research planning, decision-making, and increase transparency of the overall review process.

Systematic nature positive markets.

Environmental markets are a rapidly emerging tool to mobilize private funding to incentivize landholders to undertake more sustainable land management. How units of biodiversity in these markets are measured and subsequently traded creates key challenges ecologically and economically because it determines whether environmental markets can deliver net gains in biodiversity and efficiently lower the costs of conservation. We developed and tested a metric for such markets based on the well-established principle of irreplaceability from systematic conservation planning. Irreplaceability as a metric avoids the limitations of like-for-like trading and allows one to capture the multidimensional nature of ecosystems (e.g., habitats, species, ecosystem functioning) and simultaneously achieve cost-effective, land-manager-led investments in conservation. Using an integrated ecological modeling approach, we tested whether using irreplaceability as a metric is more ecologically and economically beneficial than the simpler biodiversity offset metrics typically used in net gain and no-net-loss policies. Using irreplaceability ensured no net loss, or even net gain, of biodiversity depending on the targets chosen. Other metrics did not provide the same assurances and, depending on the flexibility with which biodiversity targets can be achieved, and how they overlap with development pressure, were less efficient. Irreplaceability reduced the costs of offsetting to developers and the costs of ecological restoration to society. Integrating economic data and systematic conservation planning approaches would therefore assure land managers they were being fairly rewarded for the opportunity costs of conservation and transparently incentivize the most ecologically and economically efficient investments in nature recovery.

Hyperparameter optimization strategy for Multi-Armed Bandits: Genre recommendation in MovieLens dataset

Due to the challenge of balancing exploration and exploitation in Multi-Armed Bandits (MAB) problems, it is rather challenging to determine the optimal exploration length for diverse datasets. This paper presents an in-depth investigation of the hyperparameter setting for the Explore-Then-Commit (ETC) algorithm, emphasizing an enforced exploration strategy to guarantee adequate exploration of each arm. This investigation will be realized in the context of movie recommendation systems, specifically utilizing the MovieLens 1M dataset. Two key hyperparameters are scrutinized: the horizon, which sets the overall timeframe of the algorithm's execution, and the number of times each arm is explored. The study systematically varies these parameters to study their influence on cumulative regret, a measure of the opportunity cost each time a non-optimal arm is sampled. The empirical examination of the ETC algorithm, conducted employing the MovieLens 1M dataset, has yielded significant discernments pertaining to the dynamic configuration of exploration lengths tailored to particular datasets. The empirical findings underscore that judicious fine-tuning of the ETC algorithm's hyperparameters, under a defined horizon of 50,000 and an exploration length of 500, engenders commendable competitive performance. This optimized configuration notably excels in the domain of genre recommendations, particularly manifesting enhanced proficiency in suggesting genres characterized by the most elevated average ratings. This research accentuates and reinforces the comprehension of hyperparameters under the exploration and exploitation dilemma, thereby providing a structured pathway for the forthcoming applicability of MAB in the wider realm of recommendation systems.

Valuing the contribution of sport volunteering to subjective wellbeing: evidence from eight European countries.

Volunteering is a prominent and integral aspect of the activities undertaken by sports clubs in Europe. However, even with its growing importance, quantifying the monetary worth of this nonmarket activity, in terms of wellbeing, can present certain difficulties. Traditional approaches to valuing volunteering (i.e., replacement and opportunity cost approaches) do not fully capture the value of volunteering to individuals, as they do not consider the intangible benefits that individuals may derive from their participation. This research provides added value to the monetisation of volunteering in sport by applying the wellbeing valuation approach (WVA) for the first time to a cross-sectional data in eight European countries. A double instrumental variable approach was developed to correct for unobservable variables that may influence the pairs: income and subjective wellbeing (SWB), and volunteering and SWB. This allows to estimate the causal impact of volunteering and income on SWB more accurately and assign a reasonable monetary value to this non-market activity. The results, based on a sample size of 1,091, show an income compensation for a volunteer, devoting on average 8.7 hours during a four-week period of €16 to €50 per hour, equivalent to between € 1,700 and € 5,200 per year, depending on the nationality of the volunteer. With these estimations insights into the value of volunteering in sports are provided, contributing to a better understanding of how this activity can be valued and supported. By recognising and accurately valuing the contributions of volunteers, sport organizations and policymakers can develop more effective strategies for promoting and supporting volunteering in sports.

