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Tuesday, May 17, 2016

World of differences

Cut From the Same Cloth: Similarly Dishonest Individuals Across Countries

Heather Mann et al.

Journal of Cross-Cultural Psychology, forthcoming

Abstract:
Norms for dishonest behaviors vary across societies, but whether this variation is related to differences in individuals’ core tendencies toward dishonesty is unknown. We compare individual dishonesty on a novel task across 10 participant samples from five countries varying in corruption and cultural values. In each country, a die-rolling task was administered to students at major public universities and the general public in coffee shops. A separate group of participants in each country predicted that dishonesty would vary across countries and demonstrated a home country dishonesty bias. In contrast to predictions from independent samples, observed dishonesty was limited in magnitude and similar across countries. We found no meaningful relationships between dishonesty on our task and macro-level indicators, including corruption ratings and cultural values. These findings suggest that individuals around the world are similarly dishonest at their core.

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Shared Cultural History as a Predictor of Political and Economic Changes among Nation States

Luke Matthews et al.

PLoS ONE, April 2016

Abstract:
Political and economic risks arise from social phenomena that spread within and across countries. Regime changes, protest movements, and stock market and default shocks can have ramifications across the globe. Quantitative models have made great strides at predicting these events in recent decades but incorporate few explicitly measured cultural variables. However, in recent years cultural evolutionary theory has emerged as a major paradigm to understand the inheritance and diffusion of human cultural variation. Here, we combine these two strands of research by proposing that measures of socio-linguistic affiliation derived from language phylogenies track variation in cultural norms that influence how political and economic changes diffuse across the globe. First, we show that changes over time in a country’s democratic or autocratic character correlate with simultaneous changes among their socio-linguistic affiliations more than with changes of spatially proximate countries. Second, we find that models of changes in sovereign default status favor including socio-linguistic affiliations in addition to spatial data. These findings suggest that better measurement of cultural networks could be profoundly useful to policy makers who wish to diversify commercial, social, and other forms of investment across political and economic risks on an international scale.

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Consequences of ‘tiger’ parenting: A cross-cultural study of maternal psychological control and children's cortisol stress response

Stacey Doan et al.

Developmental Science, forthcoming

Abstract:
Parenting strategies involving psychological control are associated with increased adjustment problems in children. However, no research has examined the extent to which culture and psychological control predict children's stress physiology. We examine cultural differences in maternal psychological control and its associations with children's cortisol. Chinese (N = 59) and American (N = 45) mother-child dyads participated in the study. Mothers reported on psychological control. Children's cortisol was collected during a stressor and two indices of Area Under the Curve (AUC) were computed: AUCg which accounts for total output, and AUCi, which captures reactivity. Results indicate that Chinese mothers reported higher levels of psychological control and Chinese children had higher levels of AUCg than their American counterparts. Across both cultures, psychological control was significantly associated with increased cortisol levels as indexed by AUCg. There were no associations for AUCi. Finally, mediation analyses demonstrated that psychological control fully explained cultural differences in children's cortisol stress response as indexed by AUCg.

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The Impact of Culture on Well-Being: Evidence from a Natural Experiment

Gábor Hajdu & Tamás Hajdu

Journal of Happiness Studies, June 2016, Pages 1089-1110

Abstract:
This paper examines the effect of culture on subjective well-being. By exploiting the natural experiment of migration we are able to separate the effect of culture (intrinsic cultural disposition, values, beliefs, norms) from other extrinsic institutional, economic and social factors. Using data from five rounds of the European Social Survey we find that holding constant the external environment (living in the same residence country) and controlling for the important socio-demographic attributes, immigrants from countries with high levels of life satisfaction report higher life satisfaction than immigrants from countries with low levels of life satisfaction. The effect of satisfaction in the birth country lasts across generations and is stronger for immigrants who are more attached to the culture of their birth country. Since any observed differences among the immigrants is their cultural background (their birth countries), the results can be interpreted as the effect of culture on life satisfaction. Our results suggest that besides economic and social variables, institutions and personal characteristics, cultural factors play an important role in satisfaction.

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The Biogeographic Origins of Novelty-Seeking Traits

Erkan Gören

Evolution and Human Behavior, forthcoming

Abstract:
This paper empirically investigates the evolutionary drivers of between-population variation of the human DRD4 exon III locus, a particular gene associated with the human personality trait of novelty-seeking behavior. Providing a novel compilation of worldwide DRD4 exon III allele frequencies in a large sample of indigenous populations around the world, this study employs population-specific biogeographic indicators to test the hypothesis of natural selection acting on the set of DRD4 exon III allele variants. The estimates suggest that migratory distance from East Africa and various population-specific biogeographic indicators, such as latitude, land suitability for agriculture, pasture land, and terrain ruggedness, contributed significantly to overall between-population DRD4 exon III polymorphism.

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Does Causality Matter More Now? Increase in the Proportion of Causal Language in English Texts

Rumen Iliev & Robert Axelrod

Psychological Science, May 2016, Pages 635-643

Abstract:
The vast majority of the work on culture and cognition has focused on cross-cultural comparisons, largely ignoring the dynamic aspects of culture. In this article, we provide a diachronic analysis of causal cognition over time. We hypothesized that the increased role of education, science, and technology in Western societies should be accompanied by greater attention to causal connections. To test this hypothesis, we compared word frequencies in English texts from different time periods and found an increase in the use of causal language of about 40% over the past two centuries. The observed increase was not attributable to general language effects or to changing semantics of causal words. We also found that there was a consistent difference between the 19th and the 20th centuries, and that the increase happened mainly in the 20th century.

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Nastiness, Morality and Religiosity in 33 nations

Lazar Stankov & Jihyun Lee

Personality and Individual Differences, September 2016, Pages 56–66

Abstract:
This study aimed to identify the main dimensions of social attitudes across 33 countries. Altogether, 20 social attitude scales were administered, mostly to university students (N = 6938). A series of factor analyses showed that three factors exist at the pancultural level: Morality, Nastiness and Religiosity. Furthermore, Morality and Nastiness did not correlate with each other, but Religiosity correlated with both Morality and Nastiness. This suggests that one can be religious and both moral or nasty. Only one factor – Conservatism – emerged at the ecological level (i.e., between-countries analysis). The largest cross-cultural differences were found on the dimension of Religiosity, followed by Nastiness and then by Morality. The clear distinction emerged between South East Asia, South Asia and Sub-Saharan Africa on one hand, scoring high on all three factors, and Western Europe, Eastern Europe and Anglo regions on the other, scoring low on all three factors.

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Managers’ cultural background and disclosure attributes

Francois Brochet et al.

Harvard Working Paper, February 2016

Abstract:
We examine how cultural background, inferred from a manager’s ethnicity, affects managers’ communication with investors. Using a sample of earnings conference calls transcripts with 26,430 executives from 42 countries, we find that managers from ethnic groups that have a more individualistic culture (i) use a more optimistic tone, (ii) exhibit greater self-reference, and (iii) make fewer apologies in their disclosure narratives. Managers’ ethnic culture has a lasting effect on their narratives — the effects persist even for executives who are later exposed to different ethnic cultures through work experience. We find that the capital market responds positively to optimistic tone yet does not distinguish between the optimism in tone of managers from different ethnic backgrounds. The findings suggest that managers’ ethnic backgrounds have a significant effect on how they communicate with the capital markets and how the markets respond to the disclosure event.

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Gender bias in nineteenth-century England: Evidence from factory children

Sara Horrell & Deborah Oxley

Economics & Human Biology, September 2016, Pages 47–64

Abstract:
Gender bias against girls in nineteenth-century England has received much interest but establishing its existence has proved difficult. We utilise data on heights of 16,402 children working in northern textile factories in 1837 to examine whether gender bias was evident. Current interpretations argue against any difference. Here our comparisons with modern height standards reveal greater deprivation for girls than for boys. Discrimination is measured in girls’ height-for-age score (HAZ) falling eight standard deviations below boys’ at ages 11, 11.5 and 12 years of age, capturing the very poor performance of factory girls. But this result cannot be taken at face value. We query whether modern standards require adjustment to account for the later timing of puberty in historical populations and develop an alternative. We also test the validity of the age data, considering whether parents were more prone to lie about the ages of their daughters, and question whether the supply of girls was fundamentally different from that of boys. We conclude that neither proposition is justified. Disadvantage to girls remains, although its absence amongst younger children precludes an indictment of culturally-founded gender bias. The height data must remain mute on the source of this discrimination but we utilise additional information to examine some hypotheses: occupational sorting, differential susceptibility to disease, poorer nutrition for girls, disproportionate stunting from the effects of nutritional deprivation, and type and amount of work undertaken. Of these we suggest that girls had to do arduous physical labour in the home alongside their factory work and that girls may possibly have been more likely than boys to be put into factory work below the legal age limit. Both represent forms of gender bias.

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Culture modulates implicit ownership-induced self-bias in memory

Samuel Sparks, Sheila Cunningham & Ada Kritikos

Cognition, August 2016, Pages 89–98

Abstract:
The relation of incoming stimuli to the self implicitly determines the allocation of cognitive resources. Cultural variations in the self-concept shape cognition, but the extent is unclear because the majority of studies sample only Western participants. We report cultural differences (Asian versus Western) in ownership-induced self-bias in recognition memory for objects. In two experiments, participants allocated a series of images depicting household objects to self-owned or other-owned virtual baskets based on colour cues before completing a surprise recognition memory test for the objects. The ‘other’ was either a stranger or a close other. In both experiments, Western participants showed greater recognition memory accuracy for self-owned compared with other-owned objects, consistent with an independent self-construal. In Experiment 1, which required minimal attention to the owned objects, Asian participants showed no such ownership-related bias in recognition accuracy. In Experiment 2, which required attention to owned objects to move them along the screen, Asian participants again showed no overall memory advantage for self-owned items and actually exhibited higher recognition accuracy for mother-owned than self-owned objects, reversing the pattern observed for Westerners. This is consistent with an interdependent self-construal which is sensitive to the particular relationship between the self and other. Overall, our results suggest that the self acts as an organising principle for allocating cognitive resources, but that the way it is constructed depends upon cultural experience. Additionally, the manifestation of these cultural differences in self-representation depends on the allocation of attentional resources to self- and other-associated stimuli.

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Cultural differences in visual object recognition in 3-year-old children

Megumi Kuwabara & Linda Smith

Journal of Experimental Child Psychology, July 2016, Pages 22–38

Abstract:
Recent research indicates that culture penetrates fundamental processes of perception and cognition. Here, we provide evidence that these influences begin early and influence how preschool children recognize common objects. The three tasks (N = 128) examined the degree to which nonface object recognition by 3-year-olds was based on individual diagnostic features versus more configural and holistic processing. Task 1 used a 6-alternative forced choice task in which children were asked to find a named category in arrays of masked objects where only three diagnostic features were visible for each object. U.S. children outperformed age-matched Japanese children. Task 2 presented pictures of objects to children piece by piece. U.S. children recognized the objects given fewer pieces than Japanese children, and the likelihood of recognition increased for U.S. children, but not Japanese children, when the piece added was rated by both U.S. and Japanese adults as highly defining. Task 3 used a standard measure of configural progressing, asking the degree to which recognition of matching pictures was disrupted by the rotation of one picture. Japanese children’s recognition was more disrupted by inversion than was that of U.S. children, indicating more configural processing by Japanese than U.S. children. The pattern suggests early cross-cultural differences in visual processing; findings that raise important questions about how visual experiences differ across cultures and about universal patterns of cognitive development.

By KEVIN LEWIS | 09:00:00 AM

Monday, May 16, 2016

Long or short

Short Interest and Aggregate Stock Returns

David Rapach, Matthew Ringgenberg & Guofu Zhou

Journal of Financial Economics, forthcoming

Abstract:
We show that short interest is arguably the strongest known predictor of aggregate stock returns. It outperforms a host of popular return predictors both in and out of sample, with annual R2 statistics of 12.89% and 13.24%, respectively. In addition, short interest can generate utility gains of over 300 basis points per annum for a mean-variance investor. A vector autoregression decomposition shows that the economic source of short interest’s predictive power stems predominantly from a cash flow channel. Overall, our evidence indicates that short sellers are informed traders who are able to anticipate future aggregate cash flows and associated market returns.

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The Wisdom of Twitter Crowds: Predicting Stock Market Reactions to FOMC Meetings via Twitter Feeds

Pablo Azar & Andrew Lo

MIT Working Paper, March 2016

Abstract:
With the rise of social media, investors have a new tool to measure sentiment in real time. However, the nature of these sources of data raises serious questions about its quality. Since anyone on social media can participate in a conversation about markets -- whether they are informed or not -- it is possible that this data may have very little information about future asset prices. In this paper, we show that this is not the case by analyzing a recurring event that has a high impact on asset prices: Federal Open Market Committee (FOMC) meetings. We exploit a new dataset of tweets referencing the Federal Reserve and shows that the content of tweets can be used to predict future returns, even after controlling for common asset pricing factors. To gauge the economic magnitude of these predictions, the authors construct a simple hypothetical trading strategy based on this data. They find that a tweet-based asset-allocation strategy outperforms several benchmarks, including a strategy that buys and holds a market index as well as a comparable dynamic asset allocation strategy that does not use Twitter information.

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The Customer Knows Best: The Investment Value of Consumer Opinions

Jiekun Huang

University of Illinois Working Paper, March 2016

Abstract:
This paper investigates the investment value of consumer opinions. Using a dataset of over 5.9 million customer product reviews on Amazon.com from 2004 through 2015, I find evidence that consumer opinions contain information for stock pricing. A spread portfolio that buys stocks in the top tercile of abnormal customer ratings and sells stocks in the bottom tercile delivers an abnormal return of about 72-80 basis points per month. There is no evidence of return reversals in the subsequent year. I also find that abnormal customer ratings positively predict revenues and earnings surprises. Furthermore, there is evidence suggesting that hedge funds exploit information contained in customer reviews. These results suggest that consumer opinions contain novel information about firms' fundamentals and stock pricing.

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The Realization Effect: Risk-Taking After Realized Versus Paper Losses

Alex Imas

American Economic Review, forthcoming

Abstract:
Understanding how prior outcomes affect risk attitudes is critical for the study of choice under uncertainty. A large literature documents the significant influence of prior losses on risk attitudes. The findings appear contradictory: some studies find greater risk-taking after a loss, whereas others show the opposite – that people take on less risk. I reconcile these seemingly inconsistent findings by distinguishing between realized versus paper losses. Using new and existing data, I replicate prior findings and demonstrate that following a realized loss, individuals avoid risk; if the same loss is not realized, a paper loss, individuals take on greater risk.

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Local Ownership, Crises, and Asset Prices: Evidence from US Mutual Funds

Mariassunta Giannetti & Luc Laeven

Review of Finance, May 2016, Pages 947-978

Abstract:
We exploit the domestic portfolios of US mutual funds to provide microeconomic evidence that investors are more likely to liquidate geographically remote investments at times of high aggregate market volatility. This has important implications for asset prices. The valuations of stocks with ex ante less local ownership decline more when aggregate market volatility is high. Furthermore, the returns of stocks with geographically distant owners are more exposed to changes in aggregate market volatility.

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The Value of Crowdsourced Earnings Forecasts

Russell Jame et al.

Journal of Accounting Research, forthcoming

Abstract:
Crowdsourcing — when a task normally performed by employees is outsourced to a large network of people via an open call — is making inroads into the investment research industry. We shed light on this new phenomenon by examining the value of crowdsourced earnings forecasts. Our sample includes 51,012 forecasts provided by Estimize, an open platform that solicits and reports forecasts from over 3,000 contributors. We find that Estimize forecasts are incrementally useful in forecasting earnings and measuring the market's expectations of earnings. Our results are stronger when the number of Estimize contributors is larger, consistent with the benefits of crowdsourcing increasing with the size of the crowd. Finally, Estimize consensus revisions generate significant two-day size-adjusted returns. The combined evidence suggests that crowdsourced forecasts are a useful supplementary source of information in capital markets.

