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Tuesday, November 22, 2016

Race problems

Segregation by race and income in the United States 1970-2010

Jake Intrator, Jonathan Tannen & Douglas Massey

Social Science Research, November 2016, Pages 45-60

Abstract:
A systematic analysis of residential segregation and spatial interaction by income reveals that as income rises, minority access to integrated neighborhoods, higher levels of interaction with whites, and more affluent neighbors also increase. However, the income payoffs are much lower for African Americans than other groups, especially Asians. Although Hispanics and Asians have always displayed declining levels of minority-white dissimilarity and rising levels of minority-white interaction with rising income, income differentials on these outcomes for blacks did not appear until 1990 and since then have improved at a very slow pace. Given their higher overall levels of segregation and income's limited effect on residential attainment, African Americans experience less integration, more neighborhood poverty at all levels of income compared to other minority groups. The degree of black spatial disadvantage is especially acute in the nation's 21 hypersegregated metropolitan areas.

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The Race Gap in Wait Times: Why Minority Precincts are Underserved by Local Election Officials

Stephen Pettigrew

Political Science Quarterly, forthcoming

Abstract:
In this paper I demonstrate that voting precincts in mostly minority neighborhoods have an average wait time that is twice as long as the wait in a mostly white neighborhood. Minority voters are also six times more likely than whites to wait longer than 60 minutes to vote. I show that most of this racial gap can be explained by how local election officials handle white and non-white precincts differently. The biggest of these differences is that, within an election administration jurisdiction (either county or town), white precincts tend to receive more resources - like voting machines and poll workers - per voter than minority ones. White precincts tend to have 20 fewer voters per voting machine and 90 fewer voters per poll worker than minority precincts. The findings of this paper suggest way forward for improving the voting experience for the 3.5 million voters who waited more than an hour in 2012.

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Far From Fairness: Prejudice, Skin Color, and Psychological Functioning in Asian Americans

Alisia Tran et al.

Cultural Diversity and Ethnic Minority Psychology, forthcoming

Objectives: We explored the moderating role of observed skin color in the association between prejudice and concurrent and lagged psychological functioning (i.e., depression, ingroup/outgroup psychological connectedness). We further aimed to understand gender differences in these processes.

Method: Data from 821 Asian American undergraduate students (57.5% female and 42.5% male) were drawn from the National Longitudinal Survey of Freshman. Cross-sectional and longitudinal regression-based moderation models were conducted with PROCESS 2.13 for SPSS.

Results: Lighter skin color nullified the association between prejudice and recent depression for Asian American females. This moderating effect did not hold over time with regards to depression symptoms 1 year later. Additionally, prejudice predicted psychological distance to other Asian students 1 year later among females rated as lighter in skin color, whereas prejudice was tied to psychological closeness for females with darker skin ratings.

Conclusions: Results highlight skin color as a pertinent factor relevant to the short-term and long-term mental health and social experiences of Asian American women in particular.

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Blacks' Death Rate Due to Circulatory Diseases Is Positively Related to Whites' Explicit Racial Bias: A Nationwide Investigation Using Project Implicit

Jordan Leitner et al.

Psychological Science, October 2016, Pages 1299-1311

Abstract:
Perceptions of racial bias have been linked to poorer circulatory health among Blacks compared with Whites. However, little is known about whether Whites' actual racial bias contributes to this racial disparity in health. We compiled racial-bias data from 1,391,632 Whites and examined whether racial bias in a given county predicted Black-White disparities in circulatory-disease risk (access to health care, diagnosis of a circulatory disease; Study 1) and circulatory-disease-related death rate (Study 2) in the same county. Results revealed that in counties where Whites reported greater racial bias, Blacks (but not Whites) reported decreased access to health care (Study 1). Furthermore, in counties where Whites reported greater racial bias, both Blacks and Whites showed increased death rates due to circulatory diseases, but this relationship was stronger for Blacks than for Whites (Study 2). These results indicate that racial disparities in risk of circulatory disease and in circulatory-disease-related death rate are more pronounced in communities where Whites harbor more explicit racial bias.

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Racial bias is associated with ingroup death rate for Blacks and Whites: Insights from Project Implicit

Jordan Leitner et al.

Social Science & Medicine, December 2016, Pages 220-227

Method: We compiled racial bias responses from 250,665 Blacks and 1,391,632 Whites to generate county-level estimates of Blacks' and Whites' implicit and explicit biases towards each other. We then examined the degree to which these biases predicted ingroup death rate from circulatory-related diseases.

Results: In counties where Blacks harbored more implicit bias towards Whites, Blacks died at a higher rate. Additionally, consistent with previous research, in counties where Whites harbored more explicit bias towards Blacks, Whites died at a higher rate. These links between racial bias and ingroup death rate were independent of county-level socio-demographic characteristics, and racial biases from the outgroup in the same county.

Conclusion: Findings indicate that racial bias is related to negative ingroup health outcomes for both Blacks and Whites, though this relationship is driven by implicit bias for Blacks, and explicit bias for Whites.

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Moving Toward Integration? Effects of Migration on Ethnoracial Segregation Across the Rural-Urban Continuum

Richelle Winkler & Kenneth Johnson

Demography, August 2016, Pages 1027-1049

Abstract:
This study analyzes the impact of migration on ethnoracial segregation among U.S. counties. Using county-level net migration estimates by age, race, and Hispanic origin from 1990-2000 and 2000-2010, we estimate migration's impact on segregation by age and across space. Overall, migration served to integrate ethnoracial groups in both decades, whereas differences in natural population change (increase/decrease) would have increased segregation. Age differences, however, are stark. Net migration of the population under age 40 reduced segregation, while net migration of people over age 60 further segregated people. Migration up and down the rural-urban continuum (including suburbanization among people of color) did most to decrease segregation, while interregional migration had only a small impact. People of color tended to move toward more predominantly white counties and regions at all ages. Migration among white young adults (aged 20-39) also decreased segregation. Whites aged 40 and older, however, showed tendencies toward white flight. Moderate spatial variation suggests that segregation is diminishing the most in suburban and fringe areas of several metropolitan areas in the Northeast and Midwest, while parts of the South, Southwest, and Appalachia show little evidence of integration.

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Reconsidering residential mobility: Differential effects on child wellbeing by race and ethnicity

Kristin Perkins

Social Science Research, forthcoming

Abstract:
Residential mobility is a common experience among Americans, especially children. Most previous research finds residential mobility has negative effects on children's educational attainment, delinquency, substance abuse, and physical and mental health. Previous research, however, does not fully explore whether the effect of mobility differs by child race/ethnicity, in part because many of the samples used for these studies were majority white or exclusively non-white or disadvantaged. In addition, previous research rarely fully accounts for factors that predict selection into mobility and that may also be related to the outcome of interest. This study simultaneously addresses both of these limitations by estimating the effect of moving homes on children's emotional and behavioral wellbeing using first difference models and a diverse longitudinal sample from the Project on Human Development in Chicago Neighborhoods. I find that, after controlling for a wide range of individual, caregiver, household and neighborhood characteristics, the effects of moving among African American and Latino children are significantly worse than among white children.

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Symbolic Racism, Institutional Bias, and Welfare Drug Testing Legislation: Racial Biases Matter

Chris Ledford

Policy Studies Journal, forthcoming

Abstract:
Since the devolution of welfare policymaking to the states after the passage of the 1996 Personal Responsibility and Work Opportunity Reconciliation Act, there has been contentious debate about drug testing welfare applicants. Beyond elite rhetoric and debate points about the implications of welfare drug testing, extant research remains limited insofar as providing theoretical understanding about what factors influence state proposal of legislation requiring welfare applicants to submit to drug tests. I develop and test expectations that derive from research on welfare attitudes, social construction theory, and policy design - specifically, hypotheses that the proportion of blacks on state temporary assistance for needy families caseloads, as well as state-aggregate levels of symbolic racism, significantly influence state proposal of drug testing legislation. My multilevel analysis of every state proposal of welfare drug testing legislation from 2008 to 2014 yields strong evidence in support of these hypotheses and paints a more complete picture of the influence of racial attitudes on state welfare policymaking. Specifically, while much research finds evidence of institutional racial biases in the implementation of welfare policy, the evidence presented herein shows that these biases, as well as public biases, influence policymaking at the proposal stage. Implications of these findings are discussed in light of recent significant electoral gains made by Republicans in state legislatures.

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Differences in placental telomere length suggest a link between racial disparities in birth outcomes and cellular aging

Christopher Jones et al.

American Journal of Obstetrics and Gynecology, forthcoming

Background: Health disparities begin early in life and persist across the life course. Despite current efforts Black women exhibit greater risk for pregnancy complications and negative perinatal outcomes compared to White women. The placenta, a complex multi-tissue organ, serves as the primary transducer of bidirectional information between the mother and fetus. Altered placental function is linked to multiple racially disparate pregnancy complications, however little is known about racial differences in molecular factors within the placenta. Several pregnancy complications, including preeclampsia and fetal growth restriction, exhibit racial disparities and are associated with shorter placental telomere length, an indicator of cellular stress and aging. Cellular senescence and telomere dynamics are linked to the molecular mechanisms associated with the onset of labor and parturition. Further, racial differences in telomere length are found in a range of different peripheral tissues. Together these factors suggest that exploration of racial differences in telomere length of the placenta may provide novel mechanistic insight into racial disparities in birth outcomes.

Study Design: In a prospective study, placental tissue samples were collected from the amnion, chorion, villus, and umbilical cord from Black and White singleton pregnancies (N=46). Telomere length was determined using monochrome multiplex quantitative real-time polymerase chain reaction in each placental tissue. Demographic and pregnancy-related data were also collected. Descriptive statistics characterized the sample overall and among Black and White women separately. The overall impact of race was assessed by multilevel mixed-effects linear regression models that included empirically relevant covariates.

Results: Telomere length was significantly correlated across all placental tissues. Pairwise analyses of placental tissue telomere length revealed significantly longer telomere length in the amnion compared to the chorion (t=-2.06, p=0.043). Overall telomere length measured in placenta samples from Black mothers were significantly shorter than those from White mothers (β=-0.09, p=0.04). Controlling for relevant maternal and infant characteristics strengthened the significance of the observed racial differences (β=-0.12, p=0.02). Within tissue analyses revealed that the greatest difference by race was found in chorionic telomere length (t=-2.81, p=0.007).

Conclusion: These findings provide the first evidence of racial differences in placental telomere length. Telomere length was significantly shorter in placental samples derived from Black mothers compared to White. Given previous studies reporting that telomere length, cellular senescence, and telomere dynamics are molecular factors contributing to the rupture of the amniotic sac, onset of labor, and parturition, our findings of shorter telomere length in placentas from Black mothers suggests that accelerated cellular aging across placental tissues may be relevant to the increased risk of preterm delivery in Blacks. Our results suggest that racial differences in cellular aging in the placenta contribute to the earliest roots of health disparities.

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The interplay of race, socioeconomic status and neighborhood residence upon birth outcomes in a high black infant mortality community

Catherine Kothari et al.

SSM - Population Health, December 2016, Pages 859-867

Abstract:
This study examined the interrelationship of race and socioeconomic status (SES) upon infant birthweight at the individual and neighborhood levels within a Midwestern US county marked by high Black infant mortality. The study conducted a multi-level analysis utilizing individual birth records and census tract datasets from 2010, linked through a spatial join with ArcGIS 10.0. The maternal population of 2,861 Black and White women delivering infants in 2010, residing in 57 census tracts within the county, constituted the study samples. The main outcome was infant birthweight. The predictors, race and SES were dichotomized into Black and White, low-SES and higher-SES, at both the individual and census tract levels. A two-part Bayesian model demonstrated that individual-level race and SES were more influential birthweight predictors than community-level factors. Specifically, Black women had 1.6 higher odds of delivering a low birthweight (LBW) infant than White women, and low-SES women had 1.7 higher odds of delivering a LBW infant than higher-SES women. Moderate support was found for a three-way interaction between individual-level race, SES and community-level race, such that Black women achieved equity with White women (4.0% Black LBW and 4.1% White LBW) when they each had higher-SES and lived in a racially congruous neighborhood (e.g., Black women lived in disproportionately Black neighborhood and White women lived in disproportionately White neighborhood). In sharp contrast, Black women with higher-SES who lived in a racially incongruous neighborhood (e.g., disproportionately White) had the worst outcomes (14.5% LBW). Demonstrating the layered influence of personal and community circumstances upon health, in a community with substantial racial disparities, personal race and SES independently contribute to birth outcomes, while environmental context, specifically neighborhood racial congruity, is associated with mitigated health risk.

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Racial Discrimination and Statistical Discrimination: MLB Rookie Card Values and Performance Uncertainty

Gregory Burge & Arthur Zillante

Social Science Quarterly, forthcoming

Objective: While previous studies document racial discrimination in Major League Baseball, few have considered statistical discrimination, and how racial bias may spill over into related markets. Investigating rookie card (RC) values at their initial release, we exploit the role of information uncertainty to separately identify the influence of racial discrimination and statistical discrimination.

Methods: Using ordinary least squares (OLS) and Tobit models, we examine 6,026 cards released from 1986 to 1993. After documenting race-based differentials in MLB achievement, we explore the determinants of prices in certain and uncertain environments.

Results: RCs of black players carry a 14-20 percent premium at their initial release. Race does not influence card values once careers are finished. Finally, given comparable career performance, prices for black players decline significantly more over time. Collectively, this suggests statistical discrimination influences consumers in this market.

Conclusion: Racial discrimination in an upstream market can lead to spillover effects on related downstream markets.

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Beyond Disasters: A Longitudinal Analysis of Natural Hazards' Unequal Impacts on Residential Instability

James Elliott & Junia Howell

Social Forces, forthcoming

Abstract:
This study investigates the unequal impact of natural hazard damage on people's residential instability over time by shifting analyses from an event-centered design common in disaster studies to a longitudinal, population-centered approach. To demonstrate this approach, we link annual data on property damages from natural hazards at the county level to geocoded data on nationally representative samples of men and women from the Panel Study of Income Dynamics. Results indicate that the average US household lives in a county that experiences five documented hazards per year, totaling $20 million in direct property damage. Findings also indicate that as local damages accrue over time, so does residential instability, net of other factors. This pattern is particularly strong for Black and Latina women, for whom measurable differences in personal and social resources interact with hazard damages to significantly increase residential instability over time.

By KEVIN LEWIS | 09:00:00 AM

Monday, November 21, 2016

Collateral damage

Political Borders and Bank Lending in Post-Crisis America

Matthieu Chavaz & Andrew Rose

NBER Working Paper, November 2016

Abstract:
We use spatial discontinuities associated with congressional district borders to identify the effect of political influences on American banks' lending. We show that recipients of the 2008 public capital injection program (TARP) increased mortgage and small business lending by 23% to 60% more in areas located inside their home-representative's district than elsewhere. The impact is stronger if the representative supported the TARP in Congress, was subsequently re-elected, and received more political contributions from the financial industry. Together, these results suggest that political considerations influence credit allocation in a politically mature system like the United States without the formal possibility of political interference in lending decisions, and that this influence is larger if the flows between banks and politicians are reciprocal.

