Literary Elements

Short stories came into the literature world as brief, single sitting stories, yet containing an exclusively developed subject. A short story is packed with descriptive details that form together to grab the reader’s attention in a short amount of time. The authors indulge in rich  details to create the narrative into a jaw dropping meaning story from the beginning to the ending. The author begins with constructing  the story with the building blocks of literary devices. Short story authors apply the literary techniques of symbolism, irony and theme to create a meaningful connection with the reader.Authors exploit symbolism into the works of literature to create strong connections between ideas, actions or persons that intertwine to represent a greater similarity throughout the story. Edgar Allan Poe’s terrorizing narrative, â€Å"The Pit and the Pendulum† included numerous kinds of symbolism yet the one that stood out by far was regarding the fear of the unk nown world of darkness. The man has been â€Å"†¦left to perish of starvation in [the] world of darkness†¦Ã¢â‚¬  (Poe 8) symbolizes the thought of darkness being the terror of the man when death is seeking him in the prison. (I)ts outward or upward whirls† (14) of the bladed pendulum symbolized a clock’s pendulum represents time, meaning was death getting closer as it swayed back and forth. In â€Å"The Monkey’s Paw†, W. W. Jacobs goes in depth of bringing in symbolism through actions that one as a human can make because they want certain possessions that maybe they don’t necessarily need. The holy man that had placed the mortifying spell on the devious monkey paw that gave three wishes â€Å"†¦wanted to show that fate ruled people’s lives†¦Ã¢â‚¬  (Jacobs 34) but it didn’t give out those wishes without getting something in return.When the father had wished two hundred pounds, they were warned that they would hav e to â€Å"†¦in consideration for your son’s services they wish to present you with a certain sum as compensation. † (39) Now in Poe’s short story, â€Å"The Masque of the Red Death† symbolism is used all throughout to illustrate the meaning of the story. â€Å"Now in no one of the seven apartments was there any lamp†¦Ã¢â‚¬  (374) the seven apartments symbolize what the human undergoes through in life and in life, there will not be a lamp that leads you throughout life.The ebony clock’s sound was â€Å"†¦of so peculiar a note and emphasis†¦Ã¢â‚¬  (374) symbolizes the importance of living life to the fullest, because time is always ticking by, that death will be approaching at all times. Symbolism has a significant impact into making short stories connote to the readers to grasp the meaning behind the words. Authors then use through character or plot development, an intention of conveying actions or thoughts that  are not w hat they seem to actually be. Josephina Niggli’s story, â€Å"The Street of the Canon† brings out irony from different angles beginning with the mysterious man.While the suspicious man danced with the girl, she had said â€Å"†¦ I think you are a dangerous man. † (Niggli 275) giving the reader the thought that this man must be a disguised as someone that he portrays to be in her town because he knows he wouldn’t be welcomed. When Tio Daniel realizesâ€Å"(t)his is no cheese from Linares,† (279) it generates the idea that someone had trespassed into their land and give them clues that it was someone from the land of Hidalgo to show hope that one day, their quarrel will end in peace.While in â€Å"The Masque of the Red Death†, Poe applies a slightly different touch of irony into the story but it still has a vast meaning that ties it in together. â€Å"With such precautions the courtiers might bid defiance to contagion,† (373) Princ e Prospero was hoping that with locking the abbey, he and the others would prevent the deadly plague to cause death upon their lives. Prince Prospero became â€Å"†¦maddening with rage and the shame of his own momentary cowardice†¦Ã¢â‚¬  (379) made him aware that he could not run away from death, running away would only trigger death to seek him sooner.Whereas in story, â€Å"The Bet† irony is exposed between the lawyer and the banker towards the end of the story. As the fifteen years began closing in, â€Å"†¦it is all over with me: I shall be utterly ruined,† (Chekhov 100) the banker realized he was doomed because he hadn’t been expecting the lawyer to survive imprisoned for the fifteen years which caused his pride to increase and his fortune to decrease. Lastly, irony is seen upon when in the letter that the lawyer wrote to the banker stating, â€Å"†¦I despise wisdom and the blessings of this world.It is all worthless†¦Ã¢â‚¬  (10 2), the reader can see that the fifteen years of being imprison had evolved being in prison which led him to open his eyes to see what actually matters in life. Irony is the digging deeper of the obvious in a short story that perhaps changes the whole meaning of the story. Finally, theme is the repeated idea that the author weaves into the story which represents the purpose of the narrative. Anton Chekhov’s main theme in â€Å"The Bet† that is emphasized is that life is more precious than money. To live anyhow is better than not at all,† (97)  the lawyer states from the opening believes that life is too valuable for one to give up the opportunity to live. He would rather live in prison the rest of his life then to be sentenced with the death penalty. Thus, short stories have been given the honor of entering the world due to their presence and the talented authors that have done a remarkable job of using literary elements. They have gone farther than just puttin g words on a paper; they have turned a gist into a tour de force with symbolism, irony and theme.

Efficient Market Hypothesis and Behavioral Finance †Is a Compromise in Sight

Legend has it that once upon the time two economists were walking together when one of them saw something that struck his mind. â€Å"Look,† he exclaimed, â€Å"here’s a great research topic! † â€Å"Nonsense,† the other one said, â€Å"If it were, someone would have written a paper on it by now. † For a long time this attitude governed the view of economists toward the stock market. Economists simply believed that the stock market was not a proper subject for serious study.Indeed, most of the pre-1960 research on security prices was actually done by statisticians. The Pre-History: Statistical Research Most of the early statistical research of the stock market concentrated around the same question: are security prices serially correlated? Do security prices follow a random walk? Are prices on any given day as likely to go up as they are to go down? A number of studies concluded that successive daily changes in stock prices are mostly independent. Th ere seemed to be no pattern that could predict the future direction of price movements.One of the most interesting (and currently relevant) research projects of that earlier era was undertaken by Harry Roberts, a statistician at the University of Chicago. In his paper, â€Å"Stock Market ‘Patterns’ and Financial Analysis,† published in the Journal of Finance in 1959, Roberts wrote: If the stock market behaved like a mechanically imperfect roulette wheel, people would notice the imperfections and, by acting on them, remove them. This rationale is appealing, if for no other reason than its value as counterweight to the popular view of stock market â€Å"irrationality,† but it is obviously incomplete.Roberts generated a series of random numbers and plotted the results to see whether any patterns that were known to technical analysts would be visible. Figure 1 provides an example of Roberts’ plot: Efficient Market Hypothesis And Behavioral Financeâ€⠀Is A Compromise In Sight? Figure 1. Simulated stock price path Those somewhat acquainted with technical patterns might recognize a familiar head and shoulders formation, which technical analysts believe to be one of the surest indicators of a trend reversal. At this point, the reader may take pause. Are these stock price patterns of value or not?If they work even on decidedly random series, isn’t there a contradiction? Maybe not. Consider a hypothetical example of a stock price path in Figure 2. If tomorrow the price of this stock goes down, there will be a clearly visible head and shoulders pattern, which should signal a trend reversal. If, however, the price goes up, the resulting formation will look more like a pennant pattern, which, according to market technicians, signals the renewal of the trend. In other words, technical patterns are easy to see only when it is too late to act on them. P P t Figure 2. Hypothetical example of technical patterns formation tToday, anyo ne can replicate Roberts’ results using a common spreadsheet program. In his popular textbook, Financial Modeling, Simon Benninga of the Wharton Business School devotes an entire chapter to simulating stock price paths using Microsoft Excel. 2 Efficient Market Hypothesis And Behavioral Finance—Is A Compromise In Sight? Returning to Harry Roberts, his paper turned out to be almost prophetic in one major respect. He wrote: Perhaps the traditional academic suspicion about the stock market as an object of scholarly research will be overcome. As we shall see during the rest of this presentation, Roberts was right.The Pre-History: CRSP Another enabling factor for the soon-to-follow boom in stock market research was provided by an initially small outfit based at the University of Chicago, the Center for Research in Securities Prices (CRSP). CRSP was established by James H. Lorie in 1960 and provided comprehensive data on all stocks traded on the New York Stock Exchange since 1926. From day one, CRSP data were available in machine-readable form, a rare and pleasant occurrence to anyone involved in economic research at the time. Also important is the fact that CRSP data contained a negligibly small number of errors.Overall, CRSP database was one of the richest data sets available. Everything was ready for a revolution. Indeed, the revolution was soon to begin. The Origin of the Efficient Market Hypothesis The introduction of the term â€Å"efficient market† is usually attributed to Eugene Fama. In his 1965 paper, â€Å"Random Walks in Stock Market Prices,† published in the Financial Analysts Journal, Fama cites, among other things, his earlier study of serial correlations in daily price changes of 30 stocks that comprise the Dow Jones Industrial Average index (â€Å"The Behavior of Stock Market Prices†).He concluded that daily changes had a very small positive correlation, approaching zero for practical purposes. The stock market seem ed to work in a way that allowed all information reflected in past prices to be incorporated into the current price. In other words, the market efficiently processed the information contained in past prices. Fama defined an efficient market as: a market where there are large numbers of rational profit maximizers actively competing, with each trying to predict future market values of individual securities, and where important current information is almost freely available to all participants. Efficient Market Hypothesis And Behavioral Finance—Is A Compromise In Sight? Note that this description is very similar to that of a perfectly competitive market out of a microeconomics textbook. And in a perfectly competitive market, every seller earns a normal profit, i. e. , the amount of profit sufficient to stay in business, but insufficient to attract a competitor. If we assume that this is true of the stock market, it follows that any new information that becomes available to the m arket will be very quickly reflected in the prices.Otherwise, there will be opportunities for abnormal returns. In Fama’s own words, In an efficient market, on the average, competition will cause the full effects of new information on intrinsic values to be reflected â€Å"instantaneously† in actual prices. The efficient market hypothesis has been formulated. The time has come to test it. Tests of Market Efficiency in the 1960s A number of different approaches were used to test the efficient market hypothesis. One of the most obvious ones was to do more studies on serial correlation of security prices.A variation of this approach would be to test various trading strategies recommended by technical analysts to see if they have any investment value. Both have been tried, and invariably came back with mostly negative results. An interesting area of research dealt with the nature of return distributions. There are some clearly visible asymmetries in stock returns. If we lo ok at the ten biggest one-day movements in S&P 500 index since 1947, nine of them would be declines. The market crash of October 1987 resulted in a negative return that was 20 standard deviations away from the mean.It turned out that stock returns are not normally distributed. They follow some sort of distribution, but, to our knowledge, no one has figured out what kind of distribution it is. On several occasions, stable Paretian distribution and Student t-distribution were found to be better approximations than the normal distribution. Needless to say, this poses a huge methodological problem for researchers who, for lack of a better assumption, are still