Appraising Commitments and Guarantees with Option Prices1

Budgetary decision‐making is prone to myopia and to tunnel vision. Pension commitments suffer from both of these pathologies. In this case, we look closely at the State of Oregon's Public Employee Retirement System to show how the disclosure standards adopted by the Government Accounting Standards Board (GASB) help correct the fiscal vision of state and local governments and further conclude that postemployment commitments ought to be comprehensively examined in GASB's review of its accounting and reporting standards scheduled for 2008, ideally from the standpoint of present‐value budgeting.     

A Friendly Visit

U.S. President Barack Obama eases Canadian concerns on his first foreign trip Mao Zedong once described relations between the People's Republic of China and North Korea as being as close as "lips and teeth."     

Back on Track

Chinese Foreign Minister Yang Jiechi's visit to Canadabodes well for improved China-Canada relations     

POLICE RESPONSE TO DOMESTIC VIOLENCE: SITUATIONS INVOLVING VETERANS EXHIBITING SIGNS OF MENTAL ILLNESS*

Drawing on attribution theory, research on police discretion, and public attitudes toward mental illness, we examine attributional processes in police decision making in response to domestic violence situations involving veterans and nonveterans with signs of mental illness. Using data from experimental vignettes varying veteran status, victim injury, and suspect compliance administered to a sample of 309 police officers, the results indicate that 1) veterans are perceived as less responsible for troublesome behavior but more dangerous than nonveterans, 2) suspects’ veteran status has a significant effect on officers’ preference for mental health treatment versus arrest, and 3) part of the effect of veteran status on officer response is mediated by internal and external attributions for problematic behavior and by perceptions of dangerousness. The study empirically demonstrates countervailing processes in police decision making—recognition of the causes for troublesome behavior and the need for mental health treatment on the one hand and concern for community safety and enforcing the law on the other.     

THE PROBABILITY OF PLACEMENT BY THE PUBLIC EMPLOYMENT SERVICE

In a typical year, the United States Employment Service places over 4 million persons from among 16 million applicants. This investigation of which applicants are most likely to be placed shows that placement occurs in two labor market segments, corresponding roughly to the primary and secondary labor markets described in the economic literature. The equity and efficiency implications o f devoting a substantial percentage o f Employment Service resources t o secondary labor market placements are considered. Several states currently use Employment Service data as a source of local labor market information. An argument is made that these states are misusing this data and suggestions for improvements are offered.     

PSYCHIATRIC HOSPITAL CAPACITY,HOMELESSNESS, AND CRIME AND ARREST RATES*

As a result of developments in pharmacology, stricter standards for involuntary commitment, and changes in public expenditures, there has been a dramatic decline in the capacity of public psychiatric hospitals to maintain America's most severely mentally ill. Psychiatric deinstitutionalization has led to an increased presence of persons with mental illness in urban areas, many “falling through the cracks” of community‐based services. This is hypothesized to have contributed to homelessness, crime, and arrests. Individual‐level research has documented disproportionate and increasing numbers of mentally ill persons in jails and prisons. It has also found higher rates of violence and arrest among persons with mental illness compared to the general population. This study takes a macro‐level social control approach and examines the relationships between psychiatric hospital capacity, homelessness, and crime and arrest rates using a sample of eighty‐one U.S. cities. I find that public psychiatric hospital capacity has a statistically significant negative effect on crime and arrest rates, and that hospital capacity affects crime and arrest rates in part, through its impact on homelessness. In addition, I find no crime‐reducing effect of private and general psychiatric hospital capacity.     

Canadian Cold Front

Good old days for Canada-China relations are gone with Ottawa caught in a China policy dilemma