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Tuesday, July 5, 2016

Fiscal problems

The Permanent Effects of Fiscal Consolidations

Antonio Fatás & Lawrence Summers

NBER Working Paper, June 2016

Abstract:
The global financial crisis has permanently lowered the path of GDP in all advanced economies. At the same time, and in response to rising government debt levels, many of these countries have been engaging in fiscal consolidations that have had a negative impact on growth rates. We empirically explore the connections between these two facts by extending to longer horizons the methodology of Blanchard and Leigh (2013) regarding fiscal policy multipliers. Our results provide support for the presence of strong hysteresis effects of fiscal policy. The large size of the effects points in the direction of self-defeating fiscal consolidations as suggested by DeLong and Summers (2012). Attempts to reduce debt via fiscal consolidations have very likely resulted in a higher debt to GDP ratio through their long-term negative impact on output.

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A Contagious Malady? Open Economy Dimensions of Secular Stagnation

Gauti Eggertsson et al.

NBER Working Paper, June 2016

Abstract:
Conditions of secular stagnation - low interest rates, below target inflation, and sluggish output growth - characterize much of the global economy. We consider an overlapping generations, open economy model of secular stagnation, and examine the effect of capital flows on the transmission of stagnation. In a world with a low natural rate of interest, greater capital integration transmits recessions across countries as opposed to lower interest rates. In a global secular stagnation, expansionary fiscal policy carries positive spillovers implying gains from coordination, and fiscal policy is self-financing. Expansionary monetary policy, by contrast, is beggar-thy-neighbor with output gains in one country coming at the expense of the other. Similarly, we find that competitiveness policies including structural labor market reforms or neomercantilist trade policies are also beggar-thy-neighbor in a global secular stagnation.

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Millionaire Migration and Taxation of the Elite: Evidence from Administrative Data

Cristobal Young et al.

American Sociological Review, June 2016, Pages 421-446

Abstract:
A growing number of U.S. states have adopted “millionaire taxes” on top income-earners. This increases the progressivity of state tax systems, but it raises concerns about tax flight: elites migrating from high-tax to low-tax states, draining state revenues, and undermining redistributive social policies. Are top income-earners “transitory millionaires” searching for lower-tax places to live? Or are they “embedded elites” who are reluctant to migrate away from places where they have been highly successful? This question is central to understanding the social consequences of progressive taxation. We draw on administrative tax returns for all million-dollar income-earners in the United States over 13 years, tracking the states from which millionaires file their taxes. Our dataset contains 45 million tax records and provides census-scale panel data on top income-earners. We advance two core analyses: (1) state-to-state migration of millionaires over the long-term, and (2) a sharply-focused discontinuity analysis of millionaire population along state borders. We find that millionaire tax flight is occurring, but only at the margins of statistical and socioeconomic significance.

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“Dynamic Scoring”: Why and How to Include Macroeconomic Effects in Budget Estimates for Legislative Proposals

Douglas Elmendorf

Brookings Papers on Economic Activity, Fall 2015, Pages 91-149

Abstract:
Official estimates of the budgetary effects of legislative proposals generally include anticipated behavioral responses except for those that would alter overall output or employment. Based on my experience as director of the Congressional Budget Office and on the analysis in this paper, I conclude that such macroeconomic effects of legislative proposals should be included in budget estimates — that is, so-called dynamic scoring should be used — for major (but not minor) proposals and for proposals affecting federal spending as well as revenues. However, such macroeconomic effects should not be included when the estimating agencies do not have the tools or time needed to do a careful analysis of those effects. Current rules governing the official estimating process do not fully meet those conditions.

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Searching for a Tolerable Tax: Public Attitudes toward Roadway Financing Alternatives

Denvil Duncan et al.

Public Finance Review, forthcoming

Abstract:
A growing number of states are pursuing strategies to combat declining fuel tax revenue and fund road construction and maintenance, including the use of sales taxes, income taxes, and tolls; raising fuel tax rates; and adopting road mileage user fees. We use data from a nationally representative survey to compare public acceptability of a mileage user fee with each of these alternative revenue mechanisms. We find that support for the revenue options varies from 13.4 percent for income taxes to 33.8 percent for tolls, with higher gasoline tax rates, mileage user fees, and sales taxes in the middle. The evidence also points to stronger intensity of opposition than intensity of support across all alternatives. Finally, we find that, conditional on opposition to the mileage user fee, public acceptability is highest for tolls, followed by higher fuel taxes, sales taxes, and income taxes. Policy implications are discussed.

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Taxes and leverage at multinational corporations

Michael Faulkender & Jason Smith

Journal of Financial Economics, forthcoming

Abstract:
Empirical research has struggled to show that variation in corporate capital structure arises from variation in estimated corporate income tax rates. We argue that, in previous studies, both the tax rates applied to multinational corporations and the taxable income earned have been mismeasured. Using the Bureau of Economic Analysis annual survey sample combined with each firm's income and country specific tax rate, we find that firms do have higher leverage ratios and lower interest coverage ratios when they operate in countries with higher tax rates, as theory would suggest. The trade-off theory of capital structure continues to have empirical support.

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The Domino Effects of Federal Research Funding

Lauren Lanahan, Alexandra Graddy-Reed & Maryann Feldman

PLoS ONE, June 2016

Abstract:
The extent to which federal investment in research crowds out or decreases incentives for investment from other funding sources remains an open question. Scholarship on research funding has focused on the relationship between federal and industry or, more comprehensively, non-federal funding without disentangling the other sources of research support that include nonprofit organizations and state and local governments. This paper extends our understanding of academic research support by considering the relationships between federal and non-federal funding sources provided by the National Science Foundation Higher Education Research and Development Survey. We examine whether federal research investment serves as a complement or substitute for state and local government, nonprofit, and industry research investment using the population of research-active academic science fields at U.S. doctoral granting institutions. We use a system of two equations that instruments with prior levels of both federal and non-federal funding sources and accounts for time-invariant academic institution-field effects through first differencing. We estimate that a 1% increase in federal research funding is associated with a 0.411% increase in nonprofit research funding, a 0.217% increase in state and local research funding, and a 0.468% increase in industry research funding, respectively. Results indicate that federal funding plays a fundamental role in inducing complementary investments from other funding sources, with impacts varying across academic division, research capacity, and institutional control.

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The Impact of Education Earmarking on State-Level Lottery Sales

Carol Stivender et al.

B.E. Journal of Economic Analysis & Policy, forthcoming

Abstract:
Prior research argues that lottery consumers consider how funds are to be used in making lottery purchase decisions. Possible explanations for this behavior include altruism as well as the desire of low-income families to provide educational opportunities within their community. This paper uses a panel of lottery sales for U.S. states covering the period 1980–2000 to test hypotheses regarding the impact of educational earmarking on lottery purchases. Our estimates suggest that states earmarking all or part of their revenue to education experience an increase in lottery sales between 11 % and 25 %, depending on the specification of state trends. Whether the propensity for earmarking to increase sales is viewed positively or negatively depends largely on one’s ethical and moral views of lotteries.

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Does Government-sponsored Advertising Increase Social Welfare? A Theoretical and Empirical Investigation

Carlos Carpio & Olga Isengildina-Massa

Applied Economic Perspectives and Policy, June 2016, Pages 239-259

Abstract:
The main objective of this study was to analyze the effect of advertising on social welfare in a perfectly competitive market where the level of advertising is chosen by a social planner. The theoretical model revealed that social planner-sponsored advertising that increases the equilibrium price of the advertised good can increase society's welfare if the effect of advertising in consumers' utility is higher than the consumer welfare-reducing price effect. The empirical illustration focuses on the U.S. state of South Carolina's “buy local” food products campaign. The findings suggest that this government-sponsored advertising campaign increases total welfare.

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How do corporate tax bases change when corporate tax rates change? With implications for the tax rate elasticity of corporate tax revenues

Laura Kawano & Joel Slemrod

International Tax and Public Finance, June 2016, Pages 401-433

Abstract:
We construct a new database of extensive margin changes to multiple aspects of corporate tax bases for OECD countries between 1980 and 2004. We use our data to systematically document the tendency of countries to implement policies that both lower the corporate tax rate and broaden the corporate tax base. This correlation informs our interpretation of previous estimates of the relationship between corporate tax rates and corporate tax revenues, which typically do not include comprehensive measures of the corporate tax base definition. We then re-examine the relationship between corporate tax rates and corporate tax revenues. We find that accounting for unobserved heterogeneity attenuates the relationship between corporate tax rates and corporate tax revenues, and increases the implied revenue-maximizing tax rate. Controlling for our new tax base measures does not substantively impact the magnitude of this relationship.

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Measuring Consumer Responses to a Bottled Water Tax Policy

Peter Berck et al.

American Journal of Agricultural Economics, forthcoming

Abstract:
Using panel data of retail purchases, we measure the effects of the introduction, and later removal, of a bottled-water tax in the state of Washington. We use a difference-in-differences approach to measure effects of the tax against untreated stores (in comparable control states) and untreated weeks (the pre-period). We further estimate triple-difference specifications comparing bottled water to juice and milk substitute products. Our results show that, when imposed, the tax causes bottled water sales to drop by nearly 6% in our preferred specification. Sales never fully recover, even after the tax removal. In terms of the heterogeneity of this effect, we find larger quantity drops in high tax rate areas and in the lowest and highest quintile income areas.

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Behavioral Interventions to Increase Tax-Time Saving: Evidence from a National Randomized Trial

Michal Grinstein-Weiss et al.

Journal of Consumer Affairs, forthcoming

Abstract:
We provide new large-scale experimental evidence on policies that aim to boost household saving out of income tax refunds. Households that filed income tax returns with an online tax preparer and chose to receive their refund electronically were randomized into eight treatment groups, which received different combinations of motivational saving prompts and suggested shares of the refund to save — 25% and 75% — and a control group, which received neither. In treatment conditions where they were presented, motivational prompts focused on various savings goals: general, retirement, or emergency. Analysis reveals that higher suggested allocations generated increased allocations of the refund to savings but that prompts for different reasons to save did not. These interventions, which draw on lessons from behavioral economics, represent potentially low-cost, scalable tools for policy makers interested in helping low- and moderate-income households build savings.

By KEVIN LEWIS | 09:00:00 AM

Monday, July 4, 2016

Places and times

Tolerance in the United States: Does economic freedom transform racial, religious, political and sexual attitudes?

