Local Government Procurement of CPA Audit Services: The Role of the States

Recent studies have raised serious concerns about the quality of governmental audits by independent CPAs. Part of the problem is that many governmental units do not use effective audit procurement procedures. This article examines current state guidelines for the procurement of CPA audit services by local governments and recommends an expansion of the states' role in this area.     

Shirking and sorting in a political market with finite-lived politicians

This paper analyzes principal-agent slack in the context of a political market composed of voters, challengers, and incumbents. The introduction of a last period (via finite-livedness) in combination with voters' imperfect information about politicians' preferences causes time-varying shirking behavior on the part of politicians. Political markets eventually sort out those politicians with significantly deviant policy preferences, potentially providing a solution to the last period problem and enabling politicians to make credible commitments. In the extreme, sorting can insure that it is not worthwhile for potential shirkers to run for office. A systematic relationship between political shirking and number of terms in office may exist, and depends on how quickly sorting takes place. We show that evidence of little if any shirking is quite consistent with politicians having diverse and strongly held policy preferences. In addition, if sorting is a significant feature of political markets, cross-sectional studies will tend to oversample little- and non-shirking politicians compared to longitudinal studies. Reinterpretations of existing empirical work are also discussed.We wish to thank John Bond, Donald Deere, Gertrud Fremling, Tim Gronberg, Michael Munger, Russell Roberts, and the participants of workshops at Dartmouth College, Texas A&M University, University of Houston, University of Texas, Yale Law School, and the 1987 Public Choice Meetings for valuable discussions on earlier drafts of this paper. An earlier version of this paper was issued as working paper E-87-34 by the Hoover Institution. The views expressed here do not necessarily reflect those of the U.S. Sentencing Commission nor those of any of its Commissioners. Any remaining errors are of course our own.     

On the optimal retaliation against terrorists: The paid-rider option

We examine whether nations, faced with the threat of terrorism, will be motivated to engage in the efficient amount of retaliation against terrorists. We demonstrate that the problem confronting the efforts of nations to achieve an optimal retaliation against terrorists is understated by the traditional free-rider analysis. In particular, nations have the option of actually selling or reducing the public good of retaliation, provided through the efforts of others, by offering safe havens to terrorists in return for the terrorists' pledge to attack elsewhere. This paid-rider behavior is also shown to apply to other public good scenarios.The authors gratefully acknowledge the helpful comments of Gordon Tullock on an earlier draft. Sole responsibility for the paper's content rests with the authors. Todd Sandler's research was supported by a Science and Humanities Research Institute Summer Grant at Iowa State University.     

Book reviews

Islamic homeland, soviet section

Alexandre Bennigsen and Marie Broxup, The Islamic Threat to the Soviet State. London & Canberra: Croom Helm, 1983, 170 pp. Cloth, £12.95. ISBN 0–7099–0619–6.

Islam Today: the USSR

T. S. Saidbaev, Islam: istoriia i sovremennost. Moscow: Znanie, 1985, 64 pp., 47,290 copies. Series Nauchnyi Ateizm, No. 11, 1985.     

Teenagers' perception of agreement over family expenditures,employment, and family life

Teenagers' perspective of disagreement over family finances and related factors were investigated. Involvement of teenagers in employment and percentage of earnings kept for personal use were examined. Reasons for employment affected disagreement over finances, whereas family income had no important effect on disagreement over finances in multivariate analysis. Disagreement over finances was important in explaining variation in satisfaction with money management in the family and in satisfaction with family life. Results have implication for reducing stress in family life and for contributing to theory on family resource management and adolescent development.This study is part of an interregional Agricultural Experiment Station Research Project NC-128 Quality of Life as Affected by Area of Residence. Cooperating states: Arizona, California, Colorado, Illinois, Indiana, Iowa, Kansas, Michigan, Minnesota, Missouri, Nebraska, Nevada, Ohio, and Texas.Received Ph.D. from Purdue University. Research interests include family economics.Received B.S. from Cornell. Research interests include consumer and family economics.     

The social context of adolescent self-esteem

The global self-esteem of adolescents was examined in relation to two aspects of their daily lives: (a) the perceived quality of their relationships with parents and peers; and (b) their self-evaluation in the areas of school, popularity, and athletics. The quality of relationships with parents made significant contributions to the explained variance in self-esteem of both boys and girls. The quality of peer relationships made a significant additional contribution for girls but not boys. The importance of parent and peer relationships to self-esteem did not vary as a function of age for either sex. Self-evaluation of popularity was related to girls' global self-esteem, while evaluation of school performance was more important for boys.Received her Ph.D. from George Peabody College. Research interests include adolescent stress and coping, and parent-child relationships.Received his M.D. from Medical College of Georgia. Research interests include stress, eating disorders, and pregnancy in adolescents.     

Competitive bidding and states' purchase of services: the case of mental health care in Massachusetts.

Over the past two decades states have significantly increased their use of competitive bidding to purchase health and social services from private agencies. Competitive contracting is thought to facilitate program administration, to reduce costs, and to increase the quality of delivered services. We evaluate these claims in light of Massachusetts' experience with competitive contracting for mental health care. We find that few of the expected benefits are achieved. In practice, supposedly competitive bidding systems often degenerate into administratively complicated negotiations between the state and private monopolies. This results in higher costs and lower quality of services. In light of this negative assessment, three strategies for reform are proposed and evaluated.