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Differential Access to Capital from Financial Institutions by Minority Entrepreneurs

Darius Palia

Journal of Empirical Legal Studies, December 2016, Pages 756-785

Abstract:
This article examines whether minority small business borrowers have the same access to loans from financial institutions as similar white borrowers. Using matching methods, I find that African-American borrowers are rejected at an approximately 30 percent higher probability than similar white borrowers. I also find that the impact of unobservable variables has to be greater than 85 percent the impact of observable variables to show no discrimination. This bound seems to be a high number given that I have controlled for a large number of borrower, firm, and lender characteristics. No such differential effect is found for Asian and other minority borrowers. I also find equal expected default losses between African-American and white borrowers. These results are consistent with the information-based, laissez faire, and group hoarding theories of discrimination, and against the taste-based theory of discrimination.

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The Making of Hawks and Doves: Inflation Experiences and Voting on the FOMC

Ulrike Malmendier, Stefan Nagel & Zhen Yan

University of California Working Paper, October 2016

Abstract:
We show that personal lifetime experiences of inflation significantly affect the hawkish or dovish leanings of central bankers. We link experience-based inflation expectations to the desired level of nominal interest rates using a forward-looking formulation of the Taylor rule. Using data of the FOMC voting history from March 1951 to January 2014, we estimate that a one standard-deviation increase in experience-based forecasts increases the unconditional probability of a hawkish dissent by about one third, and decreases the unconditional probability of a dovish dissent also by about one third. FOMC members also use a significantly more hawkish tone in their speeches if they have experienced high inflation in their lives so far. Aggregating over all FOMC members present at a meeting, we establish a significantly positive relationship between their average inflation experience and the Fed Funds Rate target decided at the meeting. Finally, inflation experiences have a strong direct impact on FOMC members' inflation forecasts as reported in their semiannual Monetary Policy Reports to Congress, suggesting that experiences affect beliefs. Our findings imply that even professionals are affected by their lifetime experiences of macroeconomic outcomes and shed new light on the importance of FOMC appointments.

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The Stock Market and Bank Risk-Taking

Antonio Falato & David Scharfstein

NBER Working Paper, September 2016

Abstract:
We present evidence that pressure to maximize short-term stock prices and earnings leads banks to increase risk. We start by showing that banks increase risk when they transition from private to public ownership through a public listing or an acquisition. The increase in risk is greater than for a control group of banks that intended but failed to transition from private to public ownership, a result that is robust to using a plausibly exogenous instrument for failed transitions. The increase in risk is also greater than for a control group of banks that were acquired but did not change their listing status. We establish that pressure to maximize short-term stock prices helps to explain these findings by showing that the increase in risk is larger for newly public banks that are more focused on short-term stock prices and performance.

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The effect of "sunshine" on policy deliberation: The case of the Federal Open Market Committee

John Woolley & Joseph Gardner

Social Science Journal, forthcoming

Abstract:
How does an increase in transparency affect policy deliberation? Increased government transparency is commonly advocated as beneficial to democracy. Others argue that transparency can undermine democratic deliberation by, for example, causing poorer reasoning. We analyze the effect of increased transparency in the case of a rare natural experiment involving the Federal Open Market Committee (FOMC). In 1994 the FOMC began the delayed public release of verbatim meeting transcripts and announced it would release all transcripts of earlier, secret, meetings back into the 1970s. To assess the effect of this change in transparency on deliberation, we develop a measure of an essential aspect of deliberation, the use of reasoned arguments. Our contributions are twofold: we demonstrate a method for measuring deliberative reasoning and we assess how a particular form of transparency affected ongoing deliberation. In a regression model with a variety of controls, we find increased transparency had no independent effect on the use of deliberative reasoning in the FOMC. Of particular interest to deliberative scholars, our model also demonstrates a powerful role for leaders in facilitating deliberation. Further, both increasing participant equality and more frequent expressions of disagreement were associated with greater use of deliberative language.

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Government as Borrower of First Resort

Gilles Chemla & Christopher Hennessy

Journal of Monetary Economics, December 2016, Pages 1-16

Abstract:
Optimal government bond supply is examined under asymmetric information and safe asset scarcity. Corporations issue junk debt when demand for safe debt is high since uninformed investors then migrate to risky overheated debt markets. Uninformed demand stimulates informed speculation, driving debt prices toward fundamentals, encouraging pooling at high leverage. As borrower of first resort, government can issue bonds, siphoning off uninformed demand for risky corporate debt, reducing wasteful informed speculation. Government bonds eliminate pooling at high leverage or improve risk sharing in such equilibria. Optimal government bond supply is increasing in demand for safe assets and non-monotonic in marginal Q.

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Much Ado About Nothing? New Evidence on the Effects of Payday Lending on Military Members

Susan Payne Carter & William Skimmyhorn

Review of Economics and Statistics, forthcoming

Abstract:
We evaluate the effect that payday loan access has on credit and labor market outcomes of individuals in the U.S. Army. Using the conditional random assignment of servicemembers to different locations, we employ three identification strategies: cross-sectional variation in state policies, within-term variation in payday lending access, and a difference-in-difference analysis using the national Military Lending Act. We find few adverse effects of payday loan access on servicemembers when using any of these methods even when we examine dozens of subsamples that explore potential differential treatment effects.

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Deposit Insurance: Theories and Facts

Charles Calomiris & Matthew Jaremski

Annual Review of Financial Economics, 2016, Pages 97-120

Abstract:
Economic theories posit that bank liability insurance is designed to serve the public interest by mitigating systemic risk in the banking system through the reduction of liquidity risk. Political theories, however, see liability insurance as serving the private interests of banks, bank borrowers, and depositors, potentially at the expense of the public interest. Empirical evidence - both historical and contemporary - supports the private-interest approach, as liability insurance has been associated with increases, rather than decreases, in systemic risk. Exceptions to this rule are rare and reflect design features that prevent moral hazard and adverse selection. Prudential regulation of insured banks has generally not been a very effective tool in limiting the systemic risk increases associated with liability insurance. This likely reflects purposeful failures in regulation; if liability insurance is motivated by private interests, then there would be little point to removing the subsidies it creates through strict regulation. The same logic explains why more effective policies for addressing systemic risk are not employed in place of liability insurance. The politics of liability insurance thus should not be narrowly construed to encompass only the vested interests of bankers. Indeed, in many countries, liability insurance has been installed as a pass-through subsidy targeted to particular classes of bank borrowers.

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An Evaluation of Friedman's Monetary Instability Hypothesis

Joshua Hendrickson

Southern Economic Journal, forthcoming

Abstract:
In this article, I examine what I call Milton Friedman's Monetary Instability Hypothesis. Drawing on Friedman's work, I argue that there are two main components to this view. The first component is the idea that deviations between the public's demand for money and the supply of money are an important source of economic fluctuations. The second component of this view is that these deviations are primarily caused by fluctuations in the supply of money rather than the demand for money. Each of these components can be tested independently. To do so, I estimate an otherwise standard New Keynesian model, amended to include a money demand function consistent with Friedman's work and a money growth rule, for a period from 1875 to 1963. This structural model allows me to separately identify shocks to the money supply and shocks to money demand. I then use variance decompositions to assess the relative importance of shocks to the supply and demand for money. I find that shocks to the monetary base can account for up to 28% of the fluctuations in output whereas money demand shocks can account for less than 1% of such fluctuations. This provides support for Friedman's view.

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Rushing into the American Dream? House Prices Growth and the Timing of Homeownership

Sumit Agarwal, Luojia Hu & Xing Huang

Review of Finance, October 2016, Pages 2183-2218

Abstract:
We use the New York Fed Consumer Credit Panel data set to empirically examine how past house price growth influences the timing of homeownership. We find that the median individual in metropolitan areas with the highest quartile house price growth becomes a homeowner 5 years earlier than that in areas with the lowest quartile house price growth. The result is consistent with a life cycle housing-demand model in which high past price growth increases expectations of future price growth thus accelerating home purchases at young ages. We show that extrapolative expectations formed by homebuyers are a necessary channel to explain the result.

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The Shifting Demand for Housing by American Renters and Its Impact on Household Budgets: 1940-2010

Denise DiPasquale & Michael Murray

Journal of Regional Science, forthcoming

Abstract:
From 1940 to 1960 across 20 large U.S. cities, rental housing's price fell, renters' incomes rose, rent's share in household budgets fell, and, as expected, renters' real housing consumption increased. From 1970 to 2010, rental housing's price increased, renters' incomes decreased, but, unexpectedly, renters' real housing consumption increased. We find neither demographics nor housing supply factors account for the anomalous post-1970 increase in renters' housing consumption. We conclude that after 1970 there was a nationwide increase in renters' preferences for housing consumption. With incomes falling, renters increased housing consumption by decreasing consumption of other necessities including food, clothing, and transportation.

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Minimum Payments and Debt Paydown in Consumer Credit Cards

Benjamin Keys & Jialan Wang

NBER Working Paper, October 2016

Abstract:
Using a dataset covering one quarter of the U.S. general-purpose credit card market, we document that 29% of accounts regularly make payments at or near the minimum payment. We exploit changes in issuers' minimum payment formulas to distinguish between liquidity constraints and anchoring as explanations for the prevalence of near-minimum payments. Nine to twenty percent of all accounts respond more to the formula changes than expected based on liquidity constraints alone, representing a lower bound on the role of anchoring. Disclosures implemented by the CARD Act, an example of one potential policy solution to anchoring, resulted in fewer than 1% of accounts adopting an alternative suggested payment. Based on back-of-envelope calculations, the disclosures led to $62 million in interest savings per year, but would have saved over $2 billion per year if all anchoring consumers had adopted the new suggested payment. Our results show that anchoring to a salient contractual term has a significant impact on household debt.

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The Price of Homeowners: An Examination of the First-Time Homebuyer Tax Credit

Erik Hembre

University of Illinois Working Paper, October 2016

Abstract:
A major policy response to the 2008 housing crisis was the First-time Homebuyer Tax Credit, worth up to $8,000. To estimate the tax credit effects on homeownership, I construct a quarterly first-time homebuyer time-series using American Housing Survey data. Using both an event-study and a difference-in-difference framework, I estimate the tax credit induced 301,900 first-time homeowners and calculate the government paid $24,180 per additional homeowner. I find no evidence that first-time homebuyers bought more expensive houses or increased default rates. Estimating state and MSA-level effects I find a strong correlation between effect size and average home values, with a doubling in average home values implying a drop in effect size by 19.7 percentage points. These local effects also reveal larger effects in areas with smaller housing busts, had lower mortgage delinquency rates, and have higher housing supply elasticity.

By KEVIN LEWIS | 09:00:00 AM

Sunday, November 20, 2016

Bummed

National Trends in the Prevalence and Treatment of Depression in Adolescents and Young Adults

Ramin Mojtabai, Mark Olfson & Beth Han

Pediatrics, forthcoming

Objectives: This study examined national trends in 12-month prevalence of major depressive episodes (MDEs) in adolescents and young adults overall and in different sociodemographic groups, as well as trends in depression treatment between 2005 and 2014.

Methods: Data were drawn from the National Surveys on Drug Use and Health for 2005 to 2014, which are annual cross-sectional surveys of the US general population. Participants included 172 495 adolescents aged 12 to 17 and 178 755 adults aged 18 to 25. Time trends in 12-month prevalence of MDEs were examined overall and in different subgroups, as were time trends in the use of treatment services.

Results: The 12-month prevalence of MDEs increased from 8.7% in 2005 to 11.3% in 2014 in adolescents and from 8.8% to 9.6% in young adults (both P < .001). The increase was larger and statistically significant only in the age range of 12 to 20 years. The trends remained significant after adjustment for substance use disorders and sociodemographic factors. Mental health care contacts overall did not change over time; however, the use of specialty mental health providers increased in adolescents and young adults, and the use of prescription medications and inpatient hospitalizations increased in adolescents.

Conclusions: The prevalence of depression in adolescents and young adults has increased in recent years. In the context of little change in mental health treatments, trends in prevalence translate into a growing number of young people with untreated depression. The findings call for renewed efforts to expand service capacity to best meet the mental health care needs of this age group.

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Narcissism on the Jersey Shore: Exposure to Narcissistic Reality TV Characters Can Increase Narcissism Levels in Viewers

Bryan Gibson et al.

Psychology of Popular Media Culture, forthcoming

Abstract:
Recent research documents an increase in narcissism in the United States. Little research, however, has explored mechanisms that could cause higher narcissism. In 2 studies, we test the hypothesis that exposure to narcissistic reality TV characters is related to greater narcissism for those engaging in experience taking (Kaufman & Libby, 2012). Study 1 is a correlational study showing that greater exposure to narcissistic reality TV while engaged in experience taking is related to higher levels of narcissism. Study 2 is an experimental study showing that participants randomly assigned to watch a narcissistic reality TV show, under conditions that encouraged experience taking, were more narcissistic. These results suggest that media can shape trait narcissism levels that are generally assumed to be stable.

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Relative verbal intelligence and happiness

Boris Nikolaev & Jennifer Juergensen McGee

Intelligence, November–December 2016, Pages 1–7

Abstract:
Even though higher intelligence (IQ) is often associated with many positive outcomes in life, it has become a stylized fact in the happiness literature that smarter people are not happier than their less intelligent counterparts. In this paper, we examine how relative verbal intelligence correlates with happiness and present two main findings. First, our estimations from the General Social Survey for a large representative sample of Americans suggest a small, but positive and significant correlation between verbal intelligence and happiness. Second, we find that verbal intelligence has a strong positional effect on happiness, i.e., people who have greater verbal proficiency relative to their peers in their reference group are more likely to report higher levels of happiness. The positional effect of happiness holds even when we control for a large set of socio-economic characteristics as well as relative income.

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Seeing our self reflected in the world around us: The role of identity in making (natural) environments restorative

Thomas Morton, Anne Marthe van der Bles & Alexander Haslam

Journal of Environmental Psychology, forthcoming

Abstract:
Exposure to nature has been shown to restore cognitive capacities and activate intrinsic motivational states. The present research considered the role of salient identities in determining these effects. Three studies demonstrated that salient identities modify how people respond to natural environments. Exposure to images of natural environments increased the strength of intrinsic over extrinsic aspirations, and improved cognitive capacity, only when nature was central to a salient identity (Studies 1 & 2), or when the specific nature portrayed was connected to the salient identity (Study 3). Conversely, when nature was inconsistent with a salient identity, exposure had deleterious effects on aspiration and cognition. Together these studies suggest that the restorative potential of environments is determined, at least in part, by social and psychological processes connected to identity. These findings invite a more nuanced approach to understanding the possible psychological benefits of exposure to nature, and suggest that a variety of environments (natural and urban) can have restorative potential.

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Psychosocial distress and inflammation: Which way does causality flow?

