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                                                                                        RESEARCH
AMERICAN INSTITUTE
for ECONOMIC RESEARCH                                                                    REPORTS
Great Barrington, Massachusetts                                  01230                 Vol. LXVII No. 8                   April 24, 2000

                                                                                                ill policyholder, viatical settlements and
                          Investing in Death                                                    living benefits are attractive options. They
                                                                                                provide him with extra funds and allow
      Properly handled, viatical settlements provide sick people with an                        him to decide how they are spent. He re-
   opportunity to convert their illiquid life insurance policies into cash at                   ceives more than the cash value of the
   a time when they may need it most. Now, however, this largely unregu-                        policy. Most settlements range from 30 to
                                                                                                70 percent of the face value of the policy.
   lated market is untested and policyholders and investors should care-                        Under the 1996 Health Insurance Port-
   fully consider their risks before entering it.                                               ability and Accountability Act, such pay-
                                                                                                ments may be free of Federal income tax,
    In most instances the primary purpose      pany pays them slightly sooner rather than       provided that the insured is medically cer-
of life insurance is to protect the benefi-    later. The cost to the insurer is minimal,       tified as terminally ill (with a life expect-
ciary from a loss of income resulting from     representing mainly the foregone invest-         ancy of 2 years or less) or chronically ill
the premature death of the insured. The        ment earnings on the benefit when it is          (as defined by the law).
beneficiary might be a spouse or child for     paid out, say, a year earlier. Insurers can          There are some potential disadvan-
whom the insured person is a primary           more than make up this cost by paying a          tages. The policyholder may get substan-
breadwinner, or a business partner or a        “living benefit” that is somewhat less than      tially less than the death benefit (the face
corporation that would suffer if a partner,    the face value of the policy. The attrac-        value of the policy) that would otherwise
officer, or key employee died. In other        tion for the insured is that “accelerated        go to his beneficiaries. The proceeds might
words, the beneficiary is usually some-        death benefits” (as they are also called)        quickly be exhausted, perhaps even be-
one who stands to lose financially if the      can help defray medical costs and reduce         fore the insured dies, leaving dependents
insured dies, and therefore needs insur-       the financial upheaval that can follow even      with none of the financial protection that
ance to protect against such loss.             an expected death. The insured might use         presumably prompted the purchase of the
    A new type of insurance arrangement,       the funds to finance possibly life-saving        insurance in the first place. The proceeds
however, pays benefits to people who do        medical treatment.                               may also disqualify the insured for means-
not face a loss if the insured dies—who,           Viatical settlements take this idea one      tested government programs such as Med-
in fact, stand to gain financially by his      step further, by creating a secondary mar-       icaid. They are also subject to the claims of
death. In a “viatical settlement” (from the    ket for life insurance policies. Prior to this   creditors. They may be subject to state and
Latin “viaticum,” meaning money for a          innovation, accelerated death benefits           local income tax and (if the payment does
journey) the owner of a life insurance         were available only from the                     not meet Federal rules) Federal income tax.
policy sells the policy for cash to a third    policyholder’s insurance company, at             These considerations apply to both viatical
party. When the insured dies, the new          whatever discount it offered. Viatical           settlements and living benefits.
policy owner receives the death benefit.       settlement providers open up the process             Viatical settlements would seem to carry
Policies may be sold to individuals but        to competition. Now, a qualified policy-         an additional risk for insured persons—
most viatical settlements involve compa-       holder can shop around in hopes of get-          namely, the possibly adverse incentives that
nies that specialize in this business. These   ting a better settlement than his own in-        are created when a policy is transferred to
“viatical settlement providers” are fi-        surance company offers.                          someone who has no insurable interest in
nanced by investors who provide the funds          The market for viatical settlements is       the insured person. The annals of crime
to buy policies. The death benefits pro-       growing rapidly. According to the Viatical       attest that life insurance benefits can be a
vide the return on their investment.           Association of America, the face value of        powerful inducement to homicide. When
    Viatical settlements are an offspring      life insurance policies purchased by the         there is nothing to lose but much to gain by
of the AIDS epidemic. In the 1980s, life       industry exceeded $1 billion last year. The      his death, there is a genuine risk—how-
insurance companies began offering poli-       business is also largely unregulated, at         ever slight—that the person or company
cyholders with AIDS the option of taking       least for now. The marketing of death ben-       that buys the policy might try to make their
their death benefits before they died. These   efits as an “investment” has caused con-         investment “pay off” sooner by hastening
“living benefits” provided AIDS patients       cern among state and federal authorities,        the death of the insured (more on this be-
with additional resources to help cover        and many states are enacting or propos-          low). This risk would appear to be remote,
medical costs. Soon the option was ex-         ing new laws and regulations. For now,           and to date there have been no reported
panded to cover all terminal illnesses and     however, it is largely the responsibility of     cases of “murder for profit” involving
many catastrophic illnesses as well.           policyholders and investors to evaluate the      viatical settlements. But even such a re-
    The logic behind “living benefits” is      merits and risks of viatical settlements and     mote risk is more than some policyholders
simple. The insurance company eventu-          the companies that market them.                  may want to assume.