assuming normal distributions for drawing statistical inferences. An important breakthrough in testing market efficiency came with the advent of the â€Å"event study† methodology.In an event study, researchers take a sample of similar events that occurred in different companies at different times and determine how, on aver age, this event impacted the stock price. And what would a researcher expect to see as the outcome of an event study? Assuming that we are studying favorable events, the outcome would depend on whether or not the event is anticipated by the market and, of course, on whether or not the market is efficient. In all cases, we would expect the stock price to go up. The question is, when? 4Efficient Market Hypothesis And Behavioral Finance—Is A Compromise In Sight? Consider an unanticipated event first. If the market were efficient, the stock price would adjust upward very quickly. If not efficient, it will drift upward for some time following the event (see Figure 3). P Efficient Market P Inefficient Market Event Time t Event Time t Figure 3. Market reaction to an unanticipated favorable event If the event were anticipated, the price would drift upward for some time before the event, and, in an efficient market, likely stabilize on the event date (see Figure 4). PEfficient Market P Inefficient Market Event Time t Event Time t Figure 4. Market reaction to an anticipated favorable event The first event study was designed and conducted by Eugene Fama, Lawrence Fisher, Michael Jensen, and Richard Roll. Their article, â€Å"The Adjustment of Stock Prices to New Information,† was published in the International Economic Review in 1969 and quickly earned itself a nickname, â€Å"the FFJR study. † FFJR studied the stock market reaction to announcements of stock splits. Typically, stock splits are believed to be seemingly inexplicable good news for investors.One possible reason was reported by FFJR themselves: they found that 72% of firms in their sample announced above-average dividend increases in the year after the split. Stock splits seemed to â€Å"signal† future dividend increases. (Actually, the term â€Å"signaling† was proposed in the early 1970s by Michael Spence, who won the 2001 Nobel prize for, among other things, his research on signaling in labor markets. ) 5 Efficient Market Hypothesis And Behavioral Finance—Is A Compromise In Sight? What FFJR found is that, on average, stock prices around the date of the split behaved as shown in Figure 5. Figure 5.Averaged stock price performance around the split date According to FFJR findings, the market begins to anticipate a stock split more than two years before it actually happens and figures out the consequences of the split the day it is announced. The event study techniques were further refined by other researchers. Some of the research designs are quite clever. A bizarre example appeared in a 1985 article in the Journal of Accounting and Economics by Johnson, Magee, Nagarajan, and Newman. The title of the article, â€Å"An Analysis of the Stock Price Reaction to Sudden Executive Deaths,† is self-explaining.The authors found that unexpected CEO deaths are associated with stock price decreases. However, in cases when the CEO was the company foun der, the stock market tends to react by a price increase, begging the inference that the ability to create a business is different from the ability to run one. The efficacy of professional investors is another enduring question. Can they, on average, provide better investment performance? The research here was focused primarily on mutual funds. Regrettably, most professional money managers are not able to provide superior returns.By 1975, the preponderance of evidence argued that markets were efficient. Statistical studies showed that technical analysis did not add value (consistent with the weak form of market efficiency). Event studies found that the market quickly reacts to new information (consistent with the semi-strong form of market efficiency). And studies of professional investors’ performance made a strong case for the strong form market efficiency. Tests of Market Efficiency after 1975 As more and more researchers tested the efficient market hypothesis, some rather controversial evidence began to appear. Efficient Market Hypothesis And Behavioral Finance—Is A Compromise In Sight? In 1976, Rozeff and Kinney published their article on stock market seasonality. They found that January stock returns were higher than in any other month. In 1981, Gibbons and Hess reported â€Å"the Monday effect† – stock prices tended to go down on Mondays. Both of these findings were clearly inconsistent with the weak-form market efficiency. Interestingly enough, Gibbons and Hess noticed that the Monday effect seemed to decrease over time (see Figure 6).Figure 6. The Monday effect In the nine-year period of 1962-1970, the S&P 500 returned about -0. 16% on an average Monday. In the following nine-year period, 1970-1978, the S&P 500 would only drop by 0. 10% on average. It appears that the effect has been known to some market participants for a while, and they were taking advantage of this private information, which, in turn, caused their gains to decrease over time. A growing body of research indicated that profitable selection rules could be based on publicly available information.In particular, stocks with low price-earnings ratio and high dividend yield outperformed the market. And, while small capitalization stocks have a greater risk than large-cap stocks, the return premium seemed to be too large for the degree of additional risk taken. The discovery of these and other â€Å"market anomalies† prompted the editorial board of the Journal of Financial Economics to publish a special issue in June 1978 on a dozen of those market anomalies. An unexpected blow to the efficient market hypothesis came from academic economists.In 1980, Sanford Grossman and Joseph Stiglitz published their article â€Å"On the Impossibility of Informationally Efficient Markets† in the American Economic Review. They argued that if all relevant information were reflected in market prices, market agents would have no incentive to acq uire the information on which prices are based. This line of reasoning came to be known as Grossman-Stiglitz paradox and, along with his other contributions, earned Joseph Stiglitz his Nobel prize in 2001. The empirical research, of course, did not stop there. 7Efficient Market Hypothesis And Behavioral Finance—Is A Compromise In Sight? In 1981, Henry Oppenheimer tested stock selection criteria developed by Benjamin Graham. Most of us probably know Ben Graham as the author of the classic, Security Analysis, but he also wrote another, somewhat less technical, book, called The Intelligent Investor. In each new edition of the book, Graham updated his investment advice to his readers, whom he called â€Å"defensive investors†. Oppenheimer back-tested this advice as if he purchased every edition of The Intelligent Investor and acted on it after reading it.It turned out that Graham’s advice did have significant value. Moreover, it actually had more value than Graham h imself claimed. In 1982, Rendelman, Jones, and Latane published their article, â€Å"Empirical Anomalies Based on Unexpected Earnings and the Importance of the Risk Adjustments,† in the Journal of Financial Economics. They studied earnings surprises and their effect on the stock price. They divided their sample into ten categories (deciles in statistical parlance) according to how positive or negative the earnings surprise was.Then they calculated averaged price paths for stocks in each decile. Figure 7 presents a summary of their findings. Figure 7. Stock price paths around earnings announcement by decile While the market did react to earnings surprises quickly, the prices also drifted in the direction of the earnings surprise following the announcement. In other words, the market commonly underreacts to the quarterly earnings announcements. This suggests the validity of an â€Å"earnings momentum† strategy (buying stocks that just had a positive earnings surprise).A number of later studies produced results consistent with this thinking. However, in a somewhat puzzling twist, there were studies which suggested that the stock market actually overreacts to certain announcements. In 1981, Robert Shiller published his article, â€Å"Do Stock Prices Move Too Much to Be Justified by Subsequent Changes in Dividends? † in the American Economic Review and concluded that they do. This phenomenon came to be known as â€Å"excess volatility†. 8 Efficient Market Hypothesis And Behavioral Finance—Is A Compromise In Sight?In 1985, Werner De Bondt and Richard Thaler published their article, â€Å"Does the Stock Market Overreact? † in the Journal of Finance. Their conclusion was that the stock market tends to overreact to long series of bad news. So by 1985, there were enough anomalies discovered to seriously doubt the validity of the efficient market hypothesis. Reconciling the Theory and the Reality This is a good point at which to consider the efficient market hypothesis and identify those assumptions that may be inconsistent with reality as we know it.First of all, as ironic as it sounds, there is no way to test market efficiency per se. We can only test a joint hypothesis stating that, first, the market is efficient in equating asset prices with their intrinsic values, and, second, we know what the intrinsic values are; i. e. , we have a perfect asset pricing model. Whenever an anomaly is found, we don’t know (and have no way of knowing) which part of this joint hypothesis did not work. Returning to Fama’s definition of an efficient market, he assumes that important current information is almost freely available to all participants.This appears to be an accurate assumption; however, both the processing of this information and the subsequent action have associated costs. An institutional investor must hire security analysts and portfolio managers. Even an individual investor faces an opportunit y cost with every portfolio evaluation. Both face transactional costs; large portfolios, in addition, may be subject to additional costs caused by market impact. The transactional cost considerations prompted Michael Jensen to argue that an efficient market should adjust prices within limits imposed by the cost of trading.In his 1978 paper, â€Å"Some Anomalous Evidence Regarding Market Efficiency,† published in the Journal of Financial Economics, he insisted that if, for example, transactional costs are 1%, an abnormal return of 1% must be considered within the bounds of efficiency. Indeed, if inefficiency cannot be exploited for profit net of costs, is the market really inefficient? This, of course, begs a question: what is the level of transactional costs at which we can no longer call a market efficient in spite of its being within the bounds of efficiency?There may also be some effects caused by the way security prices are reported (market microstructure effects, in the financial economics lingo). A typical research assumption has been that trades can be executed at the closing price as recorded by a data provider such as CRSP. However, the average NYSE-AMEX stock has a quoted bid-ask spread of about 3%. For NYSE-AMEX stocks priced under $5, the average spread is about 6%. In addition, sometimes it is impossible to execute at quoted spreads because of illiquidity or market impact. 9 Efficient Market Hypothesis And Behavioral Finance—Is A Compromise In Sight?In fact, Donald Keim used precisely this argument to explain â€Å"the January effect. † In his 1989 paper, â€Å"Trading Patterns, Bid-Ask Spreads, and Estimated Security Returns,† published in the Journal of Financial Economics, he reported that stocks tend to close near the bid in late December, but close prices move toward the ask in early January (although we still have to come up with the explanation of why it happens). Also, there is a short-selling issue. In an effic ient market, short sales are unrestricted. In reality, 70% of mutual funds state in their prospectus that they will never engage in a short sale.Interestingly enough, recent empirical evidence seems to suggest that, while undervalued investments are hard to come by, overvalued ones are much more common. For example, a 1999 article by Mark Finn, Russell Fuller, and John Kling, â€Å"Equity Mispricing: It’s Mostly on the Short Side,† in the Financial Analysts Journal concludes that in 1983-1998 overvalued large-cap U. S. stocks tended to be overpriced by as much as four times the amount of underpricing observed in undervalued large-cap U. S. stocks. Finally, there is the unavoidable issue of investor heterogeneity. Investors are not identical.Even if they have precisely the same information available to them, they are likely to interpret it differently. More importantly, they tend to act on it differently. One obvious example is tax status. Tax-exempt, tax-deferred, and taxable investors acting rationally will often choose different courses of action when presented with the same problem. Liquidity needs can also play a role. Speaking more broadly, is Fama-style rational profit maximizing the only possible model of investor behavior? Are there other models? This, of course, leads us straight into the brave new world of behavioral finance.An Alternative Behavioral Model? Since the early 1980s, there has been a movement toward incorporating more behavioral science into finance. The proponents of behavioral finance cite several key areas where the reality seems to be most at odds with the efficient market hypothesis. One is the excess volatility problem that we discussed above. Price movements seem to be much greater than an efficient market would allow. A related puzzle is that of trading volume. If everyone knows that everyone (including themself) is rational, then every trader might wonder what information the seller has that the buyer doesn’ t, and vice versa.Figuring out exactly how little trading should be occurring under the efficient market hypothesis is difficult, because people have liquidity and rebalancing needs, but the proponents of behavioral finance believe it is safe to say that a billion or so shares a day on NYSE alone is a little more than one should expect in an efficient market. 