Aniruddha Das

Social Science & Medicine, December 2016, Pages 1–8

Methods: Data were from the 2005–2006 and 2010–2011 waves of the U.S. National Social Life, Health, and Aging Project. Inflammation was indicated by C-reactive protein, and distress by depression, anxiety, as well as stress. Autoregressive cross-lagged panel models were used to examine causal direction.

Results: Rather than being an outcome of psychosocial distress, inflammation was a predictor of it. Linkages were gender differentiated, with inflammation seeming to induce depression among men but stress among women.

Discussion: Contrary to previous literature, inflammation may not be a mechanism through which psychosocial distress gets “under the skin” to cause cardiovascular and metabolic issues. Rather, it may be a node through which social pathologies and life events influence both mental health and physiological problems.

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Even Optimists Get the Blues: Inter-Individual Consistency in the Tendency to Brace for the Worst

Kate Sweeny & Angelica Falkenstein

Journal of Personality, forthcoming

Method: Across 9 studies in laboratory and field settings, we examined the roles of dispositional optimism and defensive pessimism in the propensity to brace for the worst when awaiting uncertain news. The studies used a variety of paradigms, including predictions about performance on the bar exam, peer ratings of attractiveness, and feedback on an intelligence test.

Results: Results from these studies consistently failed to support individual differences in the tendency to brace for the worst.

Conclusions: Trait-like differences in future outlooks seem to influence only the level and not trajectories of outcome predictions, pointing to relative commonalities in the development of the tendency to brace for the worst.

By KEVIN LEWIS | 09:00:00 AM

Saturday, November 19, 2016

Impulse control

Winning and Losing: Effects on Impulsive Action

Frederick Verbruggen et al.

Journal of Experimental Psychology: Human Perception and Performance, forthcoming

Abstract:
In the present study, we examined the effect of wins and losses on impulsive action in gambling (Experiments 1-3) and nongambling tasks (Experiments 4-5). In each experiment, subjects performed a simple task in which they had to win points. On each trial, they had to choose between a gamble and a nongamble. The gamble was always associated with a higher amount but a lower probability of winning than the nongamble. After subjects indicated their choice (i.e., gamble or not), feedback was presented. They had to press a key to start the next trial. Experiments 1-3 showed that, compared to the nongambling baseline, subjects were faster to initiate the next trial after a gambled loss, indicating that losses can induce impulsive actions. In Experiments 4 and 5, subjects alternated between the gambling task and a neutral decision-making task in which they could not win or lose points. Subjects were faster in the neutral decision-making task if they had just lost in the gambling task, suggesting that losses have a general effect on action. Our results challenge the dominant idea that humans become more cautious after suboptimal outcomes. Instead, they indicate that losses in the context of potential rewards are emotional events that increase impulsivity.

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Adaptive Adolescent Flexibility: Neurodevelopment of Decision-making and Learning in a Risky Context

Ethan McCormick & Eva Telzer

Journal of Cognitive Neuroscience, forthcoming

Abstract:
Research on adolescence has largely focused on the particular biological and neural changes that place teens at risk for negative outcomes linked to increases in sensation-seeking and risky behavior. However, there is a growing interest in the adaptive function of adolescence, with work highlighting the dual nature of adolescence as a period of potential risk and opportunity. We examined how behavioral and neural sensitivity to risk and reward varies as a function of age using the Balloon Analog Risk Task. Seventy-seven children and adolescents (ages 8-17 years) completed the Balloon Analog Risk Task during an fMRI session. Results indicate that adolescents show greater learning throughout the task. Furthermore, older participants showed increased neural responses to reward in the OFC and ventral striatum, increased activation to risk in the mid-cingulate cortex, as well as increased functional OFC-medial PFC coupling in both risk and reward contexts. Age-related changes in regional activity and interregional connectivity explain the link between age and increases in flexible learning. These results support the idea that adolescents' sensitivity to risk and reward supports adaptive learning and behavioral approaches for reward acquisition.

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Association of Early Stress and BDNF Genotype With Response Inhibition During Emotional Distraction in Adolescence

Julia Cohen-Gilbert et al.

Journal of Early Adolescence, forthcoming

Abstract:
This study investigated whether brain-derived neurotrophic factor (BDNF) genotype moderated inhibitory control during an emotionally valenced task in a sample of internationally adopted adolescents (N = 109, ages 12-13 years) who spent their early years in institutional care. Participants were genotyped for the Val66Met polymorphism of the BDNF gene. Inhibitory control in different emotional contexts was assessed via a Go-NoGo task where letters appeared at the center of positive, negative, neutral, or scrambled images. Carriers of one or more methionine (Met) alleles demonstrated a significant association between poorer performance and increased adversity, indexed by age at adoption, while valine/valine (Val/Val) carriers did not. Thus, Val/Val genotype was associated with resilience to increased impulsivity with more prolonged deprivation. These results do not converge with research suggesting differential susceptibility effects for this polymorphism, but more closely reflect a diathesis-stress model for the impact of BDNF genotype on a behavioral measure of impulsivity during emotional distraction.

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Influences of Fertility Status on Risky Driving Behaviour

Federica Biassoni et al.

Applied Cognitive Psychology, forthcoming

Abstract:
The effects of hormones on human behaviour have been extensively studied, but little attention has been paid to the influence of ovarian hormones on risky driving. Twenty-five normally cycling women took part in three sessions, including an ovulatory phase estimation session and two experimental sessions: high vs low fertile phases. These two phases were monitored through a urine-based luteinizing hormone predictor test. In the two experimental sessions, participants were administered the Driving Behaviour Questionnaire and the Vienna Risk-Taking Test. Results showed that women are more risk-averse in their driving behaviour during their high-fertile phase. The influence of hormonal fluctuations on self-perception of risk attitude when driving was non-significant. Findings are discussed from an evolutionary perspective.

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Authentic and Hubristic Pride: Differential Effects on Delay of Gratification

Shi-Yun Ho, Eddie Tong & Lile Jia

Emotion, forthcoming

Abstract:
Research demonstrates that there are 2 distinct facets of pride: the prosocial, achievement-oriented form of pride known as authentic pride, and the self-aggrandizing, egotistical form of pride known as hubristic pride. This research examined whether authentic pride and hubristic pride have divergent effects on delay of gratification. Support was found for the prediction that authentic pride would facilitate the ability to delay gratification, whereas hubristic pride would undermine it. Also, self-transcendent value affirmation was demonstrated to moderate the effects of pride on delayed gratification. Specifically, when people feeling hubristic pride had an opportunity to affirm a self-transcendent value that was important to them, their tendency to seek immediate gratification was attenuated. Theoretical implications of these findings are discussed.

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Noninvasive Stimulation Over the Dorsolateral Prefrontal Cortex Facilitates the Inhibition of Motivated Responding

Nicholas Kelley & Brandon Schmeichel

Journal of Experimental Psychology: General, forthcoming

Abstract:
Self-control involves the inhibition of dominant response tendencies. Most research on self-control has examined the inhibition of appetitive tendencies, and recent evidence suggests that stimulation to increase right frontal cortical activity helps to inhibit approach-motivated responses. The current experiment paired an approach-avoidance joystick task with transcranial DC stimulation to test the effects of brain stimulation on the inhibition of both approach and avoidance response tendencies. Anodal stimulation over the right/cathodal stimulation over the left dorsolateral prefrontal cortex (compared to the opposite pattern of stimulation or sham stimulation) caused participants to initiate motive-incongruent movements more quickly, thereby suggesting a shared neural mechanism for the self-control of both approach- and avoidance-motivated impulses.

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Episodic social media impact on users

Samuel Doss, Deborah Carstens & Stephen Kies

International Journal of Social Media and Interactive Learning Environments, Summer 2016, Pages 273-286

Abstract:
With the abundance of technological devices, an increasing number of users of all ages rely on social media. There is a growing concern of the impact that technology has on the user community. This research study was conducted to explore these concerns and specifically whether individuals' characteristics are impacted from the use of social media. A total of 209 respondents from a private university in the southeast participated in the study. Self-administered questionnaires were implemented with the survey instrument developed by the researchers. Five hypotheses were tested on the relationships of social media technologies with attention span, time pressure, long-term orientation, polychromic attitude index, and sociability. The research findings suggest that there is no difference in attention spans or sociability in frequent or infrequent users of social media. Furthermore, the research findings suggest that episodic social media usage is not positively correlated to the long-term orientation, time pressure scale, and polychromic attitude index. Future areas of research are also discussed.

By KEVIN LEWIS | 09:00:00 AM

Friday, November 18, 2016

Exhale

Will the Paris Accord Accelerate Climate Change?

Laurence Kotlikoff, Andrey Polbin & Andrey Zubarev

NBER Working Paper, October 2016

Abstract:
The 2015 Paris Accord is meant to control our planet’s rising temperature. But it may be doing the opposite in gradually, rather than immediately reducing CO2 emissions. The Accord effectively tells dirty-energy producers to "use it or lose it." This may be accelerating their extraction and burning of fossil fuels and, thereby, be permanently raising temperatures. Our paper uses a simple OLG model to illustrate this long-noted Green Paradox. Its framework treats climate damage as a negative externality imposed by today’s generations on tomorrow’s – an externality that is, in part, irreversible and can tip the climate to permanently higher temperatures. In our model, delaying abatement can lead to larger changes in climate than doing nothing, reducing welfare for all generations. In contrast, immediate policy action can raise welfare for all generations. Finally we question the standard use of infinitely-lived, single-agent models, which assume, unrealistically, intergenerational altruism in determining optimal abatement policy. Their prescriptions can differ, potentially dramatically, from those needed to correct the negative climate externality today’s generations are imposing on tomorrow’s.

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Hurricane Sandy’s flood frequency increasing from year 1800 to 2100

Ning Lin et al.

Proceedings of the National Academy of Sciences, 25 October 2016, Pages 12071–12075

Abstract:
Coastal flood hazard varies in response to changes in storm surge climatology and the sea level. Here we combine probabilistic projections of the sea level and storm surge climatology to estimate the temporal evolution of flood hazard. We find that New York City’s flood hazard has increased significantly over the past two centuries and is very likely to increase more sharply over the 21st century. Due to the effect of sea level rise, the return period of Hurricane Sandy’s flood height decreased by a factor of ∼3× from year 1800 to 2000 and is estimated to decrease by a further ∼4.4× from 2000 to 2100 under a moderate-emissions pathway. When potential storm climatology change over the 21st century is also accounted for, Sandy’s return period is estimated to decrease by ∼3× to 17× from 2000 to 2100.

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The Economics of Wind Power

Cornelis van Kooten

Annual Review of Resource Economics, 2016, Pages 181-205

Abstract:
Many countries have incentivized wind power projects to reduce their reliance on fossil fuels for generating electricity. As shown in this review, the benefits and costs of integrating electricity from an intermittent wind source into a preexisting electricity grid depend on the operating protocols of the electricity system, the preexisting generation mix, wind profiles, and the nature of economic incentives. Electricity systems are discussed from generation through transmission and distribution to retail demand, including how wind energy impacts investment in marginal (peak time) generating assets. The discussion also examines issues that could limit the usefulness of wind power at the high penetration rates now envisioned: the inability to store electricity, the need for fast-responding backup-generating capacity, network instability, low-capacity factors, and inappropriate incentives. Overall, this review finds that the costs of wind power likely exceed the benefits and that there may be limits to the proportion of electricity that can be generated by wind.

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Recent pause in the growth rate of atmospheric CO2 due to enhanced terrestrial carbon uptake

Trevor Keenan et al.

Nature Communications, November 2016

Abstract:
Terrestrial ecosystems play a significant role in the global carbon cycle and offset a large fraction of anthropogenic CO2 emissions. The terrestrial carbon sink is increasing, yet the mechanisms responsible for its enhancement, and implications for the growth rate of atmospheric CO2, remain unclear. Here using global carbon budget estimates, ground, atmospheric and satellite observations, and multiple global vegetation models, we report a recent pause in the growth rate of atmospheric CO2, and a decline in the fraction of anthropogenic emissions that remain in the atmosphere, despite increasing anthropogenic emissions. We attribute the observed decline to increases in the terrestrial sink during the past decade, associated with the effects of rising atmospheric CO2 on vegetation and the slowdown in the rate of warming on global respiration. The pause in the atmospheric CO2 growth rate provides further evidence of the roles of CO2 fertilization and warming-induced respiration, and highlights the need to protect both existing carbon stocks and regions, where the sink is growing rapidly.

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Strategic Policy Choice in State-Level Regulation: The EPA's Clean Power Plan

James Bushnell et al.

American Economic Journal: Economic Policy, forthcoming

Abstract:
The EPA's Clean Power Plan sets goals for CO2 emission rate reductions by 2030 that vary substantially across states. States can choose the regulatory mechanism they use and whether or not to join with other states in implementing their goals. We analyze incentives to adopt rate standards versus cap-and-trade with theory and simulation. We show conditions where adoption of inefficient rate standards is a dominant strategy from both consumers' and generators' perspectives. Numerical simulations of the Western electricity system highlight incentives for uncoordinated policies that lower welfare and increase emissions relative to coordination.

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Observed Arctic sea-ice loss directly follows anthropogenic CO2 emission

Dirk Notz & Julienne Stroeve

Science, 11 November 2016, Pages 747-750

Abstract:
Arctic sea ice is retreating rapidly, raising prospects of a future ice-free Arctic Ocean during summer. Since climate-model simulations of the sea-ice loss differ substantially, we here use a robust linear relationship between monthly-mean September sea-ice area and cumulative CO2 emissions to infer the future evolution of Arctic summer sea ice directly from the observational record. The observed linear relationship implies a sustained loss of 3 ± 0.3 m2 of September sea-ice area per metric ton of CO2 emission. Based on this sensitivity, Arctic sea-ice will be lost throughout September for an additional 1000 Gt of CO2 emissions. Most models show a lower sensitivity, which is possibly linked to an underestimation of the modeled increase in incoming longwave radiation and of the modeled Transient Climate Response.

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The Social Cost of Carbon Revisited

Robert Pindyck

NBER Working Paper, November 2016

Abstract:
An estimate of the social cost of carbon (SCC) is key to climate policy. But how should we estimate the SCC? A common approach is to use an integrated assessment model (IAM) to simulate time paths for the atmospheric CO2 concentration, its impact on global mean temperature, and the resulting reductions in GDP and consumption. I have argued that IAMs have serious deficiencies that make them poorly suited for this job, but what is the alternative? I present a more transparent approach to estimating an average SCC, which I argue is a more useful guide for policy than the marginal SCC derived from IAMs. I rely on a survey through which I elicit expert opinions regarding (1) the probabilities of alternative economic outcomes of climate change, including extreme outcomes such as a 20% or greater reduction in GDP, but not the particular causes of those outcomes; and (2) the reduction in emissions required to avert an extreme outcome. My estimate of the average SCC is the ratio of the present value of damages from an extreme outcome to the total emission reduction needed to avert such an outcome. I discuss the survey instrument, explain how experts were identified, and present results. I obtain SCC estimates of $200/mt or higher, but the variation across experts is large. Trimming outliers and focusing on experts who expressed a high degree of confidence in their answers yields lower SCCs, $80 to $100/mt.