ally will have to pay death benefits to a                                                           Aside from this scary consideration,
terminally ill policyholder’s beneficiary,       Considerations for the Policyholder            the advantages and disadvantages of sell-
and it makes little difference if the com-        From the standpoint of the terminally-        ing a policy for a viatical settlement are
                                                                    41
straightforward. Clearly this option is not     and not receive notice when he dies. The         company that knows he is actually sick
appropriate for every terminally-ill poli-      insured has no reason to keep in touch           enough to give them a healthy profit. This
cyholder, but, when properly arranged           and his survivors have no incentive to con-      type of fraud is known as “clean sheet-
with a reputable company, it is a useful        tact the company. If the company fails to        ing” because the policyholder falsely
alternative to traditional settlement options   make adequate arrangements, investors            claims a “clean” history on the insurance
for life insurance proceeds.                    could lose everything.                           company’s medical questionnaire.
                                                    Viatical companies’ profits, and their           Wet-ink policies also raise questions
     Considerations for the Investor            investors’ returns, depend on how well they      about whether they evade the requirement
    For investors, viaticals are a more com-    balance their expenses and their incomes.        that an “insurable interest” exist when a
plicated product. They present a number         Like life insurance companies, they need         life insurance policy is purchased. This is
of financial risks. The main one, to be         sound actuarial analysis to set prices for       a legal requirement and a basic tenet of
blunt, is that the insured person will not      viatical settlements, taking into account        underwriting. It is not easy to identify what
die “on time.” The investment pays off          such factors as the insured’s life expect-       constitutes an insurable interest in all in-
only when he dies, not before. Everyone         ancy and projected levels of interest rates      stances, but the general rule is that it ex-
eventually dies, of course, and in this sense   and expenses. However, few underwriters          ists when the person buying the insurance
the policy is “guaranteed” to pay off. How-     are experienced in pricing viatical settle-      expects to benefit from the continuance
ever, the time of death is uncertain. Even      ments, because the product is so new. As         of the insured person’s life or to suffer
people who are certified by doctors as ter-     with any new financial product, the ab-          from his death. The law presumes that
minally ill may live years longer than ex-      sence of a track record should raise a yel-      every person has an insurable interest in
pected. Some, like AIDS patients, may           low flag for investors. There are any num-       his own life. Moreover, because a life in-
benefit from medical advances, while oth-       ber of scenarios in which a company’s ex-        surance policy is considered to be “per-
ers may simply confound the experts. Be-        penses and income might not balance as           sonal property,” an individual who takes
cause the payoff date of a viatical invest-     anticipated. If current underwriting stan-       out a policy on his life is allowed to as-
ment is uncertain, the annual rate of re-       dards prove too optimistic, investment re-       sign it (transfer ownership by sale or other
turn cannot be guaranteed. This makes           turns could fall far short of what viatical      means) to anybody he chooses, including
them a riskier investment than they might       settlement companies are projecting.             someone with no insurable interest. How-
appear at first glance.                             Most viatical companies try to limit         ever, if it can be shown that his purchase
    Some viatical settlement companies          their investment risks by offering viatical      and subsequent sale of the policy was
use the certainty of a payoff as a selling      settlements only to terminally-ill policy-       merely a subterfuge to satisfy the require-
point to attract investors, without disclos-    holders. However, there is a growing mar-        ment of an insurable interest, the insur-
ing that the actual rate of return depends      ket for viaticals for policyholders who are      ance company can void the contract.