10 Efficient Market Hypothesis And Behavioral Finance—Is A Compromise In Sight? Next is the great dividend puzzle. In a perfect world according to Modigliani and Miller, investors should be indifferent between dividends and capital gains.In the real world, because of the structure of the U. S. tax system, investors should prefer capital gains to dividends, and companies should prefer share repurchases to dividends. At the same time, most large companies do pay dividends. In addition, stock prices tend to rise when dividends are increased or initiated. The current literature treats dividends as yet another instance of sig naling—companies that increase or initiate dividends send a signal of their financial health to the investors. Another puzzle is that of the equity premium.Historically, this benefit has been much greater than can be explained by risk alone. (To the defense of the efficient market hypothesis, the equity premium implied in dividend yields tends to be significantly lower. ) Finally, it seems that future returns can, at least partially, be predicted on the basis of various historic measures such as price-earnings and price-to-book ratios, earnings surprises, dividend changes, or share repurchases. However, in spite of all these irregularities, real-world portfolio managers are still having a hard time trying to beat the market.Most of the studies of mutual funds and pension fund performance still show that, on average, active managers do no better than the market. Moreover, good performance this year consistently fails to predict good performance next year. With this in mind, le t's examine the case for behavioral finance. First of all, what is behavioral finance? In short, it postulates that investors have cognitive biases. What is a cognitive bias? Simply put, it is an imperfection in human perception of reality. (Have you ever noticed how much bigger the moon looks when it is just above the horizon compared to when it is high? Here are a few of the most common cognitive biases in finance. Mental accounting. It seems that the majority of people perceive a dividend dollar differently from a capital gains dollar. Dividends are perceived as an addition to disposable income; capital gains usually are not. Biased expectations. People tend to be overconfident in their predictions of the future. If security analysts believe with an 80% confidence that a certain stock will go up, they are right about 40% of the time. Between 1973 and 1990, earnings forecast errors have been anywhere between 25% and 65% of actual earnings.Reference dependence. Investment decisions seem to be affected by an investor’s reference point. If a certain stock was once trading for $20, then dropped to $5 and finally recovered to $10, the investor’s propensity to increase holdings of this stock will depend on whether the previous purchase was made at $20 or $5. 11 Efficient Market Hypothesis And Behavioral Finance—Is A Compromise In Sight? Representativeness heuristic. In cognitive psychology this term means simply that people tend to judge â€Å"Event A† to be more probable than â€Å"Event B† when A appears more representative than B.In finance, the most common instance of representativeness heuristic is that investors mistake good companies for good stocks. Good companies are well-known and in most cases fairly valued. Their stocks, therefore, may not have a significant upside potential. One of the most peculiar manifestations of cognitive biases in finance is the reluctance to realize losses. Investors seem to have a problem adm itting to themselves that they have made a mistake and avoid selling securities at a loss, even though such sale has some tax incentives.Now, what are the implications of behavioral finance for the markets? In his 1999 article, â€Å"The End of Behavioral Finance,† published in the Financial Analysts Journal, Richard Thaler offers this simple model: Suppose a market has two kinds of investors: rational investors (rationals), who behave like agents in economics textbooks, and quasi-rational investors (quasi’s), people who are trying to make good investment decisions but make predictable mistakes. Suppose also that two assets in this market, X and Y, are objectively worth the same amount but cannot be transformed from one into the other.Finally, assume that the quasi’s think X is worth more than Y, an opinion that could change (quasi’s often change their minds) while rationals know that X and Y are worth the same. What conditions are necessary to assure tha t the prices of X and Y will be the same, as they would be in a world with only rational investors? This question is complex, but some of the essential conditions are the following. First, in dollar-weighted terms, such a market cannot have too many quasi’s (in order for the rational investor to be marginal).Second, the market must allow costless short selling (so that if prices get too high, the rationals can drive them down). Third, only rational investors can sell short; otherwise, the quasi’s will short Y when the two prices are the same because they believe X is worth more than Y. Fourth, at some date T, the true relationship between X and Y must become clear to all investors. Fifth, the rationals must have long horizons, long enough to include date T. These conditions are tough to meet.Thaler seems to suggest that the belief by quasi-rational investors that certain assets are undervalued may lead to an asset bubble, which will burst as soon as quasi-rational inve stors sentiment changes. (Did somebody say Internet? ) Why is behavioral finance important? 12 Efficient Market Hypothesis And Behavioral Finance—Is A Compromise In Sight? As most marketers know, any product has its unique set of utilitarian and valueexpressive characteristics. The value-expressive characteristics are the most visible in jewelry and almost absent in laundry detergents.An interesting question to ask, then, is, do investments have value-expressive characteristics? If they do, we should not be surprised that pricing differences exist between otherwise identical investments, based entirely on their value-expressive characteristics. A casual look at stock exchange advertisements suggests a positive answer to this question. The NYSE promotes itself as solid, while NASDAQ claims it is innovative. A review of mutual funds marketing can also give us a few insights. In 1983, Fidelity Investments put Charles Jarvie in charge of marketing its mutual funds.Prior to joinin g Fidelity, Jarvie marketed Tide and Pringles at Procter ; Gamble. Jarvie immediately noticed two deficiencies in Fidelity’s marketing. Fidelity’s flagship product, the Magellan fund, was not advertised as Fidelity Magellan; the company was underemphasizing its brand name. Also, almost no attention was paid to cross-selling. Under Jarvie’s leadership, Fidelity redefined itself as a â€Å"family of funds† and built itself one of the strongest brands in the financial services industry. Other mutual fund companies followed quickly.Even more interesting are the studies of investment clubs. Over 35,000 of these clubs exist in the United States. An investment club usually includes 10-15 members (friends, co-workers, or relatives) who, on average, contribute $25 a month to the club’s account. In 1998, Brad Barber and Terrance Odean of the University of California at Davis studied performance of 166 investment clubs that had accounts with a large brokerage firm and found that 60% of the clubs lagged the market. The average underperformance was 3. 8% a year. So it seems that investment clubs lack utilitarian characteristics.What about value-expressive ones? Also in 1998, Brooke Harrington of Harvard University studied the identity formation in investment clubs. Her sample included three clubs: an all-men’s club where all members were sports car hobbyists, an all-women’s club where all members belonged to the American Association of University Women, and a mixed-gender club where all members met each other through a church singles group. She concluded that investment clubs are also social clubs. In terms of our marketing approach, they do have strong value-expressive characteristics.The importance of behavioral finance and its role in the professional’s decision making process appears self-evident. While it may fail to enhance our capacity to beat the market, it can help us understand the beliefs and motivations of our clients and improve the service provided. Is a Compromise in Sight? Are the differences between traditional finance and behavioral finance irreconcilable? Recent literature suggest a negative answer to this question. 13 Efficient Market Hypothesis And Behavioral Finance—Is A Compromise In Sight? One the one hand, the sensible proponents of behavioral finance recognize the limitations of this approach.Meir Statman of Santa Clara University said it best: Market efficiency has two meanings. To some, market efficiency means that there is no systematic way to beat the market. To others, it means that security prices are rational – that is, reflect only â€Å"fundamental† or â€Å"utilitarian† characteristics, such as risk, but not â€Å"psychological† or â€Å"value-expressive† characteristics, such as sentiment†¦ I argue that finance scholars and professionals would do well to accept market efficiency in the beat-the-market sense, but reject it in the rational-pricing sense.On the other hand, the standard finance begins to produce some research that models effects of opinion differences. Earlier, we talked about the seemingly excessive trading volumes. It appears that trading volume varies directly with the difference in investors’ opinions. Figure 8 provides a simple Marshallian cross analysis of a widening difference in opinions. Both supply and demand for a particular security shift to the right as both number of buyers and number of sellers increase.While the effect on price cannot be determined without additional information such as relative magnitude of shifts in supply and demand, the volume is bound to increase. P (price) S S’ D D’ Q0 Q1 Q (volume) Figure 8. Opinion difference and trading volume An interesting thing to discuss here would be the work of Joseph Chen and Harrison Hong of Stanford University and Jeremy Stein of Harvard Business School. In their 1999 paper, â€Å"Differen ces of Opinion, Rational Arbitrage and Market Crashes,† Hong and Stein propose the following model. 14 Efficient Market Hypothesis And Behavioral Finance—Is A Compromise In Sight?There are two investors, A and B, and a class of fully rational, risk-neutral arbitrageurs. A and B each receive a different private signal affecting their rational perception of the value of the same stock. Both signals are useful, but A only pays attention to his signal, even if that of B is revealed to him, and vice versa. Arbitrageurs, on the other hand, recognize that the best estimate of the stock’s value is to be found by averaging both signals. However, if A and B face short sale constraints and the signals they receive are negative, the arbitrageurs simply will not see those signals.In other words, the negative private information will not have any effect on market price. This is consistent with the empirical research findings of equity mispricing being mostly on the short side. So if the arbitrageurs only hear the good news, the stock price may well be trending up, until some of the arbitrageurs begin to suspect overvaluation and take short positions in the stock. As a result, the trading volume would increase, reflecting the increasing difference of opinion among the arbitrageurs. If the stream of good news consequently ceases or private signals of A and/or B become public information, the stock price would collapse.In a later paper, â€Å"Forecasting Crashes,† Chen, Hong and Stein found that the probability of a crash is positively correlated with an increase in trading volume relative to trend over prior six months and positive returns over the prior thirty-six months. Overall, it appears that many stock market anomalies can be explained through either behavioral biases or institutional imperfections. In fact, Richard Thaler suggests applying the behavioral model to institutional investing and corporate finance. What immediately comes to mind he re is a Nobel-winning economist Herbert Simon and his 1947 book, Administrative Behavior.Here is how the outcome of Simon’s research was summarized by the Nobel committee: He rejects the assumption made in the classic theory of the firm as an omniscient, rational, profit-maximizing entrepreneur. He replaces this entrepreneur by a number of cooperating decision makers, whose capacities for rational action are limited, both by a lack of knowledge about the total consequences of their decisions, and by personal and social ties. A classic example of this approach is a 1956 paper by John Lintner, â€Å"Distribution of Incomes of Corporations among Dividends, Retained Earnings, and Taxes,† published in the American Economic Review.Lintner started by interviewing the corporate executives about their dividend policy decisions. These interviews led him to a very simple model. Companies move the dividend toward a desired payout ratio, but try to avoid having to cut the dividend. This model remains an accurate description of dividend policy to this day. Conclusion We conclude this presentation by quoting Meir Statman: 15 Efficient Market Hypothesis And Behavioral Finance—Is A Compromise In Sight? People are â€Å"rational† in standard finance; they are â€Å"normal† in behavioral finance.Rational people care about utilitarian characteristics, but not valueexpressive ones, are never confused by cognitive errors, have perfect selfcontrol, are always averse to risk, and are never averse to regret. Normal people do not obediently follow that pattern. Standard finance asks for too much when it asks for market efficiency in the rational sense, and investment professionals ask for too much when they insist that the primary contribution of behavioral finance is its potential help in beating the market.