Niclas Berggren & Therese Nilsson

European Journal of Political Economy, forthcoming

Abstract:
Tolerance is a distinguishing feature of Western culture. Still, it varies between and within countries, as well as over time, and irrespective of whether one values it for its own sake or for its beneficial consequences, it becomes important to identify its determinants. In this study, we investigate whether the character of economic policy plays a role, by looking at the effect of changes in economic freedom (i.e., lower government expenditures, lower and more general taxes and more modest regulation) on tolerance in one of the most market-oriented countries, the United States. In comparing U.S. states, we find that an increase in the willingness to let atheists, homosexuals and communists speak, keep books in libraries and teach college students is, overall, positively related to preceding increases in economic freedom, more specifically in the form of more general taxes. We suggest, as one explanation, that a discriminatory tax system, which is susceptible to the influence of special interests and which treats people differently, gives rise to feelings of tension and conflict. In contrast, the positive association for tolerance towards racists only applies to speech and books, not to teaching, which may indicate that when it comes to educating the young, (in)tolerant attitudes towards racists are more fixed.

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See Paris and... found a business? The impact of cross-cultural experience on opportunity recognition capabilities

Peter Vandor & Nikolaus Franke

Journal of Business Venturing, July 2016, Pages 388-407

Abstract:
Internationally mobile individuals such as migrants and expatriates exhibit a higher level of entrepreneurial activity than people without cross-cultural experience. Current research suggests that this pattern is rooted in specific resources and institutional arrangements that increase the attractiveness of exploiting entrepreneurial opportunities. In this study, we provide an additional explanation: We argue that cross-cultural experience increases the ability to recognize entrepreneurial opportunities. This argument is supported by two complementary studies - a longitudinal quasi-experiment and a priming experiment. We find convergent evidence that cross-cultural experience increases a person's capabilities to recognize particularly profitable types of opportunities by facilitating the application of cross-cultural knowledge for the discovery of arbitrage opportunities and creative recombination.

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Long-run cultural divergence: Evidence from the Neolithic revolution

Ola Olsson & Christopher Paik

Journal of Development Economics, September 2016, Pages 197-213

Abstract:
This paper investigates the long-run influence of the Neolithic Revolution on contemporary cultural norms as reflected in the dimension of collectivism-individualism. We present a theory of agricultural origins of cultural divergence, where we claim that the advent of farming in a core region was characterized by collectivist values and eventually triggered the out-migration of individualistic farmers towards more and more peripheral areas. This migration pattern caused the initial cultural divergence, which remained persistent over generations. Using detailed data on the date of adoption of Neolithic agriculture among Western regions and countries, the empirical findings show that the regions which adopted agriculture early also value obedience more and feel less in control of their lives. The findings add to the literature by suggesting the possibility of extremely long lasting norms and beliefs influencing today's socioeconomic outcomes.

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The longevity of national identity and national pride: Evidence from wider Europe

Valentina Dimitrova-Grajzl, Jonathan Eastwood & Peter Grajzl

Research & Politics, June 2016

Abstract:
National pride predicts a wide range of politico-economic outcomes, yet what makes individuals proud of their nation is not completely understood. We propose and test a theory that an important but thus far unexplored determinant of contemporary national pride is the longevity of national identity. To measure the longevity of national identity, we construct an index based on responses from an original expert survey designed to trace the emergence of national identity across the polities of Europe and the former Soviet Union. We find that our National Identity Longevity Index is statistically significantly positively associated with the extent of national pride. The implied effect is robust and noteworthy in magnitude. Our results suggest that contemporary national pride inter alia reflects deep, historically rooted societal conventions which take time to emerge.

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Cultural Modes of Expressing Emotions Influence How Emotions Are Experienced

May Helen Immordino-Yang, Xiao-Fei Yang & Hanna Damasio

Emotion, forthcoming

Abstract:
The brain's mapping of bodily responses during emotion contributes to emotional experiences, or feelings. Culture influences emotional expressiveness, that is, the magnitude of individuals' bodily responses during emotion. So, are cultural influences on behavioral expressiveness associated with differences in how individuals experience emotion? Chinese and American young adults reported how strongly admiration- and compassion-inducing stories made them feel, first in a private interview and then during functional magnetic resonance imaging (fMRI). As expected, Americans were more expressive in the interview. Although expressiveness did not predict stronger reported feelings or neural responses during fMRI, in both cultural groups more-expressive people showed tighter trial-by-trial correlations between their experienced strength of emotion and activations in visceral-somatosensory cortex, even after controlling for individuals' overall strength of reactions (neural and felt). Moreover, expressiveness mediated a previously described cultural effect in which activations in visceral-somatosensory cortex correlated with feeling strength among Americans but not among Chinese. Post hoc supplementary analyses revealed that more-expressive individuals reached peak activation of visceral-somatosensory cortex later in the emotion process and took longer to decide how strongly they felt. The results together suggest that differences in expressiveness correspond to differences in how somatosensory mechanisms contribute to constructing conscious feelings. By influencing expressiveness, culture may therefore influence how individuals know how strongly they feel, what conscious feelings are based on, or possibly what strong versus weak emotions "feel like."

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Taking Turns or Not? Children's Approach to Limited Resource Problems in Three Different Cultures

Henriette Zeidler et al.

Child Development, May/June 2016, Pages 677-688

Abstract:
Some problems of resource distribution can be solved on equal terms only by taking turns. We presented such a problem to 168 pairs of 5- to 10-year-old children from one Western and two non-Western societies (German, Samburu, Kikuyu). Almost all German pairs solved the problem by taking turns immediately, resulting in an equal distribution of resources throughout the game. In the other groups, one child usually monopolized the resource in Trial 1 and sometimes let the partner monopolize it in Trial 2, resulting in an equal distribution in only half the dyads. These results suggest that turn-taking is not a natural strategy uniformly across human cultures, but rather that different cultures use it to different degrees and in different contexts.

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Culture, Fixed-World Beliefs, Relationships, and Perceptions of Identity Change

Franki Kung, Richard Eibach & Igor Grossmann

Social Psychological and Personality Science, forthcoming

Abstract:
Personal identity continuity has been a focus of much philosophical inquiry, yet lay perceptions of identity continuity and their psychological bases are not well understood. We hypothesize that cultural differences in lay beliefs about the fixedness of the world promote different intuitions about identity continuity: People from a society with rigid social systems should perceive more identity discontinuity when a person's social relationships (vs. internal traits) change, whereas those from a society with more flexible social systems should perceive the reverse. We tested this hypothesis by comparing fixed-world beliefs and perceptions of identity discontinuity in India and the United States. Results of two studies (N = 863) showed that Indians perceived more identity discontinuity than Americans when relationships (vs. internal traits) changed, which was explained by Indians' stronger fixed-world beliefs. Moreover, in Study 2, cultural differences in perceived identity discontinuity mediated cultural differences in trust when a target's relationships (vs. internal traits) changed.

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Children's Play and Culture Learning in an Egalitarian Foraging Society

Adam Boyette

Child Development, May/June 2016, Pages 759-769

Abstract:
Few systematic studies of play in foragers exist despite their significance for understanding the breadth of contexts for human development and the ontogeny of cultural learning. Forager societies lack complex social hierarchies, avenues for prestige or wealth accumulation, and formal educational institutions, and thereby represent a contrast to the contexts of most play research. Analysis of systematic observations of children's play among Aka forest foragers (n = 50, ages 4-16, M = 9.5) and Ngandu subsistence farmers (n = 48, ages 4-16, M = 9.1) collected in 2010 illustrates that while play and work trade off during development in both groups, and consistent patterns in sex-role development are evident, Aka children engage in significantly less rough-and-tumble play and competitive games than children among their socially stratified farming neighbors.

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The Evolution and Development of Inferential Reasoning about Ethnic Markers: Comparisons between Urban United States and Rural Highland Peru

Cristina Moya & Robert Boyd

Current Anthropology, June 2016, Pages S131-S144

Abstract:
Social scientists have long argued about the relationship between ethnic phenomena, symbolic markers, and cultural traits. In this paper, we illustrate the potential of functionalist cultural and genetic evolutionary models to reconcile these debates. Specifically, we argue that we must take seriously the role of cultural similarity in delineating certain category boundaries if we are to understand the origins and development of ethnic stereotyping. We examine whether symbolic markers - namely, sartorial ones - are privileged in the development of social stereotypes by comparing how children and adults in the urban United States and rural highland Peru perform a categorization task. We find that arbitrary sartorial markers motivate generalizations about novel traits in all samples except among US children, even when they crosscut body morphology, emotional expression, and socioeconomic cues. Unlike children in the United States, children in the Peruvian sample demonstrate an even stronger reliance on sartorial and work site cues than do adults of the same community. This suggests a role for early-developing evolved biases that guide learning and require appropriate cultural inputs or different niches for adults and children. We document further cross-cultural variation, in that US participants privilege socioeconomic cues to occupational status more than other cues, whereas Peruvian participants rely on sartorial cues more than other cues, indicating the importance of cognitive rules for learning locally relevant social taxonomies.

By KEVIN LEWIS | 09:00:00 AM

Sunday, July 3, 2016

Over thousands of years

Extraordinary intelligence and the care of infants

Steven Piantadosi & Celeste Kidd

Proceedings of the National Academy of Sciences, 21 June 2016, Pages 6874–6879

Abstract:
We present evidence that pressures for early childcare may have been one of the driving factors of human evolution. We show through an evolutionary model that runaway selection for high intelligence may occur when (i) altricial neonates require intelligent parents, (ii) intelligent parents must have large brains, and (iii) large brains necessitate having even more altricial offspring. We test a prediction of this account by showing across primate genera that the helplessness of infants is a particularly strong predictor of the adults’ intelligence. We discuss related implications, including this account’s ability to explain why human-level intelligence evolved specifically in mammals. This theory complements prior hypotheses that link human intelligence to social reasoning and reproductive pressures and explains how human intelligence may have become so distinctive compared with our closest evolutionary relatives.

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Isotopic Evidence for Early Trade in Animals between Old Kingdom Egypt and Canaan

Elizabeth Arnold et al.

PLoS ONE, June 2016

Abstract:
Isotope data from a sacrificial ass and several ovicaprines (sheep/goat) from Early Bronze Age household deposits at Tell es-Safi/Gath, Israel provide direct evidence for the movement of domestic draught/draft and husbandry animals between Old Kingdom Egypt (during the time of the Pyramids) and Early Bronze Age III Canaan (ca. 2900–2500 BCE). Vacillating, bi-directional connections between Egypt and Canaan are known throughout the Early Bronze Age, but here we provide the first concrete evidence of early trade in animals from Egypt to Canaan.