on how long the insured lives. For ex-          in good health and have life insurance               Insurers can challenge the validity of a
ample, a viatical investor might be told        policies they no longer need. These “se-         life insurance contract at any time during
that he is “guaranteed” to earn a “28 per-      nior settlements” (so called because the         a “contestable period,” which is usually
cent total fixed return in 2 years.” This is    insured are usually elderly) would appear        two years from the date the policy is is-
not an annual return, it is the total return    to be especially risky for the investors fi-     sued. During this period they may raise
he will receive if the insured dies as ex-      nancing them, because their funds may            questions if they suspect there have been
pected in 2 years. If that happens, the 28      be tied up for longer, less predictable pe-      misrepresentations, misstatements, mis-
percent total return would work out to a        riods. As far as the investor is concerned,      takes, fraud, or an absence of good faith.
simple annual rate of return of 14 percent.     the better the insured’s health, the more        If they find evidence of wrongdoing they
But suppose the insured were to live for 3      uncertain his investment returns.                will rescind the contract. If the insured
years? Then the annual return would drop            Even riskier, from the investor’s per-       dies during the contestable period, the
to 9.3 percent. If he lingered for 5 years,     spective, are viatical settlements that in-      company may refuse to pay the death ben-
the annual return would be just 5.6 per-        volve newly-issued life insurance policies       efit. In general, reputable viatical settle-
cent. The projected rate of return is just      that insured persons purchase solely for         ment providers avoid contestable policies,
that, a projection. It is based on estimates    the purpose of quickly reselling them for        i.e., those that are less than two years old.
of the insured’s life expectancy, based on      a viatical settlement. These are known as        Investors face a much higher risk of los-
his age and health. If the insured lives        “wet ink” policies because they change           ing their money with such policies.
longer than projected, the actual return        hands almost before the ink dries. The               The doctrine of insurable interest is
will be less than expected.                     problem with these deals is that there is        meant to protect the insured as well as the
    In addition, when a viatical settlement     little room for profit. If the insured is        insurer. When there is no insurable inter-
provider buys a person’s insurance policy,      young and healthy, the premiums will be          est, the purchase of life insurance becomes
it becomes responsible for paying the pre-      relatively affordable but the policy prob-       a means of gambling on human life. Such
miums in order to keep the policy in force.     ably won’t pay off for a long time. If he is     gambling obviously increases the risk of
The company maintains a fund for this pur-      sick or elderly, the policy may pay off          murder for profit. This problem was rec-
pose, based on how long it expects to pay       quickly—but life insurance for such              ognized as long ago as the 18th century,
premiums before the policy pays off. If the     people is very expensive, if it is even avail-   when daily wagering on the duration of
insured person lives longer than expected,      able. Insurance companies will not insure        men’s lives led to the passage in England
the company may not have sufficient funds       a person they believe to be terminally ill.      of the first laws regulating life insurance.
to continue paying premiums. Investors              Wet-ink policies are especially likely           This doctrine does not apply, however,
may have to chip in additional funds in         to draw scrutiny from regulators because         to viatical settlements. The companies that
order to keep their investment alive. If the    they invite fraud. There is an incentive         provide these settlements are not required
face value of the policy is large, these pre-   for someone who is gravely ill to mislead        to have an insurable interest when they buy
miums are likely to be substantial.             an insurance company into thinking he is         an insured person’s policy. The reasoning
    Another risk for investors is that the      healthy when he buys insurance, then turn        is that the insured makes the decision to
company will lose track of the insured          around and sell the policy to a viatical         sell his policy and he also selects the buyer,
                                                                     42
43
44
45
46
and presumably he would not sell it to            impatient viatical company or investor                make their wager on death pay off more
someone who might murder him. (Assum-             may decide to do “whatever it takes” to               quickly. u
ing his initial purchase of the policy did
not entail fraud, he is free to sell it to any-                            BUSINESS-CYCLE CONDITIONS
one.) The problem with this reasoning is
that probably few policyholders are aware                  The current expansion can be expected to continue, but a few clouds
that viatical settlements create an incen-               have appeared on the horizon.
tive for homicide. They regard these pay-
ments as life enhancing, not life threaten-           Five of our twelve primary leading in-            posting large increases.
ing. Moreover, even if they trust the com-        dicators reached new highs for the cur-                   Two series—M2 money supply and the
pany, they have no control over who will          rent cycle and are appraised as clearly ex-           3-month percent change in sensitive ma-
ultimately benefit, as investors, from their      panding. They are: new orders for con-                terials prices—were downgraded from
death. Concern over this issue is another         sumer goods, contracts and orders for                 clearly expanding to probably expanding.