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Socioecological transitions trigger fire regime shifts and modulate fire–climate interactions in the Sierra Nevada, USA, 1600–2015 CE

Alan Taylor et al.

Proceedings of the National Academy of Sciences, forthcoming

Abstract:
Large wildfires in California cause significant socioecological impacts, and half of the federal funds for fire suppression are spent each year in California. Future fire activity is projected to increase with climate change, but predictions are uncertain because humans can modulate or even override climatic effects on fire activity. Here we test the hypothesis that changes in socioecological systems from the Native American to the current period drove shifts in fire activity and modulated fire–climate relationships in the Sierra Nevada. We developed a 415-y record (1600–2015 CE) of fire activity by merging a tree-ring–based record of Sierra Nevada fire history with a 20th-century record based on annual area burned. Large shifts in the fire record corresponded with socioecological change, and not climate change, and socioecological conditions amplified and buffered fire response to climate. Fire activity was highest and fire–climate relationships were strongest after Native American depopulation — following mission establishment (ca. 1775 CE) — reduced the self-limiting effect of Native American burns on fire spread. With the Gold Rush and Euro-American settlement (ca. 1865 CE), fire activity declined, and the strong multidecadal relationship between temperature and fire decayed and then disappeared after implementation of fire suppression (ca. 1904 CE). The amplification and buffering of fire–climate relationships by humans underscores the need for parameterizing thresholds of human- vs. climate-driven fire activity to improve the skill and value of fire–climate models for addressing the increasing fire risk in California.

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Future nuisance flooding at Boston caused by astronomical tides alone

Richard Ray & Grant Foster

Earth's Future, forthcoming

Abstract:
Sea level rise necessarily triggers more occurrences of minor, or nuisance, flooding events along coastlines, a fact well documented in recent studies. At some locations nuisance flooding can be brought about merely by high spring tides, independent of storms, winds, or other atmospheric conditions. Analysis of observed water levels at Boston indicates that tidal flooding began to occur there in 2011 and will become more frequent in subsequent years. A compilation of all predicted nuisance-flooding events, induced by astronomical tides alone, is presented through year 2050. The accuracy of the tide prediction is improved when several unusual properties of Gulf of Maine tides, including secular changes, are properly accounted for. Future mean sea-level rise at Boston cannot be predicted with comparable confidence, so two very different climate scenarios are adopted; both predict a large increase in the frequency and the magnitude of tidal flooding events.

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The U.S. Economy in WWII as a Model for Coping with Climate Change

Hugh Rockoff

NBER Working Paper, September 2016

Abstract:
During World War II the United States rapidly transformed its economy to cope with a wide range of scarcities, such as shortfalls in the amounts of ocean shipping, aluminum, rubber, and other raw materials needed for the war effort. This paper explores the mobilization to see whether it provides lessons about how the economy could be transformed to meet scarcities produced by climate change or other environmental challenges. It concludes that the success of the United States in overcoming scarcities during World War II without a major deterioration in living standards provides a basis for optimism that environmental challenges can be met, but that the unique political consensus that prevailed during the war limits the practical usefulness of the wartime model.

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Climate change is advancing spring onset across the U.S. national park system

William Monahan et al.

Ecosphere, October 2016

Abstract:
Many U.S. national parks are already at the extreme warm end of their historical temperature distributions. With rapidly warming conditions, park resource management will be enhanced by information on seasonality of climate that supports adjustments in the timing of activities such as treating invasive species, operating visitor facilities, and scheduling climate-related events (e.g., flower festivals and fall leaf-viewing). Seasonal changes in vegetation, such as pollen, seed, and fruit production, are important drivers of ecological processes in parks, and phenology has thus been identified as a key indicator for park monitoring. Phenology is also one of the most proximate biological responses to climate change. Here, we use estimates of start of spring based on climatically modeled dates of first leaf and first bloom derived from indicator plant species to evaluate the recent timing of spring onset (past 10–30 yr) in each U.S. natural resource park relative to its historical range of variability across the past 112 yr (1901–2012). Of the 276 high latitude to subtropical parks examined, spring is advancing in approximately three-quarters of parks (76%), and 53% of parks are experiencing “extreme” early springs that exceed 95% of historical conditions. Our results demonstrate how changes in climate seasonality are important for understanding ecological responses to climate change, and further how spatial variability in effects of climate change necessitates different approaches to management. We discuss how our results inform climate change adaptation challenges and opportunities facing parks, with implications for other protected areas, by exploring consequences for resource management and planning.

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Coastal sea level rise with warming above 2 °C

Svetlana Jevrejeva et al.

Proceedings of the National Academy of Sciences, forthcoming

Abstract:
Two degrees of global warming above the preindustrial level is widely suggested as an appropriate threshold beyond which climate change risks become unacceptably high. This “2 °C” threshold is likely to be reached between 2040 and 2050 for both Representative Concentration Pathway (RCP) 8.5 and 4.5. Resulting sea level rises will not be globally uniform, due to ocean dynamical processes and changes in gravity associated with water mass redistribution. Here we provide probabilistic sea level rise projections for the global coastline with warming above the 2 °C goal. By 2040, with a 2 °C warming under the RCP8.5 scenario, more than 90% of coastal areas will experience sea level rise exceeding the global estimate of 0.2 m, with up to 0.4 m expected along the Atlantic coast of North America and Norway. With a 5 °C rise by 2100, sea level will rise rapidly, reaching 0.9 m (median), and 80% of the coastline will exceed the global sea level rise at the 95th percentile upper limit of 1.8 m. Under RCP8.5, by 2100, New York may expect rises of 1.09 m, Guangzhou may expect rises of 0.91 m, and Lagos may expect rises of 0.90 m, with the 95th percentile upper limit of 2.24 m, 1.93 m, and 1.92 m, respectively. The coastal communities of rapidly expanding cities in the developing world, and vulnerable tropical coastal ecosystems, will have a very limited time after midcentury to adapt to sea level rises unprecedented since the dawn of the Bronze Age.

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Economic tools to promote transparency and comparability in the Paris Agreement

Joseph Aldy et al.

Nature Climate Change, November 2016, Pages 1000–1004

Abstract:
The Paris Agreement culminates a six-year transition towards an international climate policy architecture based on parties submitting national pledges every five years. An important policy task will be to assess and compare these contributions. We use four integrated assessment models to produce metrics of Paris Agreement pledges, and show differentiated effort across countries: wealthier countries pledge to undertake greater emission reductions with higher costs. The pledges fall in the lower end of the distributions of the social cost of carbon and the cost-minimizing path to limiting warming to 2 °C, suggesting insufficient global ambition in light of leaders’ climate goals. Countries’ marginal abatement costs vary by two orders of magnitude, illustrating that large efficiency gains are available through joint mitigation efforts and/or carbon price coordination. Marginal costs rise almost proportionally with income, but full policy costs reveal more complex regional patterns due to terms of trade effects.

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The Effects of Adaptation Measures on Hurricane Induced Property Losses: Which FEMA investments have the highest returns?

Meri Davlasheridze, Karen Fisher-Vanden & Allen Klaiber

Journal of Environmental Economics and Management, January 2017, Pages 93–114

Abstract:
This paper evaluates the relative effectiveness of FEMA expenditures on hurricane induced property losses. We find that spending on FEMA ex-ante mitigation and planning projects leads to greater reductions in property losses than spending on ex-post adaptation programs — specifically, a one percent increase in annual spending on ex-ante risk reduction and warning projects reduces damages by 0.21 percent while a one percent increase in ex-post recovery and clean-up spending reduces damages by 0.12. Although both types of program spending are effective, we find the marginal return from spending on programs that target long-term mitigation and risk management to be almost twice that of spending on ex-post recovery programs. With the predicted increases in the frequency and severity of North Atlantic hurricanes in the future, our findings suggest there are important potential gains that could be realized from the further diversification of FEMA spending across project categories.

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Impact of anthropogenic climate change on wildfire across western US forests

John Abatzoglou & Park Williams

Proceedings of the National Academy of Sciences, 18 October 2016, Pages 11770–11775

Abstract:
Increased forest fire activity across the western continental United States (US) in recent decades has likely been enabled by a number of factors, including the legacy of fire suppression and human settlement, natural climate variability, and human-caused climate change. We use modeled climate projections to estimate the contribution of anthropogenic climate change to observed increases in eight fuel aridity metrics and forest fire area across the western United States. Anthropogenic increases in temperature and vapor pressure deficit significantly enhanced fuel aridity across western US forests over the past several decades and, during 2000–2015, contributed to 75% more forested area experiencing high (>1 σ) fire-season fuel aridity and an average of nine additional days per year of high fire potential. Anthropogenic climate change accounted for ∼55% of observed increases in fuel aridity from 1979 to 2015 across western US forests, highlighting both anthropogenic climate change and natural climate variability as important contributors to increased wildfire potential in recent decades. We estimate that human-caused climate change contributed to an additional 4.2 million ha of forest fire area during 1984–2015, nearly doubling the forest fire area expected in its absence. Natural climate variability will continue to alternate between modulating and compounding anthropogenic increases in fuel aridity, but anthropogenic climate change has emerged as a driver of increased forest fire activity and should continue to do so while fuels are not limiting.

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Telework: Urban Form, Energy Consumption, and Greenhouse Gas Implications

William Larson & Weihua Zhao

Economic Inquiry, forthcoming

Abstract:
A primary motivation of telework policy is to reduce energy consumption and greenhouse gas emissions. Using a numerical simulation of the standard urban model, we show telework causes sprawl, calling into question the idea that telework decreases energy consumption. Overall effects depend on wage changes due to telework, land-use regulation such as height limits or greenbelts, and the telework participation rate. While energy consumption increases in some scenarios, emissions may fall due to changes in the energy mix between gasoline and other sources.

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Civil Society in an Age of Environmental Accountability: How Local Environmental Nongovernmental Organizations Reduce U.S. Power Plants’ Carbon Dioxide Emissions

Don Grant & Ion Bogdan Vasi

Sociological Forum, forthcoming

Abstract:
Institutional scholars have argued that in the absence of legislation on the issue of climate change, nongovernmental organizations (NGOs) can help reduce the amount of anthropogenic greenhouse gases being emitted to the environment by disseminating environmental norms. Consistent with this reasoning, they have shown that from the middle of the last century up through the mid-1990s, nations with more memberships in NGOs have tended to have lower carbon dioxide (CO2) emissions in the aggregate. Doubts remain, however, about whether NGOs have reduced emissions in the time since and at the level of individual power plants where the lion's share of carbon pollution is emitted. Using plant-specific information on CO2 emissions recently collected by the Environmental Protection Agency (EPA) under its Greenhouse Gas Reporting Program, we investigate the effects of local environmental NGOs (ENGOs) on plants’ environmental performance. Consistent with our expectations, we find that local ENGOs not only directly reduce plants’ emissions but indirectly do so by enhancing the effectiveness of subnational climate policies that encourage energy efficiency. We discuss the implications of our findings for research on the decoupling of normative systems, social movements, environmental sociology, and the EPA's proposed Clean Power Plan.

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Relative impacts of mitigation, temperature, and precipitation on 21st-century megadrought risk in the American Southwest

Toby Ault et al.

Science Advances, October 2016

Abstract:
Megadroughts are comparable in severity to the worst droughts of the 20th century but are of much longer duration. A megadrought in the American Southwest would impose unprecedented stress on the limited water resources of the area, making it critical to evaluate future risks not only under different climate change mitigation scenarios but also for different aspects of regional hydroclimate. We find that changes in the mean hydroclimate state, rather than its variability, determine megadrought risk in the American Southwest. Estimates of megadrought probabilities based on precipitation alone tend to underestimate risk. Furthermore, business-as-usual emissions of greenhouse gases will drive regional warming and drying, regardless of large precipitation uncertainties. We find that regional temperature increases alone push megadrought risk above 70, 90, or 99% by the end of the century, even if precipitation increases moderately, does not change, or decreases, respectively. Although each possibility is supported by some climate model simulations, the latter is the most common outcome for the American Southwest in Coupled Model Intercomparison 5 generation models. An aggressive reduction in global greenhouse gas emissions cuts megadrought risks nearly in half.

https://www.ncbi.nlm.nih.gov/pubmed/27790992

By KEVIN LEWIS | 09:00:00 AM

Thursday, November 17, 2016

Atypical

Democratic Values? A Racial Group-Based Analysis of Core Political Values, Partisanship, and Ideology

David Ciuk

Political Behavior, forthcoming

Abstract:
Research on American core political values, partisanship, and ideology often concludes that liberals and Democrats believe equality to be one of the most important values while conservatives and Republicans place greater emphasis on social order and moral traditionalism. Though these findings are valuable, it is assumed that they generalize across various groups (e.g. socioeconomic classes, religious groups, racial groups, etc.) in society. Focusing on racial groups in contemporary American politics, I challenge this assumption. More specifically, I argue that if individuals’ value preferences are formed during their pre-adult socialization years, and if the socialization process is different across racial groups, then it may be the case that members of different racial groups connect their value preferences to important political behaviors, including partisanship and ideology, in different ways as well. In the first part of this study, I fit a geometric model of value preferences to two different data sets — the first from 2010 and the second from 2002 — and I show that although there is substantial value disagreement between white Democrats/liberals and Republicans/conservatives, that disagreement is smaller in Latinos and almost completely absent in African Americans. In the second part of this study, I demonstrate the political implications of these findings by estimating the effects of values on party and ideology, conditional on race. Results show that where whites’ value preferences affect their partisan and ideological group ties, the effects are smaller in Latinos and indistinguishable from zero in African Americans. I close by suggesting that scholars of values and political behavior ought to think in a more nuanced manner about how fundamental political cognitions relate to various attitudes and behaviors across different groups in society.

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Learned inequality: Racial labels in the biology curriculum can affect the development of racial prejudice

Brian Donovan

Journal of Research in Science Teaching, forthcoming

Abstract:
For over a century, genetic arguments for the existence of racial inequality have been used to oppose policies that promote social equality. And, over that same time period, American biology textbooks have repeatedly discussed genetic differences between races. This experiment tests whether racial terminology in the biology curriculum causes adolescents to develop genetic beliefs about racial difference, thereby affecting prejudice. Individual students (N = 135, grades 7–9) were randomly assigned within their classrooms to learn either from: (i) four text-based lessons discussing racial differences in skeletal structure and the prevalence of genetic disease (racial condition); or (ii) an identical curriculum lacking racial terminology (nonracial condition). Over 3-months that coincided with this learning, students in the racial condition grew significantly more in their perception of the amount of genetic variation between races relative to students in the nonracial condition. Furthermore, those in the racial condition grew in their belief that races differ in intelligence for genetic reasons significantly more than those in the nonracial condition. And, compared to the nonracial condition, students in the racial condition became significantly less interested in socializing across racial lines and less supportive of policies that reduce racial inequality in education. These findings show how biology education sustains racial inequality, and conversely, how human genetic variation education could be designed to reduce genetically based racism.