Prison Inmates Should Be Allowed To Take College Courses Essay

Prison Inmates Should Be Allowed To Take College Courses Prison inmates should be allowed to take college course because having an education helps reform the inmate into a useful member of society. Education is useful in helping the inmate acquire the life skills necessary to make a life change for the better. Studies have shown that inmates who participate in educational programs were less likely to recidivate once released back into to society than those who did ot participate. Allowing prisoners to take college courses restructures the way inmates think and benefits society as a whole by helping inmates adapt once released, providing Job skills necessary to find work, and aiding in inmate rehabilitation. Providing an education for inmates helps them acquire the necessary life skills to make better choices once released and makes it easier to adapt to life outside the prison walls. An educated person is better able to choose etween right and wrong and also make wiser decisions. By restructuring the way an inmate thinks, the inmate makes better choices and finds better role models to emulate. An inmate who has the ability to read and write is better able to find information for himself and is more likely to use that information to make informed decisions. It is therefore easy to deduce, an inmate who has received a prison education can think more clearly and will act more positively preventing most inmates from recidivism. Using the education gained in prison will facilitate an inmate’s adaption to society and provides the necessary Jobs skills to find work once released. Education for inmates helps build a foundation for future success and provides the Job skills necessary to help inmates find work once they are released. Teaching basic educational skills to inmates such as reading, writing, and math skills increases their chances of passing employment tests and greatly improves their..

Marketing in a Higher Education Institution Essay

I would like to thank my supervisor, Professor Jake Ansell, for all his support and encouragement during this challenging dissertation period. My gratitude also goes out to all academic and support staff of the MSc Marketing and Business Analysis course for what was an educational stimulating academic year. All the knowledge passed on and assistance given formed a solid foundation that was invaluable during the course of working on this dissertation. I would like to also like to take this opportunity to extend my appreciation to my family members, course mates and friends, who acted as pillars of strength by continuously keeping check and giving out words of encouragement during the dissertation phase. ABSTRACT The nature of the rapidly changing Higher Education (HE) industry has forced universities to implement more innovative marketing strategies. In order to remain competitive, there is a need for universities to not only engage in marketing strategies that are relevant to the existing HE context, but also be aware of foreseeable changes that are taking place to enable them to alter their positions and adapt smoothly without being left behind. This study investigates the marketing strategies employed by the College of Humanities and Social Science at the University of Edinburgh and the relevance of these strategies in the context of the fast-moving HE industry. Three main areas were studied in the literature review- demands of the industry, current marketing philosophies and practices within the industry and trends that likely to shape the future of the industry. A proper understanding of these areas is important as it used as a comparative yardstick to evaluate the College’s existing strategic position and the direction it is heading towards. Qualitative research was used given the exploratory nature of the study that aimed to uncover thoughts, experiences and ideas of respondents. In-depth interview was used as the main research method as there was a specific need to gather detailed information from select-few respondents based on their job expertise. On a smaller scale, focus group interviews comprising students were also conducted as a complementary research to generate their perception and views regarding the Higher Education Industry. Upon analysis, discussion of the findings was divided into three sections based on their relevance to the research questions and the gaps observed in the literature review. The key findings was that the general philosophy of the College’s marketing is in line with the existing standards expected of the HE, but there is inadequate marketing for undergraduate levels which was brought about by an arguably false interpretation of high demand. The study also shows that there is under-utilization of the role of student ambassador and lack of gender-based marketing, both of which were identified in the literature as important in keeping up with fiercer competition and addressing challenges of the future. In terms of fee structure, high-income household students are expected to pay the largest share of costs because of their ineligibility to apply for most loans and grants. However, they are seen to be willing to pursue HE studies and view it as an investment for a better career. Low and middle-income household students, although are not affected much at undergraduate level, are likely to seek employment after their studies instead of commencing a postgraduate degree. The findings and analysis brought about several recommendations which include focusing on international marketing to increase the level of international students, hence generating higher revenues that could be channelled at funding purposes for postgraduate level to increase participation of low and middle-income household students. Recommendations for strengthening marketing efforts at undergraduate level, tailoring gender-based marketing and efficient utilization of student ambassador schemes were also provided. The study concludes that while the current marketing philosophy fits the existing context (with exception to undergraduate level), a lot can be done to capitalized on emerging trends to ensure that the College is better prepared to deal with the changes of the future. 1.0 CHAPTER ONE: INTRODUCTION This Chapter will present the purpose of the research, along with the objectives that are aimed to be achieved. It also brings into attention the relevant research questions that the study seeks to answer. The Introduction Chapter concludes with a structure of report to demonstrate the organization and structural design of this study. 1.1 Purpose of Study The purpose of this study is to analyze the current marketing strategies employed by the University of Edinburgh’s College of Humanities and Social Science and its relevance to the rapidly changing higher education industry, to enhance the knowledge available in existing research and also to set the foundation for further research. Existing research on higher education is vast but there is limited research on contemporary strategies in the fastchanging higher education industry. More importantly, there has been very few studies done on the University of Edinburgh and the Colleges associated with it, in terms of its effectiveness in executing marketing strategies and preparatory measures in dealing with future challenges. The objectives of this research are: 1) To investigate the relevance of marketing strategies adopted by the College of Humanities and Social Science with regards to the existing context of the Higher Education industry. 2) To investigate the competitiveness of marketing strategies employed by the College of Humanities and Social Science with regards to the foreseeable changes to the Higher Education industry. In order to do this, there was need to gain a general understanding on the Higher Education industry and also the transformations that it has witnessed and are likely to face in the recent future. Upon identifying the underlying and emerging factors that are set to affect the marketing strategies undertaken by the College, the study was limited to a focused area of study and the following research questions were derived: 1) Are the general marketing philosophies of the University of Edinburgh in line with contemporary standards expected in the Higher Education industry? 2) To what extent are Student Ambassadors being empowered and utilized as a marketing tool to provide the edge in a competitive student recruitment market? 3) Are there initiatives on gender-based marketing to capitalize on the trend of consistently increasing number of female students in Higher Education? 4) How would a new fee-structure, if implemented, affect marketing strategies in recruiting UK, EU and Overseas students? 1.2 Structure of Report The report is organised as follows: CHAPTER ONE: Reveals the purpose of the study and central issues that are observed. It moves on to identify the research objectives that the study endeavours to appreciate through the assessment of key research questions (previous section). CHAPTER TWO: Provides an overview of the Higher Education industry and explores three main section- demands in higher education, contemporary marketing philosophies and practices of the industry, and the higher education fee structure. Each section is concluded by establishing their relevance to the research questions being posed. CHAPTER THREE: Discusses the methodology used in addressing the research questions. This Chapter establishes the reasons for the selection of methods and techniques used, and highlights the limitations in place. It also provides reasons as to why other methods were not employed. CHAPTER FOUR: Provides findings from the primary research and analysis linking the findings to the literature review. This Chapter is divided into three sections- New-age marketing philosophies of the higher education industry, relationship between tuition fees structure and marketing strategies with regards to recruitment for UK, EU and Non-EU students, and under-utilization of resources to capitalize of emerging trends (student ambassador and gender-based marketing). It also critically discusses the strengths and weakness of the College’s marketing strategies. Recommendations were also provided in this chapter to counter weaknesses that were observed. CHAPTER FIVE: Concludes the study and reiterates the summarized findings, analysis and recommendations of the previous Chapter. Areas for future research and research limitations that could be improved on were also highlighted. Note: In this research, ‘College’ would refer to College of Humanities and Social Science, University of Edinburgh. This is distinct from ‘University’ which would refer to the University of Edinburgh as a whole. Although this study is done in the College, the word ‘University’ will be used in some discussion areas which encompass both the College and the University. 2.0 CHAPTER TWO: LITERATURE REVIEW The Literature review will emphasize on three areas: demands for Higher Education, contemporary marketing philosophies and practices of Higher Education, and Higher Education fee structure. A firm comprehension of these areas will provide a good understanding on the current structure of Higher Education and the direction it is heading towards. 