What happened to the workshop of West Africa? Resilience and decline of handicraft textiles in colonial northern Nigeria, 1911–52

AbstractThe Sokoto Caliphate of northern Nigeria was the workshop of West Africa in the pre‐colonial nineteenth century, producing famous blue‐black cloth that reached many markets south of the Sahara as well as across it. Under British colonial rule this large handicraft textile industry was faced with the winds of foreign competition. We rely on a newly digitized set of colonial district reports to measure the impact of trade on northern Nigerian textile manufacturing and find that (contrary to British expectations) areas closer to railway stations were less likely to experience industrial decline. We argue that the resilience of local textiles relied on the low opportunity cost of dry‐season labour. Analysing a piece of tax microdata, we show that a low opportunity cost of labour outside of the rainy season was associated with a higher likelihood of engaging in textile by‐employment. Seasonal changes in relative factor prices were a trap as well as a refuge. Part‐time employment limited specialization and technological innovation, and can help to explain why northern Nigerian textiles eventually declined. Thus, beyond our particular case study, these results contribute to our understanding of the role of seasonality in determining the structure and pace of development of tropical economies.

Quantifying potential trade-offs and win-wins between arthropod diversity and yield on cropland under agri-environment schemes–A meta-analysis

In Europe, agri-environment schemes (AES) are a key instrument to combat the ongoing decline of farmland biodiversity. AES aim is to support biodiversity and maintain ecosystem services, such as pollination or pest control. To what extent AES affect crop yield is still poorly understood. We performed a systematic review, including hierarchical meta-analyses, to investigate potential trade-offs and win-wins between the effectiveness of AES for arthropod diversity and agricultural yield on European croplands. Altogether, we found 26 studies with a total of 125 data points that fulfilled our study inclusion criteria. From each study, we extracted data on biodiversity (arthropod species richness and abundance) and yield for fields with AES management and control fields without AES. The majority of the studies reported significantly higher species richness and abundance of arthropods (especially wild pollinators) in fields with AES (31 % increase), but yields were at the same time significantly lower on fields with AES compared to control fields (21 % decrease). Aside from the opportunity costs, AES that promote out-of-production elements (e.g. wildflower strips), supported biodiversity (29–32 % increase) without significantly compromising yield (2–5 % increase). Farmers can get an even higher yield in these situations than in current conventional agricultural production systems without AES. Thus, our study is useful to identify AES demonstrating benefits for arthropod biodiversity with negligible or relatively low costs regarding yield losses. Further optimization of the design and management of AES is needed to improve their effectiveness in promoting both biodiversity and minimizing crop yield losses.

A Qualitative Perspective of Entrepreneurial Intention Among Students in a Private Higher Institution in Selangor

Entrepreneurship as a field of study has different sub-dimensions due to its usefulness in society, which makes it difficult to gain a holistic understanding of its key due to practical applications. A shift in generations creates a different yet unique business environment, especially in new business ventures. Younger generations have a different view and insight about entrepreneurship in small business. Thus, this study aims to seek deeper insight into entrepreneurial behaviour and intention among younger generations. Twenty semi-structured interviews with students from a higher private university in Malaysia were performed using the qualitative method. Using Nvivo 12, the interviews' transcriptions were used for content analysis to produce themes. This study highlights the four emerging themes from students’ perspectives: expectations for future goals, financial constraints in business venturing, personal growth, and opportunity cost to venture into business. The results of this study add to the body of knowledge in the field of entrepreneurship research since they emphasize students' intentions, worries, and considerations while starting a small firm. Additionally, it contributes to empirical research aimed at improving entrepreneurship ecosystems.