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Tweetment Effects on the Tweeted: Experimentally Reducing Racist Harassment

Kevin Munger

Political Behavior, forthcoming

Abstract:
I conduct an experiment which examines the impact of group norm promotion and social sanctioning on racist online harassment. Racist online harassment de-mobilizes the minorities it targets, and the open, unopposed expression of racism in a public forum can legitimize racist viewpoints and prime ethnocentrism. I employ an intervention designed to reduce the use of anti-black racist slurs by white men on Twitter. I collect a sample of Twitter users who have harassed other users and use accounts I control (“bots”) to sanction the harassers. By varying the identity of the bots between in-group (white man) and out-group (black man) and by varying the number of Twitter followers each bot has, I find that subjects who were sanctioned by a high-follower white male significantly reduced their use of a racist slur. This paper extends findings from lab experiments to a naturalistic setting using an objective, behavioral outcome measure and a continuous 2-month data collection period. This represents an advance in the study of prejudiced behavior.

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A comparison of race-related pain stereotypes held by White and Black individuals

Nicole Hollingshead et al.

Journal of Applied Social Psychology, forthcoming

Abstract:
Pain judgments are the basis for pain management. The purpose of this study was to assess Black and White participants' race-related pain stereotypes. Undergraduates (n = 551) rated the pain sensitivity and willingness to report pain for the typical Black person, White person, and themselves. Participants, regardless of race, rated the typical White person as being more pain sensitive and more willing to report pain than the typical Black person. White participants rated themselves as less sensitive and less willing to report pain than same-race peers; however, Black participants rated themselves as more pain sensitive and more willing to report pain than same-race peers. These findings highlight similarities and differences in racial stereotypic pain beliefs held by Black and White individuals.

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Ethnic Cueing Across Minorities a Survey Experiment on Candidate Evaluation in the United States

Claire Adida, Lauren Davenport & Gwyneth McClendon

Public Opinion Quarterly, Winter 2016, Pages 815-836

Abstract:
The number of minority voters in the United States continues to rise, and politicians must increasingly appeal to a diverse electorate. Are ethnic cues effective with different groups of minority voters? In this article, we investigate this question across the two largest minority groups in the United States: Blacks and Latinos. Drawing on American politics research, we propose that Black respondents will react positively to coethnic and cominority cues, while Latinos will be less receptive to such cues, and that this difference will be due at least in part to varying perceptions of discrimination across the two groups. We test this argument with an experimental design that leverages Congressman Charles Rangel’s mixed heritage as Black and Latino. Our results confirm that Black participants respond positively to both coethnic and cominority cues about Rangel, while Latino participants do not. Reactions to ethnic cues in turn correspond to differences in perceptions of discrimination.

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Hearing in Color: How Expectations Distort Perception of Skin Tone

Ulrik Lyngs et al.

Journal of Experimental Psychology: Human Perception and Performance, forthcoming

Abstract:
Previous research has found that the perceived brightness of a face can be distorted by the social category of race. Thus, Levin and Banaji (2006) found, in a U.S. sample, that faces of identical brightness were perceived to be lighter if they had stereotypical White American features than if they had Black American features. Here, we present 2 experiments conducted in Natal, Brazil, that extend this line of research. Experiment 1 tested if the brightness distortion effect would generalize to a Brazilian population. Experiment 2 tested if speech accent would have a similar effect on brightness perception. In Experiment 1, we found that the brightness distortion effect clearly replicated in the Brazilian sample: Faces with Black racial features were perceived to be darker than faces with White racial features, even though their objective brightness was identical. In Experiment 2, we found that speech accent influenced brightness perception in a similar manner: Faces were perceived to be darker when paired with an accent associated with low socioeconomic status than when they were paired with an accent associated with high socioeconomic status. Whereas racial concepts in Brazil are often claimed to be much more fluid compared with the United States, our findings suggest that the populations are quite similar with respect to associations between facial features and skin tone. Our findings also demonstrate speech accent as an additional source of category information that perceptual cognition can take into account when modeling the world.

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Positivity Bias in Judging Ingroup Members’ Emotional Expressions

Talya Lazerus et al.

Emotion, forthcoming

Abstract:
We investigated how group membership impacts valence judgments of ingroup and outgroup members’ emotional expressions. In Experiment 1, participants, randomized into 2 novel, competitive groups, rated the valence of in- and outgroup members’ facial expressions (e.g., fearful, happy, neutral) using a circumplex affect grid. Across all emotions, participants judged ingroup members’ expressions as more positive than outgroup members’ expressions. In Experiment 2, participants categorized fearful and happy expressions as being either positive or negative using a mouse-tracking paradigm. Participants exhibited the most direct trajectories toward the “positive” label for ingroup happy expressions and an initial attraction toward positive for ingroup expressions of fear, with outgroup emotion trajectories falling in between. Experiment 3 replicated Experiment 2 and demonstrated that the effect could not be accounted for by targets’ gaze direction. Overall, people judged ingroup faces as more positive, regardless of emotion, both in deliberate and implicit judgments.

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Cultural Sentiments and Schema-Consistency Bias in Information Transmission

Fallin Hunzaker

American Sociological Review, forthcoming

Abstract:
The negative outcomes associated with cultural stereotypes based on race, class, and gender and related schema-consistency biases are well documented. How these biases become culturally entrenched is less well understood. In particular, previous research has neglected the role of information transmission processes in perpetuating cultural biases. In this study, I combine insights from the cultural cognition, affect control theory, and cultural transmission frameworks to examine how one form of internalized culture — fundamental cultural sentiments — affects the content of information shared in communication. I argue that individuals communicate narratives in ways that minimize deflection of internalized cultural sentiments, resulting in cultural-consistency bias. I test this proposition using a serial transmission study in which participants read and retell short stories. Results show that culturally inconsistent, high-deflection information experiences an initial boost in memorability, but consistency biases ultimately win out as information is altered to increase cultural consistency, demonstrating that deflection provides a promising measure of cultural schema-consistency. This measure is predictive of the information that individuals share in communication and changes to this information in the transmission process.

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Fairy Godmothers > Robots: The Influence of Televised Gender Stereotypes and Counter-Stereotypes on Girls’ Perceptions of STEM

Bradley Bond

Bulletin of Science, Technology & Society, June 2016, Pages 91-97

Abstract:
The present study, grounded in gender schema theory, employed a posttest experimental design to examine how television might influence girls’ perceptions of STEM (science, technology, engineering, and mathematics). Girls (6-9 years old) were either exposed to stereotypical or counter-stereotypical STEM female television characters. In a posttest following exposure, girls reported math and science self-efficacy, preference for STEM and stereotypical careers, and perceptions of scientists’ gender using the draw-a-scientist procedure. Girls in the stereotype condition reported more interest in stereotypical careers and were more likely to perceive scientists as males than girls in the counter-stereotype STEM condition or a no exposure control. Girls in the counter-stereotype STEM condition did not differ from the no exposure control in any of the dependent variables. Results suggest that onetime exposure to televised stereotypes may activate existing gender schema, but that onetime exposure to televised counter-stereotypes may not have the capacity to alter girls’ STEM schema.

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Recalibrating valence-weighting tendencies as a means of reducing anticipated discomfort with an interracial interaction

Evava Pietri, John Dovidio & Russell Fazio

Group Processes & Intergroup Relations, forthcoming

Abstract:
We utilized a general intervention that affects (through “recalibration”) the way people generalize negative associations when evaluating objects to promote less negative expectations about an interaction with a Black Internet “chat” partner. During this intervention, participants played a game to learn which “beans” varying in shape and speckles increased or decreased their points. Participants later classified game beans and new beans as good or bad. Recalibration condition participants were told whether they classified beans correctly, thus receiving feedback regarding the appropriate weighting of resemblance to a known positive versus negative object. Control participants, who received no feedback, were more likely to classify new beans as negative than recalibration participants. Compared to control, the recalibration condition also anticipated feeling less intergroup anxiety during a chat with a Black partner (Experiments 1 and 2) and this effect was strongest among participants who reported fewer close interactions with Black people (Experiment 2).

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Experiencing Racial Humor with Outgroups: A Psychophysiological Examination of Co-Viewing Effects

Omotayo Banjo et al.

Media Psychology, forthcoming

Abstract:
Research on co-viewing (or group viewing) is scarce. Yet, co-viewing has important implications for the viewers’ entertainment experience and the way viewers respond to and evaluate entertainment — especially those with controversial messages. The present study investigated responses to racial humor content among racial in-group and out-group viewing contexts. Specifically, the study examined the extent to which Blacks and Whites would experience discomfort when viewing racial slurs in comedies with in-group compared to out-group members. Employing real-time psychophysiological data and multilevel time series models, the study found a significant increase in emotional arousal (indicated by SCRs) and distraction (indicated by RSA) among Blacks in the context of out-group viewing compared to in-group viewing, but not for Whites. Implications of findings are discussed.

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The world is a scary place: Individual differences in belief in a dangerous world predict specific intergroup prejudices

Corey Cook et al.

Group Processes & Intergroup Relations, forthcoming

Abstract:
Research suggests that people chronically concerned with safety, as measured by the Belief in a Dangerous World (BDW) Scale, are prone to intergroup prejudice and likely to endorse negative stereotypes under conditions eliciting concern for safety. Using a sociofunctional, threat-based approach to prejudice, the current research tested whether people with high BDW report increased prejudice specifically toward groups stereotypically associated with safety-related threats compared to groups associated with unrelated threats. Studies 1 and 2 found that higher BDW predicts increased negativity, safety-related concern, and fear toward groups stereotypically associated with threats to safety (e.g., illegal immigrants and Muslims) compared to groups thought to pose unrelated threats (e.g., gay men and obese people). Study 3 activated concern for safety using a news story detailing increased crime (vs. a control story), finding an interaction between safety concern activation, target group, and BDW, such that situational threat concern elicited greater prejudice toward Mexican Americans, but not toward Asian Americans, from those participants with higher BDW. These studies suggest that individual differences in concern for safety predict specific prejudices (e.g., fear and social distancing) toward distinct groups rather than general outgroup negativity.

By KEVIN LEWIS | 09:00:00 AM

Wednesday, November 16, 2016

No holds barred

Are Legacy Airline Mergers Pro- or Anti-Competitive? Evidence from Recent U.S. Airline Mergers

Dennis Carlton et al.

University of Chicago Working Paper, October 2016

Abstract:
Recent mergers have reduced the number of legacy airlines in the United States from six to three. We examine the effect of these legacy airline mergers on fares and output to determine whether the mergers have had an overall pro-competitive or anti-competitive effect. We focus on routes most likely to have been adversely affected by a reduction in competition. Our difference-in-differences regression analysis shows that those routes experienced no significant adverse effect on fares and significant increases in passenger traffic as well as capacity. These results indicate that the recent legacy mergers were pro-competitive.

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Evidence for the Effects of Mergers on Market Power and Efficiency

Bruce Blonigen & Justin Pierce

NBER Working Paper, October 2016

Abstract:
Study of the impact of mergers and acquisitions (M&As) on productivity and market power has been complicated by the difficulty of separating these two effects. We use newly-developed techniques to separately estimate productivity and markups across a wide range of industries using detailed plant-level data. Employing a difference-in-differences framework, we find that M&As are associated with increases in average markups, but find little evidence for effects on plant-level productivity. We also examine whether M&As increase efficiency through reallocation of production to more efficient plants or through reductions in administrative operations, but again find little evidence for these channels, on average. The results are robust to a range of approaches to address the endogeneity of firms’ merger decisions.

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Using Big Data to Estimate Consumer Surplus: The Case of Uber

Peter Cohen et al.

NBER Working Paper, September 2016

Abstract:
Estimating consumer surplus is challenging because it requires identification of the entire demand curve. We rely on Uber’s “surge” pricing algorithm and the richness of its individual level data to first estimate demand elasticities at several points along the demand curve. We then use these elasticity estimates to estimate consumer surplus. Using almost 50 million individual-level observations and a regression discontinuity design, we estimate that in 2015 the UberX service generated about $2.9 billion in consumer surplus in the four U.S. cities included in our analysis. For each dollar spent by consumers, about $1.60 of consumer surplus is generated. Back-of-the-envelope calculations suggest that the overall consumer surplus generated by the UberX service in the United States in 2015 was $6.8 billion.

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Do Ride-Sharing Services Affect Traffic Congestion? An Empirical Study of Uber Entry

Ziru Li, Yili Hong & Zhongju Zhang

Arizona State University Working Paper, August 2016

Abstract:
Sharing economy platform, which leverages information technology (IT) to re-distribute unused or underutilized assets to people who are willing to pay for the services, has received tremendous attention in the last few years. Its creative business models have disrupted many traditional industries (e.g., transportation, hotel) by fundamentally changing the mechanism to match demand with supply in real time. In this research, we investigate how Uber, a peer-to-peer mobile ride-sharing platform, affects traffic congestion and environment (carbon emissions) in the urban areas of the United States. Leveraging a unique data set combining data from Uber and the Urban Mobility Report, we examine whether the entry of Uber car services affects traffic congestion using a difference-in-difference framework. Our findings provide empirical evidence that ride-sharing services such as Uber significantly decrease the traffic congestion after entering an urban area. We perform further analysis including the use of instrumental variables, alternative measures, a relative time model using more granular data to assess the robustness of the results. A few plausible underlining mechanisms are discussed to help explain our findings.

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Information, competition, and the quality of charities

Silvana Krasteva & Huseyin Yildirim

Journal of Public Economics, December 2016, Pages 64–77

Abstract:
Drawing upon the all-pay auction literature, we propose a model of charity competition in which informed giving alone can account for the significant quality heterogeneity across similar charities. Our analysis identifies a negative effect of competition and a positive effect of informed giving on the equilibrium quality of charity. In particular, we show that as the number of charities grows, so does the percentage of charity scams, approaching one in the limit. In light of this and other results, we discuss the need for regulating nonprofit entry and conduct as well as promoting informed giving.

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Defaults, Decision Costs and Welfare in Behavioural Policy Design

Nicholas Chesterley

Economica, forthcoming

Abstract:
This paper studies the welfare effects of behavioural policies that change a consumer's default option or their cost of optimizing. I find that such policies, though increasingly popular, lead not just to changes in the welfare of optimizers or default-takers in the population — the payoff effect — but also to the membership of those groups — the composition effect. This can lead to costly and potentially counterintuitive effects: improving defaults may actually lower welfare, unlike decision simplification, which is unambiguously positive. Such approaches present a useful policy tool but are not always appropriate, and considerable knowledge of preferences is necessary for effective implementation.

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The Optimal Distribution of Population across Cities

David Albouy et al.

NBER Working Paper, November 2016

Abstract:
The received economic wisdom is that cities are too big and that public policy should limit their sizes. This wisdom assumes, unrealistically, that city sites are homogeneous, migration is unfettered, land is given freely to incoming migrants, and federal taxes are neutral. Should those assumptions not hold, large cities may be inefficiently small. We prove this claim in a system of cities with heterogeneous sites and either free mobility or local governments, where agglomeration economies, congestion, federal taxation, and land ownership create wedges. A quantitative version of our model suggests that cities may well be too numerous and underpopulated for a wide range of plausible parameter values. The welfare costs of free migration equilibria appear small, whereas they seem substantial when local governments control city size.