2.1 Demands for Higher Education The implementation of effective marketing strategies depends significantly on clear understanding of demands within an industry. This section of the literature review aims to look into the patterns seen in demand, from both local and international perspectives, and how they have evolved over the years. It would seek to review motivations that drive demand for higher education and identify emerging trends that could have an effect on future demands in the higher education industry. Such understandings are vital for institutions in continuing to remain competitive and also in laying the foundations to facilitate possible changes in strategies for the future. Statistical figures show that in 1950, about 50,000 tertiary level students studied in institutions outside their home country (Brickman 1975). Europe and North America were the most popular continents of study destination and a vast majority of the students were from these regions. In terms of Asian students, few studied away from their home countries and for those who did, the majority followed the colonial path with students from India, the Malay Peninsula and Hong Kong heading to the United Kingdom and ones from Indochina preferring an education in France (Cummings and So 1985). Out of a total of 900,000 students who studied abroad in tertiary institutions in 1984, Asian students constituted about 45% of them in 1985. The sharp increase of Asian students was contributed by factors such as increment in income per capita in Asia which made it affordable for them to pursue a degree overseas and also the perception that overseas degrees were viewed as a platform to achieve good employment opportunities. Another contributing factor was the rapid expansion of secondary education in many Asian countries, hence creating more qualified tertiary-level applicants that the local education system could accommodate (Cumming 1984). Over the last decade, developed countries around the world saw a significant increase in demand for tertiary education and there have been a large volume of research in economic literature to assess and analyze the driving forces that brought about this shift. Albert (2000) states that all these studies lead to one major contributing force that has resulted in high demand for higher education; the positive association between level of education and income and career prospects. Testing this hypothesis in the UK context, Greenaway and Haynes (2000) reported that an average earning difference between a graduate and a nongraduate stands at  £410,000 while Skidelski (2000) through a study using a different methodology projects the figure at  £400,000. These figures are supported strongly by the report of UK’s Department of Education and Skill using Labour Force Survey data which estimated a lifetime average differential of  £400,000 as well (Greenaway and Haynes 2003). Therefore, given the similar period in which these studies were done, the UK figures asserts the findings of Albert (2000) whereby there is validity in the perception of association between income and level of education. Another important finding by Albert (2000) is the role of gender in explaining demand, in which women were noted to be relatively more motivated and inclined than men to demand for higher education on the basis that it would enable them to compete on par with men in career advancement opportunities. This is supported by Broecke and Hamed (2008) in which they stated that although women has been historically under-representation in higher education, statistics show that by 1992, they have caught up with men in terms of participation in England and as of 2008, are ahead of men by 7.2%. In a report submitted to the United Nations, Johnson and Vanderpool (2003) found that in the Carribean, the number of women in higher education outnumber that of men, and in some institutions even show 3.2:1 ratio. It is also estimated that the ratio could go up as high as 8:1 in favour of women. In the United States, the participation of women in higher education increased from 43% in 1971 to 56% in 1997 and the gap continues to widen (United States General Accounting Office 2000). In the UK context, the numbers of undergraduate female student applicants over the past 3 years have been consistently placed at 56% compared to male student applicants at 44% (see Appendix 1).This trend is of importance to higher education marketing in terms of weighing the importance of gender in relation to the establishment of target groups. While women may be seen as the ones more inclined to embrace higher education, it also indicates that little focus have to be channelled to them in marketing campaigns as compared to males. In terms of undergraduate students in the UK higher education industry, a significant portion of 88% consists of UK students in 2009/10. This is followed by Non-EU and EU students at 8% and 4% respectively. Figures based solely on undergraduate students enrolled on a full time basis indicate that UK students emerge as the significant front runner with 84% ahead of Non-EU students at 10% and EU students at 6%. As for part-time undergraduate students, UK students are again the majority at 94% followed by Non-EU students at 4% and EU students at 2% (see Appendix 2). Although the pattern across both these modes of study is quite similar, there is a difference in terms of percentage variation between the 2009/10 enrolments compared to the previous academic cycle of 2008/2009. While all full time students regardless of geographical background recorded a positive variation in enrolment, UK and EU part time students recorded a decrease in enrolment by 3% and 7% respectively. Only Non-EU part -time students registered a positive increment from 2008/09 to 2009/10 with an increase of 6% (HESA 2011). Sastry (2004) argues that the number of students obtaining postgraduate courses immediately after their undergraduate studies is expected to rise due to the fact that there has been increasing number of graduates over the years. Therefore, as supported by Hesketh and Knight (1999), postgraduate study is viewed as an option for undergraduates to differentiate themselves from the pool of other graduates seeking employment. Non-EU students make up about 43% of overall full-time postgraduate students in UK in 2009/10. This consists of a significant portion of total postgraduate students and the number has nearly doubled in the past seven years, indicating that this is a recent and emerging trend (HESA 2011). Overall, without taking UK into account, Non-EU students constitute 69% of students at all levels of study (see Appendix 3). This trend has seen the number of Non-EU students increase by almost 200% from 1995 to 2010. Income received by higher education institutions from Non-EU students during this same period has also increased significantly from  £455 million in 1995 to  £2,580 million in 2010 (see Appendix 4). Given that this is now a major market for UK tertiary institutions, there has been a rise in efforts taken to continue reaching prospective students abroad (Hemsley-Brown and Oplatka 2006). Important factors that come into play when assessing the ability of the UK higher education to remain   attractive are the standard and reputation of institutions, the expansion of local education system in countries abroad, particularly China and India, and the competitiveness of the UK market as opposed to other study destinations (Ramsden and Brown 2008). Employment opportunities in the UK is also a reason for Non-EU students to take up a postgraduate course as students who have studied in the UK for at least one full academic year would be eligible to apply for a Post-Study Work Visa. Guruz (2009) stated that incentives in the form of research grants and employment opportunities abroad are major forces that are considered by foreign students when choosing a study destination. However, it has to be brought into attention that the current UK Government has tightened visa regulations and the Post-Study Work Visa would be abolished in 2012 (The Guardian 2011). Therefore, the changes in regulation may bring about significant changes to the enrolment of international students in postgraduate courses in the UK. UK students consist of about 45% of the total number of full-time postgraduate students in the region, almost similar to the number of Non-EU students. However, UK students make up 82% of the part-time postgraduate students in 2009/10 (HESA 2011). This is partly due to the fact that the high postgraduate fees require students to work in order to finance themselves. Other contributing reasons include company scholarship and students not wanting to leave their jobs in times of economic turmoil (Jongbloed 2003). EU students make up about 12% of full time postgraduate students, with most of its students coming from the new countries admitted into EU since 2004. However, increasing or perhaps even retaining the current level of enrolment of EU students may be a challenge as projections show that the population of 1830 year olds in EU are set to fall by 14% over the next 20 years. Of the new countries admitted into the EU in 2004, it is projected that their combined population of 18 year olds will decrease by a significant 37%, from 1.5 million in 2007 to 1 million in 2027 (Ramsden and Brown 2008). Reviewing this section shows that there is an increasing number of Non-EU students, particularly Asians, opting to study out of their home countries. Overall, over the years, there are a growing number of students who embark on higher education and one of the major contributors to this is the positive association between level of education and career prospects. The secondary research also reveals that although the majority of undergraduate students come from the UK, most of the postgraduate students in the UK are made up of Non-EU students. The trend of growing number of female students in the higher education industry was also observed. 2.2 Contemporary Marketing Philosophies and Practices of Higher Education In order to remain relevant in rapidly changing industry, it is important for institutions to keep abreast with current needs of the market and changes that are required of the industry to remain competitive. Therefore, this section of the literature review attempts to assess the paradigm shift of traditional higher education marketing to contemporary strategies required by the industry and also look at key areas that could be fully utilized to enhance the efficiency of higher education marketing campaigns. The marketing of higher education needs to encompass the traditional emphasis on product, place, price and promotion but also include people, process and physical evidence through a service-oriented marketing approach which gives due credence to the value of the intangible and inseparable. In this context, the components of people, process and physical evidence have been altered slightly to represent a more appropriate connotation in regards to the higher education industry. Newman and Jahdi (2009) described people as ‘calibre’ or ‘champions’ whereby such human qualities in an institution would be pivotal in attracting students. This echoes the view held by McGrath (2003) in which a positive correlation between the development of education market and high priority on variables such as managerial competence, role-model associations and performance. The component of process has been defined as ‘capability’, where issues such as communication between the institution and prospective student, relationship marketing and enrolment procedures should be handled efficiently to gain competitive advantage. Newman and Jahdi (2009) further asserts that considerations as small as publicising opening hours for consulting and enrolment purposes as well as offering refreshments could, once combined, prove to be the ‘added value’ that would inevitably enhance the end service that is being marketed. The final component, physical evidence was represented by ‘charisma’, whereby elements such as geographical location, facilities and amenities are taken into account. Factors such as history and heritage of a location and the tradition of graduation ceremonies could provide a sense of identity that students would take pride in being associated with the institution (Roper and Davies 2007). However, Newman and Jahdi (2009) stated that the implementation of marketing mix could potentially lead to adverse consequences as marketing rhetoric may not necessarily always reflect educational reality. They go on to state that although there are indications that higher education marketers have started to take the leap into focusing on people, process and physical evidence, these elements need to be expanded to include contemplation and thoughts of higher education from staff and students as this would be able to minimize the mismatch of the marketing rhetoric and the reality of the environment. Critically, Newman and Jahdi (2009) also argued that knowledge and skills acquired in tertiary educational institutions should not be conveniently marketed as mere commodities that are to be sold as predetermined packages to those who have been targeted. Instead, there should be a genuine attempt to convey that education is a challenging industry that would require effort and planning by students, hence projecting the reality. Evans (2004) holds similar views