WHEN CLIMATE CHANGES, SO DOES VIOLENCE: EXAMINING THE LINK BETWEEN WEATHER AND CRIME IN PERNAMBUCO-NORTHEAST, BRAZIL

This paper examines the impact of weather shocks on crime in Pernambuco-Northeast, one of the states most affected by climate disasters in the Brazilian semi-arid region. We show that precipitation and temperature shocks in the form of droughts have a significant impact on the increase of rates of intentional lethal violent crimes (ILVC), property crimes (PC), and homicides. The effects of precipitation fluctuations in the form of droughts persist beyond the agricultural season and in the medium-term, and vary according to municipal and criminological characteristics. Moreover, adverse weather conditions (e.g., droughts) have a greater impact on income-related crimes. Consistent with this evidence, we find that the persistent response of crime rates to adverse weather conditions is driven by negative shocks to rural income, followed by a deterioration in overall economic activity, urban labor market conditions, and the government’s ability to provide public goods. The patterns we identify align with a relationship between weather and crime explained by reduced opportunity costs associated with criminal activity. Regarding policy recommendations, our findings suggest that local governments should prioritize investments in water infrastructure, agricultural irrigation, expansion of water coverage, and conservation of forested areas. These measures can contribute to climate adaptation and mitigate the economic impact of weather shocks on crime.

Using community-based, participatory qualitative research to identify determinants of routine vaccination drop-out for children under 2 in Lilongwe and Mzimba North Districts, Malawi

ObjectiveIn recent years, full childhood routine immunisation coverage has fallen by 5% to levels not seen since 2008; between 2019 and 2021, 67 million children were undervaccinated. We aimed to...

The Economic Costs of Informal Care: Estimates from a National Cross-Sectional Survey in The Netherlands.

Faced with an unprecedented demand for long-term care, European health care systems are moving towards mixed care models, where the welfare state and informal caregivers share care responsibilities. While informal care is often viewed as a means of alleviating pressure on public care, it comes with significant economic costs for caregivers, their employers, and society at large. This study uses nationally representative data to estimate the total direct (informal care time and out-of-pocket costs) and indirect (productivity) economic costs of informal care in the Netherlands in 2019. Informal care time costs are estimated using the opportunity cost and the proxy good methods. Indirect costs are estimated using the human capital and friction cost approaches. Our results reveal the considerable annual societal cost of informal care in the Netherlands, ranging between €17.5 billion and €30.1 billion, depending on the valuation approach. These costs are equivalent to 2.15% and 3.71% of Dutch GDP in 2019, comparable to the public expenditure on long-term care in that year. Female caregivers account for slightly more than half (53%-57%) of the total costs. Around 57%-88% of these costs are in the form of informal care time. The main driver of indirect costs is the temporary cessation of work, which comprises 12%-17% of the total costs. Findings corroborate that substantial resources, yet thus far largely disregarded, are spent on informal care even in a country with a relatively generous public long-term care system.

경제교육이 노인 경제기본개념에 미치는 영향

In this study, economic education was conducted for the elderly, and the purpose of this study was to find out how economic education for the elderly affects the elderly's basic economic concepts and economic concept variables by sub-factor. The conclusions based on the results of this study are as follows. First, before the experiment, there was no significant difference in the basic economic concepts of the experimental group and the control group, but after the experiment, the experimental group's basic economic concepts showed significantly higher scores. Second, in the case of the experimental group, after providing economic education for the elderly, among the economic concept variables for each sub-factor, they showed significantly higher scores in scarcity and opportunity cost of choice, consumption, products and services, price and exchange, and retirement funds, showing that it was effective. can be analyzed. Third, it was found that there was a significant difference in basic economic concepts between the experimental group and the control group that underwent an economic education program for the elderly.

Where does the time go? Temporal patterns of pumping behaviors in mothers of very preterm infants vary by sociodemographic and clinical factors.

Mothers of very preterm (<32 weeks gestational age [GA]) infants are breast pump dependent and have shorter duration of milk provision than mothers of term infants. The opportunity (i.e., time) cost of pumping and transporting mother's own milk (MOM) from home to the NICU may be a barrier. There is a paucity of data regarding how much time mothers actually spend pumping. To investigate the variation in pumping behavior by postpartum week, maternal characteristics, and infant GA. Prospectively collected pump log data from mothers enrolled in ReDiMOM (Reducing Disparity in Mother's Own Milk) randomized, controlled trial included pumping date and start time and end time of each pumping session for the first 10 weeks postpartum or until the infant was discharged from the NICU, whichever occurred first. Outcomes included number of daily pumping sessions, number of minutes spent pumping per day, and pumping behaviors during 24-h periods, aggregated to the postpartum week. Medians (interquartile ranges) were used to describe outcomes overall, and by maternal characteristics and infant GA. Data included 13,994 pump sessions from 75 mothers. Maternal characteristics included 55% Black, 35% Hispanic, and 11% White and 44% <30 years old. The majority (56%) of infants were born at GA 28-31 weeks. Mothers pumped an average of less than 4 times per day, peaking in postpartum week 2. After accounting for mothers who stopped pumping, there was a gradual decrease in daily pumping minutes between postpartum weeks 2 (89 min) and 10 (46 min). Black mothers pumped fewer times daily than non-Black mothers after the first 2 weeks postpartum. On average mothers pumped less intensively than the minimum recommendation of 8 times and 100 min per day. However, these pumping behaviors represent significant maternal opportunity costs that should be valued by the institution and society at large.