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On the Relevance of Market Power

Louis Kaplow

Harvard Law Review, forthcoming

Abstract:
Market power is the most important determinant of liability in competition law cases throughout the world. Yet fundamental questions on the relevance of market power are underanalyzed, if examined at all: When and why should we inquire into market power? How much should we require? Should market power be viewed as one thing, regardless of the practice under scrutiny and independent of the pertinent anticompetitive and procompetitive explanations for its use? Does each component of market power have the same probative force? Or even influence optimal liability determinations in the same direction? This Article’s ground-up investigation of market power finds that the answers often differ from what is generally believed and sometimes are surprising — notably, higher levels of certain market power measures or particular market power components sometimes disfavor liability. This gulf between conventional wisdom and correct understanding suggests the need to redirect research agendas, agency guidance, and competition law doctrine.

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Attribute Search in Online Retailing

Timothy Richards, Stephen Hamilton & Janine Empen

American Journal of Agricultural Economics, forthcoming

Abstract:
Online retailing has created an empirical opportunity to examine consumer search behavior using click stream data. In this article we examine the implications of greater variety online for consumer search intensity, and equilibrium prices. We test our hypothesis using consumer data on online search and purchase behavior from the comScore Web Behavior Panel. We find that search intensity systematically decreases in categories with broader product ranges, and equilibrium prices rise. Our findings suggests that broader product ranges in online retail markets can produce anti-competitive effects that are mediated through equilibrium responses in consumer search behavior.

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Power to the People: Does Ownership Type Influence Electricity Service?

Richard Boylan

Journal of Law and Economics, May 2016, Pages 441-476

Abstract:
After storm-related power outages, many have recommended municipalizing investor-owned utilities, claiming that profit-making utilities have insufficient incentive to prepare for storms. I provide empirical evidence that municipal utilities spend more on maintenance of their distribution network than investor-owned utilities. Nonetheless, I find that storms significantly disrupt electricity consumption in areas served by municipal utilities but do not disrupt areas served by investor-owned utilities. These results are based on a stratified random sample of 241 investor-owned, 96 cooperative, and 94 municipal utilities in the United States between 1999 and 2012. I conclude that municipal utilities’ in-efficiencies are more important in causing power outages than investor-owned utilities’ disincentives to spend on maintenance.

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Can Nudges Hurt? The Case of Tightwads and Spendthrifts

Linda Thunström, Ben Gilbert & Chian Jones Ritten

University of Wyoming Working Paper, August 2016

Abstract:
People have been found to experience pain when spending money, which can help regulate spending. For some, pain levels are optimal for managing spending (‘unconflicted’), but for others these levels are too low (‘spendthrifts’) or too high (‘tightwads’). We evaluate the effect of spending reminder nudges across subjects with different levels of pain of paying. To do so, we use a laboratory spending task where we vary the market context through treatments with different availability of product quality information (full, opt in, no information), and nudges designed to encourage rational spending (an opportunity cost reminder, an arbitrage reminder, no reminder). Two key results emerge. First, reminder nudges have undesired welfare effects. Tightwads, who already spend too little, significantly reduce their spending when reminded of opportunity costs, while spending by spendthrifts, who spend too much, is unaffected. Opportunity cost reminders therefore exacerbate the predisposition of tightwads to feel too much pain of paying, rather than encourage all types to make more rational decisions. Arbitrage reminders have similar effects, but results are mixed and weaker. Second, the context most helpful in reducing pain of paying for tightwads and increasing pain of paying for spendthrifts is the standard condition of an efficient market: fully-provided, costless information and no spending nudges.

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Regional Technology Dynamism and Noncompete Clauses: Evidence from a Natural Experiment

Thor Berger & Carl Benedikt Frey

Journal of Regional Science, forthcoming

Abstract:
In this paper, we examine the causal impact of enforceable covenants not to compete (CNCs) on labor market matching and the technological dynamism of regions. Exploiting the fact that the Michigan Antitrust Reform Act (MARA) of 1985 inadvertently repealed Michigan' s prohibition on CNC enforcement, we show that technical professionals in Michigan became increasingly likely to switch industry relative to similar workers in other U.S. states after prohibition. Workers switching industries after the introduction of MARA also earned lower wages, implying that they shifted into technical fields where their skills from previous employment were less productive. Estimates further show that the technological dynamism of Michigan declined in tandem, as fewer workers shifted into new types of jobs associated with recent technological advances. These findings are consistent with the view that skilled professionals that are subject to CNCs are more likely to leave their field of work postemployment to avoid lawsuits.

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Who Feeds the Trolls? Patent Trolls and the Patent Examination Process

Josh Feng & Xavier Jaravel

Harvard Working Paper, July 2016

Abstract:
Leveraging random examiner assignment and detailed patent prosecution data, we find that non-practicing entities (NPEs) purchase patents granted by examiners that tend to issue incremental patents with vaguely-worded claims. In comparison, practicing entities purchase a very different set of patents, but assert patents similar to those purchased by NPEs. These results show that on average NPEs purchase and assert patents productive for litigation but lacking technological merit, thus adding to overall litigation fees without providing incentives for high-quality innovations. Their activities are in part the symptom of a broader problem with the issuance of ill-defined intellectual property rights, which leads to (likely inefficient) litigation even among practicing entities. A cost-benefit calibration shows that investments in improving examination quality at the United States Patent Office would have large social returns.

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When Civil Society Uses an Iron Fist: The Roles of Private Associations in Rulemaking and Adjudication

Robert Ellickson

American Law and Economics Review, Fall 2016, Pages 235-271

Abstract:
Alexis de Tocqueville and Robert Putnam are but two of the many admirers of the countless private associations that lie at the core of civil society. This article seeks to advance understanding of the law-like activities of these associations. Residential community associations and sports leagues, for example, make rules and levy fines on members who violate them. The New York Diamond Dealers Club and the Writers Guild of America, like many other associations, have established internal arbitral panels for the resolution of member disputes. Courts are highly likely to defer to the outcomes of these arbitrations. The article’s central positive thesis, hedged with qualifications, is that a private association tends to engage in social control when it is the most cost-effective institution for addressing the issue at hand. This thesis is used to illuminate some otherwise puzzling associational practices, such as the efforts of the National Football League and other professional sports leagues to control players' domestic violence off the field of play.

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Welfare Implications of Congestion Pricing: Evidence from SFpark

Pnina Feldman, Jun Li & Hsin-Tien Tsai

University of California Working Paper, September 2016

Abstract:
Congestion pricing provides an appealing solution to urban parking problems. By charging varying rates across areas based on their congestion levels, congestion pricing shifts demand and allows a better allocation of limited resources. It aims to increase the accessibility of highly desired public goods for commuters who value them, and reduce traffic caused by drivers searching for available parking spaces. Using data from the City of San Francisco both before and after a congestion pricing scheme was implemented in 2011, we estimate the welfare implications of the policy. We use a two-stage dynamic search model to estimate consumers' search costs, distance disutilities, price sensitivities and trip valuations. These estimates then allow us to conduct welfare comparisons. We find that congestion pricing increases consumer welfare in popular areas, but when implemented in less-congested areas, it may actually hurt consumer welfare. In one of the districts under study, consumers ended up searching more, parked further away and paid more. Interestingly, despite the improved availability, congestion pricing may actually increase traffic due to cruising (searching for parking), as price sensitive consumers start to search for inexpensive parking spaces, particularly when prices are highly dispersed geographically. Through counterfactual analyses, we find that a simple three-tier pricing policy, which eliminates the search for a lower price, can significantly increase welfare and achieve more than 50% of the welfare increase achieved by a full price information benchmark.

By KEVIN LEWIS | 09:00:00 AM

Tuesday, November 15, 2016

All about babies

Pregnancy and Dropout: Effects of Family, Neighborhood, and High School Characteristics on Girls’ Fertility and Dropout Status

Nathan Berg & Teresa Nelson

Population Research and Policy Review, December 2016, Pages 757–789

Abstract:
Administrative data from multiple sources are combined to measure pregnancy (excluding those ending in abortion or miscarriage) and high school dropout in a cohort of girls who were 9th graders in the 1994–1995 academic year. Rates of pregnancy (as identified in the data) and dropout are substantially higher among Hispanic high school students than among African-Americans or non-Hispanic whites. Previous studies of teen pregnancy and dropout typically focus on pregnancy rates conditional on dropout status, or dropout rates conditional on fertility. This paper presents estimates of pregnancy and dropout as a joint-dependent variable. Estimates of their joint probability distribution conditional on individual, family, neighborhood, and high school characteristics are reported. The estimates use longitudinal administrative data collected as annual censuses of all public school students in Texas with individual-level ids. Neighborhood characteristics (from the US Census data geographically linked to Texas high schools) have large effects on pregnancy and dropout. Immigrant Hispanic girls’ pregnancy rates are significantly lower than native-born Hispanic girls’ pregnancy rates. Above-normal-age status in the 9th grade is among the strongest predictors of pregnancy and dropout in later years. Ethnic differences in age distributions within grade level appear to explain a large share of ethnic differences in pregnancy and dropout rates.

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Trends in Gestational Age at Time of Surgical Abortion for Fetal Aneuploidy and Structural Abnormalities

Anne Davis, Sarah Horvath & Paula Castaño

American Journal of Obstetrics and Gynecology, forthcoming

Study Design: We conducted a retrospective case series of all women undergoing surgical abortion for fetal aneuploidy or structural abnormalities up to 24 weeks gestation from 2004 through 2014 in a hospital operating room setting at a single, urban medical center. We excluded labor induction abortions (<1% of abortions at our medical center) and suction aspirations performed in the office practice. We performed suction aspiration up to 14 weeks and dilation and evacuation after that gestational age. We describe the median gestational age at abortion by fetal indication and year.

Results: For women undergoing abortion for fetal aneuploidy (n = 392), the median gestational age at time of abortion decreased from 19.0 weeks (interquartile range 18.0-21.0) in 2004 to 14.0 weeks (interquartile range 13.0-17.0) in 2014 (Kruskal Wallis P < .0001). For women undergoing abortion for fetal structural abnormalities (n = 586), the median gestational age was ≥ 20 weeks for each year during the study interval (P = .1). As gestational age decreased in the fetal aneuploidy group, fewer women underwent dilation and evacuation and more became eligible for suction aspiration (<14 weeks). In 2004, >90% of women underwent dilation and evacuation for either indication. By 2014, 31% of women with fetal aneuploidy were eligible for suction aspiration compared to 11% of those with structural anomalies.

Conclusion: Gestational age at the time of abortion for fetal aneuploidy decreased substantially from 2004 to 2014; earlier abortion is safer for women. In contrast, women seeking abortion for fetal structural abnormalities did not experience a change in timing. Legislation restricting gestational age at the time of abortion could disproportionately affect women with fetal structural abnormalities.

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State Abortion Policy and Unintended Birth Rates in the United States

Marshall Medoff

Social Indicators Research, November 2016, Pages 589–600

Abstract:
Restrictive state abortion laws make it more difficult and costly for women to obtain an abortion. The fundamental law of demand posits that an increase in the cost of an abortion should cause the number of abortions to decrease. This suggests that restrictive state abortion laws should cause women with unintended pregnancies to have fewer abortions and concomitantly more unintended births. This paper investigates the impact four restrictive state abortion laws — No Medicaid Funding, Parental Involvement, Mandatory Counseling and Waiting Periods — have on the unintended birth rates of the 50 US states for the year 2006. Using a variety of methodologies, the empirical results show that, contrary to the theoretical prediction, these four antiabortion laws do not have a significant positive effect on unintended birth rates.

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Black-White Differences in Sex and Contraceptive Use Among Young Women

Yasamin Kusunoki et al.

Demography, October 2016, Pages 1399–1428

Abstract:
This study examines black-white and other sociodemographic differences in young women’s sexual and contraceptive behaviors, using new longitudinal data from a weekly journal-based study of 1,003 18- to 19-year-old women spanning 2.5 years. We investigate hypotheses about dynamic processes in these behaviors during early adulthood in order to shed light on persisting racial differences in rates of unintended pregnancies in the United States. We find that net of other sociodemographic characteristics and adolescent experiences with sex and pregnancy, black women spent less time in relationships and had sex less frequently in their relationships than white women, but did not differ in the number of relationships they formed or in their frequency or consistency of contraceptive use within relationships. Black women were more likely to use less effective methods for pregnancy prevention (e.g., condoms) than white women, who tended to use more effective methods (e.g., oral contraceptives). And although the most effective method for pregnancy prevention — long-acting reversible contraception (LARC) — was used more often by black women than white women, LARC use was low in both groups. In addition, black women did not differ from white women in their number of discontinuations or different methods used and had fewer contraceptive method switches. Further, we find that net of race and adolescent experiences with sex and pregnancy, women from more-disadvantaged backgrounds had fewer and longer (and thus potentially more serious) relationships, used contraception less frequently (but not less consistently), and used less effective methods (condoms) than women from more-advantaged backgrounds.

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Paternal age negatively predicts offspring physical attractiveness in two, large, nationally representative datasets

Michael Woodley of Menie & Satoshi Kanazawa

Personality and Individual Differences, forthcoming

Abstract:
The effect of paternal age on offspring attractiveness has recently been investigated. Negative effects are predicted as paternal age is a strong proxy for the numbers of common de novo mutations found in the genomes of offspring. As an indicator of underlying genetic quality or fitness, offspring attractiveness should decrease as paternal age increases, evidencing the fitness-reducing effects of these mutations. Thus far results are mixed, with one study finding the predicted effect, and a second smaller study finding the opposite. Here the effect is investigated using two large and representative datasets (Add Health and NCDS), both of which contain data on physical attractiveness and paternal age. The effect is present in both datasets, even after controlling for maternal age at subject's birth, age of offspring, sex, race, parental and offspring (in the case of Add Health) socio-economic characteristics, parental age at first marriage (in the case of Add Health) and birth order. The apparent robustness of the effect to different operationalizations of attractiveness suggests high generalizability, however the results must be interpreted with caution, as controls for parental levels of attractiveness were indirect only in the present study.

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Pensions and fertility: Back to the roots

Robert Fenge & Beatrice Scheubel

Journal of Population Economics, January 2017, Pages 93–139

Abstract:
Fertility has long been declining in industrialised countries and the existence of public pension systems is considered as one of the causes. This paper provides detailed evidence on the mechanism by which a public pension system depresses fertility, based on historical data. Our theoretical framework highlights that the effect of a public pension system on fertility is ex ante ambiguous while its size is determined by the internal rate of return of the pension system. We identify an overall negative effect of the introduction of pension insurance on fertility using regional variation across 23 provinces of Imperial Germany in key variables of Bismarck’s pension system, which was introduced in Imperial Germany in 1891. The negative effect on fertility is robust to controlling for the traditional determinants of the first demographic transition as well as to other policy changes.