reason that the viatical market is drawing        plant and equipment, the ratio of manu-               Although both series are just one month
growing attention from regulators.                facturing and trade sales to inventories,             off their cyclical peak, this month’s de-
                                                  initial claims for state unemployment in-             cline in each series’ base data was suffi-
       There Are Few Regulations                  surance (inverted), and the 3-month per-              ciently large to reverse the direction of
    From the investor’s standpoint, viatical      centage change in consumer debt. (New                 their respective moving averages. Vendor
settlements currently fall through the regu-      orders for consumer goods and all other               performance and the index of common
latory cracks. The Securities and Ex-             dollar-denominated series are reported in             stock prices remain appraised as probably
change Commission claims they are se-             constant dollars.) New orders for con-                expanding following last month’s down-
curities and subject to regulation as such,       sumer goods expanded 0.8 percent, while               grade from clearly expanding. The base
but at least one federal district court has       the 4-month moving average for contracts              data for vendor performance, the percent-
ruled against the SEC. Most states do not         and orders for plant and equipment                    age of purchasing managers reporting
legally treat investments in viaticals as         reached a new high despite a 6.2 percent              slower deliveries from their suppliers, fell
securities transactions. Insurance laws and       decline in its base data. The sales to in-            slightly to 54.1 percent. In contrast, com-
regulations vary by state, and are mainly         ventories ratio increased to 77.4 percent,            mon stock prices edged up by 0.1 percent.
designed to protect policyholders. Some           reflecting a healthy balance in the manu-                 Three leaders have no identifiable
states require viatical settlement compa-         facturing sector. Jobless claims rose 4,200           trend. M1 money supply, the narrowest
nies and/or brokers to be licensed or be          to 284,000. Consumer debt continued to                measure of money, continued to contract.
registered with the state’s insurance com-        accelerate, jumping 2.9 percent this month,           The latest development warranted down-
missioner. According to the Viatical As-          with both revolving and nonrevolving debt             grading the series from probably expand-
sociation of America, as of February 1999,
24 states required companies to hold a li-                              Statistical Indicators of Business-Cycle Changes
cense: AR, CA, CT, FL, IL, IN, KS, KY,             Change in Base Data                                                                Cyclical Status
LA, ME, MI, MN, MT, NC, ND, NM, NY,               Dec. Jan. Feb. Mar.             Primary Leading Indicators                         Feb. Mar. Apr.
OK, OR, TX, VA, VT, WA, WY.                        +     -     -             M1 money supply                                          +?    +?      ?
    The National Association of Insurance          +    +      -             M2 money supply                                          +      +     +?
                                                   -    +      -             Change in sensitive materials prices                     +      +     +?
Commissioners is currently working on a
                                                   +     -     +             New orders for consumer goods                            +      +      +
“model act” that would set minimum stan-           +    +      -             Contracts and orders for plant and equipment             +      +      +
dards for licensing and disclosure require-        +    +      -     -       New housing permits                                      -?     ?      ?
ments for viatical settlement companies.           +    +                    Ratio of manufacturing and trade sales to inventories    +?     +      +
As currently drafted, this act would mainly        +     -     -     -       Vendor performance                                       +     +?     +?
                                                   +     -     -     +       Index of common stock prices (constant purchasing power) +     +?     +?
protect policyholders rather than inves-
                                                   -    +      +     -       Average workweek in manufacturing                         ?     ?      ?
tors. However, the proposal is subject to          +    +      -             Initial claims for unemployment insurance (inverted)     +      +      +
change and may not be approved by any              +    +      -             Change in consumer debt                                   ?     +      +
states for some time.                                                                     Percentage expanding cyclically             90 100 100

            Caution Is Necessary                                                 Primary Roughly Coincident Indicators
                                                    +       +    +     +     Nonagricultural employment                               +     +      +
    Viatical settlements might seem to be           +       +    +     +     Index of industrial production                           +     +      +
an unsavory investment. They need not               -       +    -           Personal income in manufacturing                         +?    ?      +
be. Properly handled, they provide sick             +       +                Manufacturing and trade sales                            +     +      +
people with an opportunity to convert their         +       +    +     -     Civilian employment to population ratio                  +     +      +
                                                    +                        Gross domestic product (quarterly)                       +     +      +
illiquid life insurance policies into cash at
a time when they may need it most. Right                                                 Percentage expanding cyclically             100   100    100
now, however, the market is untested and                                       Primary Lagging Indicators
largely unregulated. Some companies are             +       -    +     -   Average duration of unemployment (inverted)                +     +      +
making misleading sales pitches to inves-           +       +              Manufacturing and trade inventories                        +     +      +
                                                    +       +   +          Commercial and industrial loans                            +     +      +
tors, taking bad risks and even engaging
                                                    +       +   +          Ratio of consumer debt to personal income                  +     +      +
in fraud. Not all viatical settlement pro-          -r      -   +          Change in labor cost per unit of output, manufacturing     ?     ?      ?