about the need to craft a marketing effort that is as close to reality as possible, particularly given the context of the current climate whereby effectiveness, quality, competition and evaluation are a matter of public discourse and information are widely available and easily accessed. This is supported by Crosby et al. (1991), in their argument that a false representation in marketing could lead to adverse effects and negatively impact upon the credibility of an institution. Therefore, although not predominantly derived from a moral standpoint, the need to eliminate unsubstantiated benefits and other positive associations with an institution is vital in terms of marketing implications as failure to appreciate this growing issue may cause an institution’s credibility being put to question. Student ambassadors are very much part of UK higher education institutions and they have been known to assist in marketing efforts of their respective universities, predominantly via engagement with prospective students through campus tours. In recent times, student ambassadors have widened their scope of marketing operations and have now extended their services through handling multiple tasks, which include organizing residential summer schools to help prospective students to gain insights into university lifestyle in hope that this would encourage them to take up higher education courses. Another new area embarked by student ambassadors is their participation in mentoring activities, particularly for the disadvantaged youths (Ylonen 2010). These recent expansion in their activities have been encouraged the former Labour government’s initiative to expand participation in higher education for groups that are under-represented through its Aimhigher programme. In analyzing the relationship between higher education decision-making amongst the young and the role played by student ambassadors in this aspect, Gartland and Pacsuzka (2007) found that student ambassadors who are deemed trustworthy by prospective students could play a key role in widening their participation gap as prospects are more likely to consider them as a preferred choice of contact point when making further enquiries, especially if they do not have a family background in higher education. This is supported by Reay et al. (2005) in their argument that information gathered through relationships and networks are taken more seriously compared to ones obtained from official sources such as prospectuses and the Internet. Therefore, student ambassadors can potentially be seen as mediators and their interventions would greatly influence decisions made by prospects. Taylor (2008) argued that one of the challenges faced in institutions is to connect the territories of academia and school environment and hence, the role of a student ambassador fits in well as although they speak from the standpoint of the institution, there is not much difference in the age bracket between both these groups and this would create a more casual and appropriate comfort zone for prospective students to engage in. This finding is particularly relevant to marketers in determining the age group of candidates to be selected as student ambassadors, given that they consist of not only undergraduates but also mature postgraduate students. In a study of an Aimhigher programme in south-east London, Ylonen (2010) found that most student ambassadors had very vague ideas of what they thought their tasks would be like and many of them stated that their expected roles as perceived during training and their actual roles were very different. Although they generally had sound knowledge of higher education lifestyle and its environment, many lacked the thorough knowledge of procedures that occur within an institution, such as financial issues. Coordinators, most of whom are marketing officers within their respective universities, have also noted that many potentially good student ambassadors failed to apply because they did not see themselves to fit into the characteristics set by the coordinators (Terion and Leonard 2007). These weaknesses are of relevance to higher education marketing units as contemporary research suggests that despite having a valuable student capacity in the form of student ambassadors, their potentials are being under-utilized due to administrative and training setbacks. The flaws seen in this system is viewed to be largely due to the fact that there isn’t a national model of the student ambassador scheme to be used as a guideline and all higher education institutions are expected to craft and implement their strategies independently. Although it is important to have flexibility and a certain degree of autonomy, a scheme without guidelines can arguably be go astray and lose its sense of direct ion (Ylonen 2010). Literature in this area of study reveals that in terms of higher education marketing, there should be a focus on service-oriented marketing through an innovation of the extended 4Ps, which would include the elements of ‘calibre’, ‘capability’ and ‘charisma’. Apart from that, it also indicates that the growing importance of the role of student ambassadors have gone large unrecognized. Despite them being available in most universities, there is a lack of effective utilization of these roles. 2.3 Higher Education Fee Structure The future of higher education in the UK has been put into uncertainty by the recent changes in tuition fees policy and many are unsure as to how these changes would impact on demands by students across levels of households. Although the changes have been made effective in England and Wales, the Scottish Government has yet to make an official announcement on this issue. However, a comprehensive review of the changes that have been taking place in the fee-structure and how it has affected the industry as a whole and demand, in particular would enable higher education marketers to prepare for the changes that although unclear, appear to be imminent. The financing of the higher education industry has been a subject of debate for the past five decades and had been given high priority by successive governments, regardless of political inclinations. During this phase, there has been a shift from a fully-funded taxpayer scheme to a ‘cost-sharing’ system, whereby students are required to cover a certain portion of their tuition fees (Dearden et al. 2010). The change of system sparked a wide range of concerns, particularly the reservations that it would lead to a lower level of participation (Connor and Dewson 2001). The introduction of the 1998 Teaching and Higher Education Act was the first significant change made to the higher education financing structure as it marked the unprecedented introduction of tuition fees at a cap of  £1,000 a year for degree courses (Claire and Jonathan 2005). Maintenance grants that were previously offered were reduced  in stages and later eliminated only to be replaced with maintenance loans which were established in 1999 (Christie and Munro 2003). The 2004 Higher Education Act paved way for another significantly policy to be put in place in 2006, which saw the implementation of deferred fees which was applicable to all students, regardless of economic background (Harrison 2011). The new fee had a cap of  £3,000 and universities had the prerogative to decide the amount to charge each student (Dearden et al, 2004; 2005). Fee loans were provided, only to be repaid by students after graduation if they’re earnings were above  £15,000. Apart from that, the 2004 Higher Education Act also reinstalled maintenance grants which were to be distributed to poor students (Harrison 2011). In the year 2006, the value of this grant was significantly increased. As a result of the introduction of tuition fees along with the substitution of maintenance grants with loans, many argued that it would not only lower participation but also be discriminative against students from lower-income households (Dearden et al. 2010). On the contrary, there were also proponents of the new system who claimed that requiring student to contribute to their studies would instil a sense of responsibility in them and hence, at a larger scale, increase efficiency and quality of higher education (Greenaway and Haynes, 2003; Goodman and Kaplan, 2003). Apart from that, the benefits gained by higher education in terms of wages and salary brackets would offset the negative impact caused by the introduction of tuition fees. Another advantage of imposing tuition fees is that only students who are committed on acquiring skills and knowledge would enrol into institutes and not ones who wish to have prolonged ‘laddish’ times, hence in a way addressing the issue of youth unemployment (Lange 1998). It is also interesting to note that in the UK, government spending on higher education continues to grow despite larger share of financial burden being on placed students as shown by 2007 figures whereby  £918m,  £349m and  £564m were spent on maintenance grants, student fee loans and maintenance loans respectively (Dearden et al. 2010). In 2010, another significant policy change was made to the higher education financing structure in England and Wales, whereby the upper tier for tuition fees was increased from  £3,000 to  £9,000 (BBC 2010). While poorer students would be protected by a large number of scholarship and bursaries, students from middle and high-income households would be the group that is most negatively affected (Directgov 2011). Highly successful students who go on to land high paying jobs would also be affected as they would be required to pay loan amounts that are significantly higher than those with average incomes (The Guardian 2010). In the case of Scotland, the Cubie committee was formed in 1999 following the Scottish devolution to look into the higher education financing. The Cubie Report (2000) proposed that an endowment scheme be put in place and through the Education (Graduate Endowment and Student Support) (Scotland) Act 2001, students were required to pay  £2,000 when their annual earnings reached  £10,000. The repayment was later raised from  £2,000 to  £2,289 for students commencing their studies in 2006/07 academic period (The Cubie Report 2000). However in 2007, the government tabled the Graduate Endowment Abolition (Scotland) Bill which aimed at scraping the endowment scheme and the move was approved in 2008, hence restoring free education in Scotland (BBC 2008). Based on the United States context, Kent (1994) studied the relationship between the state’s public spending on higher education and the impact of tuition fee costs on higher education participation. The finding was that $1,000 increase in tuition fees would bring about a 3.7ppt reduction in participation among African Americans. On a wider scale, Kent (1995) found that there was a reduction in participation among Americans in higher education, in which a $1,000 increase in fees resulted in a 2.4 decrease in participation. On assessing a policy made in 1982 which led to financial aids being removed from students with deceased, disabled or retired father, Dynarksi (1999) found that the impact of aid withdrawal led to decrease tertiary participation by 3.6ppt. Supporting this finding is a study done by Seftor and Turner (2002), whom upon analysing the impact of aid withdrawal, found a small impact of reduction in participation by 0.7ppt per $1,000 of aid withdrawn. The UK context of higher education financial constraint on students and its effects on participation can be viewed at two separate phases; the 1998 reforms and the 2006 reforms as described earlier. The 1998 reforms, in terms of grants alone, saw low income students being the most significantly impacted, with participation estimated at 2.3ppt lower than what it would have been without the abolishment grants (Dearden et al. 2010). On the other hand, the increase in loans received by this group resulted in an increase in participation and hence, offset the negative impact brought about by the abolishment of grants. Therefore, there were no significant changes to participation for the lower income group. High income students, however, recorded a reduction of 5.4ppt in participation as even though the abolishment of grants had no impact on them, the increment of tuition fees was a significant impact (Dearden et al. 2010). Study on the 2006 reforms showed that both the lower and higher income groups did not record overall changes in participation (Forsyth and Furlong 2003). Therefore, this section of the literature indicates that despite concerns by many that an increment in tuition fees can be discriminatory towards lower income groups, studies have shown that the negative impact brought by the hike in fees are often outweighed by grants or loan packages. This also brings about serious implications to higher education institutions on deciding the type of financial assistance and the accurate target groups to ensure that participation does not see an unhealthy dip. Such a consequence could be detrimental to the economy of the country as many research seem to suggest that the economic well being of a nation state is directly associated with the level investments spent on education (Barro and Sala-i-Martin, 1995; Bassanini and Scarpenta, 2001).