Is B Corp certification sufficiently attractive to emerging markets? A conceptual study of B Corps in China

PurposeThis paper aims to explore how firms enter or exit B Corp certification faced with the tension between local and B Corp institutions, providing a better understanding of the unique impact of institutional complexity on B Corps' decision-making.Design/methodology/approachThis paper applies multi-case analysis to 20 Chinese firms in various stages of B Corp certification, including eight certified B Corps, six decertified firms and six candidates. The qualitative data was used to code separately for two research questions.FindingsThe study findings reveal that: (1) Participants who can obtain expected social and economic benefits by innovating their operational mode to efficiently deal with this tension attempt to continuously pursue B Corp certification. A self-renewal model was developed to show how firms hybridize the two institutional logics; (2) Participants who find it hard to mitigate this tension tend to compromise with the local institution and conform less with the B Corp institution due to high opportunity and accounting costs, low short-term benefits and collective culture.Originality/valueBy highlighting the different responses of firms to institutional complexity, this study contributes to B Corp research, social identity theory and institutional complexity, providing practical implications for B Lab strategies in China.

Designing a two-dimensional maintenance policy for products sold under a two-dimensional warranty by considering both warranty servicing cost and lost opportunity

ABSTRACT Based on the manufacturer-consumer context, a two-dimensional preventive maintenance policy is developed for sold products under a two-dimensional warranty by pursuing two objectives: (1) minimization of the imposed warranty servicing cost on the manufacturer and (2) minimization of lost opportunity cost resulting from the product downtime. In addition, in order to adapt the model to real applications, we depart from the literature by taking into consideration the continuous nature of the usage rate variable. To illustrate the advantages of the model, three types of couple-based comparative models are made. Type I consists of two models with a one-dimensional preventive maintenance policy, while type II includes a model with no maintenance activity. Finally, type III involves two single-objective models. The results obtained from the comparison of the suggested model with the type I and II models confirm the significant effect of employing a two-dimensional preventive maintenance policy in improving both manufacturers’ and customers’ satisfaction. In addition, comparisons of the suggested bi-objective model with three types of models indicate the importance of taking into account both the warranty servicing cost and loss opportunity.

The market efficiency analysis of China’s copper options based on risk-free arbitrages

ABSTRACT This paper probes into the market efficiency and relevant issues of copper options, the first industrial options product launched in China and currently the only non-ferrous metals option. Since its listing on 21 September 2018, the copper options market, developing on the fast track, has become the largest copper options market in the world, and thus it is of important meaning to study its market efficiency. Taking the data of China’s copper options market from its debut to 30 April 2022 as a sample, this paper studies the efficiency of this market using three typical risk-free arbitrages such as put-call-future parity arbitrage, box spread arbitrage, and boundary arbitrage strategies. To better reflect the actual situation, this paper, when establishing options arbitrage strategy models, not only took into account various actual trading factors such as transaction costs, market impact costs, liquidity costs, margin, and capital opportunity costs but also combined daily and high-frequency data to present highly practical arbitrage strategies. According to empirical results, there are few arbitrage opportunities with a very low proportion when actual trading factors were considered. Overall, no evidence was found to prove that China’s copper options market significantly violates the market efficiency rule.