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The mitogenome of a 35,000-year-old Homo sapiens from Europe supports a Palaeolithic back-migration to Africa

M. Hervella et al.

Scientific Reports, May 2016

Abstract:
After the dispersal of modern humans (Homo sapiens) Out of Africa, hominins with a similar morphology to that of present-day humans initiated the gradual demographic expansion into Eurasia. The mitogenome (33-fold coverage) of the Peştera Muierii 1 individual (PM1) from Romania (35 ky cal BP) we present in this article corresponds fully to Homo sapiens, whilst exhibiting a mosaic of morphological features related to both modern humans and Neandertals. We have identified the PM1 mitogenome as a basal haplogroup U6*, not previously found in any ancient or present-day humans. The derived U6 haplotypes are predominantly found in present-day North-Western African populations. Concomitantly, those found in Europe have been attributed to recent gene-flow from North Africa. The presence of the basal haplogroup U6* in South East Europe (Romania) at 35 ky BP confirms a Eurasian origin of the U6 mitochondrial lineage. Consequently, we propose that the PM1 lineage is an offshoot to South East Europe that can be traced to the Early Upper Paleolithic back migration from Western Asia to North Africa, during which the U6 lineage diversified, until the emergence of the present-day U6 African lineages.

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Early Neanderthal constructions deep in Bruniquel Cave in southwestern France

Jacques Jaubert et al.

Nature, 2 June 2016, Pages 111-114

Abstract:
Very little is known about Neanderthal cultures, particularly early ones. Other than lithic implements and exceptional bone tools, very few artefacts have been preserved. While those that do remain include red and black pigments and burial sites, these indications of modernity are extremely sparse and few have been precisely dated, thus greatly limiting our knowledge of these predecessors of modern humans. Here we report the dating of annular constructions made of broken stalagmites found deep in Bruniquel Cave in southwest France. The regular geometry of the stalagmite circles, the arrangement of broken stalagmites and several traces of fire demonstrate the anthropogenic origin of these constructions. Uranium-series dating of stalagmite regrowths on the structures and on burnt bone, combined with the dating of stalagmite tips in the structures, give a reliable and replicated age of 176.5 thousand years (±2.1 thousand years), making these edifices among the oldest known well-dated constructions made by humans. Their presence at 336 metres from the entrance of the cave indicates that humans from this period had already mastered the underground environment, which can be considered a major step in human modernity.

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Early farmers from across Europe directly descended from Neolithic Aegeans

Zuzana Hofmanová et al.

Proceedings of the National Academy of Sciences, 21 June 2016, Pages 6886-6891

Abstract:
Farming and sedentism first appeared in southwestern Asia during the early Holocene and later spread to neighboring regions, including Europe, along multiple dispersal routes. Conspicuous uncertainties remain about the relative roles of migration, cultural diffusion, and admixture with local foragers in the early Neolithization of Europe. Here we present paleogenomic data for five Neolithic individuals from northern Greece and northwestern Turkey spanning the time and region of the earliest spread of farming into Europe. We use a novel approach to recalibrate raw reads and call genotypes from ancient DNA and observe striking genetic similarity both among Aegean early farmers and with those from across Europe. Our study demonstrates a direct genetic link between Mediterranean and Central European early farmers and those of Greece and Anatolia, extending the European Neolithic migratory chain all the way back to southwestern Asia.

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The transition to foraging for dense and predictable resources and its impact on the evolution of modern humans

Curtis Marean

Philosophical Transactions of the Royal Society: Biological Sciences, 5 July 2016

Abstract:
Scientists have identified a series of milestones in the evolution of the human food quest that are anticipated to have had far-reaching impacts on biological, behavioural and cultural evolution: the inclusion of substantial portions of meat, the broad spectrum revolution and the transition to food production. The foraging shift to dense and predictable resources is another key milestone that had consequential impacts on the later part of human evolution. The theory of economic defendability predicts that this shift had an important consequence — elevated levels of intergroup territoriality and conflict. In this paper, this theory is integrated with a well-established general theory of hunter–gatherer adaptations and is used to make predictions for the sequence of appearance of several evolved traits of modern humans. The distribution of dense and predictable resources in Africa is reviewed and found to occur only in aquatic contexts (coasts, rivers and lakes). The palaeoanthropological empirical record contains recurrent evidence for a shift to the exploitation of dense and predictable resources by 110 000 years ago, and the first known occurrence is in a marine coastal context in South Africa. Some theory predicts that this elevated conflict would have provided the conditions for selection for the hyperprosocial behaviours unique to modern humans.

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Severe extinction and rapid recovery of mammals across the Cretaceous-Paleogene boundary, and the effects of rarity on patterns of extinction and recovery

N.R. Longrich, J. Scriberas & M.A. Wills

Journal of Evolutionary Biology, forthcoming

Abstract:
The end-Cretaceous mass extinction ranks among the most severe extinctions of all time; however, patterns of extinction and recovery remain incompletely understood. In particular, it is unclear how severe the extinction was, how rapid the recovery was, and how sampling biases might affect our understanding of these processes. To better understand terrestrial extinction and recovery and how sampling influences these patterns, we collected data on the occurrence and abundance of fossil mammals to examine mammalian diversity across the K-Pg boundary in North America. Our data show that the extinction was more severe and the recovery more rapid than previously thought. Extinction rates are markedly higher than previously estimated: of 59 species, 4 survived (93% species extinction, 86% of genera). Survival is correlated with geographic range size and abundance, with widespread, common species tending to survive. This creates a sampling artifact in which rare species are both more vulnerable to extinction and less likely to be recovered, such that the fossil record is inherently biased towards the survivors. The recovery was remarkably rapid. Within 300,000 years, local diversity recovered and regional diversity rose to twice Cretaceous levels, driven by increased endemicity; morphological disparity increased above levels observed in the Cretaceous. The speed of the recovery tends to be obscured by sampling effects; faunas show increased endemicity, such that a rapid, regional increase in diversity and disparity is not seen in geographically restricted studies. Sampling biases that operate against rare taxa appear to obscure the severity of extinction and the pace of recovery across the K-Pg boundary, and similar biases may operate during other extinction events.

By KEVIN LEWIS | 09:00:00 AM

Saturday, July 2, 2016

Finding someone

How Are Mate Preferences Linked with Actual Mate Selection? Tests of Mate Preference Integration Algorithms Using Computer Simulations and Actual Mating Couples

Daniel Conroy-Beam & David Buss

PLoS ONE, June 2016

Abstract:
Prior mate preference research has focused on the content of mate preferences. Yet in real life, people must select mates among potentials who vary along myriad dimensions. How do people incorporate information on many different mate preferences in order to choose which partner to pursue? Here, in Study 1, we compare seven candidate algorithms for integrating multiple mate preferences in a competitive agent-based model of human mate choice evolution. This model shows that a Euclidean algorithm is the most evolvable solution to the problem of selecting fitness-beneficial mates. Next, across three studies of actual couples (Study 2: n = 214; Study 3: n = 259; Study 4: n = 294) we apply the Euclidean algorithm toward predicting mate preference fulfillment overall and preference fulfillment as a function of mate value. Consistent with the hypothesis that mate preferences are integrated according to a Euclidean algorithm, we find that actual mates lie close in multidimensional preference space to the preferences of their partners. Moreover, this Euclidean preference fulfillment is greater for people who are higher in mate value, highlighting theoretically-predictable individual differences in who gets what they want. These new Euclidean tools have important implications for understanding real-world dynamics of mate selection.

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Shaping Men's Memory: The Effects of a Female's Waist-To-Hip Ratio on Men's Memory for Her Appearance and Biographical Information

Carey Fitzgerald, Terrence Horgan & Susan Himes

Evolution and Human Behavior, forthcoming

Abstract:
Previous research has shown that people are better at remembering attractive faces than unattractive faces, possibly because physical attractiveness is a sign of increased mate value. However, perceivers' may rely on additional appearance cues (e.g., bodily features, dress) when assessing mate value. Thus, men may remember more about a female target when she possesses more attractive bodily features, such as a waist-to-hip ratio that approaches the optimal .70. Two studies were conducted to examine whether female waist-to-hip ratio influences the number of details men recall and recognize about a female target. Study 1 utilized a free recall method, whereas Study 2 consisted of a recognition method. Results indicated that men who viewed a female target with a waist-to-hip ratio of .50 or .90 recalled and recognized significantly fewer details than men who viewed a female target with a waist-to-hip ratio of.60, .70, and .80. These data illustrate adaptive memory, whereby perceivers better remember information of greater adaptive value to them, because this information may lead them to make better fitness-related decisions about whom to potentially mate with. Limitations regarding the realism of the photographs and generalizability of the data are also discussed.

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How gender role stereotypes affect attraction in an online dating scenario

Kelsey Chappetta & Joan Barth

Computers in Human Behavior, October 2016, Pages 738-746

Abstract:
Today, it is not uncommon to meet someone and begin a romantic relationship online. Meeting on a dating website differs from meeting in person because a dating profile is created first that allows others to review potential romantic partners. Few studies have examined romantic attraction within an online dating context, and even fewer have examined how gender roles may influence attraction. The current study1 (N = 447, 49.4% female) examined the effects of gender role congruence and physical attractiveness on romantic interest in college students. Participants viewed online dating profiles that varied in their physical attractiveness and adherence to gender role norms. Results indicated that both men and women preferred attractive and gender role incongruent dating partners over average looking and gender role congruent. Contrary to previous research, women differentiated more between profiles based on physical attractiveness than the men, especially for gender role congruent profiles. Men were especially interested in attractive, gender role incongruent profiles. After physical attractiveness, gender role incongruence was the greatest factor that determined interest in a profile. Future research may need to consider how the potential seriousness of a relationship, as defined by the expected length of the relationship, influences how online profile characteristics affect attraction and interest.

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The effect of mate value feedback on women's mating aspirations and mate preference

Simon Reeve, Kristine Kelly & Lisa Welling

Personality and Individual Differences, forthcoming

Abstract:
The concept of a mating sociometer (e.g., Kavanagh, Robins, & Ellis, 2010) suggests that humans adaptively calibrate their mating aspirations in line with their mate value, drawing from relevant cues and experiences. Here we investigate the influence of acceptance versus rejection cues on a variety of mate preferences among women. Results suggest that a rejection cue from opposite-sex individuals decreases overall choosiness when rating the importance of several traits. Specifically, Cultivated traits were rated as less important by women who received a rejection cue compared to those who received an acceptance cue or no feedback. Also, Similar Ideals/Interests, Sociable, Intellectual, Pleasant, Physical Attractiveness, Kind and Understanding, and Wealthy traits were rated as significantly less important by rejected participants, but these fell short of significance after Bonferroni correction. There was no significant difference in preference for sexually dimorphic body types or in facial coloration between feedback conditions. However, participants that received an acceptance cue preferred more masculine-shaped male faces compared to rejected or control participants. Overall, results provide some support for a sociometer perspective on women's mating aspirations.