Is beauty best? Highs versus normally attractive models in advertising Essay

Abstract (Summary) Several studies investigating the positive effects of including highly attractive models (HAMs) in advertising have failed to unilaterally support their use. A study explores the differential effects of pairing highly versus normally attractive models with different types of attractiveness-relevant products. Contrary to past research, the results suggest that HAMs are not the most effective choice for all categories of attractiveness-relevant products. The research also explores the method by which the match between model attractiveness and product type influences advertising effectiveness. Results suggest that a match between a model and a product improves ad effectiveness not necessarily through the elicitation of product arguments from model appearance, but instead by heightening perceptions of the model’s expertise about the product.  » Jump to indexing (document details) Full Text (7266 words) Copyright American Academy of Advertising Spring 2001 [Headnote] Several studies investigating the positive effects of including highly attractive models (HAMs) in advertising have failed to unilaterally support their use. This paper explores the differential effects of pairing highly versus normally attractive models with different types of attractiveness-relevant products. Contrary to past research (Kahle and Homer 1985; Kamins 1990), the results suggest that HAMS are not the most effective choice for all categories of attractiveness-relevant products. This research also explores the method by which the match between model attractiveness and product type influences advertising effectiveness. Results suggest that a match between a model and a product improves ad effectiveness not necessarily through the elicitation of product arguments from model appearance, but instead by heightening perceptions of the model’s expertise about the product. The inconsistent support for the use of highly attractive models (HAMs) in advertising has led one group of researchers to state that â€Å"physical attractiveness seems to have been granted greater influence than can be supported empirically† (Caballero, Lumpkin, and Madden 1989, p. 21). To better understand these inconsistencies, researchers have explored the importance of a convergence between the product and the message communicated by a model’s image, that is, a model-product type match-up (e. g. , Baker and Churchill 1977; Caballero and Solomon 1984; Joseph 1982; Kahle and Homer 1985; Kamins 1990; Park and Young 1986; Peterson and Kerin 1977). Although prior research has argued that HAMs are most effectively matched with attractiveness-relevant products (e. g., Kahle and Homer 1985; Kamins 1990; Peterson and Kerin 1977), the mixed results from HAM-attractiveness-relevant product match-ups may be because there are different types of attractiveness-relevant products (Bloch and Richins 1992) that may not all be appropriate for use with highly attractive people. Furthermore, much of the past model-product type match-up research has tended to compare HAMs with unattractive models (e. g. , Caballero and Solomon 1984; Kahle and Homer 1985; Kamins 1990) instead of considering more realistic, normally attractive models (NAMs) as counterpoints. The sparse use of unattractive people in advertising (Caballero and Solomon 1984) and the greater usage of NAMs suggest comparing HAMs with NAMs is more ecologically valid. The purpose of the present research is two-fold. First, the different attractiveness-relevant product types (Bloch and Richins 1992) are incorporated into the model-product type match-up literature, and the types of attractiveness-relevant products that are most effectively paired with HAMs or NAMs are delineated. Because beautiful people may be perceived as having better lives that are free of the problems of normal people (Dion, Berscheid, and Walster 1972; Kanner 1994), advertisements for problem-solving attractiveness-relevant products may be more effective if the models are normal looking. Second, this research attempts to determine whether model-product type match-ups influence ad effectiveness either directly, through the elicitation of product arguments from the picture, or indirectly, through his or her perceived credibility. Previous research has explored the effect of model-product type match-up on perceptions of model credibility (Kamins 1990; Maddux and Rogers 1980), product evaluations, purchase intentions, or other measures of ad effectiveness (Caballero, Lumpkin, and Madden 1989; Kahle and Homer 1985; Kamins 1990). However, the relationship between spokesperson credibility and ad effectiveness (i. e. , product evaluations, purchase intentions) has not been explored under match-up conditions. Literature Review Highly Versus Normally Attractive Models The appearances of HAMs are both idealized and unrealistic and have been called â€Å"haunting images of perfection† (Richins 1991, p. 71). The elements of HAM beauty include a beautiful facial appearance (Richins 1991), as well as thinness (Striegel-Moore, Silberstein, and Rodin 1986). Contrary to these icons of flawlessness, â€Å"normal† attractiveness is defined here as a more average or moderate weight, height, and facial beauty, that is, more representative of a â€Å"real† woman. Normally attractive models are considered attractive but not beautiful in the idealized manner of HAMs. An important difference between HAMs and NAMs is in the attributions made about each. Highly attractive models tend to be associated with the â€Å"what is beautiful is good† stereotype, in that beautiful people are believed to have more positive life outcomes (e. g. , more successful careers, better marriages) and not suffer from the problems of â€Å"normal† people (Dion, Berscheid, and Walster 1972; Kanner 1994; Walster et al. 1966). Whereas NAMs are considered to be somewhat attractive, they are perceived to be normal people to whom these more positive life outcomes are not attributed. Problem-Solving Versus Enhancing Products Attractiveness-relevant product types are introduced into the match-up literature to delineate not only those that are best paired with HAMs, but also those that may be best paired with NAMs. A major distinction that can be drawn between types of attractiveness-relevant products is whether the product is associated with a potentially problematic area of life and appearance (Bloch and Richins 1992). One group of attractiveness-relevant products (called problem-solving products) serves to fix or hide beauty liabilities or flaws such as acne or dandruff. Other products (called enhancing products) serve more aesthetic purposes by enhancing beauty (e. g. , jewelry, lipstick, perfume) instead of masking defects. Enhancing products either may be inherently beautiful (e. g. , jewelry) or may enhance beauty through their application to the user (e. g. , lipstick). Regardless of their method of enhancing beauty though, the use of enhancing products is not catalyzed by the existence of a beauty problem. A product’s classification depends on whether the product-related body attribute is perceived positively or negatively (e. g. , a consumer may use mascara either to thicken puny eyelashes or to enhance beautiful eyes). Advantages of Normally Attractive Models? Prior research suggests that the match-up between product type and model beauty may be more important than the models attractiveness alone and that a NAM may sometimes be more effective. Kahle and Homer (1985) demonstrate that a â€Å"well-matched† celebrity endorser for an attractiveness-relevant product should be physically attractive (versus unattractive) to convey information about the quality and benefits of that product. Kamins (1990) findings also indicate that physically attractive (versus unattractive) celebrities are best matched with attractiveness-relevant (versus irrelevant) products. Although these findings do not take into account the advantages of NAMs or recognize the important distinctions between different kinds of attractiveness-relevant product types, both Kahle and Homer (1985) and Kamins (1990) support the importance of matching spokesperson image with product characteristics. Similarly, Baker and Churchill (1977) find that when the product is related to romance (e. g., perfume), men had higher purchase intentions when the female model was attractive. However, when the product was unrelated to romance (e. g. , coffee), male subjects indicated greater purchase intent if the model was less attractive. In a study by Caballero and Solomon (1984), more tissues were purchased when they were paired with an unattractive (versus attractive) model. Although the authors proposed that this response was due to the unusual (for advertising) and perhaps more noticeable nature of the model, an alternative explanation may be that an unattractive appearance may be more convergent with sickness. Consumers may not perceive the HAM as suffering from such mundane problems as an illness that requires tissues, whereas the less attractive model’s more realistic appearance may have made her a more credible spokesperson. HAM Versus NAM Match- Ups Some of the research investigating model-product type match-ups has assessed match-up effectiveness by measuring spokesperson credibility (Kamins 1990; Maddux and Rogers 1980). Two components of spokesperson credibility typically recognized are source expertise and trustworthiness. Expertise refers to the perceived ability of a source to make valid claims, whereas trustworthiness pertains to the believed willingness of the spokesperson to make those claims (Hovland, Janis, and Kelley 1953; Ohanian 1990). Model Attractiveness and Trustworthiness. There is evidence to suggest that NAMs may be perceived as more trustworthy than HAMs because of consumers’ perceived similarity between themselves and the NAMs. Deshpande and Stayman (1994) demonstrate that enhanced identification and similarity with a source can increase perceptions of source trustworthiness. If a woman perceives herself to be physically more similar to a NAM, a greater perceived attitudinal similarity between the receiver and the source may drive the receiver to like the source more (O’Keefe 1990; see also Berscheid 1985; Byrne 1969). A greater liking for the source may influence source trustworthiness positively (e. g. , O’Keefe 1990; Simons, Berkowitz, and Moyer 1970), which may in turn influence the consumer to like and trust the source more. Therefore, H1: NAMs are