From Countryside to City: How Land Property Rights Drive Migration in China

China’s remarkable economic surge since the 1970s hasn’t erased the pronounced economic disparities across different regions, most notably between rural and urban locales. Rooted in the historical division of land rights and usage stipulated by economic reforms, this urban-rural dichotomy has fostered varied development patterns in infrastructure, primary industries, and foreign trade and investment. At the core of this dichotomy is the contrasting landscape of land property rights—state ownership in urban areas with permissible leaseholds versus collective ownership in rural areas with restrictions on transfer or leasing. This paper investigates how these divergent land property rights regimes have engendered significant migration patterns, predominantly marked by rural to urban migration, in pursuit of better economic prospects. Through a meticulous examination of the Household Responsibility System (HRS) and subsequent agrarian reforms, this paper elucidates how partial property rights and restrictions on land transferability under HRS have had substantial repercussions on domestic migration. The analysis delineates how well-defined and secure property rights, as postulated by prominent theories of property rights, are instrumental in incentivizing migration. When operational, market mechanisms of land property rights enable farmers to lease their lands, thereby fostering migration by reducing the opportunity cost of leaving rural lands. Conversely, in the absence of robust property rights, government mechanisms often lead to forced land acquisitions sans adequate compensation, exacerbating rural-urban income disparities and propelling rural-urban migration. The paper expounds on the multifaceted implications of these migration patterns on economic opportunities, poverty alleviation, and urbanization in China. Additionally, it discusses the ripple effects of rural-urban migration on income disparity and the consequent socioeconomic repercussions. The findings shed light on the complex interrelationship between land property rights and migration, providing a nuanced understanding of China’s urbanization trajectory and its attendant rural-urban disparities. This analysis offers valuable insights for policy formulations aimed at addressing the systemic issues arising from the entrenched land property rights framework, and suggests a pathway towards a more balanced regional economic development and sustainable urbanization in China.

Spatial Optimization Based on the Trade-Off between Ecosystem Conservation and Opportunity Cost of Tarim National Park in Xinjiang, China

National parks (NPs) are the flagship protected areas in China’s conservation network and play a key role in the ecological protection of core objects and important natural landscapes. However, the shortage of spatial optimization methods based on quantitative indicators has limited the spatially explicit identification of national parks. Therefore, in this study, we selected the main area of the Tarim River (MTR) in Xinjiang as an example to optimize the spatial boundary of a national park. We constructed an evaluation system based on representativeness, ecological importance, and the foundation of the existing protected area. Subsequently, we comprehensively employed a species distribution model to simulate the habitat of the primary conservation targets. Additionally, we spatially optimized the region using an integer linear model, considering multiple scenarios. The results of this study show that fewer than 30% of the existing protected areas in the MTR protect conservation objects. Using different protection objects and quantitative goals, the spatial optimization results for the eight protection scenarios show that the most effective national park establishment scenario covers a total area of 15,009.3 km2, which is 8157.5 km2 more than the protected area already in place and would include the Tarim Populus National Nature Reserve and Luntai Tarim Populus Forest Park. The opportunity cost to be paid for protection according to this boundary is approximately USD 115.14 million. The protection ratios of each protection object for the expanded park are more than 50%, which is 27.7% higher than the protection effect produced by the existing protected area, so we recommend that Tarim National Park be set up on the basis of this boundary.

Why cost-effectiveness thresholds for global health donors should differ from thresholds for Ministries of Health (and why it matters).

Healthcare cost-effectiveness analysis is increasingly used to inform priority-setting in low- and middle-income countries and by global health donors. As part of such analyses, cost-effectiveness thresholds are commonly used to determine what is, or is not, cost-effective. Recent years have seen a shift in best practice from a rule-of-thumb 1x or 3x per capita GDP threshold towards using thresholds that, in theory, reflect the opportunity cost of new investments within a given country. In this paper, we observe that international donors face both different resource constraints and opportunity costs compared to national decision-makers. Hence, their perspective on cost-effectiveness thresholds must be different. We discuss the potential implications of distinguishing between national and donor thresholds and outline broad options for how to approach setting a donor-perspective threshold. Further work is needed to clarify healthcare cost-effectiveness threshold theory in the context of international aid and to develop practical policy frameworks for implementation.

Academic publishing behavior and pay across business fields

AbstractAcademic finance faculty earn a premium relative to other business school faculty. We show that the rewards to publishing outside of the top journals (JF, JFE, RFS) are significantly lower in finance relative to a broader set of journals in other business school fields. Revealed preferences from a journal submission survey suggest these incentives influence behavior. We estimate a lower unconditional probability of a top publication in finance, which raises its marginal value, leading to higher compensation. The opportunity cost of academic finance versus industry is also larger relative to other departments. Our results complement a number of recent studies on the rise of finance industry wages and suggest a novel channel that raises the production costs of finance‐educated workers.