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Further evidence on the strategic timing of earnings news: Joint analysis of weekdays and times of day

Roni Michaely, Amir Rubin & Alexander Vedrashko

Journal of Accounting and Economics, August 2016, Pages 24–45

Abstract:
Using combinations of weekdays and times of day (before, during, and after trading hours) of earnings announcements, we examine whether managers attempt to strategically time these announcements. We document that the worst earnings news is announced on Friday evening and find robust evidence that only Friday evening announcements represent managers’ rational opportunistic behavior. Friday evening announcements are followed by insider trading in the direction of earnings news and the largest post-earnings announcement drift. Managers also attempt to reduce interaction with investors and hide more than just earnings news by announcing on Friday evening. We find that Friday evening announcements occur later in the evening than announcements on other evenings, firms have a reduced propensity to hold conference calls, and major firm restructuring events are relatively more likely to occur after Friday evening announcements.

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It Pays to Set the Menu: Mutual Fund Investment Options in 401(k) Plans

Veronika Pool, Clemens Sialm & Irina Stefanescu

Journal of Finance, forthcoming

Abstract:
This paper investigates whether mutual fund families acting as service providers in 401(k) plans display favoritism toward their own affiliated funds. Using a hand-collected data set on the menu of investment options offered to plan participants, we show that fund deletions and additions are less sensitive to prior performance for affiliated than unaffiliated funds. We find no evidence that plan participants undo this affiliation bias through their investment choices. Finally, we find that the subsequent performance of poorly performing affiliated funds indicates that this favoritism is not information driven.

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Rating friends: The effect of personal connections on credit ratings

Seyed Hossein Khatami, Maria-Teresa Marchica & Roberto Mura

Journal of Corporate Finance, forthcoming

Abstract:
Using a large sample of US public debt issues we show that personal connections between directors of issuing companies and rating agencies result in higher credit ratings. We estimate the average effect to be about one notch. Moreover, our tests indicate that issues by connected firms are 30% more likely to be rated A3. Results are robust to several alternative tests including additional controls for managerial traits, firm fixed effects, and propensity score matching. Furthermore, our tests on default rates and bond yields suggest that personal connections act as a mechanism to reduce asymmetric information between the rating agency and the issuer.

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Do Earnings Estimates Add Value to Sell-Side Analysts’ Investment Recommendations?

Ambrus Kecskés, Roni Michaely & Kent Womack

Management Science, forthcoming

Abstract:
Sell-side analysts change their stock recommendations when their valuations differ from the market’s. These valuation differences can arise from either differences in earnings estimates or the nonearnings components of valuation methodologies. We find that recommendation changes motivated by earnings estimate revisions have a greater initial price reaction than the same recommendation changes without earnings estimate revisions: about +1.3% (−2.8%) greater for upgrades (downgrades). Nevertheless, the postrecommendation drift is also greater, suggesting that investors underreact to earnings-based recommendation changes. Implemented as a trading strategy, earnings-based recommendation changes earn risk-adjusted returns of 3% per month, considerably more than non-earnings-based recommendation changes. Evidence from variation in firms’ information environment and analysts’ regulatory environment suggests that recommendation changes with earnings estimate revisions are less affected by analysts’ cognitive and incentive biases.

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Pseudo-Precision? Precise Forecasts and Impression Management in Managerial Earnings Forecasts

Mathew Hayward & Markus Fitza

Academy of Management Journal, forthcoming

Abstract:
We examine earnings guidance precision as a mechanism of organization impression management (OIM) and, specifically, suggest that strategic leaders use very precise earnings forecasts as an OIM tactic to convey a greater sense of authority and control over organizational performance after material organizational setbacks. Contributing to the OIM literature, we argue that the use of more precise judgment makes use of different physiological mechanisms than kinds of OIM that have been previously studied. Results presented here suggest that a) OIM is an important motivation for more precise earnings forecasts b) precision as an OIM tactic is more likely to arise when managers convey impressions of brighter performance prospects and c) investors generally respond favorably to the tactic.

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Social Media, News Media and the Stock Market

Peiran Jiao, Andre Veiga & Ansgar Walther

University of Oxford Working Paper, April 2016

Abstract:
We contrast the impact of traditional news media and social media coverage on stock market volatility and trading volume. We develop a theoretical model of asset pricing and information processing, which allows for both rational traders and a variety of commonly studied behavioural biases. The model yields several novel and testable predictions about the impact of news and social media on asset prices. We then test the model’s theoretical predictions using a unique dataset which measures coverage of individual stocks in social and news media using a broad spectrum of print and online sources. Stocks with high social media coverage in one month experience high idiosyncratic volatility of returns and trading volume in the following month. Conversely, stocks with high news media coverage experience low volatility and low trading volume in the following month. These effects are statistically and economically significant and robust to controlling for stock and time fixed effects, as well as time-varying stock characteristics. The empirical evidence on news media is consistent with a market in which some traders are overconfident when interpreting new information. The evidence on social media is consistent with Tetlock’s (2011) “stale news” hypothesis (investors treat repeated information on social networks as though it were new) and with a model where investors’ perceptions are subject to random sentiment shocks.

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It Hurts (Stock Prices) When Your Team is about to Lose a Soccer Match

Michael Ehrmann & David-Jan Jansen

Review of Finance, May 2016, Pages 1215-1233

Abstract:
The end result of major sporting events has been shown to affect next day stock returns through shifts in investor mood. By studying intraday data during the soccer matches that led to the elimination of France and Italy from the 2010 FIFA World Cup, we test whether mood-related pricing effects already materialize as events unfold. We use data for a cross-listed firm, which allows for a straightforward identification of underpricing. During the matches, the firm’s stock is underpriced by up to 7 basis points in the country that eventually loses. The probability of underpricing increases as elimination becomes more likely.

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Gambling and Comovement

Alok Kumar, Jeremy Page & Oliver Spalt

Journal of Financial and Quantitative Analysis, February 2016, Pages 85-111

Abstract:
This study shows that correlated trading by gambling-motivated investors generates excess return comovement among stocks with lottery features. Lottery-like stocks comove strongly with one another, and this return comovement is strongest among lottery stocks located in regions where investors exhibit stronger gambling propensity. Looking directly at investor trades, we find that investors with a greater propensity to gamble trade lottery-like stocks more actively and that those trades are more strongly correlated. Finally, we demonstrate that time variation in general gambling enthusiasm and income shocks from fluctuating economic conditions induce a systematic component in investors’ demand for lottery-like stocks.

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Trading Skill: Evidence from Trades of Corporate Insiders in Their Personal Portfolios

Itzhak Ben-David, Justin Birru & Andrea Rossi

NBER Working Paper, March 2016

Abstract:
We study trading patterns of corporate insiders in their own personal portfolios. To do so, we identify accounts of corporate insiders in a large dataset provided by a retail discount broker. We show that insiders overweight firms from their own industry. Furthermore, insiders earn substantial abnormal returns only on stocks from their industry, especially obscure stocks (small, low analyst coverage, high volatility). In a battery of tests, we find no evidence that corporate insiders use private information and conclude that insiders have an informational advantage in trading stocks from their own industry over outsiders to the industry.

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Is There a “Boom Bias” in Agency Ratings?

Mark Dilly & Thomas Mählmann

Review of Finance, May 2016, Pages 979-1011

Abstract:
Theory predicts rating agencies’ incentive conflicts to be stronger in boom periods, leading to biased ratings and a reduced level of rating quality. We investigate this prediction empirically based on three different approaches. First, we show that initial ratings disagree with bond spread levels during boom periods in the way that rating agencies hold a systematically more optimistic view. Second, we reveal that boom bond ratings tend to be more heavily downgraded from an ex post perspective; and, third, we demonstrate that boom ratings are inflated compared with “conflicts-free” benchmark ratings. In several robustness tests we show that the observed “boom bias” does not result from changes in credit-worthiness, adjustments in rating standards, competitive pressure, or market supply, but rather from rating agencies’ incentive conflicts.

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Political Conflict and Foreign Portfolio Investment: Evidence from North Korean Attacks

Jeffrey Gerlach & Youngsuk Yook

Federal Reserve Working Paper, April 2016

Abstract:
We examine the response of foreign (i.e., non-South Korean) investors to escalating political conflict and its impact on the South Korean stock market surrounding 13 North Korean military attacks between 1999 and 2010. Using domestic (i.e., South Korean) institutions and individuals as benchmarks, we evaluate the trading behavior and performance of foreign investors. Following attacks, foreigners increase their holdings of Korean stocks and buy more shares of risky stocks. Performance results show foreigners maintain their pre-attack level of performance while domestic individuals, who make the overwhelming majority of domestic trades, perform worse. In addition, domestic institutions improve their performance. Overall, the results are consistent with the predictions based on the benefits of international diversification. Unlike domestic individuals, foreigners trade more shares than usual and deviate from their general strategy of positive feedback trading.

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The Capital Market Consequences of Language Barriers in the Conference Calls of Non-U.S. Firms

Francois Brochet, Patricia Naranjo & Gwen Yu

Accounting Review, forthcoming

Abstract:
We examine how language barriers affect the capital market reaction to information disclosures. Using transcripts from non-U.S. firms' English-language conference calls, we find that the calls of firms in countries with greater language barriers are more likely to contain non-plain English and erroneous expressions. For non-U.S. firms that hire an English-speaking manager, we find less use of non-plain English and fewer erroneous expressions. Calls with a greater use of non-plain English and more erroneous expressions show lower intraday price movement and trading volume. The capital market responses to non-plain English and erroneous expressions are more negative when the firm is located in a non-English-speaking country and has more English-speaking analysts participating in the call. Our results highlight that, when disclosure happens verbally, language barriers between speakers and listeners affect its transparency, which in turn impacts the market's reaction.

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Why Don't We Agree? Evidence from a Social Network of Investors

Anthony Cookson & Marina Niessner

Yale Working Paper, March 2016

Abstract:
We develop a new measure of disagreement based on the sentiment expressed by investors on a social network investing platform. Changes in our measure of disagreement robustly forecast abnormal trading volume, even though it is unlikely that investor trades from those on the investing platform move the market. Using information on the investment philosophies of the investors (e.g., technical, fundamental, short term, long term), we test existing theories that suggest that differing investment philosophies are an important source of disagreement. Although we also find significant scope for disagreement among investors with the same investment philosophy, our findings suggest that investment approaches matter fundamentally to disagreement. Therefore, even with perfectly informationally efficient markets, investor disagreement, and thus high trading volume and volatility, would likely persist.

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Why Do Traders Choose Dark Markets?

Ryan Garvey, Tao Huang & Fei Wu

Journal of Banking & Finance, July 2016, Pages 12–28

Abstract:
We examine U.S. equity trader use of dark and lit markets. Marketable orders executed in the dark have lower information content and smaller fill rates. Dark orders take longer to execute, but they execute at more favorable prices. Traders are more likely to go dark when the bid-ask spread is wider and those with higher dark participation are more sophisticated. Although market regulators have expressed concern over the rise in dark trading, our results indicate that dark markets provide important benefits to traders that lit markets do not.

By KEVIN LEWIS | 09:00:00 AM

Sunday, May 15, 2016

Heartwarming

Whole-Body Hyperthermia for the Treatment of Major Depressive Disorder: A Randomized Clinical Trial

Clemens Janssen et al.

JAMA Psychiatry, forthcoming

Design, Setting, and Participants: A 6-week, randomized, double-blind study conducted between February 2013 and May 2015 at a university-based medical center comparing WBH with a sham condition. All research staff conducting screening and outcome procedures were blinded to randomization status. Of 338 individuals screened, 34 were randomized, 30 received a study intervention, and 29 provided at least 1 postintervention assessment and were included in a modified intent-to-treat efficacy analysis. Participants were medically healthy, aged 18 to 65 years, met criteria for major depressive disorder, were free of psychotropic medication use, and had a baseline 17-item Hamilton Depression Rating Scale score of 16 or greater.

Interventions: A single session of active WBH vs a sham condition matched for length of WBH that mimicked all aspects of WBH except intense heat.

Results: The mean (SD) age was 36.7 (15.2) years in the WBH group and 41.47 (12.54) years in the sham group. Immediately following the intervention, 10 participants (71.4%) randomized to sham treatment believed they had received WBH compared with 15 (93.8%) randomized to WBH. When compared with the sham group, the active WBH group showed significantly reduced Hamilton Depression Rating Scale scores across the 6-week postintervention study period (WBH vs sham; week 1: −6.53, 95% CI, −9.90 to −3.16, P < .001; week 2: −6.35, 95% CI, −9.95 to −2.74, P = .001; week 4: −4.50, 95% CI, −8.17 to −0.84, P = .02; and week 6: −4.27, 95% CI, −7.94 to −0.61, P = .02). These outcomes remained significant after evaluating potential moderating effects of between-group differences in baseline expectancy scores. Adverse events in both groups were generally mild.

Conclusions and Relevance: Whole-body hyperthermia holds promise as a safe, rapid-acting, antidepressant modality with a prolonged therapeutic benefit.

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Antidepressants and Age: A New Form of Evidence for U-shaped Well-being Through Life

David Blanchflower & Andrew Oswald

Journal of Economic Behavior & Organization, July 2016, Pages 46–58

Abstract:
A growing literature argues that mental well-being follows an approximate U-shape through life. Yet in the eyes of some scholars this evidence remains controversial. The reason is that it relies on people’s answers to ‘happiness’ surveys. The present paper explores a different approach. It examines modern data on the use of antidepressant pills (as an implicit signal of mental distress) in 27 European nations. The regression-adjusted probability of using antidepressants reaches a peak in people’s late 40s. This pattern – one that does not rely on well-being survey answers – is thus consistent with the claim that human beings experience a midlife low.

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Walking Facilitates Positive Affect (Even When Expecting the Opposite)

Jeffrey Conrath Miller & Zlatan Krizan

Emotion, forthcoming

Abstract:
Across 3 experiments, we rely on theoretical advancements that connect movement, embodiment, and reward-seeking behavior to test the proposal that walking incidental to routine activity (heretofore referred to as “incidental ambulation”) — not specifically “exercise” — is a robust facilitator of positive affect. Experiment 1 reveals that ambulation facilitates positive affect even when participants are blind to the purpose of this activity. Experiment 2 further demonstrates the robustness of this effect of incidental ambulation by documenting its operation under conditions of low interest, as well as its power to override expectations of mood worsening. Experiment 3 replicates the main finding while eliminating the possibility that posture, ambient events, or experimenter bias account for the results. Taken together, the experiments demonstrate that incidental ambulation systematically promotes positive affect regardless of the focus on such movement, and that it can override the effects of other emotionally relevant events such as boredom and dread. The findings hold key implications for understanding the role of movement in shaping affect as well as for clarifying the embodied nature of emotion.

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Family Ruptures, Stress, and the Mental Health of the Next Generation

Petra Persson & Maya Rossin-Slater

NBER Working Paper, May 2016

Abstract:
This paper studies how in utero exposure to maternal stress from family ruptures affects later mental health. We find that prenatal exposure to the death of a maternal relative increases take-up of ADHD medications during childhood and anti-anxiety and depression medications in adulthood. Further, family ruptures during pregnancy depress birth outcomes and raise the risk of perinatal complications necessitating hospitalization. Our results suggest large welfare gains from preventing fetal stress from family ruptures and possibly from economically induced stressors such as unemployment. They further suggest that greater stress exposure among the poor may partially explain the intergenerational persistence of poverty.