viders, agents, and brokers are unscrupu-           +       -   +      + Composite of short-term interest rates                       +     +      +
lous or incompetent. It is up to investors        nc No change. r Revised.             Percentage expanding cyclically               100   100    100
and policyholders, however, to identify
the honest and competent ones. Otherwise,         Under “Change in Base Data,” plus and minus signs indicate increases and decreases from the previous
                                                  month or quarter and blank spaces indicate data not yet available. Under “Cyclical Status,” plus and
investors may not get the returns they ex-        minus signs indicate expansions or contractions of each series as currently appraised; question marks
pect, and policyholders face a risk that an       indicate doubtful status when shown with another sign and indeterminate status when standing alone.

                                                                        47
 Percentage of AIER Leaders Expanding                                                                                                                                             at 4.1 percent. Manufacturing and trade
                                                                                                                                                                            100   inventories rose 0.3 percent and commer-
                                                                                                                                                                                  cial and industrial loans were up 1.4 per-
                                                                                                                                                                                  cent. The ratio of consumer debt to per-
                                                                                                                                                                            75    sonal income, at 17.6 percent, continues to
                                                                                                                                                                                  climb, as does the composite of short-term
                                                                                                                                                                                  interest rates, currently 6.0 percent. All five
 ○   ○   ○   ○    ○    ○   ○   ○   ○     ○   ○   ○   ○   ○   ○   ○   ○    ○    ○   ○   ○   ○     ○   ○   ○   ○   ○   ○   ○   ○     ○   ○    ○   ○   ○     ○   ○   ○   ○


                                                                                                                                                                            50
                                                                                                                                                                                  series are appraised as clearly expanding.
                                                                                                                                                                                      Although the base data for the percent
                                                                                                                                                                            25
                                                                                                                                                                                  change from a year earlier in manufac-
                                                                                                                                                                                  turing labor cost per unit of output in-
                                                                                                                                                                                  creased, the series still has no identifiable
                                                                                                                                                                             0    trend and its cyclical status remains inde-
 Cyclical Score of AIER Leaders                                                                                                                                             100
                                                                                                                                                                                  terminate. Overall, 100 percent (five out
                                                                                                                                                                                  of five) of the primary lagging indicators
                                                                                                                                                                                  with apparent cyclical trends are expand-
                                                                                                                                                                            75    ing. Taken as a whole, the latest batch of
                                                                                                                                                                                  data indicate that the economy remains
                                                                                                                                                                                  strong, and can be expected—in the near
 ○   ○   ○   ○    ○    ○   ○   ○   ○     ○   ○   ○   ○   ○   ○   ○   ○    ○    ○   ○   ○   ○     ○   ○   ○   ○   ○   ○   ○   ○     ○   ○    ○   ○   ○     ○   ○   ○   ○


                                                                                                                                                                            50    term at least—to continue to expand.
                                                                                                                                                                                               Wall Street Woes
                                                                                                                                                                            25        Throughout most of the remarkable
                                                                                                                                                                                  bull market in common stocks prices of
                                                                                                                                                                                  the past several years, our leading index
                                                                                                                                                                             0    of common stocks prices has remained
1960             ’65               ’70               ’75                 ’80               ’85               ’90                 ’95                '00               '05
                                                                                                                                                                                  clearly expanding—and it bears repeat-
 ing to indeterminate. New housing per-                                                        in manufacturing, which was appraised                                              ing that the economy has never entered a
 mits fell 74,000 to an annual rate of                                                         as probably expanding as recently as Feb-                                          recession while the stock market was
 1,579,000. For the first 3 months of this                                                     ruary and downgraded to indeterminate                                              trending upward.