By KEVIN LEWIS | 09:00:00 AM

Friday, July 1, 2016

From left to right

Do Higher Housing Values Make Communities More Conservative? Evidence from the Introduction of E-ZPass

Connor Jerzak & Brian Libgober

Harvard Working Paper, January 2016

Abstract:
A rich corpus exists on the extent to which homeownership is central to American political attitudes. This paper contributes to the literature by using the introduction of E-ZPass in Pennsylvania and New Jersey to identify the effect of traffic-reducing transportation infrastructure on property values and, in turn, political behaviors. First, we develop a model showing that faster travel times results in individuals preferring a lower tax rate, as those who face the lower travel times are made effectively wealthier. Next, we present empirical evidence consistent with this theoretical result. We show that voting precincts near newly introduced E-ZPass toll plazas experienced a sharp increase in property values relative to similar precincts near non-E-ZPass exists, giving us leverage to identify the causal effect of property value changes on voting. After finding that the positive shock in property values is associated with a sizable increase in Republican vote share, we discuss the implications of this finding in light of the literature on homeownership and American politics.

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The Polarizing Effect of the Stimulus: Partisanship and Voter Responsiveness to the American Recovery and Reinvestment Act

Katherine Levine Einstein, Kris-Stella Trump & Vanessa Williamson

Presidential Studies Quarterly, June 2016, Pages 264-283

Abstract:
We examine the effect of a sudden influx of government spending, the 2009 American Recovery and Reinvestment Act (ARRA) on support for the president's party. Using a difference-in-differences design, we find that stimulus spending had a modest positive effect on Democratic vote share but only in counties that were already Democratic leaning. In Republican counties, by contrast, government spending had a small, but significant negative effect on Democratic vote share. That is to say, ARRA polarized already partisan places. These results have important implications for the study of voter responsiveness to government spending and the measurement of the political effects of policy visibility.

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Going to extremes: Politics after financial crises, 1870-2014

Manuel Funke, Moritz Schularick & Christoph Trebesch

European Economic Review, forthcoming

Abstract:
Partisan conflict and policy uncertainty are frequently invoked as factors contributing to slow post-crisis recoveries. Recent events in Europe provide ample evidence that the political aftershocks of financial crises can be severe. In this paper we study the political fall-out from systemic financial crises over the past 140 years. We construct a new long-run dataset covering 20 advanced economies and more than 800 general elections. Our key finding is that policy uncertainty rises strongly after financial crises as government majorities shrink and polarization rises. After a crisis, voters seem to be particularly attracted to the political rhetoric of the extreme right, which often attributes blame to minorities or foreigners. On average, far-right parties increase their vote share by 30% after a financial crisis. Importantly, we do not observe similar political dynamics in normal recessions or after severe macroeconomic shocks that are not financial in nature.

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The Politics of Beauty: The Effects of Partisan Bias on Physical Attractiveness

Stephen Nicholson et al.

Political Behavior, forthcoming

Abstract:
Does politics cause people to be perceived as more or less attractive? As a type of social identity, party identifiers often exhibit in-group bias, positively evaluating members of their own party and, especially under conditions of competition, negatively evaluating out-party members. The current experiment tests whether political in-party and out-party status affects perceptions of the physical attractiveness of target persons. In a nationally representative internet sample of U.S. adults during the 2012 presidential election, we presented participants with photos of individuals and varied information about their presidential candidate preference. Results indicate that partisans, regardless of gender, rate target individuals as less attractive if they hold a dissimilar candidate preference. Female partisans, however, were more likely to rate target persons as more physically attractive when they held a similar candidate preference whereas no such effect was found for male partisans.

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Going to political extremes in response to boredom

Wijnand Van Tilburg & Eric Igou

European Journal of Social Psychology, forthcoming

Abstract:
Boredom makes people attempt to re-establish a sense of meaningfulness. Political ideologies, and in particular the adherence to left- versus right-wing beliefs, can serve as source of meaning. Accordingly, we tested the hypothesis that boredom is associated with the stronger adherence to left- versus right-wing beliefs, resulting in more extreme political orientations. Study 1 demonstrates that experimentally induced boredom leads to more extreme political orientations. Study 2 indicates that people who get easily bored with their environment adhere to more extreme ends of a political spectrum compared with their less easily bored counterparts. Finally, study 3 reveals that the relatively extreme political orientations among those who are easily bored can be attributed to their enhanced search for meaning. Overall, our research suggests that extreme political orientations are, in part, a function of boredom's existential qualities.

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Measuring Polarization in High-dimensional Data: Method and Application to Congressional Speech

Matthew Gentzkow, Jesse Shapiro & Matt Taddy

University of Chicago Working Paper, June 2015

Abstract:
Standard measures of segregation or polarization are inappropriate for high-dimensional data such as Internet browsing histories, item-level purchase data, or text. We develop a model-based measure of polarization that can be applied to such data. We illustrate the measure with an application to the partisanship of speech in the US Congress from 1872 to the present. We find that speech has become more polarized across party lines over time, with a clear trend break around 1980.

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Patronage, Logrolls, and "Polarization": Congressional Parties of the Gilded Age, 1876-1896

Frances Lee

Studies in American Political Development, forthcoming

Abstract:
According to the quantitative indicators scholars use to measure political polarization, the Gilded Age stands out for some of the most party-polarized Congresses of all time. By contrast, historians of the era depict the two major parties as presenting few programmatic alternatives to one another. I argue that a large share of the party-line votes in the Congress of this period are poorly suited to the standard conceptualization as "polarization," meaning wide divergence on an ideological continuum structuring alternative views on national policy. Specifically, the era's continuous battles over the distribution of particularized benefits, patronage, and control of political office make little sense conceived as stemming from individual members' preferences on an underlying ideological dimension. They are better understood as fights between two long coalitions competing for power and distributive gains. In short, the Gilded Age illustrates that political parties are fully capable of waging ferocious warfare over spoils and office, even despite a relative lack of sharp party differences over national policy.

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Ideological Fit Enhances Interpersonal Orientations

William Chopik & Matt Motyl

Social Psychological and Personality Science, forthcoming

Abstract:
Living among politically dissimilar others leads individuals to feel left out and ultimately predicts mobility away from an area. But does living in politically incongruent environment affect how we relate to other people? In two national samples (N = 12,846 and N = 6,316), the congruence between an individual's ideological orientation and their community's ideological orientation were examined. Lack of ideological fit with one's environment was associated with a difficulty to form close relationships and lower perspective taking. Our findings illustrate the psychological effects of living among dissimilar others and possible explanations for how social environments modulate interpersonal relations.

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Political Orientation Moderates Worldview Defense in Response to Osama bin Laden's Death

William Chopik & Sara Konrath

Peace and Conflict: Journal of Peace Psychology, forthcoming

Abstract:
This study examined 480 Americans' psychological attitudes following Osama bin Laden's death. We tracked changes in how different participants responded to dissimilar others from the night of bin Laden's death for five weeks. Liberal participants reported lower worldview defense (i.e., a defensive reaction to uphold one's cultural worldview) immediately after bin Laden's death but then increased over time. Conservative participants reported greater worldview defense during each point of the study and did not significantly change over time. These temporal differences between liberals and conservatives were only present in the year of bin Laden's death and not in a comparison sample (N = 329) collected 1 year prior. These findings demonstrate that the attitudes of liberals and conservatives may change in theoretically predictable ways following a major societal event.

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Commitment to the Team: Perceived Conflict and Political Polarization

Bryan McLaughlin

Journal of Media Psychology, forthcoming

Abstract:
Scholars have increasingly employed social identity theory to explain how and why political polarization occurs. This study aims to build off of this work by proposing that perception of intergroup conflict serves as a mechanism that mediates the effect of news media coverage on political polarization. Specifically, I argue that the news media's emphasis on political animosity can cultivate partisans' perception that the parties are in conflict, which provides a context that makes partisan identity salient and, ultimately, leads to higher levels of affective and ideological polarization. This hypothesis is tested with an experiment using an American national sample of Democrats and Republicans (N = 300). Participants read a news story in which the public believes the parties are in a state of either high or low conflict (or they did not receive a news story). Using mediation analysis, the results of the study provide evidence that news media coverage of political conflict leads to increased perception of intergroup conflict, which then leads to higher levels of (a) partisan identification, (b) affective polarization, and (c) ideological polarization.

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Partisan Enclaves or Shared Media Experiences? A Network Approach to Understanding Citizens' Political News Environments

Brian Weeks, Thomas Ksiazek & Lance Holbert

Journal of Broadcasting & Electronic Media, Spring 2016, Pages 248-268

Abstract:
The abundance of political media outlets raises concerns that citizens isolate themselves to likeminded news, leaving the public with infrequent shared media experiences and little exposure to disagreeable information. Network analysis of 2008 National Annenberg Election Survey data (N = 57,967) indicates these worries are exaggerated, as general interest news outlets like local newspapers and non-partisan television news are central to the public's media environment. Although there is some variation between the media diets of Republicans and Democrats (FOX News and conservative talk radio are central to Republicans' information network), neither group appears to engage in active avoidance of disagreeable information. Individuals across the political spectrum are not creating partisan "echo chambers" but instead have political media repertoires that are remarkably similar.

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Polarization and Partisan Divergence in the American Public, 1946-2012

Devin Caughey, James Dunham & Chris Warshaw

MIT Working Paper, April 2016

Abstract:
In this paper, we examine polarization and partisan divergence in the American public on economic issues over the past 70 years. We bring to bear a new dataset that contains over half a million respondents from hundreds of individual polls. This dataset contains the responses to over 150 question series about economic issues. We combine this dataset with a dynamic group-level item response model to measure the ideology of the American public at both the state and national levels between 1946 and 2012. We find that the American public has only become modestly more polarized on economic issues over the past 70 years. However, the two parties are much more clearly sorted on economic issues today than in earlier decades. Moreover, members of the two parties are now further apart than ever before at both the state and federal levels. Our results speak to debates about polarization. They also suggest that partisan divergence in the mass public may have contributed more to elite polarization than scholars have previously thought.

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Political Chameleons: An Exploration of Conformity in Political Discussions

Taylor Carlson & Jaime Settle

Political Behavior, forthcoming

Abstract:
Individuals do not always express their private political opinions in front of others who disagree. Neither political scientists nor psychologists have been able to firmly establish why this behavior occurs. Previous research has explored, at length, social influence on political attitudes and persuasion. However, the concept of conformity does not involve attitude change or persuasion; it more accurately involves self-censoring to match a socially desirable norm. In an effort to improve our understanding of this behavior, we conduct two experiments to investigate perceptions and behavioral responses to contentious political interactions. Study 1 asked participants to predict how a hypothetical character would respond to a variety of political interactions among coworkers. In Study 2, participants discussed political issues with confederates who were scripted to disagree with them. The studies reveal that individuals are uncomfortable around political interactions in which they hold an opinion counter to the group. Participants both expected a hypothetical character to conform in Study 1 and actually conformed themselves in the lab session in Study 2.