perceived to be more trustworthy than HAMs. There is no hypothesized relationship or interaction between product type and model condition on trustworthiness. Trustworthiness pertains to a personality trait of the endorser, regardless of the endorsed product. Model Attractiveness-Product Type Match-Up and Model Expertise. Models may be more credible if they either have some physical characteristic that is associated with a product schema or demonstrate some characteristic that indicates that the product has accomplished what it claims, which thus suggests expertise based on experience (Lynch and Schuler 1994). Stemming from their attributions about beautiful people, consumers may believe that HAMs know more about the presentation and elements of a beautiful image, including the kinds of products used to enhance beauty. In addition, HAMs may be perceived as having more experience accentuating beautiful features or surrounding themselves with aesthetic things. Thus, H2: HAMs are perceived to have greater source expertise for enhancing products than are NAMs. Highly attractive models may not be perceived as having the problems that purportedly are solved by problem-solving products (e.g. , Dion, Berscheid, and Walster 1972; Kanner 1994) and therefore are believed to have little expertise using such products. Alternatively, consumers may be more likely to believe that a NAM has struggled with and, as evidenced in the ad, â€Å"conquered† the problem using the advertised product. Therefore, NAMs may be more congruous with the schema associated with enhancing products (Lynch and Schuler 1994). H3: NAMs are perceived to have greater source expertise for problem-solving products than are HAMs. Model Attractiveness-Product Type Match-Up and Product Evaluations. If a viewer can convert the visual imagery of an endorser into product information, the model’s image may serve as an argument for product efficacy (Bloch and Richins 1992; Downs and Harrison 1985; Kahle and Homer 1985; Lynch and Schuler 1994; see also Rossiter and Percy 1980). There is general evidence that product arguments may be elicited from pictures (e. g. , Mitchell and Olson 1981) and that, in high involvement situations, pictures containing product-relevant information can strengthen product beliefs and result in more positive product attitudes than can pictures that only influence affect (Miniard et al.1991). If a viewer believes that a model possesses some physical characteristic that indicates the model has improved his or her appearance with the product, then the viewer may believe that the product was responsible for that improvement (Lynch and Schuler 1994). The pairing of an enhancing product and a HAM may serve to reinforce the argument for product quality and efficacy for enhancing beauty by demonstrating the enhancer’s ability to highlight beautiful features (Petty and Cacioppo 1980). This stronger argument for product quality may enhance ad efficacy by improving evaluations of the product and heightening product purchase intentions (Caballero, Lumpkin, and Madden 1989; Kahle and Homer 1985; Kamins 1990). Therefore, 114: Ads for enhancing products that include HAMs will be more effective than those that include NAMs. Specifically, we expect that ads for enhancing products that include HAMs will result in greater product evaluations and higher purchase intentions than will those ads containing NAMs. With regard to problem-solving products, it might initially appear that a HAM could serve as a more positive argument for a product’s effectiveness. The more beautiful appearance of the HAM (versus NAM) might make the product appear as if it is more effective in heightening the user’s beauty. However, for the efficacy of problem-solving products to be assessed from the model’s photo, the viewer must first believe that the model had a beauty problem prior to product use. Because HAMs are not perceived as having the problems of normal people (e. g., Dion, Berscheid, and Walster 1972; Kanner 1994), consumers may not believe that the HAM suffered from a beauty problem that required the use of the advertised product. In contrast, consumers may believe that NAMs are more likely to have experienced beauty problems (e. g. , Dion, Berscheid, and Walster 1972; Kanner 1994). According to attribution theory, if an outcome occurs despite the presence of something that might have prevented that outcome (an inhibitory cause), a consumer may give more weight to the cause that is perceived to be responsible for that outcome (the facilitative cause; Kelley 1972). A HAM’s overall appearance might suggest multiple facilitative causes for the model’s superior appearance in the productrelated attribute, and the greater the number of other potential causes for the overall superior appearance, the more the problem-solving product may be discounted as responsible for solving the beauty problem (Kelley 1972). However, a NAMs’ overall typical appearance might suggest that, prior to product use, the appearance of the NAM’s product-related attribute was normal. Because the product (facilitative cause) may be responsible for a beautiful product-related physical attribute in the face of the inhibitory cause of the model’s â€Å"normalcy,† the perceived efficacy of the problem-solving product is augmented. With this improvement in product evaluations and likely improvement in purchase intentions (Caballero, Lumpkin, and Madden 1989; Kahle and Homer 1985; Kamins 1990), the following hypothesis is offered: H5: Ads for problem-solving products that include NAMs will be more effective than those that include HAMs. Specifically, we expect that ads for problem-solving products that include NAMs will result in greater product evaluations and higher purchase intentions than will those ads containing HAMs. The Mediating Role of Source Credibility Although model-product type match-up effectiveness has measured both spokesperson credibility and other measures of ad effectiveness, such as product evaluations or purchase intentions, no relationship between these two constructs has been examined. Past credibility research has suggested that greater spokesperson credibility (i. e., expertise and trustworthiness) tends to generate greater attitude chane (e. g. , Dholakia and Sternthal 1977; Harman and Coney 1982; Hovland, Janis, and Kelley 1953; Sternthal, Dholakia, and Leavitt 1978). Therefore, any influence that a model-product type match-up may have on spokesperson credibility subsequently might offect product evaluations or other measures of ad effectiveness. Therefore, H6A: Spokesperson expertise will mediate the effects of model-product match-up on ad effectiveness. H6B: Spokesperson trustworthiness will mediate the effects of model beauty on ad effectiveness. Study I Pretests. Two pretests were conducted to select product and model stimuli. The purpose of the first pretest (n=25) was to select two products to represent enhancing products and two to represent problem-solving products. Subjects were asked to categorize a list of products according to the provided definitions of each product type. The two products selected to represent the problem-solving category were acne concealer and acne medicine because of their categorization as problem-solving products (100% and 92%, respectively). With regard to enhancing products, 88% of people categorized lipstick and jewelry as enhancers. Because acne medicine, acne concealer, and lipstick all pertain to the face, the jewelry selected for use as stimuli in this experiment was earrings (i. e. , the only widely accepted jewelry associated with the face). For the second pretest, two judges selected full-color model photographs from popular women’s magazines on the basis of subjective criteria of which photos might represent each model condition. Photos intended to represent NAMs were selected from â€Å"Reader Makeover† issues of the magazines so that, while the physical features of the NAMs were still moderately attractive, the hair and makeup were professionally styled. Two undergraduate classes viewed five photos of NAMs (n=72) while two other classes evaluated five photos of HAMs (n=65). Respondents were asked to complete five questions regarding the beauty and four items assessing the normalcy of the model (all seven-point scales), and each set of items subsequently was summed. The HAM photo was selected on the basis of beauty extremity (M=29. 37) and subjects’ beliefs that she was leading a less-than-normal life (M=13. 31). The NAM photo was selected on a rating of moderate beauty (M=22. 06; p

Urban Rural divide Essay Example | Topics and Well Written Essays - 2000 words

Urban Rural divide - Essay Example This diverse population in the demographic makeup of the rural sections of the country also has a vastly broad economic composition. It is notable that agriculture constitutes the relatively vast percentage of the rural economy (Great Britain, p 3, 2008). Through such observations, the government of UK is taking into account several measures to initiate programs that facilitate growth and development in the country, particularly the rural settings to ensure they catch up in development to the pace at urban locations (Farmer & Currie, p 54, 2009). Consequently, in taking these measures, the government is keen to adopt strategies and welfare policies that facilitate growth and development and encourage the working age to be more productive. The policies in their contribution are factoring the component of proofing the policies and strategies adopted to ensure that such strategies and policies of development are effective in achieving success for each of the communities, individuals and business elements in England. The urban-rural divide remains a core factor of consideration in alleviating the economic and social development of the entire England nation. The rural divide in England takes three key aspects, which entail the economic growth, the quality of life and the rural engagement aspect of the entire communities in the rural England (Michale Woods, p 581, 2006). The rural statement entails underlining the commitment of the England government to the rural elements that facilitate success. The statement reflects the vision for successful business at the rural community, thriving accordingly in living and working from the countryside; hence, better welfare (Pateman, p 43, 2010). The key objectives of bridging the urban-rural divide in this concept thus base on three key priorities. The vital areas of precedence for the policy entail establishing the