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Social Support and Mental Health Outcomes Among U.S. Army Special Operations Personnel

Dale Russell et al.

Military Psychology, forthcoming

Abstract:
Mental health disorders continue to plague service members and veterans; thus, new approaches are required to help address such outcomes. The identification of risk and resilience factors for these disorders in specific populations can better inform both treatment and prevention strategies. This study focuses on a unique population of U.S. Army Special Operations personnel to assess how specific avenues of social support and personal morale are related to mental health outcomes. The results indicate that, whereas personal morale and friend support reduce the relationship between combat experiences and posttraumatic stress disorder (PTSD), strong unit support exacerbates the negative effects of combat experiences in relation to PTSD. The study thus shows that although informal social support can lessen postdeployment mental health concerns, military populations with strong internal bonds may be at greater risk of PTSD because the support that they receive from fellow service members may heighten the traumatic impact of combat experiences.

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Cortisol alters reward processing in the human brain

Valerie Kinner, Oliver Wolf & Christian Merz

Hormones and Behavior, forthcoming

Abstract:
Dysfunctional reward processing is known to play a central role for the development of psychiatric disorders. Glucocorticoids that are secreted in response to stress have been shown to attenuate reward sensitivity and thereby might promote the onset of psychopathology. However, the underlying neurobiological mechanisms mediating stress hormone effects on reward processing as well as potential sex differences remain elusive. In this neuroimaging study, we administered 30mg cortisol or a placebo to 30 men and 30 women and subsequently tested them in the Monetary Incentive Delay Task. Cortisol attenuated anticipatory neural responses to a verbal and a monetary reward in the left pallidum and the right anterior parahippocampal gyrus. Furthermore, in men, activation in the amygdala, the precuneus, the anterior cingulate, and in hippocampal regions was reduced under cortisol, whereas in cortisol-treated women a signal increase was observed in these regions. Behavioral performance also indicated that reward learning in men is impaired under high cortisol concentrations, while it is augmented in women. These findings illustrate that the stress hormone cortisol substantially diminishes reward anticipation and provide first evidence that cortisol effects on the neural reward system are sensitive to sex differences, which might translate into different vulnerabilities for psychiatric disorders.

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Specific and Individuated Death Reflection Fosters Identity Integration

Laura Blackie, Philip Cozzolino & Constantine Sedikides

PLoS ONE, May 2016

Abstract:
Identity integration is the process wherein a person assimilates multiple or conflicting identities (e.g., beliefs, values, needs) into a coherent, unified self-concept. Three experiments examined whether contemplating mortality in a specific and individuated manner (i.e., via the death reflection manipulation) facilitated outcomes indicative of identity integration. Participants in the death reflection condition (vs. control conditions) considered positive and negative life experiences as equally important in shaping their current identity (Experiment 1), regarded self-serving values and other-serving values as equally important life principles (Experiment 2), and were equally motivated to pursue growth-oriented and security-oriented needs (Experiment 3). Death reflection motivates individuals to integrate conflicting aspects of their identity into a coherent self-concept. Given that identity integration is associated with higher well-being, the findings have implications for understanding the psychological benefits of existential contemplation.

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Beauty in Mind: The Effects of Physical Attractiveness on Psychological Well-Being and Distress

Nabanita Datta Gupta, Nancy Etcoff & Mads Jaeger

Journal of Happiness Studies, June 2016, Pages 1313-1325

Abstract:
Attractive people enjoy many social and economic advantages. Most studies find effects of attractiveness on happiness or life satisfaction, but based on traditional cross-sectional approaches. We use a large longitudinal survey consisting of a sample of male and female high school graduates from Wisconsin followed from their late teens to their mid-1960s. The panel construction of the data and the fact that interviews of the siblings of the respondents are available allow us to analyze the effects of physical appearance on psychological well-being (human flourishing) and ill-being (distress and depression) conditioning on unobserved individual heterogeneity via random effects. We find a significant positive relationship between measures of physical attractiveness (greater facial attractiveness at high school, and lower BMI and greater height in middle age) and a measure of psychological well-being, and a significant negative relationship between measures of physical attractiveness and distress/depression. These effects are slightly smaller when we adjust for demographics and mental ability but, with the exception of height, remain significant. Our results suggest that attractiveness impacts psychological well-being and depression directly as well as through its effects on other life outcomes.

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The effects of the Make a Wish intervention on psychiatric symptoms and health-related quality of life of children with cancer: A randomised controlled trial

Anat Shoshani, Keren Mifano & Johanna Czamanski-Cohen

Quality of Life Research, May 2016, Pages 1209-1218

Methods: The design was a wait-list-controlled trial with two parallel groups. Sixty-six children aged 5–12 with an initial diagnosis of life-threatening cancer were identified and randomly assigned to the Make a Wish intervention (n = 32) or a wait-list control group (n = 34). Children completed measures of psychiatric and health-related symptoms, positive and negative affect, hope, and optimism pre-intervention and post-intervention. After baseline data collection, children were interviewed and made an authentic wish that they wanted to come true. These wishes were made possible 5–6 months after baseline data collection, to fuel anticipation and excitement over the wish-fulfillment event. The post-intervention assessment point was 5 weeks after wish fulfillment (approximately 7 months after baseline data collection).

Results: Children in the intervention group exhibited a significant reduction in general distress (d = 0.54), depression (d = 0.70), and anxiety symptoms (d = 0.41), improved health-related quality of life (d = 0.59), hope (d = 0.71), and positive affect (d = 0.80) compared to decrease in positive affect and no significant changes in the other measures in the control group.

Conclusions: These findings emphasize the role of hope and positive emotions in fostering the well-being of children who suffer from serious illnesses.

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Heart Rate Variability and Suicidal Behavior

Scott Wilson et al.

Psychiatry Research, 30 June 2016, Pages 241–247

Abstract:
Identification of biological indicators of suicide risk is important given advantages of biomarker-based models. Decreased high frequency heart rate variability (HF HRV) may be a biomarker of suicide risk. The aim of this research was to determine whether HF HRV differs between suicide attempters and non-attempters. Using the Trier Social Stress Test (TSST), we compared HF HRV between females with and without a history of suicide attempt, all with a lifetime diagnosis of a mood disorder. To investigate a potential mechanism explaining association between HF HRV and suicide, we examined the association between self-reported anger and HF HRV. Results of an Area under the Curve (AUC) analysis showed attempters had a lower cumulative HF HRV during the TSST than non-attempters. In addition, while there was no difference in self-reported anger at baseline, the increase in anger was greater in attempters, and negatively associated with HF HRV. Results suggest that suicide attempters have a reduced capacity to regulate their response to stress, and that reduced capacity to regulate anger may be a mechanism through decreased HR HRV can lead to an increase in suicide risk. Our results have implications for the prevention of suicidal behavior in at-risk populations.

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Do Unto Others or Treat Yourself? The Effects of Prosocial and Self-Focused Behavior on Psychological Flourishing

Katherine Nelson et al.

Emotion, forthcoming

Abstract:
When it comes to the pursuit of happiness, popular culture encourages a focus on oneself. By contrast, substantial evidence suggests that what consistently makes people happy is focusing prosocially on others. In the current study, we contrasted the mood- and well-being-boosting effects of prosocial behavior (i.e., doing acts of kindness for others or for the world) and self-oriented behavior (i.e., doing acts of kindness for oneself) in a 6-week longitudinal experiment. Across a diverse sample of participants (N = 473), we found that the 2 types of prosocial behavior led to greater increases in psychological flourishing than did self-focused and neutral behavior. In addition, we provide evidence for mechanisms explaining the relative improvements in flourishing among those prompted to do acts of kindness — namely, increases in positive emotions and decreases in negative emotions. Those assigned to engage in self-focused behavior did not report improved psychological flourishing, positive emotions, or negative emotions relative to controls. The results of this study contribute to a growing literature supporting the benefits of prosocial behavior and challenge the popular perception that focusing on oneself is an optimal strategy to boost one’s mood. People striving for happiness may be tempted to treat themselves. Our results, however, suggest that they may be more successful if they opt to treat someone else instead.

By KEVIN LEWIS | 09:00:00 AM

Saturday, May 14, 2016

Do your best

The Green Eggs and Ham Hypothesis: How Constraints Facilitate Creativity

Catrinel Haught-Tromp

Psychology of Aesthetics, Creativity, and the Arts, forthcoming

Abstract:
Two experiments tested the hypothesis that constraints imposed on a common writing task yield more creative outputs. In the 1st study, participants were asked to include a given noun in a 2-line rhyme for a special occasion. In the 2nd study, they generated their own nouns, which they then had to include in their rhymes. Both studies show a main effect of constraints on creativity and an interaction with order of presentation, which suggests a carryover effect: Mere practice with constraints can stimulate creativity. The Green Eggs and Ham model is put forth to explain the current findings and why Dr. Seuss's best-seller, written using only 50 words, was such a creative and commercial success.

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Keep in touch: The effects of imagined touch support on stress and exploration

Brittany Jakubiak & Brooke Feeney

Journal of Experimental Social Psychology, forthcoming

Abstract:
Although social support buffers stress and helps individuals to embrace challenges (exploration), individuals often experience stressors when close others are not proximally available to provide support. The current research tested whether imagining supportive touch from a romantic partner promotes exploration and buffers stress better than imagining verbal support or control imagination tasks. Participants completed a 5-min imagined support manipulation prior to experiencing a physical stressor, the cold pressor pain task (Exp. 1) or social/performance stressors, the Trier Social Stress task (Exp. 2). In Experiment 1, participants who imagined touch support experienced pain-buffering benefits compared to participants who imagined verbal support, and women who imagined touch support were more likely than women in other conditions to accept the challenge of a more difficult cold pressor task. In Experiment 2, participants who imagined touch support were more buffered from the stress of the socially-evaluative tasks and viewed these tasks with more enthusiasm than participants in all other imagination conditions. Potential mechanisms and implications are discussed.

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Do People Anticipate Loss Aversion?

Alex Imas, Sally Sadoff & Anya Samek

Management Science, forthcoming

Abstract:
There is growing interest in the use of loss contracts that offer performance incentives as up-front payments that employees can lose. Standard behavioral models predict a trade-off in the use of loss contracts: employees will work harder under loss contracts than under gain contracts, but, anticipating loss aversion, they will prefer gain contracts to loss contracts. In a series of experiments, we test these predictions by measuring performance and preferences for payoff-equivalent gain and loss contracts. We find that people indeed work harder under loss than gain contracts, as the theory predicts. Surprisingly, rather than a preference for the gain contract, we find that people actually prefer loss contracts. In exploring mechanisms for our results, we find suggestive evidence that people do anticipate loss aversion but select into loss contracts as a commitment device to improve performance, using one bias, loss aversion, to address another, dynamic inconsistency.

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Thinking Cap Plus Thinking Zap: tDCS of Frontopolar Cortex Improves Creative Analogical Reasoning and Facilitates Conscious Augmentation of State Creativity in Verb Generation

Adam Green et al.

Cerebral Cortex, forthcoming

Abstract:
Recent neuroimaging evidence indicates neural mechanisms that support transient improvements in creative performance (augmented state creativity) in response to cognitive interventions (creativity cueing). Separately, neural interventions via tDCS show encouraging potential for modulating neuronal function during creative performance. If cognitive and neural interventions are separately effective, can they be combined? Does state creativity augmentation represent "real" creativity, or do interventions simply yield divergence by diminishing meaningfulness/appropriateness? Can augmenting state creativity bolster creative reasoning that supports innovation, particularly analogical reasoning? To address these questions, we combined tDCS with creativity cueing. Testing a regionally specific hypothesis from neuroimaging, high-definition tDCS-targeted frontopolar cortex activity recently shown to predict state creativity augmentation. In a novel analogy finding task, participants under tDCS formulated substantially more creative analogical connections in a large matrix search space (creativity indexed via latent semantic analysis). Critically, increased analogical creativity was not due to diminished accuracy in discerning valid analogies, indicating "real" creativity rather than inappropriate divergence. A simpler relational creativity paradigm (modified verb generation) revealed a tDCS-by-cue interaction; tDCS further enhanced creativity cue-related increases in semantic distance. Findings point to the potential of noninvasive neuromodulation to enhance creative relational cognition, including augmentation of the deliberate effort to formulate connections between distant concepts.

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When Red Means Go: Non-Normative Effects of Red Under Sensation-Seeking

Ravi Mehta et al.

Journal of Consumer Psychology, forthcoming

Abstract:
Although previous research has identified red as the color of compliance, the current work proposes that this effect of red may not hold under high sensation-seeking propensity conditions. It is argued that the color red has the capability to induce arousal, which in turn has been shown to enhance a person's default tendencies. Further, because high sensation-seekers have a higher tendency to react, the exposure to the color red for these individuals will increase reactance and thereby non-compliant behavior. One field study and two lab experiments provide support for this theorizing. The first experiment, a field study, examines prank-chatting incidences at a child helpline and shows a positive effect of red on such non-compliant behavior. Experiment 2 confirms this finding in a controlled lab setting and shows that when one has a high sensation-seeking propensity, the color red positively affects one's attitude towards non-compliance. The final study illuminates the underlying process and explicates the role of arousal and reactance in the color - non-compliance relationship. Both theoretical and practical implications are discussed.

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Disentangling Sunk-Costs and Completion Proximity: The Role of Regulatory Focus

Adam Barsky & Michael Zyphur

Journal of Experimental Social Psychology, forthcoming

Abstract:
Why do some people escalate commitment to a project that is unlikely to succeed? Existing research shows that people tend to escalate when prior expenditures (e.g., sunk costs) are high, whereas other research suggests that people tend to escalate when a project nears completion, regardless of prior expenditures. In this paper, we argue decision-makers have diverse goals driven by regulatory foci that represent alternative motivations for escalation. Specifically, people who regulate their behavior towards achieving gains (i.e., a promotion focus) are influenced more strongly by proximity to project completion than those who focus on the presence or absence of losses (i.e., a prevention focus). Across empirical studies using different operationalizations of regulatory focus, we show that increased promotion focus, but not prevention focus, exacerbates escalation behavior as a project nears completion. Our findings highlight the importance of accounting for individual motivations when designing interventions to curb escalation behavior.

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When the Frame Fits the Social Picture: The Effects of Framed Social Norm Messages on Healthy and Unhealthy Food Consumption

Saar Mollen et al.

Communication Research, forthcoming

Abstract:
We investigated the influence of framed norm messages about food consumption on motivation to consume, and actual consumption of, healthy and unhealthy foods. We proposed that the effects of positive and negative message frames would vary by the type of underlying norms (i.e., injunctive, descriptive). More specifically, based on information processing theories, it was expected that injunctive norms would be more effective when framed negatively compared with positively, while the opposite was expected for descriptive norms. In both experiments, participants were randomly assigned to one of four framed social norm conditions or a no-norm control condition. In Experiment 1, motivation to consume healthy and unhealthy foods was assessed by means of both indirect and self-report measures. In Experiment 2, actual food consumption was assessed. In both experiments, the predicted interaction was found. Results show that injunctive norms benefit from a negative (vs. positive) frame, while preliminary evidence suggests the opposite for descriptive norms.

By KEVIN LEWIS | 09:00:00 AM

Friday, May 13, 2016

Party line

Delayed Gratification: Party Competition for White House Control in the U.S. House of Representatives

Travis Baker

Political Research Quarterly, forthcoming

Abstract:
Americans expect the president to lead Congress, but Congress's partisan divide typically widens on presidential priorities. More often, presidents are reduced to leading their copartisans rather than Congress as a whole, but why? In this paper, I argue that competition for White House control creates incentives for parties to disagree on presidents' policy agendas, regardless of the contents of those agendas. I use an original data set of members' roll-call vote decisions on presidents' agendas between 1971 and 2010 to show that partisan polarization is larger on presidents' priorities and largest on their top priorities, above and beyond what we would expect from members' ideologies and standard party effects. These findings persist over time and under a wide range of alternative model specifications, bringing us closer to understanding the partisan conflict so prevalent in today's politics.