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Elite Cues, News Coverage, and Partisan Support for Compromise

Bryan McLaughlin et al.

Journalism & Mass Communication Quarterly, forthcoming

Abstract:
In accordance with self-categorization theory, this study predicts that because elite cues affect partisans' perceptions of group norms, news coverage of political gridlock should influence partisans' willingness to endorse compromise. Results of two experimental studies, where Republican and Democratic samples read a news story in which group leaders were either willing or unwilling to compromise, largely support our expectations. However, we also find evidence that willingness to compromise can depend on the specific issue context, as well as pre-existing attitudes. These results further our understanding of how media coverage affects the functioning of democracy in the United States.

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Tarnishing Opponents, Polarizing Congress: The House Minority Party and the Construction of the Roll-Call Record

William Egar

Legislative Studies Quarterly, forthcoming

Abstract:
Existing research on congressional parties tends to focus almost exclusively on the majority party. I argue that the inattention to the House minority party hampers our understanding of the construction of the roll-call record and, consequently, our understanding of the sources of polarization in congressional voting. Employing an original data set of House members' requests for recorded votes between 1995 and 2010, I demonstrate that votes demanded by the minority party are disproportionately divisive and partisan and make Congress appear considerably more polarized based on commonly used measures. Moreover, minority-requested votes make vulnerable members of the majority appear more partisan and ideologically extreme.

By KEVIN LEWIS | 09:00:00 AM

Thursday, June 30, 2016

Finding religion

Association Between Religious Service Attendance and Lower Suicide Rates Among US Women

Tyler VanderWeele et al.

JAMA Psychiatry, forthcoming

Design, Setting, and Participants: We evaluated associations between religious service attendance and suicide from 1996 through June 2010 in a large, long-term prospective cohort, the Nurses’ Health Study, in an analysis that included 89 708 women. Religious service attendance was self-reported in 1992 and 1996. Data analysis was conducted from 1996 through 2010.

Main Outcomes and Measures: Cox proportional hazards regression models were used to examine the association between religious service attendance and suicide, adjusting for demographic covariates, lifestyle factors, medical history, depressive symptoms, and social integration measures. We performed sensitivity analyses to examine the influence of unmeasured confounding.

Results: Among 89 708 women aged 30 to 55 years who participated in the Nurses’ Health Study, attendance at religious services once per week or more was associated with an approximately 5-fold lower rate of suicide compared with never attending religious services (hazard ratio, 0.16; 95% CI, 0.06-0.46). Service attendance once or more per week vs less frequent attendance was associated with a hazard ratio of 0.05 (95% CI, 0.006-0.48) for Catholics but only 0.34 (95% CI, 0.10-1.10) for Protestants (P = .05 for heterogeneity). Results were robust in sensitivity analysis and to exclusions of persons who were previously depressed or had a history of cancer or cardiovascular disease. There was evidence that social integration, depressive symptoms, and alcohol consumption partially mediated the association among those occasionally attending services, but not for those attending frequently.

Conclusions and Relevance: In this cohort of US women, frequent religious service attendance was associated with a significantly lower rate of suicide.

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Religious Workers' Density and the Racial Earnings Gap

Fernando Lozano & Jessica Shiwen Cheng

American Economic Review, May 2016, Pages 355-359

Abstract:
We explore differences between Black and White Non-Hispanic workers in the relationship between childhood exposure to religious workers and a worker's labor market outcomes thirty years later. We identify this relationship by exploiting two sources of variation: we use changes in the number of religious workers within states, and we use states' differences by following workers who moved to a different state. Our results suggest that a one percent increase in the number of clergy increases the earnings of Black workers by a range from 0.027 to 0.082 percent relative to the increase in the earnings of White workers.

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Taboo desires, creativity, and career choice

Nathan Hudson & Dov Cohen

Motivation and Emotion, June 2016, Pages 404-421

Abstract:
Two studies suggest that Protestants are more likely than Catholics or Jews to sublimate taboo desires into motives to pursue creative careers. The results are consistent with a synthesis of psychological and classic sociological theories. In Study 1, Protestants induced to have taboo sexual desires were likely to express a preference for creative careers (as opposed to prosocial ones). In Study 2, a national probability sample revealed that “conflicted” Protestants — who had taboo desires but tried to rule their sexual behavior according to their religious beliefs — worked in the most creative jobs. The effects in both studies did not hold for Catholics and Jews. Results suggest that intrapsychic conflict can partially motivate important real-world decisions, such as the choice to pursue a creative career.

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Hunter-Gatherers and the Origins of Religion

Hervey Peoples, Pavel Duda & Frank Marlowe

Human Nature, forthcoming

Abstract:
Recent studies of the evolution of religion have revealed the cognitive underpinnings of belief in supernatural agents, the role of ritual in promoting cooperation, and the contribution of morally punishing high gods to the growth and stabilization of human society. The universality of religion across human society points to a deep evolutionary past. However, specific traits of nascent religiosity, and the sequence in which they emerged, have remained unknown. Here we reconstruct the evolution of religious beliefs and behaviors in early modern humans using a global sample of hunter-gatherers and seven traits describing hunter-gatherer religiosity: animism, belief in an afterlife, shamanism, ancestor worship, high gods, and worship of ancestors or high gods who are active in human affairs. We reconstruct ancestral character states using a time-calibrated supertree based on published phylogenetic trees and linguistic classification and then test for correlated evolution between the characters and for the direction of cultural change. Results indicate that the oldest trait of religion, present in the most recent common ancestor of present-day hunter-gatherers, was animism, in agreement with long-standing beliefs about the fundamental role of this trait. Belief in an afterlife emerged, followed by shamanism and ancestor worship. Ancestor spirits or high gods who are active in human affairs were absent in early humans, suggesting a deep history for the egalitarian nature of hunter-gatherer societies. There is a significant positive relationship between most characters investigated, but the trait “high gods” stands apart, suggesting that belief in a single creator deity can emerge in a society regardless of other aspects of its religion.

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Religious Beliefs, Gender Consciousness, and Women’s Political Participation

Erin Cassese & Mirya Holman

Sex Roles, forthcoming

Abstract:
Organized religion affords the faithful a variety of civic skills that encourage political participation. Women are more religious than are men by most measures, but religious women do not participate in politics at elevated rates. This discrepancy suggests a puzzle: religion may have a different effect on the political mobilization of men and women. In the present paper, we explore the effect of biblical literalism — a widespread belief that the Bible is the actual word of God, to be taken literally — on political participation. Using the 2012 American National Election Study, we find support for our two hypotheses: (a) biblical literalism is associated with lower levels of gender consciousness, as measured by perceptions of discrimination and strength of ties to women as a group, and (b) reductions in these two factors account for lower political participation among women. Our findings provide new insights into the ways religious and gender identities intersect to influence political mobilization among women, with interesting implications for an American political climate where gender and religion both represent fundamental identities that shape political behavior.

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A tale of minorities: Evidence on religious ethics and entrepreneurship

Luca Nunziata & Lorenzo Rocco

Journal of Economic Growth, June 2016, Pages 189-224

Abstract:
Does Protestantism favour entrepreneurship more than Catholicism does? We provide a novel way to answer this question by comparing Protestant and Catholic minorities using Swiss census data. Exploiting the strong adhesion of religious minorities to their denomination’ ethical principles and the historical determination of the geographical distribution of denominations across Swiss cantons, we find that Protestantism is associated with a significantly higher propensity for entrepreneurship. The estimated difference ranges between 1.5 and 3.2 % points, it is larger the smaller the size of the religious minority, it is mainly driven by prime age male entrepreneurs and it stands up to a number of robustness checks. No effects are found when comparing religious majorities, suggesting that the implications of religious ethical norms on economic outcomes emerge only when such norms are fully internalized.

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Religiosity and the Cost of Debt

Hanwen Chen et al.

Journal of Banking & Finance, September 2016, Pages 70–85

Abstract:
In a cross-country setting, we document that stronger religiosity is associated with lower loan interest spread. In addition, we show that this negative association is more pronounced in countries with weaker creditor rights, suggesting that religious values play a more significant role in constraining opportunistic behavior in a weaker legal environment. Our analysis reveals that stronger religiosity is also related to other favorable terms in loan contracting, such as larger facility amount, use of accounting-based performance pricing, and lower upfront fee. Corroborating our cross-country findings, we also show that in the U.S. setting, firms in regions with stronger religiosity enjoy lower loan interest spread. Our study contributes to understanding the important role religiosity plays in debt financing.

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Dimensions of religious involvement and leukocyte telomere length

Terrence Hill et al.

Social Science & Medicine, forthcoming

Abstract:
Although numerous studies suggest that religious involvement is associated with a wide range of favorable health outcomes, it is unclear whether this general pattern extends to cellular aging. In this paper, we tested whether leukocyte telomere length varies according to several dimensions of religious involvement. We used cross-sectional data from the Nashville Stress and Health Study (2011–2014), a large probability sample of 1252 black and white adults aged 22 to 69 living in Davidson County, TN, USA. Leukocyte telomere length was measured using the monochrome multiplex quantitative polymerase chain reaction method with albumin as the single-copy reference sequence. Dimensions of religious involvement included religiosity, religious support, and religious coping. Our multivariate analyses showed that religiosity (an index of religious attendance, prayer frequency, and religious identity) was positively associated with leukocyte telomere length, even with adjustments for religious support, religious coping, age, gender, race, education, employment status, income, financial strain, stressful life events, marital status, family support, friend support, depressive symptoms, smoking, heavy drinking, and allostatic load. Unlike religiosity, religious support and religious coping were unrelated to leukocyte telomere length across models. Depressive symptoms, smoking, heavy drinking, and allostatic load failed to explain any of the association between religiosity and telomere length. To our knowledge, this is the first population-based study to link religious involvement and cellular aging. Although our data suggest that adults who frequently attend religious services, pray with regularity, and consider themselves to be religious tend to exhibit longer telomeres than those who attend and pray less frequently and do not consider themselves to be religious, additional research is needed to establish the mechanisms underlying this association.

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Does Viewing Pornography Diminish Religiosity Over Time? Evidence From Two-Wave Panel Data

Samuel Perry

Journal of Sex Research, forthcoming

Abstract:
Research consistently shows a negative association between religiosity and viewing pornography. While scholars typically assume that greater religiosity leads to less frequent pornography use, none have empirically examined whether the reverse could be true: that greater pornography use may lead to lower levels of religiosity over time. I tested for this possibility using two waves of the nationally representative Portraits of American Life Study (PALS). Persons who viewed pornography at all at Wave 1 reported more religious doubt, lower religious salience, and lower prayer frequency at Wave 2 compared to those who never viewed porn. Considering the effect of porn-viewing frequency, viewing porn more often at Wave 1 corresponded to increases in religious doubt and declining religious salience at Wave 2. However, the effect of earlier pornography use on later religious service attendance and prayer was curvilinear: Religious service attendance and prayer decline to a point and then increase at higher levels of pornography viewing. Testing for interactions revealed that all effects appear to hold regardless of gender. Findings suggest that viewing pornography may lead to declines in some dimensions of religiosity but at more extreme levels may actually stimulate, or at least be conducive to, greater religiosity along other dimensions.