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Abortion, Property, and Liberty

William Simkulet

Journal of Ethics, December 2016, Pages 373–383

Abstract:
In “Abortion and Ownership” John Martin Fischer argues that in Judith Jarvis Thomson’s violinist case you have a moral obligation not to unplug yourself from the violinist. Fischer comes to this conclusion by comparing the case with Joel Feinberg’s cabin case, in which he contends a stranger is justified in using your cabin to stay alive. I argue that the relevant difference between these cases is that while the stranger’s right to life trumps your right to property in the cabin case, the violinist’s right to life does not trump your right to liberty in the violinist case.

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Does Population Control Lead to Better Child Quality? Evidence from China’s One-Child Policy Enforcement

Bingjing Li & Hongliang Zhang

Journal of Comparative Economics, forthcoming

Abstract:
Scholarly evidence on the quantity-quality trade-off is mixed in part because of the identification challenge due to endogenous family size. This paper provides new evidence of the causal effect of child quantity on child quality by exploiting regional differences in the enforcement intensity of China’s one-child policy (OCP) as an exogenous source of variation in family size. Using the percentage of current mothers of primary childbearing age who gave a higher order birth in 1981, we construct a quantitative indicator of the extent of local violation of the OCP, referred to as the excess fertility rate (EFR). We then use regional differences in EFRs, net differences in pre-existing fertility preferences and socio-economic characteristics, to proxy for regional differences in OCP enforcement intensity. Using micro data from the Chinese Population Censuses, we find that prefectures with stricter enforcement of the OCP have experienced larger declines in family size and also greater improvements in children’s education. Despite the evident trade-off between family size and child quality in China, our quantitative estimates suggest that China’s OCP makes only a modest contribution to the development of its human capital.

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The effects of teenage childbearing on long-term health in the US: A twin-fixed-effects approach

Pınar Mine Güneş

Review of Economics of the Household, December 2016, Pages 891–920

Abstract:
This paper explores the effect of teenage childbearing on long-term health outcomes and behaviors of mothers using the Midlife Development in the US dataset. Within-family estimations, using samples of siblings, and twin pairs, are employed to overcome the bias generated by unobserved family background and genetic traits. The results suggest no significant effects on health outcomes, and modest effects on health behaviors, including exercise and preventive care. However, accounting for life-cycle effects demonstrates that teenage childbearing has significant effects on both health outcomes and behaviors early in life, but very few significant effects later in life. Moreover, teenage childbearing has a particularly acute effect among minorities. Finally, this paper provides evidence that the effects operate through reduced income and labor force participation, and matching with a lower “quality” spouse.

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No relationship between abortion numbers and maternal cognitive ability

Michael Woodley of Menie, Justus Sänger & Gerhard Meisenberg

Personality and Individual Differences, January 2017, Pages 489–492

Abstract:
The relationship between maternal cognitive ability (as indicated by g and highest attained educational level) and self-reported numbers of abortions at near-completed fertility is investigated in two, population representative samples of the US: (i) a sample of 1386 women, sourced from NLSY’79 (aged 39–47), and (ii) a sample 842 women (aged 38–45), sourced from NSFG’11–13. No linear relationships between either of the cognitive ability measures and abortion numbers were found, nor were quadratic effects present in these data. Income had an independent negative effect on abortion numbers in the NSFG’11–13 sample, whereas age was a positive independent predictor in the NLSY’79 sample. The essentially zero-magnitude association between maternal cognitive ability and abortion numbers may have resulted from the wide scale destigmatization of elective abortion as a birth-control technique in the US following the 1973 US Supreme Court ruling in Roe v. Wade. Despite this, self-reported abortion numbers data typically underrepresent the true numbers of abortions hence these findings must be considered tentative especially if underreporting is unsystematic with respect to any of the predictors.

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Embryo quality: The missing link between pregnancy sickness and pregnancy outcome

Scott Forbes

Evolution and Human Behavior, forthcoming

Abstract:
Pregnancy sickness is widespread yet its etiology is poorly understood. It is almost certainly endocrine in origin and most likely a product of placental hormones, with human chorionic gonadotropin being the strongest candidate. It has long been known that greater levels of nausea and vomiting during pregnancy are associated with a lower incidence of spontaneous abortion, yet the causal mechanisms remain unclear. One current popular explanation is that nausea and vomiting during pregnancy is fetoprotective, inducing aversions to foods, especially meat, dairy and seafoods, which may carry toxins, pathogens or mutagens. However, most spontaneous abortions arise from genetic or epigenetic defects that are present at or near conception. Moreover, measurements of human chorionic gonadotropin (hCG) at the time of implantation, particularly its hyperglycosylated isoform, accurately predict subsequent spontaneous abortion. Thus the developmental fate of most embryos is fixed before the onset of the symptoms of pregnancy sickness. An alternative explanation for the link between pregnancy sickness and spontaneous abortion is the embryo quality hypothesis: high quality embryos are both more likely to produce the biochemical antecedents of pregnancy sickness and avoid spontaneous abortion. Recent work has shown that the link between pregnancy sickness and spontaneous abortion grows stronger with maternal age, dramatically so in mothers 35 or older. This reflects the parallel rise in the incidence of autosomal aneuploidies with maternal age. The link between pregnancy sickness and spontaneous abortion exists not because nausea and vomiting during pregnancy is fetoprotective, but because nausea and vomiting is an index of a high quality embryo. Pregnancy sickness is not adaptive pers se, but the result of an antagonistic pleiotropy over thyroid function, where embryos use hCG to modulate maternal thyroid hormone production during gestation. Embryos benefit from the thyroid hormone production that is key to neurodevelopment, but produce maternal nausea and vomiting as a by-product. Pregnancy sickness, however, may still serve to protect embryo quality but by a different mechanism that posited under the MEPH. Embryo quality is protected by calibrating the dietary intake of a micronutrient – iodine – critical to neuromotor development. For most humans over most of our evolutionary history, iodine has been in short supply, and iodine deficiency is still the most common source of cognitive impairment across the globe. Thus it is of interest that the foods aversions most commonly associated with pregnancy sickness, to meat, dairy and seafoods, are also the chief dietary sources of iodine. There is a further intriguing property about iodine: both too little and too much during early pregnancy is damaging to embryo brain development. Given that pregnancy sickness is closely linked to iodine intake and thyroid function (hypothyroidism is associated with lower levels of nausea and vomiting, hyperthyroidism with more), an obvious interpretation emerges. The previously described link between diet and pregnancy sickness – pregnancy sickness is less likely when plants and particularly corn / maize are the sole food staples – arises not because plant food staples are safe, as previously suggested, but because these foods are iodine poor and may, in addition, be goitrogenic. Pregnancy sickness, which reduces the dietary intake of iodine, is clearly maladaptive under conditions of iodine deficiency and hypothyroidism. Conversely, higher levels of pregnancy sickness induced by hyperthyroidism may protect embryos from the inimical effects of excessive dietary iodine during early gestation by reducing the intake of iodine rich foods.

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Malaria Ecology, Child Mortality & Fertility

Gordon McCord, Dalton Conley & Jeffrey Sachs

Economics & Human Biology, February 2017, Pages 1–17

Abstract:
The broad determinants of fertility are thought to be reasonably well identified by demographers, though the detailed quantitative drivers of fertility levels and changes are less well understood. This paper uses a novel ecological index of malaria transmission to study the effect of child mortality on fertility. We find that temporal variation in the ecology of the disease is well-correlated to mortality, and pernicious malaria conditions lead to higher fertility rates. We then argue that most of this effect occurs through child mortality, and estimate the effect of child mortality changes on fertility. Our findings add to the literature on disease and fertility, and contribute to the suggestive evidence that child mortality reductions have a causal effect on fertility changes.

By KEVIN LEWIS | 09:00:00 AM

Monday, November 14, 2016

Developing stories

Masters of Disasters? An Empirical Evaluation of the Social Implications of Corporate Disaster Giving

Luis Ballesteros, Michael Useem & Tyler Wry

Academy of Management Journal, forthcoming

Abstract:
Corporations have become increasingly influential within societies around the world, while the relative capacity of national governments to meet large social needs has waned. Consequentially, firms are being asked to adopt responsibilities that have traditionally fallen to governments, aid agencies, and other types of organizations. There are questions, though, about whether or not this is beneficial for society. We study this in the context of disaster relief and recovery; an area where companies account for a growing share of aid as compared to traditional providers. Drawing on the dynamic capabilities literature, we argue that firms are better-equipped than other types of organizations to sense areas of need following a disaster, seize response opportunities, and reconfigure resources for fast, effective relief efforts. As such, we predict that — while traditional aid providers are important for disaster recovery — relief will arrive faster, and nations will recover more fully when locally active firms account for a larger share of disaster aid. We test our predictions with a proprietary dataset comprising information on every natural disaster and reported aid donation worldwide from 2003 to 2013. Our analysis uses a novel, quasi-experimental technique known as the synthetic control method and shows that nations benefit greatly from corporate involvement when disaster strikes.

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Knowledge Elites and Modernization: Evidence from Revolutionary France

Mara Squicciarini & Nico Voigtländer

NBER Working Paper, October 2016

Abstract:
This paper examines the role of knowledge elites in modernization. At the eve of the French Revolution, in the spring of 1789, King Louis XVI solicited lists of grievances (Cahiers de Doléances), in which the public could express complaints and suggestions for reforms of the Ancien Regime. We show that the demand for mass education and democratization was particularly high in regions that had a thick knowledge elite, measured by subscribers to the famous Encyclopédie in the 1770s. Historical evidence suggests that this pattern is driven by the spirit of enlightenment of French knowledge elites. Pre-revolution literacy, in contrast, is not correlated with demand for mass education or with the density of knowledge elites. After the French Revolution, knowledge elites played a key role in implementing schooling reforms at the local level. We show that by the mid-19th century, schooling rates were significantly higher in regions with thicker knowledge elites. The same is true of other proxies for modernization, such as association membership, Republican votes, and the share of French-speaking pupils. Our results highlight an important interaction between local culture (the spirit of enlightenment) and nation-wide institutions in economic development: the French Revolution opened a window of opportunity for local elites to pursue their agenda of modernization.

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Adam Smith, Watch Prices, and the Industrial Revolution

Morgan Kelly & Cormac Ó Gráda

Quarterly Journal of Economics, November 2016, Pages 1727-1752

Abstract:
Although largely absent from modern accounts of the Industrial Revolution, watches were the first mass produced consumer durable, and were Adam Smith’s pre-eminent example of technological progress. In fact, Smith makes the notable claim that watch prices may have fallen by up to 95 per cent over the preceding century; a claim that this paper attempts to evaluate. We look at changes in the reported value of over 3,200 stolen watches from criminal trials in the Old Bailey in London from 1685 to 1810. Before allowing for quality improvements, we find that the real price of watches in nearly all categories falls steadily by 1.3 per cent per year, equivalent to a fall of 75 per cent over a century, showing that sustained innovation in the production of a highly complex artefact had already appeared in one important sector of the British economy by the early eighteenth century.

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The economic consequences of the Spanish Reconquest: The long-term effects of Medieval conquest and colonization

Daniel Oto-Peralías & Diego Romero-Ávila

Journal of Economic Growth, December 2016, Pages 409–464

Abstract:
This paper shows that a historical process that ended more than five centuries ago, the Reconquest, is very important to explain Spanish regional economic development down to the present day. An indicator measuring the rate of Reconquest reveals a heavily negative effect on current income differences across the Spanish provinces. A main intervening factor in the impact the Reconquest has had is the concentration of economic and political power in a few hands, excluding large segments of the population from access to economic opportunities when Spain entered the industrialization phase. The timing of the effect is consistent with this argument. A general implication of our analysis is that large frontier expansions may favor a political equilibrium among the colonizing agents that is biased toward the elite, creating the conditions for an inegalitarian society, with negative consequences for long-term economic development.

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Endogenous Property Rights

Carmine Guerriero

Journal of Law and Economics, May 2016, Pages 313-358

Abstract:
Although property rights are key, their determinants are still poorly understood. When property is fully protected, some potential buyers with valuation higher than that of original owners are inefficiently excluded from trade because of transaction costs. When property rights are weak, low-valuation potential buyers inefficiently expropriate original owners. The trade-off between these two misallocations implies that the protection of property will be stronger the more heterogeneous the potential buyer’s preferences are. This implication holds true when part of the population has more political influence on institutional design, when transaction costs are determined by either market power or asymmetric information, and when the disincentive effect of weak property rights is taken into account. Moreover, it is consistent with the relationships between measures of ethnolinguistic, genetic, and religious diversity and novel data on the rules on adverse possession and on government takings of real property in 126 jurisdictions.

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The Middle-Income Trap: More Politics than Economics

Richard Doner & Ben Ross Schneider

World Politics, October 2016, Pages 608-644

Abstract:
Economists have identified the existence of a middle-income (mi) trap but have yet to analyze the politics of this trap. The authors argue that countries in the mi trap face two major institutional and political challenges. First, the policies necessary to upgrade productivity — as in human capital and innovation — require enormous investment in institutional capacity. Second, these institutional challenges come at a time when political capacity for building these institutions is weak, due primarily to the fragmentation of potential support coalitions. Politics are stalled in particular by fractured social groups, especially business and labor, and more generally by inequality. These conditions result in large measure from previous trajectories of growth. The empirical analysis concentrates on nine of the larger mi countries.

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Direct Democracy and Resource Allocation: Experimental Evidence from Afghanistan

Andrew Beath, Fotini Christia & Ruben Enikolopov

Journal of Development Economics, January 2017, Pages 199–213

Abstract:
Direct democracy is designed to better align policy outcomes with citizen preferences. To test this proposition, we randomized whether 250 villages across Afghanistan selected projects by secret-ballot referenda or by consultation meetings. We find that referenda reduce the influence of local elites over both project type and location. Consistent with previous experimental results, we also find that referenda improve villagers’ perceptions of the local economy and of the quality of local governance. However, we find no systematic evidence that selecting projects via referenda increases the average impact of such projects.

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Colonial Revenue Extraction and Modern Day Government Quality in the British Empire

Rasmus Broms

World Development, forthcoming

Abstract:
The relationship between the extent of government revenue a government collects, primarily in the form of taxation, and its overall quality has increasingly been identified as a key factor for successful state building, good institutions, and — by extension — general development. Initially deriving from historical research on Western Europe, this process is expected to unfold slowly over time. This study tests the claim that more extensive revenue collection has long-lasting and positive consequences for government quality in a developmental setting. Using fiscal records from British colonies, results from cross-colony/country regression analyses reveal that higher colonial income-adjusted revenue levels during the early twentieth century can be linked to higher government quality today. This relationship is substantial and robust to several specifications of both colonial revenue and modern day government quality, and remains significant under control for a range of rivaling explanations. The results support the notion that the current institutional success of former colonies can be traced back to the extent of historical revenue extraction.