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Misperceiving Bullshit as Profound Is Associated with Favorable Views of Cruz, Rubio, Trump and Conservatism

Stefan Pfattheicher & Simon Schindler

PLoS ONE, April 2016

Abstract:
The present research investigates the associations between holding favorable views of potential Democratic or Republican candidates for the US presidency 2016 and seeing profoundness in bullshit statements. In this contribution, bullshit is used as a technical term which is defined as communicative expression that lacks content, logic, or truth from the perspective of natural science. We used the Bullshit Receptivity scale (BSR) to measure seeing profoundness in bullshit statements. The BSR scale contains statements that have a correct syntactic structure and seem to be sound and meaningful on first reading but are actually vacuous. Participants (N = 196; obtained via Amazon Mechanical Turk) rated the profoundness of bullshit statements (using the BSR) and provided favorability ratings of three Democratic (Hillary Clinton, Martin O'Malley, and Bernie Sanders) and three Republican candidates for US president (Ted Cruz, Marco Rubio, and Donald Trump). Participants also completed a measure of political liberalism/conservatism. Results revealed that favorable views of all three Republican candidates were positively related to judging bullshit statements as profound. The smallest correlation was found for Donald Trump. Although we observe a positive association between bullshit and support for the three Democrat candidates, this relationship is both substantively small and statistically insignificant. The general measure of political liberalism/conservatism was also related to judging bullshit statements as profound in that individuals who were more politically conservative had a higher tendency to see profoundness in bullshit statements. Of note, these results were not due to a general tendency among conservatives to see profoundness in everything: Favorable views of Republican candidates and conservatism were not significantly related to profoundness ratings of mundane statements. In contrast, this was the case for Hillary Clinton and Martin O'Malley. Overall, small-to-medium sized correlations were found, indicating that far from all conservatives see profoundness in bullshit statements.

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Where's the Tea Party? An Examination of the Tea Party's Voting Behavior in the House of Representatives

Jordan Ragusa & Anthony Gaspar

Political Research Quarterly, June 2016, Pages 361-372

Abstract:
Does the Tea Party affect how lawmakers vote? Given the possible spurious effect of a representative's ideology, we leverage natural variation in the Tea Party's existence and examine this question through the lens of party switching. Like when lawmakers change parties, representatives who (1) joined Tea Party Caucus and (2) had a large volume of Tea Party activists in their district underwent a significant shift to the right in the 112th Congress. We believe these findings support both legislative-centered and extended network theorists. An additional analysis reveals that, unlike Democrats and non-Tea Party aligned Republicans who also shifted to the extremes in the 112th Congress, Tea Party Republicans did not "bounce back" in the 113th Congress. Lastly, we find no equivalent rightward shift in comparable conservative caucuses or among Republicans with similar ideologies and districts. In the end, although the Tea Party is not a "party" in the classic sense of the word, we claim that it is having "party like" effects in Congress. In the conclusion section, we discuss the implications of these results for the stability of the current two-party system. Given our findings, a major realignment or split within the Republican Party would not be surprising.

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Partisan underestimation of the polarizing influence of group discussion

Jessica Keating, Leaf Van Boven & Charles Judd

Journal of Experimental Social Psychology, July 2016, Pages 52-58

Abstract:
Group polarization occurs when people's attitudes become more extreme following discussion with like-minded others. We hypothesized that people underestimate how much a relatively brief group discussion polarizes their own attitudes. People often perceive their own attitudes as unbiased and stable over time. Therefore, people's polarized postdiscussion attitudes may cause them to misremember their pre-discussion attitudes as having been more extreme than they were. In two experiments, participants engaged in 15-minute discussions with 4-6 like-minded others regarding two political topics: whether Barack Obama or George W. Bush was the better president (Experiment 1) and whether they supported Barack Obama or Mitt Romney during the 2012 presidential election (Experiment 2). Group discussion polarized participants' attitudes, and participants misremembered their pre-discussion attitudes as having been more extreme than they actually were. Participants' polarized post-discussion attitudes significantly predicted their recalled pre-discussion attitudes, controlling for their actual pre-discussion attitudes, suggesting that their post-discussion attitudes guided reconstruction of their pre-discussion attitudes. These findings have implications for people's awareness of psychological biases and for the societal effects of partisan enclavement.

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Walking the Line: The White Working Class and the Economic Consequences of Morality

Monica Prasad, Steve Hoffman & Kieran Bezila

Politics & Society, June 2016, Pages 281-304

Abstract:
Over one-third of the white working class in America vote for Republicans. Some scholars argue that these voters support Republican economic policies, while others argue that these voters' preferences on cultural and moral issues override their economic preferences. We draw on in-depth interviews with 120 white working-class voters to defend a broadly "economic" interpretation: for this segment of voters, moral and cultural appeals have an economic dimension, because these voters believe certain moral behaviors will help them prosper economically. Even the very word "conservative" is understood as referencing not respect for tradition generally, but avoidance of debt and excessive consumption specifically. For many respondents, the need to focus on morality and personal responsibility as a means of prospering economically - what we call "walking the line" - accords with the rhetoric they associate with Republicans. Deindustrialization may have heightened the appeal of this rhetoric.

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Just the Facts? Partisan Media and the Political Conditioning of Economic Perceptions

Ian Anson

Political Research Quarterly, forthcoming

Abstract:
This paper analyzes the effects of biases in economic information on partisans' economic perceptions. In survey experiments, I manipulate the presence of partisan cues and the direction of proattitudinal information in news stories about the American economy. Results demonstrate that although proattitudinal tone in factual economic news stories most strongly affects partisans' economic perceptions, inclusion of partisan cues alongside proattitudinal information results in weaker shifts in economic sentiment relative to stories lacking partisan content. These findings suggest that the relatively subtle process of agenda setting in economic news may be the most effective tool used by partisan news outlets to drive polarization in citizens' factual economic perceptions.

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Divisive Topics as Social Threats

Joseph Simons & Melanie Green

Communication Research, forthcoming

Abstract:
The current work provides evidence for a psychological obstacle to the resolution of divisive social issues (e.g., affirmative action, drug legalization); specifically, people approach discussions of these issues with a threatened mind-set. Across three studies, it is shown that the prospect of discussing topics which divide social opinion is associated with threatened responding (the dissensus effect). Divisive discussion topics are associated with both a greater level of self-reported threat (Studies 1 and 3) and a greater tendency to perceive neutral faces as threatening (Study 2). Furthermore, the effect is shown to be robust across manipulations of social opinion (ratings of multiple social issues in Studies 1 and 2; fictional polling data in Study 3), and was not reducible to individual attitude extremity (Studies 1 and 3) or a valence effect (Study 2).

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Revisiting the Myth: New Evidence of a Polarized Electorate

Marc Hetherington, Meri Long & Thomas Rudolph

Public Opinion Quarterly, Spring 2016, Pages 321-350

Abstract:
This study uncovers strong evidence that polarization has developed in presidential candidate trait evaluations. Unlike for ideology or policy preferences, the distribution of trait evaluations has become increasingly bimodal and clustered toward the poles. This change stems in part from a more polarized choice set, but perceptions of candidate extremeness are asymmetric, with partisans perceiving the other party's candidate, but not their own, as extreme. In addition, the increased salience of racial and moral issues helps explain trait polarization. Racial attitudes among Republicans have become both more conservative over time and more potent in explaining trait evaluations; among Democrats, racial attitudes have neither changed over time nor become more potent. Moral values among Democrats have grown more liberal over time and more potent in explaining trait evaluations. Among Republicans, however, moral values have not become more conservative, but have become a more potent predictor of trait evaluations. We discuss the implications of the emergence of trait polarization for understanding problematic features of contemporary American politics.

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On the determinants of political polarization

Daryna Grechyna

Economics Letters, July 2016, Pages 10-14

Abstract:
In this article, we aim to identify the main determinants of political polarization using Bayesian Model Averaging to overcome the problem of model uncertainty. We find that the level of trust within a country and the degree of income inequality are the most robust determinants of political polarization.

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Choosing peers: Homophily and polarization in groups

Mariagiovanna Baccara & Leeat Yariv

Journal of Economic Theory, September 2016, Pages 152-178

Abstract:
This paper studies the formation of peer groups entailing the joint production of public goods. In our model agents choose their peers and have to pay a connection cost for each member added to the group. After groups are formed, each agent selects a public project to make a costly contribution to, and all members of the group experience the benefits of these contributions. Since agents differ in how much they value one project relative to the other, the group's preferences affect the generated profile of public goods. We characterize mutually optimal groups, groups that are optimal for all their members. When contribution costs are low relative to connection costs, mutually optimal groups must be sufficiently homogeneous. As contribution costs increase relative to connection costs, agents desire more connections, which in turn raises the risk of free riding. Extreme peers are then more appealing, since they are more willing to contribute, and polarization arises.

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Sympathy for the Devil: How Broadcast News Reduces Negativity Toward Political Leaders

Glen Smith

American Politics Research, forthcoming

Abstract:
This study examines whether broadcast news reduces negativity toward political leaders by exposing partisans to opposing viewpoints. For analysis, both exposure to broadcast news and variation in media content are used to predict changes in feelings toward the candidates during the 2008 presidential election. The results suggest that increased exposure to broadcast news increased partisans' favorability toward the out-party candidate. In addition, increased coverage of the candidates was followed by increased favorability among members of the opposing party. These results demonstrate the benefits of exposure to two-sided communications flows for the reduction of animosity between the political parties. Moreover, these results suggest that public negativity toward political leaders might be even worse if not for the large amount of overlap between the audiences for partisan and mainstream news outlets.

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Fair and Balanced? Quantifying Media Bias through Crowdsourced Content Analysis

Ceren Budak, Sharad Goel & Justin Rao

Public Opinion Quarterly, Spring 2016, Pages 250-271

Abstract:
It is widely thought that news organizations exhibit ideological bias, but rigorously quantifying such slant has proven methodologically challenging. Through a combination of machine-learning and crowdsourcing techniques, we investigate the selection and framing of political issues in fifteen major US news outlets. Starting with 803,146 news stories published over twelve months, we first used supervised learning algorithms to identify the 14 percent of articles pertaining to political events. We then recruited 749 online human judges to classify a random subset of 10,502 of these political articles according to topic and ideological position. Our analysis yields an ideological ordering of outlets consistent with prior work. However, news outlets are considerably more similar than generally believed. Specifically, with the exception of political scandals, major news organizations present topics in a largely nonpartisan manner, casting neither Democrats nor Republicans in a particularly favorable or unfavorable light. Moreover, again with the exception of political scandals, little evidence exists of systematic differences in story selection, with all major news outlets covering a wide variety of topics with frequency largely unrelated to the outlet's ideological position. Finally, news organizations express their ideological bias not by directly advocating for a preferred political party, but rather by disproportionately criticizing one side, a convention that further moderates overall differences.

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Are Conservatives Happier than Liberals? Not Always and not Everywhere

Olga Stavrova & Maike Luhmann

Journal of Research in Personality, forthcoming

Abstract:
Prior research has shown that conservatives report higher levels of subjective well-being than liberals (happiness gap). We investigate to what extent this phenomenon exists in different time periods within the United States (Study 1, N = 40,000) and in different countries (Study 2, N = 230,000). Consistent with our hypotheses grounded in the "shared reality" and person-culture fit literature, conservatives were happier and more satisfied with their lives than liberals to the extent that the conservative political ideology prevailed in their socio-cultural context, be it a specific time period in the U.S. or a specific country. These results show that the happiness gap between conservatives and liberals is less universal than previously assumed.

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The Impact of Uncertainty, Threat, and Political Identity on Support for Political Compromise

Ingrid Haas

Basic and Applied Social Psychology, forthcoming

Abstract:
This work examines the impact of uncertainty and threat on support for political compromise. In Study 1, uncertainty, threat, and support for compromise were measured. Uncertainty increased support for compromise only when paired with positive or neutral affect. Studies 2 and 3 used an experimental design to examine the impact of incidental affect on support for political compromise as a function of political identification. Uncertainty was more likely to increase support for compromise in positive or neutral contexts and for political moderates and liberals. The combination of uncertainty and threat led conservatives to express reduced support for compromise.

By KEVIN LEWIS | 09:00:00 AM

Thursday, May 12, 2016

Gender representative

Gender and the Returns to Attractiveness

Jaclyn Wong & Andrew Penner

Research in Social Stratification and Mobility, June 2016, Pages 113–123

Abstract:
This study uses data from the National Longitudinal Study of Adolescent to Adult Health (Add Health) to 1) replicate research that documents a positive association between physical attractiveness and income; 2) examine whether the returns to attractiveness differ for women and men; and 3) explore the role that grooming plays in the attractiveness-income relationship. We find that attractive individuals earn roughly 20 percent more than people of average attractiveness, but this gap is reduced when controlling for grooming, suggesting that the beauty premium can be actively cultivated. Further, while both conventional wisdom and previous research suggest the importance of attractiveness might vary by gender, we find no gender differences in the attractiveness gradient. However, we do find that grooming accounts for the entire attractiveness premium for women, and only half of the premium for men. Our findings underscore the social construction of attractiveness, and in doing so illuminate a key mechanism for attractiveness premia that varies by gender.

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Countries with Higher Levels of Gender Equality Show Larger National Sex Differences in Mathematics Anxiety and Relatively Lower Parental Mathematics Valuation for Girls

Gijsbert Stoet et al.

PLoS ONE, April 2016

Abstract:
Despite international advancements in gender equality across a variety of societal domains, the underrepresentation of girls and women in Science, Technology, Engineering, and Mathematics (STEM) related fields persists. In this study, we explored the possibility that the sex difference in mathematics anxiety contributes to this disparity. More specifically, we tested a number of predictions from the prominent gender stratification model, which is the leading psychological theory of cross-national patterns of sex differences in mathematics anxiety and performance. To this end, we analyzed data from 761,655 15-year old students across 68 nations who participated in the Programme for International Student Assessment (PISA). Most importantly and contra predictions, we showed that economically developed and more gender equal countries have a lower overall level of mathematics anxiety, and yet a larger national sex difference in mathematics anxiety relative to less developed countries. Further, although relatively more mothers work in STEM fields in more developed countries, these parents valued, on average, mathematical competence more in their sons than their daughters. The proportion of mothers working in STEM was unrelated to sex differences in mathematics anxiety or performance. We propose that the gender stratification model fails to account for these national patterns and that an alternative model is needed. In the discussion, we suggest how an interaction between socio-cultural values and sex-specific psychological traits can better explain these patterns. We also discuss implications for policies aiming to increase girls’ STEM participation.

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But You Don’t Look Like A Scientist!: Women Scientists with Feminine Appearance are Deemed Less Likely to be Scientists

Sarah Banchefsky et al.

Sex Roles, forthcoming

Abstract:
Two studies examined whether subtle variations in feminine appearance erroneously convey a woman’s likelihood of being a scientist. Eighty photos (half women) of tenured/tenure-track science, technology, engineering, and math (STEM) faculty at elite research universities were selected from the Internet. Participants, naïve to the targets’ occupations, rated the photos on femininity and likelihood of being a scientist and an early childhood educator. Linear mixed model analysis treated both participants and stimuli as random factors, enabling generalization to other samples of participants and other samples of stimuli. Feminine appearance affected career judgments for female scientists (with increasing femininity decreasing the perceived likelihood of being a scientist and increasing the perceived likelihood of being an early childhood educator), but had no effect on judgments of male scientists. Study 2 replicated these findings with several key procedural modifications: the presentation of the stimuli was manipulated to either be blocked by gender or completely randomized, questions pertaining to the stimuli’s appearance were removed, and a third career judgment likelihood rating was added to avoid tradeoffs between scientist and early childhood educator. In both studies, results suggest that for women pursuing STEM, feminine appearance may erroneously signal that they are not well suited for science.