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Is Religious Fundamentalism a Dimensional or a Categorical Phenomenon? A Taxometric Analysis in Two Samples of Youth From Egypt and Saudi Arabia

Johannes Beller & Christoph Kröger

Psychology of Religion and Spirituality, forthcoming

Abstract:
To examine the latent status of religious fundamentalism, we analyzed 2 large samples of Muslim youth from Egypt and Saudi Arabia, as gathered in the Youth, Emotional Energy, and Political Violence Survey. We sought to answer the following question: Is fundamentalism a dimensional or a categorical phenomenon? Equivalently, do fundamentalists represent an extreme of religious belief, or do they constitute their own category, differing from nonfundamentalists? Using taxometric methods, we found that religious fundamentalism seems to encompass differences in kind rather than degree. Hence, the results suggest that religious fundamentalists constitute their own qualitatively different category. These findings have important practical and theoretical implications regarding causality, labeling, and assessment.

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Religious Heterogeneity and Fiscal Policy: Evidence from German Reunification

Ronny Freier, Benny Geys & Joshua Holm

Journal of Urban Economics, July 2016, Pages 1–12

Abstract:
Theoretical work based on social identity theory predicts that population diversity undermines redistributive public policies. This article tests this proposition exploiting an exogenous shock in diversity due to Germany’s reunification. In contrast to previous work on ethno-linguistic or racial heterogeneity, we specifically analyze religious diversity, which is an increasingly relevant social cleavage in many countries. Our main results corroborate that increasing religious diversity leads to a change in fiscal policies in Bavarian municipalities over the 1983-2005 period. Moreover, we find some evidence of declining individual-level local identification over the post-reunification period, which suggests that the observed fiscal effects are indeed linked to the theoretical mechanism of individuals’ social identification. Finally, we highlight an important mediating role for the democratic process, since the observed fiscal effects strengthen considerably following Bavarian municipalities’ first local elections after the reunification migration wave (March 1996) and a legal change allowing local referenda on public policies (October 1995).

By KEVIN LEWIS | 09:00:00 AM

Wednesday, June 29, 2016

Life of poverty

Caught in the crossfire: The competing influence of outcome and beneficiary cues on perceptions of antipoverty spending

Carl Palmer

Politics, Groups, and Identities, forthcoming

Abstract:
Certain issues in American politics have become racialized by virtue of elite rhetoric and media coverage. When considering these issues, many Americans find themselves, either consciously or unconsciously, relying on their sentiments toward and stereotypes of implicated groups to form opinions. This project seeks to extend research in this domain by considering the extent to which racialized thinking may be offset, or enhanced, due to the presence of other cues. While citizens typically support successful programs while opposing unsuccessful ones, do these patterns persist when program outcomes and sentiments toward program targets conflict? Results from a lab experiment and two survey experiments suggest that while policy cues appear to have a strong and consistent impact on opinion, group stereotypes activated by group cues moderate the effect of policy cues.

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The Formative Years, Economic Hardship, and Beliefs about the Government’s Role in Lessening Poverty

Colin Campbell

Social Problems, May 2016, Pages 244-265

Abstract:
Existing research on beliefs about government efforts to lessen poverty is limited in two important ways. First, explanations of beliefs about antipoverty efforts largely focus on current contexts. By emphasizing contemporary contexts, existing research overlooks the potentially profound effect of past experiences. Second, most existing research relies on cross-sectional data, which limits understandings of within person change. In the research presented here, I use both cross-sectional and panel data from the General Social Survey to (1) examine how past experiences shape an individual’s belief about what the government should do about poverty and (2) examine whether beliefs about the government’s role in helping the poor are sensitive to changes in micro and macro-economic hardship. Drawing on theories related to the formative years and event driven changes, I find that experiences during late adolescence, increases in macro-level economic hardship, and increases in individual hardship all influence support for government efforts to lessen poverty; however, current objective and subjective economic position is particularly important. Moreover, I find variation in support across different types of government responses to poverty. In particular, welfare is uniquely unpopular, and support for welfare is less responsive to generational experiences or changes in individual level hardship.

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Frugality is Hard to Afford

Yesim Orhun & Mike Palazzolo

University of Michigan Working Paper, March 2016

Abstract:
Households commonly utilize strategies that provide long-term savings for everyday purchases in exchange for an increase in their short-term expenditures. They buy larger packages of non-perishable goods to take advantage of bulk discounts, and accelerate their purchases to take advantage of temporary discounts. We document that low income households are less likely to utilize these strategies even though they have greater incentives to do so. Moreover, results suggest a compounding effect: the inability to buy in bulk inhibits the ability to time purchases to take advantage of sales, and the inability to accelerate purchase timing to buy on sale inhibits the ability to buy in bulk. We find that the financial losses low income households incur due to underutilization of these strategies can be as large as half of the savings they accrue by purchasing cheaper brands. We provide causal evidence that liquidity constraints inhibit the use of these money-saving strategies.

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Moving to opportunity and mental health: Exploring the spatial context of neighborhood effects

Corina Graif, Mariana Arcaya & Ana V. Diez Roux

Social Science & Medicine, August 2016, Pages 50–58

Abstract:
Studies of housing mobility and neighborhood effects on health often treat neighborhoods as if they were isolated islands. This paper argues that conceptualizing neighborhoods as part of the wider spatial context within which they are embedded may be key in advancing our understanding of the role of local context in the life of urban dwellers. Analyses are based on mental health and neighborhood context measurements taken on over 3,000 low-income families who participated in the Moving to Opportunity for Fair Housing Demonstration Program (MTO), a large field experiment in five major U.S. cities. Results from analyses of two survey waves combined with Census data at different geographic scales indicate that assignment to MTO's experimental condition of neighborhood poverty <10% significantly decreased average exposure to immediate and surrounding neighborhood disadvantage by 97% and 59% of a standard deviation, respectively, relative to the control group. Escaping concentrated disadvantage in either the immediate neighborhood or the surrounding neighborhood, but not both, was insufficient to make a difference for mental health. Instead, the results suggest that improving both the immediate and surrounding neighborhoods significantly benefits mental health. Compared to remaining in concentrated disadvantage in the immediate and surrounding neighborhood, escaping concentrated disadvantage in both the immediate and surrounding neighborhood on average over the study duration as a result of the intervention predicts an increase of 25% of a standard deviation in the composite mental health scores.

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Redistribution through Minimum Wage Regulation: An Analysis of Program Linkages and Budgetary Spillovers

Jeffrey Clemens

Tax Policy and the Economy, 2016, Pages 163-189

Abstract:
Program linkages and budgetary spillovers can significantly complicate efforts to project a policy change’s effects. I illustrate this point in the context of recent increases in the federal minimum wage. Previous analysis finds that these particular minimum wage increases had significant effects on employment. Employment declines were sufficiently large that the average earnings of targeted individuals declined. Payroll tax revenues, thus, also fell. I find that transfers to affected individuals through programs including unemployment insurance, food stamp benefits, and cash welfare assistance changed little. These programs, thus, offset relatively little of the earnings declines experienced by individuals who lost employment. I discuss how this broad range of spillovers matters for assessing the relevant minimum wage change’s welfare implications.

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Supplemental Nutrition Assistance Program and food insecurity among families with children

Jun Zhang & Steven Yen

Journal of Policy Modeling, forthcoming

Abstract:
The roles of Supplemental Nutrition Assistance Program (SNAP) and parental resources in household food insecurity (FI) are investigated. For husband-wife families with children, SNAP participation reduces the probability of household FI among adults by 8.8%, but increases the probabilities of low food security by 6.1% and very low food security by 2.7%, both among children. The positive effects cast doubt on effectiveness of SNAP alone and call for additional policy measures to improve FI among children. SNAP participation can be promoted by policy instruments such as broad-based categorical eligibility and simplified reporting, and food security by promoting education and providing employment opportunities.

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Family Disadvantage and the Gender Gap in Behavioral and Educational Outcomes

David Autor et al.

NBER Working Paper, May 2016

Abstract:
Using birth certificates matched to schooling records for Florida children born 1992 - 2002, we assess whether family disadvantage disproportionately impedes the pre-market development of boys. We find that, relative to their sisters, boys born to disadvantaged families have higher rates of disciplinary problems, lower achievement scores, and fewer high-school completions. Evidence supports that this is a causal effect of the post-natal environment; family disadvantage is unrelated to the gender gap in neonatal health. We conclude that the gender gap among black children is larger than among white children in substantial part because black children are raised in more disadvantaged families.

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Neighborhood Socioeconomic Status in Relation to Serum Biomarkers in the Black Women’s Health Study

Yvette Cozier et al.

Journal of Urban Health, April 2016, Pages 279-291

Abstract:
Lower neighborhood socioeconomic status (SES) is associated with higher cardiovascular disease (CVD) risk. Black women have a higher CVD risk and are more likely to live in poor neighborhoods than white women. We examined the association of neighborhood SES with several CVD biomarkers using data from the Black Women’s Health Study (BWHS), a follow-up study of US black women reporting high levels of education and income. Blood specimens of 418 BWHS participants were assayed for C-reactive protein (CRP), hemoglobin A1C (hgA1C), and high-density lipoprotein (HDL) cholesterol. US Census block group data were linked to the women’s addresses to reflect neighborhood SES. Multivariable-adjusted mixed linear regression models that adjusted for person-level SES and for cardiovascular risk factors were used to assess CRP, hgA1C, and HDL levels in relation to quintiles of neighborhood SES. Women living in the poorest neighborhoods had the least favorable biomarker levels. As neighborhood SES increased, CRP decreased (P for trend = 0.01), hgA1C decreased (P for trend = 0.07), and HDL increased (P for trend = 0.19). These associations were present within strata of individual educational level. The present findings suggest that neighborhood environments may affect physiological processes within residents independently of individual SES.

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Linking systemic arterial stiffness among adolescents to adverse childhood experiences

Stephen Klassen et al.

