Econometrica, Vol. 70, No. 1 (January, 2002)
THE ECONOMETRIC SOCIETY ANNUAL REPORTS REPORT OF THE TREASURER
Lausanne, Switzerland August 25, 2001
The ﬁnancial situation of the Econometric Society (ES) has improved markedly over the last few years. Like most organizations with investments in the U.S. stock market, the ES beneﬁted from the unprecedented appreciation of its equity holdings in the period 1995–1999. Unlike many organizations, the ES does not allow its ﬁnancial outcome to ﬂoat around like a bobbing cork in a stormy sea. Instead, the ES makes its ﬁnancial decisions based on the criterion of maintaining its ratio of net worth (NW) to adjusted total revenue (ATR), that is, NW/ATR, equal to 50 percent. As capital gains on the U.S. stock market pushed up the NW/ATR ratio in the late 1990’s far above that 50 percent goal, the Society made regular, prudent decisions to shift these gains from its NW to the welfare of its constituents, primarily by providing substantial travel grants to participants in its World Congresses, by improving the quality of editorial service, and by freezing or reducing membership dues over the past decade or more.1
Despite repeated decisions to raise costs and reduce revenue, the NW/ATR ratio reached a peak of 137 percent at the end of 1999, up from 64 percent at the end of 1991. This increase reﬂected both the American stock market boom of the 1990’s and the audit- ing requirement that unrealized capital gains must be recognized as revenue in the year in which they occur. Finally in 2000 the Society incurred the ﬁnancial losses that had been planned and that were necessary to reduce the NW/ATR ratio back toward the longstand- ing goal of 50 percent, and projected additional losses in 2001 and 2002 will reduce the ratio from 137 percent at the end of 1999 to 84 percent at the end of 2002.