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Gender Differences in Response to Competition With Same-Gender Coworkers: A Relational Perspective

Sun Young Lee, Selin Kesebir & Madan Pillutla

Journal of Personality and Social Psychology, forthcoming

Abstract:
We take a relational perspective to explain how women and men may differently experience competition with their same-gender coworkers. According to gender socialization research, the female peer culture values harmony and the appearance of equality, whereas hierarchical ranking is integral to the male peer culture. As competition dispenses with equality and creates a ranking hierarchy, we propose that competition is at odds with the norms of female (but not male) peer relationships. On this basis, we predicted and found in 1 correlational study and 3 experiments that women regard competition with their same-gender coworkers as less desirable than men do, and that their relationships with each other suffer in the presence of competition. We discuss the implications of these findings for women’s career progression.

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Preference for the Workplace, Human Capital, and Gender

Matthew Wiswall & Basit Zafar

NBER Working Paper, April 2016

Abstract:
In this paper, we use a hypothetical choice methodology to robustly estimate preferences for workplace attributes and quantify how much these preferences influence pre-labor market human capital investments. Undergraduate students are presented with sets of job offers that vary in their attributes (such as earnings and job hours flexibility) and asked to state their probabilistic choices. We show that this method robustly identifies preferences for various job attributes, free from omitted variable bias and free from considering the equilibrium matching of workers to jobs. While there is substantial heterogeneity in preferences, we find that women on average have a higher willingness to pay for jobs with greater work flexibility (lower hours, and part-time option availability) and job stability (lower risk of job loss), and men have a higher willingness to pay for jobs with higher earnings growth. Using a follow-up survey several years after the experiment, we find a systematic relationship between the respondents' job preferences as revealed during college and the actual workplace characteristics of the jobs these individuals are currently working at after college. In the second part of the paper, we relate these job attribute preferences to major choice. Using data on students' perceptions about the demand side of the labor market -- beliefs about expected attributes of jobs students anticipate being offered if they were to complete particular majors -- we find that students perceive jobs offered to Humanities majors to have fewer hours, more work-time flexibility, and higher stability than jobs offered to Economics/Business majors. These job attributes are found to play a role in major choice, with women exhibiting greater sensitivity to non-pecuniary job attributes in major choice.

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Facilitating Women’s Success in Business: Interrupting the Process of Stereotype Threat through Affirmation of Personal Values

Zoe Kinias & Jessica Sim

INSEAD Working Paper, March 2016

Abstract:
Two field experiments examined if and how values affirmations can ameliorate stereotype threat-induced gender performance gaps in an international competitive business environment. Based on self-affirmation theory (Steele, 1988), we predicted that writing about personal values unrelated to the perceived threat would attenuate the gender performance gap. Study 1 found that an online assignment to write about one’s personal values (but not a similar writing assignment including organizational values) closed the gender gap in course grades by 89.0% among 423 Masters of Business Administration students (MBAs) at an international business school. Study 2 replicated this effect among 396 MBAs in a different cohort with random assignment and tested three related mediators (self-efficacy, self-doubt, and self-criticism). Personal values reflection (but not reflecting on values including those of the organization or writing about others’ values) reduced the gender gap by 66.5%, and there was a significant indirect effect through reduced self-doubt. These findings show that a brief personal values writing exercise can dramatically improve women’s performance in competitive environments where they are negatively stereotyped. The results also demonstrate that stereotype threat (Steele & Aronson, 1995) can occur within a largely non-American population with work experience and that affirming one’s core personal values (without organizational values) can ameliorate the threat.

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Some Evidence for a Gender Gap in Personality and Social Psychology

Adam Brown & Jin Goh

Social Psychological and Personality Science, forthcoming

Abstract:
This research examined a possible gender gap in personality and social psychology. According to membership demographics from the Society for Personality and Social Psychology (SPSP), women and men are represented near parity in the field. Yet despite this equal representation, the field may still suffer from a different type of gender gap. We examined the gender of first authors in two major journals, citations to these articles, and gender of award recipients. In random samples of five issues per year across 10 years (2004–2013; N = 1,094), 34% of first authors in Journal of Personality and Social Psychology were women and 44% of first authors in Personality and Social Psychology Bulletin were women. Articles authored by men were cited more than those authored by women. In examining the gender of award recipients given by SPSP (2000–2016), on average, 25% of the recipients were women.

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Gender and entrepreneurial success: Evidence from survey data

Benjamin Artz

Applied Economics Letters, forthcoming

Abstract:
A wealth of studies have contributed to the literature on gender differences in entrepreneurial success, but most lack key controls that aid in determining that success. Scale of the entrepreneur’s business is often not accounted for, and no studies to the author’s knowledge approach the gender comparison by specifically utilizing a sample of entrepreneur-only managed businesses. This allows for a direct comparison between individual entrepreneurs’ performance by gender, without the confounding heterogeneity that workforces may introduce. Data are taken from a national US survey of individuals, and model specifications include a number of important but oftentimes unavailable controls that have never before been used in conjunction. Female and male entrepreneurial success are statistically equal after controlling for risk preferences, intelligence, start-up capital, prior industry experience and hours worked at the business. Alternative specifications and sensitivity checks confirm and expand on these results.

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Second Thoughts About Second Acts: Gender Differences in Serial Founding Rates

Venkat Kuppuswamy & Ethan Mollick

University of North Carolina Working Paper, March 2016

Abstract:
Men are far more likely to start new ventures than women. We argue that one explanation of this gap is that women respond differently to signals of past entrepreneurial success due to the “male hubris, female humility” effect. We argue that as a result women are disproportionately less likely to persist in second founding attempts than men when they have succeeded or failed by large margins. Using a data set of serial founders in crowdfunding, we find evidence supporting this prediction. We then turn to a unique survey of founders in crowdfunding in order to examine alternative explanations. We find support for a variety of systematic differences between male and female founders, but the persistence effect remains. While decreased persistence in the face of low quality opportunities benefits women individually, we argue that it disadvantages women as a group, as it leads to 25.3% fewer female-led foundings in our sample than would have occurred if women reacted similarly to men.

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Human sex differences in solving a virtual navigation problem

Robert Astur et al.

Behavioural Brain Research, 15 July 2016, Pages 236–243

Abstract:
The current study examined sex differences in initial and subsequent strategies in solving a navigational problem within a virtual reality environment. We tested 163 undergraduates on a virtual T-maze task that included probe trials designed to assess whether participants were responding using either a place or response strategy. Participants were also tested on a mental rotation task and memory of the details of the virtual room. There were no differences between the sexes in copying or recalling a map of the room or on first trial performance of the T-maze. However, at trial two, males show a significant advantage in solving the task, and approximately 80% of the males adopt a place strategy to solve the T-maze whereas females at that point showed no strategy preference. Across all testing, both males and females preferentially used a place strategy. We discuss how factors such as spatial priming affect strategy preferences and how such factors may differentially affect males and females.

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The Mobilization of Title IX in Colleges and Universities, 1994-2014

Celene Reynolds

Yale Working Paper, April 2016

Abstract:
Title IX has been widely recognized as a crucial step toward gender equality in America. Yet it remains unclear how the law actually functions, particularly how it has been used in response to gender disparities in higher education. This article provides the first systematic analysis of how Title IX has been mobilized at the postsecondary level. Drawing on new data acquired through seven Freedom of Information Act requests, I analyze all resolved Title IX complaints filed with the Office of Civil Rights against four-year nonprofit colleges and universities from 1994 to 2014 (N=6,654). I find that the mobilization of Title IX has changed both in frequency and in kind during this period. Filings started to rise after 2000 and exploded after 2009, while sexual harassment complaints nearly equaled academic and athletic filings for the first time in 2014. Finally, despite the egalitarian design of the complaint process, private schools and more selective schools face a disproportionate number of complaints relative to enrollment, indicating the power of institutions in mediating legal mobilization.

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The Public Policy Roots of Women's Increasing College Degree Attainment: The National Defense Education Act of 1958 and the Higher Education Act of 1965

Deondra Rose

Studies in American Political Development, April 2016, Pages 62-93

Abstract:
How do we explain the steep increase in women's higher educational attainment that began in the mid-twentieth century and has continued, unchecked, in subsequent decades? Although many point to the emergence of feminism and the creation of Title IX in the 1970s as the origins of this trend, I argue that two federal student aid programs — the National Defense Education Act of 1958 and the Higher Education Act of 1965 — helped set the stage for women to surpass men as the recipients of bachelor's degrees. Using historical analysis of primary and secondary resources, I present two related case studies that demonstrate the central role that unique political contexts and nondiscriminatory program administration have played in lawmakers' capacity to promote equal opportunity through public policy. This study suggests that women's increasing college degree attainment has important, but frequently overlooked, public policy roots.

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Does Encouragement Matter in Improving Gender Imbalances in Technical Fields? Evidence from a Randomized Controlled Trial

Cait Unkovic, Maya Sen & Kevin Quinn

PLoS ONE, April 2016

Abstract:
Does encouragement help address gender imbalances in technical fields? We present the results of one of the first and largest randomized controlled trials on the topic. Using an applied statistics conference in the social sciences as our context, we randomly assigned half of a pool of 3,945 graduate students to receive two personalized emails encouraging them to apply (n = 1,976) and the other half to receive nothing (n = 1,969). We find a robust, positive effect associated with this simple intervention and suggestive evidence that women responded more strongly than men. However, we find that women’s conference acceptance rates are higher within the control group than in the treated group. This is not the case for men. The reason appears to be that female applicants in the treated group solicited supporting letters at lower rates. Our findings therefore suggest that “low dose” interventions may promote diversity in STEM fields but may also have the potential to expose underlying disparities when used alone or in a non-targeted way.

By KEVIN LEWIS | 09:00:00 AM

Wednesday, May 11, 2016

Big government

Taxation, Corruption, and Growth

Philippe Aghion et al.

European Economic Review, forthcoming

Abstract:
We build an endogenous growth model to analyze the relationships between taxation, corruption, and economic growth. Entrepreneurs lie at the center of the model and face disincentive effects from taxation but acquire positive benefits from public infrastructure. Political corruption governs the efficiency with which tax revenues are translated into infrastructure. The model predicts an inverted-U relationship between taxation and growth, with corruption reducing the optimal taxation level. We find evidence consistent with these predictions and the entrepreneurial channel using data from the Longitudinal Business Database of the US Census Bureau. The marginal effect of taxation for growth for a state at the 10th or 25th percentile of corruption is significantly positive; on the other hand, the marginal effects of taxation for growth for a state at the 90th percentile of corruption are much lower across the board. We make progress towards causality through Granger-style tests and by considering periphery counties where effective tax policy is largely driven by bordering states. Finally, we calibrate our model and find that the calibrated taxation rate of 37% is fairly close to the model's estimated welfare maximizing taxation rate of 42%. Reducing corruption provides the largest potential impact for welfare gain through its impact on the uses of tax revenues.

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How Income Taxes Should Change during Recessions

Zachary Liscow & William Woolston

Yale Working Paper, March 2016

Abstract:
This paper offers recommendations for how the design of labor income taxes should change during recessions, based on a simple model of a recessionary economy in which jobs are rationed and some employees value working more than others do. The paper draws two counter-intuitive conclusions for maximizing social welfare. First, subsidize non-employment. This draws marginal workers out of the labor force, creating “space” for those who really need jobs. Second, subsidize employers for hiring, not the employees themselves. The problem during recessions is having too few jobs; subsidizing employers creates more jobs, while subsidizing employees confers benefits on those who already won the job lottery. Tax policy in the recent recession has done a poor job of following these recommendations.

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Do State Business Climate Indicators Explain Relative Economic Growth at State Borders?

Georgeanne Artz et al.

Journal of Regional Science, forthcoming

Abstract:
This study submits 11 business climate indexes to tests of their ability to predict relative economic performance on either side of state borders. Our results show that most business climate indexes have no ability to predict relative economic growth regardless of how growth is measured. Some are negatively correlated with relative growth. Many are better at reporting past growth than at predicting the future. In the end, the most predictive business climate index is the Grant Thornton Index which was discontinued in 1989.

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The political economy of public investment when population is aging: A panel cointegration analysis

Philipp Jäger & Torsten Schmidt

European Journal of Political Economy, June 2016, Pages 145–158

Abstract:
Time preferences vary by age. Notably, according to experimental studies, senior citizens tend to discount future payoffs more heavily than working-age individuals. Based on these findings, we hypothesize that demographic change has contributed to the cut-back in government-financed investment that many advanced economies experienced over the last four decades. We demonstrate for a panel of 19 OECD countries between 1971 and 2007 that the share of elderly people and public investment rates are cointegrated, indicating a long-run relationship between them. Estimating this cointegration relationship via dynamic OLS (DOLS) we find a negative and significant effect of population aging on public investment. Moreover, the estimation of an error correction model reveals long-run Granger causality running exclusively from aging to investment. Our results are robust to the inclusion of additional control variables typically considered in the literature on the determinants of public investment.

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Fiscal Sentiment and the Weak Recovery from the Great Recession: A Quantitative Exploration

Finn Kydland & Carlos Zarazaga

Journal of Monetary Economics, forthcoming

Abstract:
The US economy hasn't recovered from the Great Recession as strongly as predicted by the neoclassical growth model, even after incorporating a variety of frictions to it. The paper explores quantitatively the hypothesis that the counterfactual predictions are mostly the result of ignoring the expectations of higher taxes prompted by unprecedented fiscal challenges faced by that country in peacetime. The main finding is that this fiscal sentiment hypothesis can account for a substantial fraction of the decline in investment and labor input in the aftermath of the Great Recession, provided the perceived higher taxes fall almost exclusively on capital income.

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Who Benefits from State Corporate Tax Cuts? A Local Labor Markets Approach to Heterogeneous Firms

Juan Carlos Suarez Serrato & Owen Zidar

American Economic Review, forthcoming

Abstract:
This paper estimates the incidence of state corporate taxes on the welfare of workers, landowners, and firm owners using variation in state corporate tax rates and apportionment rules. We develop a spatial equilibrium model with imperfectly mobile firms and workers. Firm owners may earn profits and be inframarginal in their location choices due to differences in location-specific productivities. We use the reduced-form effects of tax changes to identify and estimate incidence as well as the structural parameters governing these impacts. In contrast to standard open economy models, firm owners bear roughly 40 percent of the incidence, while workers and landowners bear 30-35 percent and 25-30 percent, respectively.

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Inattention to Deferred Increases in Tax Bases: How Michigan Homebuyers are Paying for Assessment Limits

Sebastien Bradley

Review of Economics and Statistics, forthcoming

Abstract:
Michigan's implementation of assessment limits gives rise to wide variation in taxable basis across comparable homes. Exploiting the fact that the resulting differences in property tax liability are temporarily inherited by new homebuyers, I estimate the degree of capitalization of these largely-idiosyncratic tax differences to evaluate whether homebuyers understand the tax implications of their home purchases. Consistent with anecdotal evidence — but in stark contrast to the traditional view of rational consumer behavior — I find that homebuyers are woefully inattentive to the temporary nature of their initial tax obligations, resulting in an overpayment of nearly $10,000 for the average home.