Child Abuse & Neglect, June 2016, Pages 1–10

Abstract:
Adverse childhood experiences (ACEs) have been linked with cardiovascular disease and early mortality among adults. Most research examines this relationship retrospectively. Examining the association between ACEs and children's cardiovascular health is required to understand the time course of this association. We examined the relationship between ACEs exposure and ECG-to-toe pulse wave velocity (PWV), a measure of systemic arterial stiffness that is strongly related to cardiovascular mortality among adults. PWV (distance/transit time; m/s) was calculated using transit times from the ECG R-wave to the pulse wave contour at the toe. Transit times were collected over 15 heartbeats and the distance from the sternal notch to the left middle toe was used. A total of 221 children (119 females) aged 10–14 years participated in data collection of PWV, hemodynamic and anthropometric variables. Parents of these children completed a modified inventory of ACEs taken from the Childhood Trust Events Survey. Multivariable regression assessed the relationship between ACEs group (<4 ACEs versus ≥4 ACEs) and PWV. Analyses yielded an ACEs group by sex interaction, with males who experienced four or more ACEs having higher PWV (p < 0.01). This association was independent of hemodynamic, anthropometric and sociodemographic variables (R2 = 0.346; p < 0.01). Four or more ACEs is associated with greater arterial stiffness in male children aged 10–14 years. Addressing stress and trauma exposure in childhood is an important target for public health interventions to reduce early cardiovascular risk.

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Differential Risk for Homelessness Among US Male and Female Veterans With a Positive Screen for Military Sexual Trauma

Emily Brignone et al.

JAMA Psychiatry, June 2016, Pages 582-589

Design, Setting, and Participants: A retrospective cohort study of US veterans who used Veterans Health Administration (VHA) services between fiscal years 2004 and 2013 was conducted using administrative data from the Department of Defense and VHA. Included in the study were 601 892 US veterans deployed in Iraq or Afghanistan who separated from the military between fiscal years 2001 and 2011 and subsequently used VHA services.

Results: The mean (SD) age of the 601 892 participants was 38.9 (9.4) years, 527 874 (87.7%) were male, 310 854 (51.6%) were white, and 382 361 (63.5%) were enlisted in the Army. Among veterans with a positive screen for MST, rates of homelessness were 1.6% within 30 days, 4.4% within 1 year, and 9.6% within 5 years, more than double the rates of veterans with a negative MST screen (0.7%, 1.8%, and 4.3%, respectively). A positive screen for MST was significantly and independently associated with postdeployment homelessness. In regression models adjusted for demographic and military service characteristics, odds of experiencing homelessness were higher among those who screened positive for MST compared with those who screened negative (30-day: adjusted odds ratio [AOR], 1.89; 95% CI, 1.58-2.24; 1-year: AOR, 2.27; 95% CI, 2.04-2.53; and 5-year: AOR, 2.63; 95% CI, 2.36-2.93). Military sexual trauma screen status remained independently associated with homelessness after adjusting for co-occurring mental health and substance abuse diagnoses in follow-up regression models (30-day: AOR, 1.62; 95% CI, 1.36-1.93; 1-year: AOR, 1.49; 95% CI, 1.33-1.66; and 5-year: AOR, 1.39; 95% CI, 1.24-1.55). In the fully adjusted models, the interaction between MST status and sex was significant in the 30-day and 1-year cohorts (30-day: AOR, 1.54; 95% CI, 1.18-2.02; and 1-year: AOR, 1.46; 95% CI, 1.23-1.74), denoting higher risk for homelessness among males with a positive screen for MST.

Conclusions and Relevance: A positive screen for MST was independently associated with postdeployment homelessness, with male veterans at greater risk than female veterans. These results underscore the importance of the MST screen as a clinically important marker of reintegration outcomes among veterans. These findings demonstrate significant long-term negative effects and inform our understanding of the public health implications of sexual abuse and harassment.

By KEVIN LEWIS | 09:00:00 AM

Tuesday, June 28, 2016

Keeping it in the family

Do Parents’ Life Experiences Affect the Political and Civic Participation of Their Children? The Case of Draft-Induced Military Service

Tim Johnson & Christopher Dawes

Political Behavior, forthcoming

Abstract:
Myriad studies show that politically-salient events influence civic and political engagement. Yet, on the other hand, decades of research indicate that familial factors mold political and civic dispositions early in life, before an individual experiences political events outside the family. Viewing these two lines of research together, we ask if individuals’ political and civic dispositions might be influenced not solely by their own experiences, but, also, by the experiences of those individuals who create their family environment — namely, their parents. Do parents’ life experiences — before the birth of their children — affect their offspring’s public engagement? To answer that question, we examine how the assignment of military service, via the Vietnam-era Selective Service Lotteries, affected rates of public participation among the children of draft-eligible men. Our analysis finds a negative relationship between a father’s probability of draft-induced military service and his offspring’s public participation. In addition to highlighting how parents’ life experiences can influence the social behavior of their children, this finding challenges the prevailing view that the Vietnam conflict did not contribute to declining civic engagement and it shows how experiences within bureaucratic institutions can yield long-standing effects on politically-relevant behaviors.

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Signing Up New Fathers: Do Paternity Establishment Initiatives Increase Marriage, Parental Investment, and Child Well-Being?

Maya Rossin-Slater

American Economic Journal: Applied Economics, forthcoming

Abstract:
With nearly half of U.S. births occurring out of wedlock, understanding how parents navigate their relationship options is important. This paper examines the consequences of a large exogenous change to parental relationship contract options on parental behavior and child well-being. Identification comes from the staggered timing of state reforms that substantially lowered the cost of legal paternity establishment. I show that the resulting increases in paternity establishment are partially driven by reductions in parental marriage. Although unmarried fathers become more involved with their children along some dimensions, the net effects on father involvement and child well-being are negative or zero.

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What mom and dad’s match means for junior: Marital sorting and child outcomes

Ryan Edwards & Jennifer Roff

Labour Economics, June 2016, Pages 43–56

Abstract:
This paper employs recently developed marital matching models to examine empirically the role played by marital sorting in observed measures of marital production. Using the US Collaborative Perinatal Project (CPP), a large-scale study from the 1960s, and the National Longitudinal Survey of Youth 1979 (NLSY), we find that marital surplus is strongly correlated with indices of child quality, as measured by cognitive test scores, and with the durability of the marital union. At ages beyond infancy, the correlation between cognitive outcomes and marital surplus is robust to the inclusion of the parental characteristics that generate the match, suggesting that the correlation represents effects of the match itself. High marital surplus is associated with assortative mating on education and age, suggesting complementarity in parental inputs in child production. Our results suggest that marital surplus is an important input for child quality above and beyond its indirect effects on marital stability.

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Household Crowding During Childhood and Long-Term Education Outcomes

Leonard Lopoo & Andrew London

Demography, June 2016, Pages 699-721

Abstract:
Household crowding, or having more household members than rooms in one’s residence, could potentially affect a child’s educational attainment directly through a number of mechanisms. We use U.S. longitudinal data from the Panel Study of Income Dynamics to derive new measures of childhood crowding and estimate negative associations between crowding during one’s high school years and, respectively, high school graduation by age 19 and maximum education at age 25. These negative relationships persist in multivariate models in which we control for the influence of a variety of factors, including socioeconomic status and housing-cost burden. Given the importance of educational attainment for a range of midlife and later-life outcomes, this study suggests that household crowding during one’s high school years is an engine of cumulative inequality over the life course.

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Coresidence Duration and Cues of Maternal Investment Regulate Sibling Altruism Across Cultures

Daniel Sznycer et al.

Journal of Personality and Social Psychology, forthcoming

Abstract:
Genetic relatedness is a fundamental determinant of social behavior across species. Over the last few decades, researchers have been investigating the proximate psychological mechanisms that enable humans to assess their genetic relatedness to others. Much of this work has focused on identifying cues that predicted relatedness in ancestral environments and examining how they regulate kin-directed behaviors. Despite progress, many basic questions remain unanswered. Here we address three of these questions. First, we examine the replicability of the effect of two association-based cues to relatedness — maternal perinatal association (MPA) and coresidence duration — on sibling-directed altruism. MPA, the observation of a newborn being cared for by one’s mother, strongly signals relatedness, but is only available to the older sibling in a sib-pair. Younger siblings, to whom the MPA cue is not available, appear to fall back on the duration of their coresidence with an older sibling. Second, we determine whether the effects of MPA and coresidence duration on sibling-directed altruism obtain across cultures. Last, we explore whether paternal perinatal association (PPA) informs sibship. Data from six studies conducted in California, Hawaii, Dominica, Belgium, and Argentina support past findings regarding the role of MPA and coresidence duration as cues to siblingship. By contrast, PPA had no effect on altruism. We report on levels of altruism toward full, half, and step siblings, and discuss the role alternate cues might play in discriminating among these types of siblings.

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Reducing children's behavior problems through social capital: A causal assessment

Ruth López Turley et al.

Social Science Research, forthcoming

Abstract:
Behavior problems among young children have serious detrimental effects on short and long-term educational outcomes. An especially promising prevention strategy may be one that focuses on strengthening the relationships among families in schools, or social capital. However, empirical research on social capital has been constrained by conceptual and causal ambiguity. This study attempts to construct a more focused conceptualization of social capital and aims to determine the causal effects of social capital on children's behavior. Using data from a cluster randomized trial of 52 elementary schools, we apply several multilevel models to assess the causal relationship, including intent to treat and treatment on the treated analyses. Taken together, these analyses provide stronger evidence than previous studies that social capital improves children's behavioral outcomes and that these improvements are not simply a result of selection into social relations but result from the social relations themselves.

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Are ‘born to rebel’ last-borns more likely to be self-employed?

Liang Han & Francis Greene

Personality and Individual Differences, October 2016, Pages 270–275

Abstract:
This paper investigates birth order effects on adult self-employment. Drawing on Sulloway's ‘born to rebel’ thesis, we test whether or not last-borns whose parents have no prior self-employment experience are more likely to bear and assume the risks associated with self-employment. We also test if parental self-employment experience moderates the relationship between last-borns and self-employment. Using large-scale life-span data on 6322 cohort members, a within-family design, and controlling for demographic confounds such as the number of siblings, we find that last-borns from non-entrepreneurial families are more likely to be self-employed than first or middle-borns. However, in families with parental experience of self-employment, we find that last-borns in three or more child families are no more likely to be self-employed than their siblings.

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Children’s Mental Disorders and Their Mothers’ Earnings: Implications for the Affordable Care Act of 2010

Patrick Richard

Journal of Family and Economic Issues, June 2016, Pages 156-171

Abstract:
Children with emotional and behavioral problems (EBP) may have a negative effect on their mothers’ earnings because they require additional time for treatment. On the other hand, children with EBP require additional financial resources, which may increase their mothers’ earnings through an increase in work activities. This study examined the impact of children’s EBP on parental earnings, while accounting for omitted variable bias. This study found significant reductions of single mothers’ wage rate/annual earnings if their children have EBP. Conversely, children’s EBP increased their married mothers’ hourly wage. These results have important implications in terms of public policy such as the Affordable Care Act (ACA) of 2010 in terms of expanding health insurance coverage to children with EBP to have access to appropriate treatment.