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Rights Without Resources: The Impact of Constitutional Social Rights on Social Spending

Adam Chilton & Mila Versteeg

University of Virginia Working Paper, October 2016

Abstract:
Over the past decades, constitutions around the world have come to protect a growing number of social rights. This constitutionalization of social rights has generally been met with approval from academics, human rights activists, policy-makers, and development economists alike. But despite this widespread support, there is hardly any evidence on whether the inclusion of rights in constitutions actually changes how governments provide social services to their citizens. We take up this question by studying the effect of adopting the constitutional right to education and healthcare on government spending. Using data on 186 countries’ constitutional rights, we employ a variety of empirical tests to examine if the rights to education and healthcare are associated with increases in government spending. Our results suggest that the adoption of these social rights is not associated with statistically significant or substantively meaningful increases in government spending on education or healthcare.

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Does household financial access facilitate law compliance? Evidence from Mexico

Emilio Gutiérrez & Kensuke Teshima

Economics Letters, December 2016, Pages 120–124

Abstract:
We investigate the impact of financial access on law compliance (whether workers are registered in a mandated social security system). In contrast to previous studies that focus on firms’ access to credit, we investigate workers’ access to credit. Exploiting the geographic variation in financial access due to Banco Azteca’s opening in Mexico in 2002 that changed financial access by poor people almost overnight, we find that financial access increased the probability of getting formalized.

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The World Bank, Organized Hypocrisy, and Women's Health: A Cross-National Analysis of Maternal Mortality in Sub-Saharan Africa

Carolyn Coburn et al.

Sociological Forum, forthcoming

Abstract:
The theory of organized hypocrisy asserts that an organization depends upon its external environment for both financial support and conferred legitimacy, which can lead to conflicting policy agendas. We apply the theory of organized hypocrisy to World Bank structural adjustment and investment lending for reproductive health, hypothesizing these two lending policies should have differential effects on maternal mortality. We estimate a two-way fixed effects regression model with robust standard errors clustered by country to examine the effect of World Bank reproductive health lending on maternal mortality within sub-Saharan African nations over the period 1990–2010. We find that in every model the coefficients for World Bank structural adjustment lending in the health sector are positive and significant while the coefficients for World Bank investment lending in the reproductive health sector are negative and significant. The findings lend support to the theory that the World Bank is pursuing contradictory agendas, embodied by its lending policies, which can have differential effects on maternal mortality.

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Securing Property Rights

Edward Glaeser, Giacomo Ponzetto & Andrei Shleifer

NBER Working Paper, September 2016

Abstract:
A central challenge in securing property rights is the subversion of justice through legal skill, bribery, or physical force by the strong — the state or its powerful citizens — against the weak. We present evidence that the less educated and poorer citizens in many countries feel their property rights are least secure. We then present a model of a farmer and a mine which can pollute his farm in a jurisdiction where the mine can subvert law enforcement. We show that, in this model, injunctions or other forms of property rules work better than compensation for damage or liability rules. The equivalences of the Coase Theorem break down in realistic ways. The case for injunctions is even stronger when parties can invest in power. Our approach sheds light on several controversies in law and economics, but also applies to practical problems in developing countries, such as low demand for formality, law enforcement under uncertain property rights, and unresolved conflicts between environmental damage and development.

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Migration, Diversity, and Economic Growth

Vincenzo Bove & Leandro Elia

World Development, January 2017, Pages 227–239

Abstract:
When migrants move from one country to another, they carry a new range of skills and perspectives, which nurture technological innovation and stimulate economic growth. At the same time, increased heterogeneity may undermine social cohesion, create coordination, and communication barriers, and adversely affect economic development. In this article we investigate the extent to which cultural diversity affects economic growth and whether this relation depends on the level of development of a country. We use novel data on bilateral migration stocks, that is the number of people living and working outside the countries of their birth over the period 1960–2010, and compute indices of fractionalization and polarization. In so doing, we explore the effect of immigration on development through its effect on the composition of the destination country. We find that overall both indices have a distinct positive impact on real GDP per capita and that the effect of diversity seems to be more consistent in developing countries.

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The Devil is in the Details: The Successes and Limitations of Bureaucratic Reform in India

Iqbal Dhaliwal & Rema Hanna

Journal of Development Economics, January 2017, Pages 1–21

Abstract:
Using a biometric technology to monitor the attendance of public health workers in India resulted in a 15 percent increase in staff presence, particularly for lower-level staff. The monitoring program led to a reduction in low-birth weight babies, highlighting the importance of improving provider presence. But, despite the government initiating this reform, there was ultimately a low demand by the government to use the higher quality attendance data available in real time to enforce their existing human resource policies (e.g. leave or salary deductions) due to logistical challenges and a not unrealistic fear of generating staff discord or increase in staff attrition, especially among doctors, who showed the least improvement in attendance. While we observed some gains from this type of monitoring program, technological solutions by themselves will not improve attendance of government staff without a willingness to use the data generated to enforce existing penalties.

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Intra-Elite Competition and Long-Run Fiscal Development

Pablo Beramendi, Mark Dincecco & Melissa Rogers

Duke University Working Paper, September 2016

Abstract:
We offer a new rationale to help explain cross-national differences in long-run fiscal development. Higher public goods provision can translate into productivity gains in an industrializing society. Thus, capitalist elites -- unlike agricultural elites, who rely on traditional production methods -- may prefer to invest in greater fiscal capacity. Furthermore, to pay for this investment, capitalist elites may prefer to shoulder a higher tax burden through progressive direct taxation, which they may view as the least-worst economic option. To test the predictions of our argument, we exploit an original fiscal database that spans 30-plus developed and developing nations over 1870-2010. We find a positive, significant, and robust relationship between intra-elite competition among agricultural and capitalist elites and the size and structure of fiscal states. Our results show that fiscal development may take place even in the absence of interstate military competition and warfare.

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Lifting the iron curtain: School-age education and entrepreneurial intentions

Oliver Falck, Robert Gold & Stephan Heblich

Journal of Economic Geography, forthcoming

Abstract:
We exploit Germany’s reunification to identify how school-age education affects entrepreneurial intentions. We look at university students in reunified Germany who were born before the Iron Curtain fell. During school age, all students in the West German control group received formal and informal education in a free-market economy, while East German students did or did not receive free-market education. Difference-in-differences estimations show that school-age education in a free-market economy increases entrepreneurial intentions. An event study supports the common-trends assumption. Results remain robust in matched samples and when we exploit within-student variation in occupational intentions to control for unobserved individual characteristics.

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Has climate change driven urbanization in Africa?

Vernon Henderson, Adam Storeygard & Uwe Deichmann

Journal of Development Economics, January 2017, Pages 60–82

Abstract:
This paper documents strong but differentiated links between climate and urbanization in large panels of districts and cities in Sub-Saharan Africa, which has dried substantially in the past fifty years. The key dimension of heterogeneity is whether cities are likely to have manufacturing for export outside their regions, as opposed to being exclusively market towns providing local services to agricultural hinterlands. In regions where cities are likely to be manufacturing centers (25% of our sample), drier conditions increase urbanization and total urban incomes. There, urban migration provides an “escape” from negative agricultural moisture shocks. However, in the remaining market towns (75% of our sample), cities just service agriculture. Reduced farm incomes from negative shocks reduce demand for urban services and derived demand for urban labor. There, drying has little impact on urbanization or total urban incomes. Lack of structural transformation in Africa inhibits a better response to climate change.

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From Personalized Exchange Towards Anonymous Trade: A Field Experiment on the Workings of the Invisible Hand

Erwin Bulte et al.

Journal of Economic Behavior & Organization, forthcoming

Abstract:
The experimental literature has shown the tendency for experimental trading markets to converge to neoclassical predictions. Yet, the extent to which theory explains the equilibrating forces in markets remains under-researched, especially in the developing world. We set up a laboratory in 94 villages in rural Sierra Leone to mimic a real market. We implement several treatments, varying trading partners and the anonymity of trading. We find that when trading with co-villagers average efficiency is somewhat lower than predicted by theory (and observed in different contexts), and markets do not fully converge to theoretical predictions across rounds of trading. When participants trade with strangers efficiency is reduced more. Anonymizing trade within the village does not affect efficiency. This points to the importance of behavioral norms for trade. Intra-village social relationships or hierarchies, instead, appear less important as determinants of trading outcomes. This is confirmed by analysis of the trader-level data, showing that individual earnings in the experiment do not vary with one’s status or position in local networks.

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Mobile Phones, Civic Engagement, and School Performance in Pakistan

Minahil Asim & Thomas Dee

NBER Working Paper, October 2016

Abstract:
The effective governance of local public services depends critically on the civic engagement of local citizens. However, recent efforts to promote effective citizen oversight of the public-sector services in developing countries have had mixed results. This study discusses and evaluates a uniquely designed, low-cost, scalable program designed to improve the governance and performance of primary and middle schools in the Punjab province of Pakistan. The School Council Mobilization Program (SCMP) used mobile-phone calls to provide sustained and targeted guidance to local school-council members on their responsibilities and authority. We examine the effects of the SCMP on school enrollment, student and teacher attendance, and school facilities using a “difference in difference in differences” (DDD) design based on the targeted implementation of the SCMP. We find that this initiative led to meaningful increases in primary-school enrollment, particularly for young girls (i.e., a 12.4 percent increase), as well as targeted improvements in teacher attendance and school facilities, most of which were sustained in the months after the program concluded.

By KEVIN LEWIS | 09:00:00 AM

Sunday, November 13, 2016

Mad men

The Dark Side of Scarcity Promotions: How Exposure to Limited-Quantity Promotions Can Induce Aggression

Kirk Kristofferson et al.

Journal of Consumer Research, forthcoming

Abstract:
Marketers frequently use scarcity promotions, where a product or event is limited in availability. The present research shows conditions under which the mere exposure to such advertising can activate actual aggression that manifests even outside the domain of the good being promoted. Further, we document the process underlying this effect: exposure to limited-quantity promotion advertising prompts consumers to perceive other shoppers as competitive threats to obtaining a desired product and physiologically prepares consumers to aggress. Seven studies using multiple behavioral measures of aggression demonstrate this deleterious response to scarcity promotions.

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Combating the Sting of Rejection With the Pleasure of Revenge: A New Look at How Emotion Shapes Aggression

David Chester & Nathan DeWall

Journal of Personality and Social Psychology, forthcoming

Abstract:
How does emotion explain the relationship between social rejection and aggression? Rejection reliably damages mood, leaving individuals motivated to repair their negatively valenced affective state. Retaliatory aggression is often a pleasant experience. Rejected individuals may then harness revenge’s associated positive affect to repair their mood. Across 6 studies (total N = 1,516), we tested the prediction that the rejection–aggression link is motivated by expected and actual mood repair. Further, we predicted that this mood repair would occur through the positive affect of retaliatory aggression. Supporting these predictions, naturally occurring (Studies 1 and 2) and experimentally manipulated (Studies 3 and 4) motives to repair mood via aggression moderated the rejection–aggression link. These effects were mediated by sadistic impulses toward finding aggression pleasant (Studies 2 and 4). Suggesting the occurrence of actual mood repair, rejected participants’ affective states were equivalent to their accepted counterparts after an act of aggression (Studies 5 and 6). This mood repair occurred through a dynamic interplay between preaggression affect and aggression itself, and was driven by increases in positive affect (Studies 5 and 6). Together, these findings suggest that the rejection–aggression link is driven, in part, by the desire to return to affective homeostasis. Additionally, these findings implicate aggression’s rewarding nature as an incentive for rejected individuals’ violent tendencies.

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Exploring the Relationship Between Violent Behavior and Participation in Football During Adolescence: Findings From a Sample of Sibling Pairs

Kevin Beaver, J.C. Barnes & Brian Boutwell

Youth & Society, November 2016, Pages 786-809

Abstract:
The current study examined the association between playing high school football and involvement in violent behaviors in sibling pairs drawn from the National Longitudinal Study of Adolescent Health (Add Health). The analysis revealed that youth who played high school football self-reported more violence than those youth who did not play football. Quantitative genetic analyses revealed that 85% of the variance in football participation was the result of genetic factors and 62% of the variance in violent behavior was due to genetic factors. Additional analyses indicated that 54% of the covariance between football participation and violence was due to genetics and 46% was the result of nonshared environmental influences. However, even after controlling for genetic influences, participation in football appeared to increase violent behavior.

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Testosterone administration does not affect men's rejections of low ultimatum game offers or aggressive mood

Carlos Cueva et al.

Hormones and Behavior, January 2017, Pages 1–7

Abstract:
Correlative evidence suggests that testosterone promotes dominance and aggression. However, causal evidence is scarce and offers mixed results. To investigate this relationship, we administered testosterone for 48 h to 41 healthy young adult men in a within-subjects, double-blind placebo-controlled balanced crossover design. Subjects played the role of responders in an ultimatum game, where rejecting a low offer is costly, but serves to destroy the proposer's profit. Such action can hence be interpreted as non-physical aggression in response to social provocation. In addition, subjects completed a self-assessed mood questionnaire. As expected, self-reported aggressiveness was a key predictor of ultimatum game rejections. However, while testosterone affected subjective ratings of feeling energetic and interested, our evidence strongly suggests that testosterone had no effect on ultimatum game rejections or on aggressive mood. Our findings illustrate the importance of using causal interventions to assess correlative evidence.

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Preliminary evidence that testosterone's association with aggression depends on self-construal

Keith Welker et al.

Hormones and Behavior, forthcoming

Abstract:
Previous research and theory suggest testosterone is an important hormone for modulating aggression and self-regulation. We propose that self-construal, a culturally-relevant difference in how individuals define the self in relation to others, may be an important moderator of the relationship between testosterone and behaviors linked to aggression. Within two studies (Study 1 N = 80; Study 2 N = 237) and an integrated data analysis, we find evidence suggesting that acute testosterone changes in men are positively associated with aggressive behavior for those with more independent self-construals, whereas basal testosterone is negatively associated with aggression when individuals have more interdependent self-construals. Although preliminary, these findings suggest that self-construal moderates the association between testosterone and aggression, thereby paving the way toward future work examining the potential cultural moderation of the behavioral effects of testosterone.

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Effects of Violent Media on Verbal Task Performance in Gifted and General Cohort Children

Yakup Çetin et al.

Gifted Child Quarterly, October 2016, Pages 279-286

Abstract:
Violent media immediately grab our attention. However, violent media also detract attention from other cues. A large body of research shows that violent media impair attention and memory, critical resources for academic performance, such as verbal tasks at school. The present study tested whether gifted children are more insulated or more vulnerable to these violent media effects. Gifted (n = 74) and general cohort (n = 80) 10-year-old children were randomly assigned to watch a 12-minute violent or nonviolent cartoon. A verbal task was completed before and after the video. Results showed that gifted children outperformed general cohort children on the verbal task after watching a nonviolent cartoon, but not after watching a violent cartoon. Thus, the violent video eliminated the typical advantage gifted children have on verbal tasks. These findings suggest that the harmful effects of violent media on verbal tasks are greater for gifted children than for general cohort children.

By KEVIN LEWIS | 09:00:00 AM


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