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Decentralized Governance, Expenditure Composition, and Preferences for Public Goods

Javier Arze del Granado, Jorge Martinez-Vazquez & Robert McNab

Public Finance Review, forthcoming

Abstract:
The literature on decentralization has long asserted that decentralized governance increases public sector allocative efficiency. We offer an indirect test of this hypothesis by examining how decentralized governance affects revealed preferences for public goods. Specifically, we examine the relationship between expenditure decentralization and the functional composition of public expenditures. We hypothesize that higher levels of expenditure decentralization induce agents to demand increased production of publicly provided private goods. We test this hypothesis using an unbalanced panel data set of forty-two developed and developing countries over twenty-two years. Using system Generalized Methods of Moments and Quasi-Maximum Likelihood estimators, we find that expenditure decentralization positively, significantly, and robustly influences the share of education expenditures in consolidated government budgets. We also find evidence to suggest that expenditure decentralization positively influences the share of health expenditures in consolidated government budgets. Decentralized governance appears to alter the composition of public expenditures toward publicly provided private goods.

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The impacts of fiscal policy shocks on the US housing market

Isabel Ruiz & Carlos Vargas-Silva

Empirical Economics, May 2016, Pages 777-800

Abstract:
We explore empirically the impact of fiscal policy shocks on the US housing market using a vector autoregressive model. Identification is achieved through sign restrictions. Accounting for announcement effects, a revenue shock has a short-lived positive impact on house prices and indicators of housing activity. The impact of a spending shock on housing activity is negative and more persistent, but there is no substantial response from house prices. A balanced budget spending expansion (i.e. 1 % increases in spending and revenue) has a short-lived negative impact on housing activity and a very persistent negative impact on house prices. The paper presents results from other combinations of the two shocks. Results are generally robust to only using data for the post-financial liberalization period (i.e. since 1983).

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Performance Management and Deficit Adjustment in U.S. Cities: An Exploratory Study

Benedict Jimenez

International Journal of Public Administration, forthcoming

Abstract:
Performance management or PM has been promoted as a tool to transform government. Claims that PM will enable governments to “do more with less,” “increase efficiency,” provide “value for money,” and make “rational budget decisions” abound. Has PM helped city governments in the United States cope with the effects of the 2007–2009 Great Recession? Theory suggests that PM can provide the informational and analytical foundation necessary for city officials to implement comprehensive but conflictive budget-cutting and revenue-raising strategies. By facilitating deep expenditure cuts and tax increases, PM can indirectly influence budget deficits. Using data from a national survey of city governments and multiyear audited financial reports, the empirical analysis shows that PM cities favored what are essentially decremental responses to fiscal crises that lead to marginal changes in revenues and expenditures. Not surprisingly, there is no evidence that PM influences the size and change in budget shortfalls.

By KEVIN LEWIS | 09:00:00 AM

Tuesday, May 10, 2016

Minority representative

Whitened Résumés: Race and Self-Presentation in the Labor Market

Sonia Kang et al.

Administrative Science Quarterly, forthcoming

Abstract:
Using interviews, a laboratory experiment, and a résumé audit study, we examine racial minorities’ attempts to avoid anticipated discrimination in labor markets by concealing or downplaying racial cues in job applications, a practice known as “résumé whitening.” Interviews with racial minority university students reveal that while some minority job seekers reject this practice, others view it as essential and use a variety of whitening techniques. Building on the qualitative findings, we conduct a lab study to examine how racial minority job seekers change their résumés in response to different job postings. Results show that when targeting an employer that presents itself as valuing diversity, minority job applicants engage in relatively little résumé whitening and thus submit more racially transparent résumés. Yet our audit study of how employers respond to whitened and unwhitened résumés shows that organizational diversity statements are not actually associated with reduced discrimination against unwhitened résumés. Taken together, these findings suggest a paradox: minorities may be particularly likely to experience disadvantage when they apply to ostensibly pro-diversity employers. These findings illuminate the role of racial concealment and transparency in modern labor markets and point to an important interplay between the self-presentation of employers and the self-presentation of job seekers in shaping economic inequality.

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Can Tracking Raise the Test Scores of High-Ability Minority Students?

David Card & Laura Giuliano

NBER Working Paper, March 2016

Abstract:
We study the impacts of a tracking program in a large urban school district that establishes separate “gifted/high achiever” (GHA) classrooms for fourth and fifth graders whenever there is at least one gifted student in a school-wide cohort. Since most schools have only a handful of gifted students per cohort, the majority of seats are filled by high achievers ranked by their scores in the previous year’s statewide tests. We use a rank-based regression discontinuity design, together with between-cohort comparisons of students at schools with small numbers of gifted children per cohort, to evaluate the effects of the tracking program. We find that participation in a GHA class leads to significant achievement gains for non-gifted participants, concentrated among black and Hispanic students, who gain 0.5 standard deviation units in fourth grade reading and math scores, with persistent effects to at least sixth grade. Importantly, we find no evidence of spillovers on non-participants. We also investigate a variety of channels that can explain these effects, including teacher quality and peer effects, but conclude that these features explain only a small fraction (10%) of the test score gains of minority participants in GHA classes. Instead we attribute the effects to a combination of factors like teacher expectations and negative peer pressure that lead high-ability minority students to under-perform in regular classes but are reduced in a GHA classroom environment.

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Credit Reports as Résumés: The Incidence of Pre-Employment Credit Screening

Alexander Wickman Bartik & Scott Nelson

MIT Working Paper, March 2016

Abstract:
We study recent bans on employers' use of credit reports to screen job applicants – a practice that has been popular among employers, but controversial for its perceived disparate impact on racial minorities. Exploiting geographic, temporal, and job-level variation in which workers are covered by these bans, we analyze these bans' effects in two datasets: the panel dimension of the Current Population Survey (CPS); and data aggregated from state unemployment insurance records. We find that the bans reduced job-finding rates for blacks by 7 to 16 log points, and increased subsequent separation rates for black new hires by 3 percentage points, arguably contrary to the bans' intended effects. Results for Hispanics and whites are less conclusive. We interpret these findings in a statistical discrimination model in which credit report data, more so for blacks than for other groups, send a high-precision signal relative to the precision of employers' priors.

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Blaming the Customer: The Effect of Cast Racial Diversity on the Performance of Hollywood Films

Venkat Kuppuswamy & Peter Younkin

University of North Carolina Working Paper, February 2016

Abstract:
Is employment discrimination driven by consumer bias rather than employer bias? One explanation for the persistence of employment discrimination, despite considerable legal and social pressure, is that unbiased employers are penalized by biased customers. An equitable employer is therefore a less profitable one, and apparent employer bias is more accurately described as reflected consumer antipathy. The empirical challenge of relating consumer behavior to employee composition has limited prior tests of this hypothesis and focused attention largely on employer behavior. We provide a rare direct test of the claim that consumers change their spending patterns in relation to employee composition by evaluating the commercial and artistic performance of all films released theatrically within the United States between 2011-2015 as a function of the racial diversity of their cast. We find that employing black actors for less prominent roles has no effect on either outcome. However, we find that films employing multiple black actors in leading roles achieve significantly higher domestic box-office revenues (149% higher) than films with no black actors. Moreover, this higher commercial performance domestically does not occur at the expense of artistic success or international box-office appeal. Specifically, we find no evidence of a penalty with respect to Academy Award nominations or international film revenues for films with more black actors. These results indicate that the persistent underemployment of minorities in Hollywood is not the product of consumer discrimination.

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Successful black immigrants narrow black-white achievement gaps

Alison Rauh

Economics Letters, forthcoming

Abstract:
Foreign-born blacks have become a large part of the American black population. Compared to native-born blacks, they are more likely to be high-earning, employed, educated, and not institutionalized. The systematic outcome differences have masked the widening of black-white achievement gaps.

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Being smart or getting smarter: Implicit theory of intelligence moderates stereotype threat and stereotype lift effects

Laura Froehlich et al.

British Journal of Social Psychology, forthcoming

Abstract:
This research explores implicit theory of intelligence (TOI) as a moderator of stereotype activation effects on test performance for members of negatively stereotyped and of favourably stereotyped groups. In Germany, Turkish-origin migrants are stereotyped as low in verbal ability. We predicted that on a test diagnostic of verbal intelligence, endorsement of an entity TOI predicts stereotype threat effects for Turkish-origin students and stereotype lift effects for German students. This effect could account for some of the performance gap between immigrants and host society members after stereotype activation. Study 1 (N = 107) established structural equivalence of implicit theories across the ethnic groups. In two experimental studies (Study 2: N = 182, Study 3: N = 190), we tested the moderating effect of TOI in a 2 (stereotype activation: diagnostic vs. non-diagnostic test) × 2 (ethnicity: German vs. Turkish migration background) experimental design. The results showed that when the test was described as diagnostic of verbal intelligence, higher entity theory endorsement predicted stereotype threat effects for Turkish-origin students (Study 2 and Study 3) and stereotype lift effects for German students (Study 3). The results are discussed in terms of practical implications for educational settings and theoretical implications for processes underlying stereotype activation effects.

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Context Moderates Affirmation Effects on the Ethnic Achievement Gap

John Protzko & Joshua Aronson

Social Psychological and Personality Science, forthcoming

Abstract:
We attempted to replicate a self-affirmation intervention that produced a 40% reduction in the academic achievement gap among at-risk students. The intervention was designed as a protection against stereotype threat, which creates stress and suppresses the performance, engagement, and learning of students stereotyped as intellectually inferior. In previous research, Black and Hispanic students who engaged in a values-affirmation exercise significantly improved their academic performance over the course of a school semester. We attempted to replicate these salutary effects in both an inner-city school and a more wealthy suburban school — contexts not tested in the original research. Despite employing the same materials, we found no effect of the affirmation on academic performance. We discuss these results in terms of the possibility that negatively stereotyped students benefit most from self-affirmations in environments where their numbers portray them neither as clearly “majority” nor minority.

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Racial disparities in education debt burden among low- and moderate-income households

Michal Grinstein-Weiss et al.

Children and Youth Services Review, June 2016, Pages 166–174

Abstract:
Evidence now demonstrates significant variation in education-debt levels by race and household income, with Black and lower-income students accumulating higher levels of education debt compared to their White and upper-income peers. This study is one of the first to evaluate whether racial disparities in education debt extend to a low- and moderate-income (LMI) population. With data from a national sample of LMI households in the Refund to Savings study (N = 17.684), we employ a two-part modeling approach with a matching-estimator robustness check to estimate racial and ethnic variation in education debt. We find that significant disparities in education debt remain: the odds of student loan indebtedness are twice as high for LMI Black students as for White counterparts. In all, LMI Black students are estimated to incur $7721 more in education debt than LMI Whites, with disparities persisting after graduation. These findings suggest that LMI Black and White students, who face similar liquidity constraints and borrowing risks, are at unequal risk of accumulating education debt. We conclude by discussing the implications of this research for asset-building policies and student loan repayment efforts, both of which offer promise in bolstering college affordability and easing the burden of education debt.

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Social Dominance Orientation, Nonnative Accents, and Hiring Recommendations

Karolina Hansen & John Dovidio

Cultural Diversity and Ethnic Minority Psychology, forthcoming

Objective: Discrimination against nonnative speakers is widespread and largely socially acceptable. Nonnative speakers are evaluated negatively because accent is a sign that they belong to an outgroup and because understanding their speech requires unusual effort from listeners. The present research investigated intergroup bias, based on stronger support for hierarchical relations between groups (social dominance orientation [SDO]), as a predictor of hiring recommendations of nonnative speakers.

Method: In an online experiment using an adaptation of the thin-slices methodology, 65 U.S. adults (54% women; 80% White; Mage = 35.91, range = 18–67) heard a recording of a job applicant speaking with an Asian (Mandarin Chinese) or a Latino (Spanish) accent. Participants indicated how likely they would be to recommend hiring the speaker, answered questions about the text, and indicated how difficult it was to understand the applicant.

Results: Independent of objective comprehension, participants high in SDO reported that it was more difficult to understand a Latino speaker than an Asian speaker. SDO predicted hiring recommendations of the speakers, but this relationship was mediated by the perception that nonnative speakers were difficult to understand. This effect was stronger for speakers from lower status groups (Latinos relative to Asians) and was not related to objective comprehension.

Conclusions: These findings suggest a cycle of prejudice toward nonnative speakers: Not only do perceptions of difficulty in understanding cause prejudice toward them, but also prejudice toward low-status groups can lead to perceived difficulty in understanding members of these groups.

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Young, Black, and (Still) in the Red: Parental Wealth, Race, and Student Loan Debt

Fenaba Addo, Jason Houle & Daniel Simon

Race and Social Problems, March 2016, Pages 64-76

Abstract:
Taking out student loans to assist with the costs of postsecondary schooling in the US has become the norm in recent decades. The debt burden young adults acquire during the higher education process, however, is increasingly stratified with black young adults holding greater debt burden than whites. Using data from the NLSY 1997 cohort, we examine racial differences in student loan debt acquisition and parental net wealth as a predictor contributing to this growing divide. We have four main results. First, confirming prior research, black young adults have substantially more debt than their white counterparts. Second, we find that this difference is partially explained by differences in wealth, family background, postsecondary educational differences, and family contributions to college. Third, young adults’ net worth explain a portion of the black–white disparity in debt, suggesting that both differences in accumulation of debt and ability to repay debt in young adulthood explain racial disparities in debt. Fourth, the black–white disparity in debt is greatest at the highest levels of parents’ net worth. Our findings show that while social and economic experiences can help explain racial disparities in debt, the situation is more precarious for black youth, who are not protected by their parents’ wealth. This suggests that the increasing costs of higher education and corresponding rise in student loan debt are creating a new form of stratification for recent cohorts of young adults, and that student loan debt may be a new mechanism by which racial economic disparities are inherited across generations.

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Racial/Ethnic Pay Disparities among Registered Nurses (RNs) in U.S. Hospitals: An Econometric Regression Decomposition

Jean Moore & Tracey Continelli

Health Services Research, April 2016, Pages 511–529

Data Sources/Study Setting: The National Sample Survey of Registered Nurses, 2008, which is representative at both the state and national level.

Study Design: Cross-sectional data were analyzed using multivariate regression and regression decomposition. Differences between groups were decomposed into differences in the possession of characteristics and differences in the value of the same characteristic between different groups, the latter being a commonly used measure of wage discrimination.

Data Collection/Extraction Methods: As the majority of minority hospital RNs are employed within the most densely populated (central) counties of metropolitan statistical areas (MSAs), only hospital RNs employed in the central counties of MSAs were selected.

Principal Findings: Regression decomposition found that black and Hispanic RNs earned less than whites and Asians, while Asian RNs earned more than white RNs. The majority of pay variation between white RNs, versus Asian, black, or Hispanic RNs was due to unexplained differences in the value of the same characteristic between groups.

Conclusions: Differences in earnings between underrepresented and overrepresented hospital RNs is suggestive of discrimination.

By KEVIN LEWIS | 09:00:00 AM

Monday, May 9, 2016

Tested

Brief intervention to encourage empathic discipline cuts suspension rates in half among adolescents

Jason Okonofua, David Paunesku & Gregory Walton

Proceedings of the National Academy of Sciences, forthcoming

Abstract:
Growing suspension rates predict major negative life outcomes, including adult incarceration and unemployment. Experiment 1 tested whether teachers (n = 39) could be encouraged to adopt an empathic rather than punitive mindset about discipline — to value students’ perspectives and sustain positive relationships while encouraging better behavior. Experiment 2 tested whether an empathic response to misbehavior would sustain students’ (n = 302) respect for teachers and motivation to behave well in class. These hypotheses were confirmed. Finally, a randomized field experiment tested a brief, online intervention to encourage teachers to adopt an empathic mindset about discipline. Evaluated at five middle schools in three districts (Nteachers = 31; Nstudents = 1,682), this intervention halved year-long student suspension rates from 9.6% to 4.8%. It also bolstered respect the most at-risk students, previously suspended students, perceived from teachers. Teachers’ mindsets about discipline directly affect the quality of teacher–student relationships and student suspensions and, moreover, can be changed through scalable intervention.

