Showing papers on "Embedded value published in 2018"
TL;DR: In this article, the authors derive a simple formula for the incremental value of insurance and show how it depends on individual characteristics and the features of available loans, and derive formulas for aggregate welfare that can be taken to data from typical studies of health insurance.
Abstract: We analyze the financial value of insurance when individuals have access to credit markets. Loans allow consumers to smooth shocks across time, decreasing the value of the smoothing (across states of the world) provided by insurance. We derive a simple formula for the incremental value of insurance and show how it depends on individual characteristics and the features of available loans. Our central contribution is to derive formulas for aggregate welfare that can be taken to data from typical studies of health insurance. We provide both exact formulas that can be taken to data on the distribution of medical expenditures and income and an approximate formula for aggregate data on medical expenditure. Using the Medical Expenditure Panel Survey we illustrate how the incremental value of insurance is decreasing with access to loans. For consumers in the sickest decile, access to a five-year loan decreases the incremental value of insurance by $338 (6%) on average and $3,433 (36%) for the poorest consumers. We also find that our approximate formula is a reasonable proxy for the exact one in our data.
10 citations
TL;DR: In this article, the authors examined the risk premium of value stocks within a global investment strategy framework and found that investing in the most underpriced stocks relative to the average ratio of price to fundamental value in a country is the key to achieving superior risk-adjusted returns.
Abstract: This paper examines the risk premium of value stocks within a global investment strategy framework. We test whether absolute or relative mispricing is better suited to capturing the global value premium by using fair value-based net asset values (NAVs) as our proxies for fundamental value. We find that investing in the most underpriced stocks relative to the average ratio of price to fundamental value in a country is the key to achieving superior risk-adjusted returns. The annualized excess return of the global value portfolio sorted according to relative mispricing is 10.0%, and remains significant after controlling for common risk factors.
TL;DR: The principal argument is that existing models of information exchange and use do not sufficiently take account of the multiplicity of networked users as a source of value, for example, their implicit and explicit interactions with other users, and with the information system.
Abstract: This article proposes that the value of information is a topic worth revisiting in the contemporary era. Although the topic has been of perennial interest to information professionals and others, since at the least the early 1980s, we believe that it is timely to revisit this question in the context of a more connected and networked environment of data, information, and knowledge. The principal argument is that existing models of information exchange and use do not sufficiently take account of the multiplicity of networked users as a source of value, for example, their implicit and explicit interactions with other users, and with the information system. We briefly review existing kinds of value that have been theorized, operationalized, and measured in the information science literature. Principally, these are the notions of information as embedded value; and information and information systems as adding value. To these notions we add the further notion of connected or cocreated value. We conclude our opinion article with a set of questions intended to orient future research into the question of the value of information in the contemporary era.