 year, the number of housing units autho-                                                      last month, is now appraised as clearly                                                Although it is not reflected in the most
 rized is down 3 percent compared with the                                                     expanding. The somewhat erratic trend in                                           recent monthly data, as of this writing the
 same period in 1999. The average work-                                                        the series owes to several revisions in its                                        S&P 500 Index of Common Stocks, which
 week in manufacturing fell by 0.2 hour to                                                     data. Manufacturing and trade sales con-                                           serves as the basis for our leading stock
 41.6 hours. Overtime hours in manufactur-                                                     tinued to strengthen, rising 0.8 percent.                                          price series, is down sharply from its
 ing also fell by 0.2 hour to 4.6 hours.                                                       According to revised estimates, based on                                           March 24th high. And the tech-heavy
     Overall, 100 percent (nine out of nine)                                                   more complete data than were available                                             NASDAQ Composite Index, which re-
 of the primary leading indicators with ap-                                                    for the preliminary estimates released last                                        cently has propelled Wall Street sentiment,
 parent cyclical trends are expanding, match-                                                  month, gross domestic product (GDP) in-                                            now has plunged 26 percent from its
 ing last month’s tally. The cyclical score,                                                   creased at an annual rate of 7.3 percent in                                        March 10th peak. Understandably, many
 AIER’s purely mathematical assessment of                                                      the fourth quarter of 1999.                                                        fear that a bear market (or worse) will end
 the 12 leading indicators, fell from 84 to 81.                                                    The civilian employment to population                                          the current expansion.
 Both of these aggregate measures remain                                                       ratio, at 64.7, although 0.1 percentage                                                As we have observed during past mar-
 well above 50, below which recession be-                                                      point off last month’s high, is also ap-                                           ket downturns, there have been a number
 comes statistically more probable than con-                                                   praised as clearly expanding. Overall, 100                                         of episodes when the stock market expe-
 tinued expansion in business activity. How-                                                   percent (six out of six) of the primary                                            rienced a sharp reversal but no recession
 ever, the base data for nine of the series                                                    roughly coincident indicators with appar-                                          followed. At all but one of these times,
 were down. The economy can be expected                                                        ent cyclical trends are expanding.                                                 the cyclical score stood above 50—the
 to continue expanding, but the outlook could                                                      Similar to the coinciders, five of the six                                     level that indicates recession. It is general
 change quickly if the base data continue to                                                   primary lagging indicators reached new                                             economic weakness that has always pre-
 deteriorate during coming months.                                                             highs. The average duration of unemploy-                                           ceded contractions, in the absence of
     Among the six primary roughly coin-                                                       ment (inverted) series rose in spite of an                                         which even violent stock market behav-
 cident indicators, five reached new highs                                                     increase in the base data from 12.5 weeks                                          ior usually has not been followed by broad
 and are appraised as clearly expanding.                                                       to 12.8 weeks. The number of unemployed                                            economic collapse. In short, it is the grow-
 Nonagricultural employment rose by                                                            persons, 5.7 million, was largely un-                                              ing number of minus signs in the leading
 416,000 to 130.7 million. However, this                                                       changed, and the unemployment rate held                                            base data that warrant greatest concern. u
 month’s robust job growth should be in-
 terpreted with caution on two counts. First,                                                                                                                         PRICE OF GOLD
 the increase included the hiring of 117,000                                                                                                                       1998               1999               —— 2000 ——
 temporary census workers, and secondly,                                                                                                                          Apr. 23            Apr. 22           Apr. 13  Apr. 20
 there were 5 weeks instead of the usual 4                                                     Final fixing in London                                             $312.75            $283.40           $281.40 $279.85
 between the February and March survey
 reference periods. The index of industrial                                                    Research Reports (ISSN 0034–5407) (USPS 311–190) is published twice a month at Great Barrington,
                                                                                               Massachusetts 01230 by American Institute for Economic Research, a nonprofit, scientific, educational,
 production increased 0.3 percent after hav-                                                   and charitable organization. Periodical postage paid at Great Barrington, Massachusetts 01230. Sustaining
 ing increased an average of 0.5 percent in                                                    memberships: $16 per quarter or $59 per year. POSTMASTER: Send address changes to Research
 the previous 3 months. Personal income                                                        Reports, American Institute for Economic Research, Great Barrington, Massachusetts 01230.

                                                                                                                                       48

				
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