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Academics vs. Athletics: Career Concerns for NCAA Division I Coaches

Christopher Avery, Brian Cadman & Gavin Cassar

NBER Working Paper, March 2016

Abstract:
We analyze the promotions and firings of NCAA Division 1 college basketball and college football coaches to assess whether these coaches are rewarded for the academic performance of their players in promotion and retention decisions. We find that an increase in Academic Progress Rate, as measured by the NCAA, for a college team in either sport significantly reduces the probability that the coach is fired at the end of the season. We find little to no evidence that an increase in the Academic Progress Rate enhances the chances of advancement (in the form of outside job offers) for these coaches.

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Labor Market Returns to the GED Using Regression Discontinuity Analysis

Christopher Jepsen, Peter Mueser & Kenneth Troske

Journal of Political Economy, forthcoming

Abstract:
We evaluate returns to General Educational Development (GED) certification for high school dropouts using state administrative data. We apply a fuzzy regression discontinuity method to account for test takers retaking the test. For women we find that GED certification has no statistically significant effect on either employment or earnings. For men we find a significant increase in earnings in the second year after taking the test but no impact in subsequent years. GED certification increases postsecondary school enrollment by 4–8 percentage points. Our results differ from regression discontinuity approaches that fail to account for test retaking.

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Explaining the Evolution of Education Attainment in the US

Rui Castro & Daniele Coen-Pirani

American Economic Journal: Macroeconomics, forthcoming

Abstract:
We study the evolution of educational attainment of the 1932–1972 cohorts using a human capital investment model with heterogeneous learning ability. Inter-cohort variation in schooling is driven by changes in skill prices, tuition, and education quality over time, and average learning ability across cohorts. Under static expectations the model accounts for the main empirical patterns. Rising skill prices for college explain the rapid increase in college graduation till the 1948 cohort. The decline in average learning ability, calibrated to match the evolution of test scores, explains half of the stagnation in college graduation between the 1948 and 1972 cohorts.

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Student Loans or Marriage? A Look at the Highly Educated

Dora Gicheva

Economics of Education Review, forthcoming

Abstract:
I examine the relationship between student loans and marital status among individuals considering or pursuing graduate management education. Using data from a panel survey of registrants for the Graduate Management Admission Test, I show that the amount of accumulated student debt is negatively related to the probability of first marriage. The strength of the relationship diminishes with age, more so for women than for men. At the median age for the sample (24 years at test registration), the estimated decrease over a seven-year period is between 3 and 4 percentage points per $10,000 in student debt for men and a percentage point lower in absolute value for women. I use information on reported marriage expectations to show evidence that education expenditures and the amount of debt are correlated with anticipated marital status, but borrowers may not have perfect foresight about the long-term consequences of accumulating student debt.

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The 'Pupil' Factory: Specialization and the Production of Human Capital in Schools

Roland Fryer

NBER Working Paper, April 2016

Abstract:
Starting in the 2013-2014 school year, I conducted a randomized field experiment in fifty traditional public elementary schools in Houston, Texas designed to test the potential productivity benefits of teacher specialization in schools. Treatment schools altered their schedules to have teachers specialize in a subset of subjects in which they have demonstrated relative strength (based on value-add measures and principal observations). The average impact of teacher specialization on student achievement is -0.042 standard deviations in math and -0.034 standard deviations in reading, per year. Students enrolled in special education and those with younger teachers demonstrated marked negative results. I argue that the results are consistent with a model in which the benefits of specialization driven by sorting teachers into a subset of subjects based on comparative advantage is outweighed by inefficient pedagogy due to having fewer interactions with each student. Consistent with this, specialized teachers report providing less attention to individual students (relative to non-specialized teachers), though other mechanisms are possible.

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Here Today, Gone Tomorrow? Investigating Rates and Patterns of Financial Aid Renewal Among College Freshmen

Kelli Bird & Benjamin Castleman

Research in Higher Education, June 2016, Pages 395-422

Abstract:
College affordability continues to be a top concern among prospective students, their families, and policy makers. Prior work has demonstrated that a significant share of prospective students forgo financial aid because they did not complete the Free Application for Federal Student Aid (FAFSA); recent federal policy efforts have focused on supporting students and their families to successfully file the FAFSA. Despite the fact that students must refile the FAFSA every year to maintain their aid eligibility, there are many fewer efforts to help college students renew their financial aid each year. While prior research has documented the positive effect of financial aid on persistence, we are not aware of previous studies that have documented the rate at which freshman year financial aid recipients successfully refile the FAFSA, particularly students who are in good academic standing and appear well-poised to succeed in college. The goal of our paper is to address this gap in the literature by documenting the rates and patterns of FAFSA renewal. Using the Beginning Postsecondary Students Longitudinal Study, we find that roughly 16 % of freshmen Pell Grant recipients in good academic standing do not refile a FAFSA for their sophomore year. Even among Pell Grant recipients in good academic standing who return for sophomore year, nearly 10 % do not refile a FAFSA. Consequently, we estimate that these non-refilers are forfeiting $3,550 in federal student aid that they would have received upon successful FAFSA refiling. Failure to refile a FAFSA is strongly associated with students dropping out later in college and not earning a degree within six years. These results suggest that interventions designed to increase FAFSA refiling may be an effective way to improve college persistence for low-income students.

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Freshman Year Financial Aid Nudges: An Experiment to Increase FAFSA Renewal and College Persistence

Benjamin Castleman & Lindsay Page

Journal of Human Resources, Spring 2016, Pages 389-415

Abstract:
In this paper we investigate, through a randomized controlled trial design, the impact of a personalized text messaging intervention designed to encourage college freshmen to refile their Free Application for Federal Student Aid (FAFSA) and maintain their financial aid for sophomore year. The intervention produced large and positive effects among freshmen at community colleges where text recipients were almost 14 percentage points more likely to remain continuously enrolled through the Spring of sophomore year. By contrast, the intervention did not improve sophomore year persistence among freshmen at four-year institutions among whom the rate of persistence was already high.

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Do School Report Cards Produce Accountability Through the Ballot Box?

Vladimir Kogan, Stéphane Lavertu & Zachary Peskowitz

Journal of Policy Analysis and Management, forthcoming

Abstract:
Public education has been transformed by the widespread adoption of accountability systems that involve the dissemination of school district performance information. Using data from Ohio, we examine if elections serve as one channel through which these accountability systems might lead to improvements in educational quality. We find little evidence that poor performance on widely disseminated state and federal indicators has an impact on school board turnover, the vote share of sitting school board members, or superintendent tenure, suggesting that the dissemination of district performance information puts little (if any) electoral pressure on elected officials to improve student achievement.

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Are All Schools Created Equal? Learning Environments in Small and Large Public High Schools in New York City

Amy Ellen Schwartz, Leanna Stiefel & Matthew Wiswall

Economics of Education Review, forthcoming

Abstract:
Over the past two decades, high school reform has been characterized by a belief that “smaller is better.” Much of the expected academic benefit from attending small schools has been credited to their better learning environments. There is little empirical support for this claim, however, and the existing research fails to provide causal evidence. Moreover, recent studies in New York City have shown that students attending newly created small schools do better academically relative to students attending both large and older established small schools. Are these differences in academic outcomes also mirrored by differences in learning environments? In this paper, we address this question by exploring the impact of attending large compared to small high schools on students’ learning environments, considering the differences between small high schools formed in two different eras with different missions and resources. We use a unique data set of school and student-level data from New York City public high school students entering 9th grade in 2008-09 and 2009-10 to examine students’ attitudes about school learning environments along three dimensions: interpersonal relationships, academic expectations and support, and social behavior and safety. While OLS results show that students attending small schools (new and old) perceive better learning environments, instrumenting for selection into these schools challenges those results. In general, it is not clear that small schools provide better learning environments than large schools. Our results challenge the conventional wisdom that the higher academic performance of students in small schools is driven by a better learning environment.

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The Causes and Consequences of Test Score Manipulation: Evidence from the New York Regents Examinations

Thomas Dee et al.

NBER Working Paper, April 2016

Abstract:
In this paper, we show that the design and decentralized, school-based scoring of New York’s high school exit exams – the Regents Examinations – led to the systematic manipulation of test sores just below important proficiency cutoffs. Our estimates suggest that teachers inflate approximately 40 percent of test scores near the proficiency cutoffs. Teachers are more likely to inflate the scores of high-achieving students on the margin, but low-achieving students benefit more from manipulation in aggregate due to the greater density of these students near the proficiency cutoffs. Exploiting a series of reforms that eliminated score manipulation, we find that inflating a student’s score to fall just above a cutoff increases his or her probability of graduating from high school by 27 percent. These results have important implications for educational attainment of marginal high school graduates. For example, we estimate that the black-white graduation gap is about 5 percent larger in the absence of test score manipulation.

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What Does It Mean to Be Ranked a “High” or “Low” Value-Added Teacher? Observing Differences in Instructional Quality Across Districts

David Blazar, Erica Litke & Johanna Barmore

American Educational Research Journal, April 2016, Pages 324-359

Abstract:
Education agencies are evaluating teachers using student achievement data. However, very little is known about the comparability of test-based or “value-added” metrics across districts and the extent to which they capture variability in classroom practices. Drawing on data from four urban districts, we found that teachers were categorized differently when compared within versus across districts. In addition, analyses of scores from two observation instruments, as well as qualitative viewing of lesson videos, identified stark differences in instructional practices across districts among teachers who received similar within-district value-added rankings. These patterns were not explained by observable background characteristics of teachers, suggesting that factors beyond labor market sorting likely played a key role.

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How Schools Structure Opportunity: The Role of Curriculum and Placement in Math Attainment

Will Tyson & Josipa Roksa

Research in Social Stratification and Mobility, June 2016, Pages 124–135

Abstract:
Most of the research on math attainment focuses on whether students begin the 9th grade in algebra 1, geometry, or algebra 2, and how that affects their subsequent progression through math sequences. While providing valuable insights, this focus on vertical differentiation among math courses fails to consider the horizontal differentiation existing at the same math level (e.g., remedial, general, and honors version of the same course). This study uses statewide longitudinal administrative transcript data to examine the consequences of horizontal differentiation in algebra 1, the most common ninth grade math course. Analyses reveal that many students were placed into remedial or honors algebra 1 despite not having corresponding low or high eighth grade math standardized test scores. The consequences of placement into less rigorous math courses were very difficult to overcome, even accounting for eighth grade test scores and ninth grade achievement. In addition, school algebra 1 curriculum was associated with attainment beyond students’ own course placement. These findings offer important insights into how school curricula structure opportunities, with implications for both theory and practice.

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Faculty Preferences over Unionization: Evidence from Open Letters at Two Research Universities

Joel Waldfogel

NBER Working Paper, April 2016

Abstract:
What determines employee preferences for unionizing their workplaces? A substantial literature addresses this question with surveys on worker attitudes and pay. Unionization drives at the Universities of Minnesota and Washington have given rise to open letters of support or opposition from over 1,000 faculty at Washington and support from over 200 at Minnesota. Combining these expressions with publicly available data on salary, job titles, department affiliation, research productivity, teaching success, and political contributions from over 5,000 faculty, we provide new estimates of the determinants of faculty preferences for unionization at research universities. We find that faculty with higher pay and greater research productivity are less supportive of unionization, even after controlling for job title and department. Attitudes matter as well: after accounting for pay and productivity, faculty in fields documented elsewhere to have more politically liberal participants are more likely to support unionization.

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Child Temperamental Regulation and Classroom Quality in Head Start: Considering the Role of Cumulative Economic Risk

Kathleen Moritz Rudasill et al.

Journal of Educational Psychology, forthcoming

Abstract:
There is growing recognition that cumulative economic risk places children at higher risk for depressed academic competencies (Crosnoe & Cooper, 2010; NCCP, 2008; Sameroff, 2000). Yet, children’s temperamental regulation and the quality of the early childhood classroom environment have been associated with better academic skills. This study is an examination of prekindergarten classroom quality (instructional support, emotional support, organization) as a moderator between temperamental regulation and early math and literacy skills for children at varying levels of cumulative economic risk. The sample includes children enrolled in Head Start programs drawn from the FACES 2009 study. Three main findings emerged. First, for lower and highest risk children, more instructional support was associated with better math performance when children had high levels of temperamental regulation but poorer performance when children had low temperamental regulation. Second, among highest risk children, low instructional support was protective for math performance for children with low temperamental regulation and detrimental for those with high temperamental regulation. Third, for highest risk children, high classroom organization predicted better literacy scores for those with high temperamental regulation. Children with low temperamental regulation were expected to perform about the same, regardless of the level of classroom organization. Implications are discussed.

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A Bargain Half Fulfilled: Teacher Autonomy and Accountability in Traditional Public Schools and Public Charter Schools

Zachary Oberfield

American Educational Research Journal, April 2016, Pages 296-323

Abstract:
Public charter schools (PCS) are thought to succeed because they have greater autonomy and are held more accountable than traditional public schools (TPS). Though teachers are central to this expectation, there is little evidence about whether teachers in PCS enjoy more autonomy and are held more accountable than teachers in TPS. Also, it is unclear what the franchising of the PCS sector — the growth of schools run by educational management organizations (EMOs) — means for teacher autonomy and accountability. Using nationally representative survey data, this article compares teachers’ perceptions of autonomy and accountability in PCS and TPS and in EMO-run and non-EMO-run PCS. It shows that teachers in PCS reported greater autonomy than teachers in TPS; similarly, teachers in non-EMO-run schools indicated greater autonomy than teachers in EMO-run schools. However, there were no differences in perceptions of accountability across these different school types.

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The Effect of Performance-Based Incentives on Educational Achievement: Evidence from a Randomized Experiment

Steven Levitt, John List & Sally Sadoff

NBER Working Paper, March 2016

Abstract:
We test the effect of performance-based incentives on educational achievement in a low-performing school district using a randomized field experiment. High school freshmen were provided monthly financial incentives for meeting an achievement standard based on multiple measures of performance including attendance, behavior, grades and standardized test scores. Within the design, we compare the effectiveness of varying the recipient of the reward (students or parents) and the incentive structure (fixed rate or lottery). While the overall effects of the incentives are modest, the program has a large and significant impact among students on the threshold of meeting the achievement standard. These students continue to outperform their control group peers a year after the financial incentives end. However, the program effects fade in longer term follow up, highlighting the importance of longer term tracking of incentive programs.

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Political Determinants of Philanthropic Funding for Urban Schools

Jeffrey Snyder & Sarah Reckhow

Journal of Urban Affairs, forthcoming

Abstract:
K-12 education philanthropy has grown rapidly since 2000, with major funders like the Gates and Walton foundations expanding their grant portfolios. We examine whether and to what degree place-based characteristics help explain funding for local school districts. Using an original database of grants from the 15 largest K-12 education foundations to the largest school districts in 2000, 2005, and 2010, we present three main findings. First, the set of districts receiving the most funds varies over time. Second, foundations tended to give to sites with capacity for reform in 2000; yet by 2010, funders increasingly targeted places embracing philanthropic priorities, including charter schools and Teach for America. Finally, major foundations increasingly gave grants to same districts as other major funders — producing a convergent pattern of funding. These rapid and dramatic changes introduce questions about how foundations and districts interact and whether these funds will produce sustained reforms.

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Inconvenient Truth? Do Collective Bargaining Agreements Help Explain the Mobility of Teachers within School Districts?

Dan Goldhaber, Lesley Lavery & Roddy Theobald

Journal of Policy Analysis and Management, forthcoming

Abstract:
We utilize detailed teacher-level longitudinal data from Washington State to investigate patterns of teacher mobility in districts with different collective bargaining agreement (CBA) transfer provisions. Specifically, we estimate the log odds that teachers of varying experience and effectiveness levels transfer out of their schools to other schools in the district in Washington kindergarten through 12th grade (K-12) public schools. We find little consistent evidence relating voluntary transfer provisions in CBAs to patterns in teacher mobility, but do find evidence that patterns in within-district mobility by teacher experience and effectiveness vary between districts that do not use seniority in involuntary transfer decisions and those that use seniority as a tiebreaker or the only factor in these moves. In models that consider teacher experience, the interaction between teacher experience and school disadvantage in teacher transfer decisions is more extreme in districts with strong involuntary seniority transfer protections; novice teachers are even more likely to stay in disadvantaged schools, and veteran teachers are even more likely to leave disadvantaged schools. On the other hand, models that consider value-added measures of teacher effectiveness suggest that more effective teachers are less likely to leave disadvantaged schools in districts that do use seniority in involuntary transfer decisions, that is, seniority transfer provisions could actually make the distribution of output-based measures of quality more equitable. Taken together, these results suggest that seniority transfer provisions may have differential impacts on the distributions of teacher experience and effectiveness.

By KEVIN LEWIS | 09:00:00 AM

Sunday, May 8, 2016

Teamwork

Echoes of our upbringing: How growing up wealthy or poor relates to narcissism, leader behavior, and leader effectiveness

Sean Martin, Stéphane Côté & Todd Woodruff

Academy of Management Journal, forthcoming

Abstract:
We investigate how parental income during one's upbringing relates to his or her effectiveness as a leader after entering an organization. Drawing on research on the psychological effects of income, social learning theory, and the integrative trait-behavioral model of leadership effectiveness, we propose a negative, serially mediated association between higher parental income and lower future leader effectiveness via high levels of narcissism and, in turn, reduced engagement in behaviors that are viewed as central to the leadership role. We test our model using multisource data collected from active soldiers in the United States Army. Results reveal that parental income exerts indirect effects on leadership effectiveness criteria because a) parental income is positively related to narcissism as an adult, b) narcissism relates negatively to engaging in task-, relational-, and change-oriented leadership behaviors, and c) reduced engagement in these behaviors relates to lower leader effectiveness. Our investigation advances theory by identifying pathways through which parental income relates to the effectiveness of leaders in organizations, and by illuminating the origins of a trait (narcissism) that predicts the behavior and effectiveness of leaders.

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Listen, Follow Me: Dynamic Vocal Signals of Dominance Predict Emergent Social Rank in Humans

Joey Cheng et al.

Journal of Experimental Psychology: General, May 2016, Pages 536-547

Abstract:
Similar to the nonverbal signals shown by many nonhuman animals during aggressive conflicts, humans display a broad range of behavioral signals to advertise and augment their apparent size, strength, and fighting prowess when competing for social dominance. Favored by natural selection, these signals communicate the displayer’s capacity and willingness to inflict harm, and increase responders’ likelihood of detecting and establishing a rank asymmetry, and thus avoiding costly physical conflicts. Included among this suite of adaptations are vocal changes, which occur in a wide range of nonhuman animals (e.g., chimpanzees, rhesus monkeys) prior to aggression, but have not been systematically examined in humans. The present research tests whether and how humans use vocal pitch modulations to communicate information about their intention to dominate or submit. Results from Study 1 demonstrate that in the context of face-to-face group interactions, individuals spontaneously alter their vocal pitch in a manner consistent with rank signaling. Raising one’s pitch early in the course of an interaction predicted lower emergent rank, whereas deepening one’s pitch predicted higher emergent rank. Results from Study 2 provide causal evidence that these vocal shifts influence perceptions of rank and formidability. Together, findings suggest that humans use transient vocal changes to track, signal, and coordinate status relationships.

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Are the Powerful Really Blind to the Feelings of Others? How Hierarchical Concerns Shape Attention to Emotions

Eftychia Stamkou et al.

Personality and Social Psychology Bulletin, June 2016, Pages 755-768

Abstract:
Paying attention to others’ emotions is essential to successful social interactions. Integrating social-functional approaches to emotion with theorizing on the reciprocal nature of power, we propose that attention to others’ emotions depends on concerns over one’s power position and the social signal conveyed by the emotion. Others’ anger signals attack — information relevant to high-power individuals who are concerned about the legitimacy or suitability of their position. On the contrary, others’ fear signals vulnerability — information relevant to low-power individuals who are concerned about their unfair treatment within an illegitimate hierarchy. Accordingly, when power roles were illegitimately assigned or mismatched with one’s trait power, leaders were faster at detecting the appearance of anger (Studies 1 and 2), slower at judging the disappearance of anger (Study 2), and more accurate in recognizing subordinates’ anger, whereas subordinates were more accurate in recognizing leaders’ fear (Study 3). Implications for theorizing about emotion and social hierarchy are discussed.

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For a dollar, would you…? How (we think) money affects compliance with our requests

Vanessa Bohns, Daniel Newark & Amy Xu

Organizational Behavior and Human Decision Processes, May 2016, Pages 45–62

Abstract:
Research has shown a robust tendency for people to underestimate their ability to get others to comply with their requests. In five studies, we demonstrate that this underestimation-of-compliance effect is reduced when requesters offer money in exchange for compliance. In Studies 1 and 2, participants assigned to a no-incentive or monetary-incentive condition made actual requests of others. In both studies, requesters who offered no incentives underestimated the likelihood that those they approached would grant their requests; however, when requesters offered monetary incentives, this prediction error was mitigated. In Studies 3–5, we present evidence in support of a model to explain the underlying mechanism for this attenuation effect. Studies 3 and 4 demonstrate that offering monetary incentives activates a money-market frame. In Study 5, we find that this activation reduces the discomfort associated with asking, allowing requesters to more accurately assess the size of their request and, consequently, the likelihood of compliance.

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Looking Out From the Top: Differential Effects of Status and Power on Perspective Taking

Steven Blader, Aiwa Shirako & Yaru Chen

Personality and Social Psychology Bulletin, June 2016, Pages 723-737

Abstract:
The impact of hierarchical rank on perspective taking is both practically and theoretically important, prompting considerable research attention to this issue. However, prior research has primarily examined how power affects perspective taking, and has neglected to investigate the impact of status (i.e., the respect and esteem that an individual holds in the eyes of others). Yet status represents a distinct and ubiquitous basis of hierarchical differentiation, one that may profoundly affect perspective taking. The current research addresses this gap, theorizing and testing the prediction that high status enhances perspective taking, in contrast to prior research that has generally found that high power diminishes perspective taking. Five studies, examining various forms of perspective taking across diverse paradigms, provide converging evidence that status and power exert differential effects on perspective taking. Moreover, these studies provide insight regarding the distinction between status and power, as well as the distinct psychology associated with status.

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The Information-Anchoring Model of First Offers: When Moving First Helps Versus Hurts Negotiators

David Loschelder et al.

Journal of Applied Psychology, forthcoming

Abstract:
Does making the first offer increase or impair a negotiator’s outcomes? Past research has found evidence supporting both claims. To reconcile these contradictory findings, we developed and tested an integrative model — the Information-Anchoring Model of First Offers. The model predicts when and why making the first offer helps versus hurts. We suggest that first offers have 2 effects. First, they serve as anchors that pull final settlements toward the initial first-offer value; this anchor function often produces a first-mover advantage. Second, first offers can convey information on the senders’ priorities, which makes the sender vulnerable to exploitation and increases the risk of a first-mover disadvantage. To test this model, 3 experiments manipulated the information that senders communicated in their first offer. When senders did not reveal their priorities, the first-mover advantage was replicated. However, when first offers revealed senders’ priorities explicitly, implicitly, or both, a first-mover disadvantage emerged. Negotiators’ social value orientation moderated this effect: A first-mover disadvantage occurred when senders faced proself recipients who exploited priority information, but not with prosocial recipients. Moderated mediation analyses supported the model assumptions: Proself recipients used their integrative insight to feign priorities in their low-priority issues and thereby claimed more individual value than senders. The final discussion reviews theoretical and applied implications of the Information-Anchoring Model of First Offers.

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Preparing the Self for Team Entry: How Relational Affirmation Improves Team Performance

Julia Lee et al.

Harvard Working Paper, March 2016

Abstract:
Working in teams often leads to productivity loss because the need to feel accepted prevents individual members from making a unique contribution to the team in terms of the information or perspective they can offer. Drawing on self-affirmation theory, we propose that pre-team relational self-affirmation can prepare individuals to contribute to team creative performance more effectively. We theorize that relationally-affirming one's self-views increases general feelings of being socially valued by others, leading to better information exchange and creative performance. In a first study, we found that teams in which members affirmed their best selves prior to team formation (i.e., by soliciting and receiving narratives that highlight one's positive impact on close others) outperformed teams that did not do so on a creative problem-solving task. In the second experiment, conducted using virtual teams, we show that pre-team relational self-affirmation leads to heightened feelings of social worth, which in turn explains the effect of the treatment on the team's ability to exchange information.

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Laughter conveys status

Christopher Oveis et al.

Journal of Experimental Social Psychology, forthcoming

Abstract:
We propose that status influences individuals' use of dominant versus submissive laughter, and that individuals are conferred status based on the way they laugh. In Study 1, naturally occurring laughter was observed while low- and high-status individuals teased one another. The use of dominant and submissive laughter corresponded to hierarchical variables: High-status individuals and teasers displayed more dominant, disinhibited laughs, whereas low-status individuals and targets of teases displayed more submissive, inhibited laughs. Further, low-status individuals were more likely to vary the form of their laughter between contexts than high-status individuals. Study 2 demonstrated that laughter influences perceptions of status by naïve observers. Individuals who laughed dominantly were afforded higher status than individuals who laughed submissively, regardless of their actual status. Moreover, low-status laughers were perceived to be significantly higher in status, and to have as much status as high-status laughers, when laughing dominantly versus submissively. Finally, exploratory analyses suggest that the positive emotional reactions of observers of laughter can help explain the link between laugh type and status perceptions.

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Optimal Distinctiveness Signals Membership Trust

Geoffrey Leonardelli & Denise Lewin Loyd

Personality and Social Psychology Bulletin, forthcoming

Abstract:
According to optimal distinctiveness theory, sufficiently small minority groups are associated with greater membership trust, even among members otherwise unknown, because the groups are seen as optimally distinctive. This article elaborates on the prediction’s motivational and cognitive processes and tests whether sufficiently small minorities (defined by relative size; for example, 20%) are associated with greater membership trust relative to mere minorities (45%), and whether such trust is a function of optimal distinctiveness. Two experiments, examining observers’ perceptions of minority and majority groups and using minimal groups and (in Experiment 2) a trust game, revealed greater membership trust in minorities than majorities. In Experiment 2, participants also preferred joining minorities over more powerful majorities. Both effects occurred only when minorities were 20% rather than 45%. In both studies, perceptions of optimal distinctiveness mediated effects. Discussion focuses on the value of relative size and optimal distinctiveness, and when membership trust manifests.

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Oxytocin Effect on Collective Decision Making: A Randomized Placebo Controlled Study

Uri Hertz et al.

PLoS ONE, April 2016

Abstract:
Collective decision making often benefits both the individuals and the group in a variety of contexts. However, for the group to be successful, individuals should be able to strike a balance between their level of competence and their influence on the collective decisions. The hormone oxytocin has been shown to promote trust, conformism and attention to social cues. We wondered if this hormone may increase participants’ (unwarranted) reliance on their partners’ opinion, resulting in a reduction in collective benefit by disturbing the balance between influence and competence. To test this hypothesis we employed a randomized double-blind placebo-controlled design in which male dyads self-administered intranasal oxytocin or placebo and then performed a visual search task together. Compared to placebo, collective benefit did not decrease under oxytocin. Using an exploratory time dependent analysis, we observed increase in collective benefit over time under oxytocin. Moreover, trial-by-trial analysis showed that under oxytocin the more competent member of each dyad was less likely to change his mind during disagreements, while the less competent member showed a greater willingness to change his mind and conform to the opinion of his more reliable partner. This role-dependent effect may be mediated by enhanced monitoring of own and other’s performance level under oxytocin. Such enhanced social learning could improve the balance between influence and competence and lead to efficient and beneficial collaboration.

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Followers Are Not Followed: Observed Group Interactions Modulate Subsequent Social Attention

Francesca Capozzi et al.

Journal of Experimental Psychology: General, May 2016, Pages 531-535

Abstract:
We asked whether previous observations of group interactions modulate subsequent social attention episodes. Participants first completed a learning phase with 2 conditions. In the “leader” condition 1 of 3 identities turned her gaze first, followed by the 2 other faces. In the “follower” condition, 1 of the identities turned her gaze after the 2 other faces had first shifted their gaze. Thus, participants observed that some individuals were consistently leaders and others followers of others’ attention. In the test phase, the faces of leaders and followers were presented in a gaze cueing paradigm. Remarkably, the followers did not elicit gaze cueing. Our data demonstrate that individuals who do not guide group attention in exploring the environment are ineffective social attention directors in later encounters. Thus, the role played in previous group social attention interactions modulates the relative weight assigned to others’ gaze: we ignore the gaze of group followers.

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Money or Friends: Social Identity and Deception in Networks

Rong Rong, Daniel Houser & Anovia Yifan Dai

European Economic Review, forthcoming

Abstract:
Strategic communication occurs in virtually all committee decision environments. Theory suggests that small differences in monetary incentives between committee members can leave deception a strategically optimal decision (Crawford and Sobel, 1982; Galeotti et al., 2013). At the same time, in natural environments social incentives can also play an important role in determining the way people share or withhold truthful information. Unfortunately, little is known about how monetary and social incentives interact to determine truth-telling. We investigate this issue by first building a novel model and then testing its equilibrium predictions using laboratory data. In the absence of social identity, the model's predictions are supported: there is more truthful communication between those who share monetary incentives than those who do not. We find that the effect of identity is asymmetric: sharing the same identity does not promote truth-telling but holding different identities reduces truthfulness. Overall, as compared to environments lacking social identity, committees with both monetary and social incentives exhibit truthful communication substantially less frequently.

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(Please Don't) Say It to My Face! The Interaction of Feedback and Distance: Experiments with Vulgar Language

David Blake Johnson

Kyklos, May 2016, Pages 336–368

Abstract:
I extend current understanding of non-monetary punishments by introducing one-way unrestricted feedback (vulgar language) from responders in laboratory and online ultimatum games. Feedback changes in the expected direction. Negative feedback is returned in the event of low offers while higher offers receive positive feedback. Additionally, the possibility of unrestricted feedback significantly increases amounts sent by proposers, but only in the lab. This effect is statistically significant and large in magnitude but is not present in the online experiments. These results illustrate that increases in social distance and/or physical proximity can weaken the effectiveness of non-monetary punishments.

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Ostracism and Forgiveness

Nageeb Ali & David Miller

American Economic Review, forthcoming

Abstract:
Many communities rely upon ostracism to enforce cooperation: if an individual shirks in one relationship, her innocent neighbors share information about her guilt in order to shun her, while continuing to cooperate among themselves. However, a strategic victim may herself prefer to shirk, rather than report her victimization truthfully. If guilty players are to be permanently ostracized, then such deviations are so tempting that cooperation in any relationship is bounded by what the partners could obtain through bilateral enforcement. Ostracism can improve upon bilateral enforcement if tempered by forgiveness, through which guilty players are eventually readmitted to cooperative society.

By KEVIN LEWIS | 09:00:00 AM


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