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Income Effects in Labor Supply: Evidence from Child-Related Tax Benefit

Philippe Wingender & Sara LaLumia

U.S. Census Bureau Working Paper, May 2016

Abstract:
A parent whose child is born in December can claim child-related tax benefits when she files her tax return a few months later. Parents of children born in January must wait more than a year before they can receive child-related tax benefits. As a result, families with December births have higher after-tax income in the first year of a child's life than otherwise similar families with January births. This paper estimates the corresponding income effect on maternal labor supply, testing whether mothers who give birth in December work and earn less in the months following birth. We use data from the American Community Survey, the Survey of Income and Program Participation, and the 2000 Decennial Census. We find that December mothers have a lower probability of working, particularly in the third month after a child's birth. Earnings data from the SIPP indicate that an additional dollar of child-related tax benefits reduces annual maternal earnings in the year following a child's birth by approximately one dollar.

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The economics of grief

Gerard van den Berg, Petter Lundborg & Johan Vikstrom

Economic Journal, forthcoming

Abstract:
We study the short-run and long-run economic impact of one of the largest losses that an individual can face; the death of a child. We utilise unique registers on the entire Swedish population, combining information on the date and cause of death with parental outcomes. We exploit the longitudinal dimension of the data and deal with several selection issues. Losing a child has adverse effects on labor income, employment status, marital status and hospitalizations. The value of policy measures aimed at preventing mortal accidents of children is underestimated if it does not take bereavement effects on parents into account.

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Children Living With Uninsured Family Members: Differences by Family Structure

Sharon Bzostek & Christine Percheski

Journal of Marriage and Family, forthcoming

Abstract:
Despite increased access to insurance through the Patient Protection and Affordable Care Act of 2010, uninsurance rates are expected to remain relatively high. Having uninsured family members may expose children to financial hardships. Eligibility rules governing both private and public health insurance are based on outdated expectations about family structure. Using 2009–2011 data from the National Health Interview Survey (N = 65,038), the authors investigated family structure differences in family-level insurance coverage of households with children. Children living with married biological parents were the least likely to have uninsured family members and most likely to have all family members covered by private insurance. Controlling for demographic characteristics and income, children in single-mother families had the same risk of having an uninsured family member as children in married-parent families. Children with cohabiting biological parents had higher rates of family uninsurance than children with married biological parents, even accounting for other characteristics.

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Effects of maternal depression on family food insecurity

Kelly Noonan, Hope Corman & Nancy Reichman

Economics & Human Biology, September 2016, Pages 201–215

Abstract:
We use data from the Early Childhood Longitudinal Study—Birth Cohort to estimate the effects of maternal depression, a condition that is fairly common and can be severe, on food insecurity, a hardship that has increased substantially in the U.S. Using various model specifications, we find convincing evidence that severe maternal depression increases the likelihood that young children experience food insecurity by 23–69%, with estimates depending on model specification and measures of depression and food insecurity. For household food insecurity, the corresponding estimates are 11–79%. We also find that maternal mental illness increases reliance on several types of public programs, suggesting that the programs play a buffering role.

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Decreasing risk factors for later alcohol use and antisocial behaviors in children in foster care by increasing early promotive factors

Katherine Pears, Hyoun Kim & Philip Fisher

Children and Youth Services Review, June 2016, Pages 156–165

Abstract:
Children in foster care are at high risk for poor psychosocial outcomes, including school failure, alcohol and other substance abuse, and criminal behaviors. Promoting healthy development by increasing broad-impact positive skills may help reduce some of the risk factors for longer-term negative outcomes. School readiness has been linked to a number of positive outcomes across childhood, adolescence, and adulthood, and may also boost intermediary positive skills such as self-competence. This paper presents findings from a longitudinal study involving 192 children in foster care who were 5 years old at the start of the study. They participated in a randomized controlled trial of a school readiness program to prepare them for kindergarten. Outcomes were assessed at third grade (9 years old) on variables associated with risk for later involvement in substance use and delinquency. These included positive attitudes towards alcohol use, positive attitudes towards antisocial behaviors, and involvement with deviant peers. Results showed that the intervention decreased positive attitudes towards alcohol use and antisocial behaviors. Further, the mediating role of children's self-competence was tested. The intervention positively influenced children's third-grade self-competence, which in turn, decreased their involvement with deviant peers. Findings suggest that promoting school readiness in children in foster care can have far-reaching, positive effects and that increased self-competence may be a mechanism for reducing risk.

By KEVIN LEWIS | 09:00:00 AM

Monday, June 27, 2016

Captains of industry

Financing Constraints and Workplace Safety

Jonathan Cohn & Malcolm Wardlaw

Journal of Finance, forthcoming

Abstract:
We present evidence that financing frictions adversely impact investment in workplace safety, with implications for worker welfare and firm value. Using several identification strategies, we find that injury rates increase with leverage and negative cash flow shocks, and decrease with positive cash flow shocks. We show that firm value decreases substantially with injury rates. Our findings suggest that investment in worker safety is an economically important margin on which firms respond to financing constraints.

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Institutional Ownership and Corporate Tax Avoidance: New Evidence

Mozaffar Khan, Suraj Srinivasan & Liang Tan

Harvard Working Paper, May 2016

Abstract:
We provide new evidence on the agency theory of corporate tax avoidance (Slemrod, 2004; Crocker and Slemrod, 2005; Chen and Chu, 2005) by showing that increases in institutional ownership are associated with increases in tax avoidance. Using the Russell index reconstitution setting to isolate exogenous shocks to institutional ownership, and a regression discontinuity design that facilitates sharper identification of treatment effects, we find a significant and discontinuous increase in tax avoidance following Russell 2000 inclusion. The tax avoidance involves the use of tax shelters, and immediate benefits include higher profit margins and likelihood of meeting or beating analyst expectations. Collectively the results shed light on the effect of increased ownership concentration on tax avoidance.

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A Fleeting Glory: Self-Serving Behavior Among Celebrated MBA CEOs

Danny Miller & Xiaowei Xu

Journal of Management Inquiry, July 2016, Pages 286-300

Abstract:
Recent studies have criticized MBA programs for their association with self-serving behavior, although there is little empirical research to establish the firm-level consequences of that relationship. We explored whether MBAs versus non-MBAs in a sample of celebrated CEOs of major U.S. companies - thus CEOs who have achieved and had opportunity to exploit their fame - were more apt than their counterparts to engage in self-serving behavior that benefits them but disadvantages their companies. We assessed this behavior via the pursuit of costly growth strategies, an inability to sustain performance, and the capacity to obtain superior private benefits in compensation. Our analysis of 444 star CEOs celebrated on the covers of major business publications confirmed that an MBA education either fosters or is related to such behavior among these executives.

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CEO Home Bias and Corporate Acquisitions

Kiseo Chung, Clifton Green & Breno Schmidt

Emory University Working Paper, June 2016

Abstract:
We find that CEOs are significantly more likely to purchase cross-state targets from their birth state, consistent with either informational advantages or familiarity bias. Evidence from bidder announcement returns supports the latter view. Acquirer returns are significantly lower for CEO home state acquisitions, and the relation is robust to controls for firm and industry characteristics. The negative announcement effect is stronger for poorly-governed firms, when the target is located further away, and when the CEO has a deeper birth-state connection. CEOs' post-acquisition trading behavior also supports a familiarity bias interpretation. Our findings suggest CEO home bias influences firm investment.

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Ties that Bind: How Business Connections Affect Mutual Fund Activism

Dragana Cvijanović, Amil Dasgupta & Konstantinos Zachariadis

Journal of Finance, forthcoming

Abstract:
We investigate whether business ties with portfolio firms influence mutual funds' proxy voting using a comprehensive data set spanning 2003 to 2011. In contrast to prior literature, we find that business ties significantly influence pro-management voting at the level of individual pairs of fund families and firms after controlling for ISS recommendations and holdings. The association is significant only for shareholder-sponsored proposals and stronger for those that pass or fail by relatively narrow margins. Our findings are consistent with a demand-driven model of biased voting in which company managers use existing business ties with funds to influence how they vote.

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What Else Do Shareholders Want? Shareholder Proposals Contested by Firm Management

Eugene Soltes, Suraj Srinivasan & Rajesh Vijayaraghavan

Harvard Working Paper, April 2016

Abstract:
Shareholder proposals provide investors an opportunity to exercise their decision rights within a firm. However, not all proposals created by shareholders receive consideration. Managers can seek permission from the Securities and Exchange Commission (SEC) to exclude specific proposals from the proxy statement. From 2003-2013, we find that managers seek to exclude 40% of all proposals they receive, but the SEC does not permit exclusion in over a quarter of the cases. Of the proposals that managers seek to exclude but the SEC does not allow, 28% win shareholder support or the firm voluntarily implements prior to a vote. Our analysis of contested shareholder proposals suggests that managers often seek to avoid the implementation of legitimate shareholder interests.

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Product Market Competition and Internal Governance: Evidence from the Sarbanes-Oxley Act

Vidhi Chhaochharia et al.

Management Science, forthcoming

Abstract:
We use the Sarbanes-Oxley Act of 2002 (SOX) as a quasi-natural experiment to examine the link between product market competition and internal governance mechanisms. Consistent with the notion that competition plays an important role in aligning incentives within the firm, SOX has led to a larger improvement in the operation of firms in concentrated industries than in nonconcentrated industries. Furthermore, within concentrated industries, the effect is especially pronounced among firms with weaker governance mechanisms prior to SOX. We corroborate these findings using two additional regulatory changes in the United States and abroad. Overall, our results indicate that corporate governance is more important when firms face less product market competition.

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How Does Hedge Fund Activism Reshape Corporate Innovation?

Alon Brav et al.

NBER Working Paper, May 2016

Abstract:
This paper studies how hedge fund activism reshapes corporate innovation. Firms targeted by hedge fund activists experience an improvement in innovation efficiency during the five-year period following the intervention. Despite a tightening in R&D expenditures, target firms experience increases in innovation output, measured by both patent counts and citations, with stronger effects seen among firms with more diversified innovation portfolios. We also find that the reallocation of innovative resources and the redeployment of human capital contribute to the refocusing of the scope of innovation. Finally, additional tests refute alternative explanations attributing the improvement to mean reversion, sample attrition, management's voluntary reforms, or activists' stock-picking abilities.

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Corporate Finance Policies and Social Networks

Cesare Fracassi

Management Science, forthcoming

Abstract:
This paper shows that managers are influenced by their social peers when making corporate policy decisions. Using biographical information about executives and directors of U.S. public companies, we define social ties from current and past employment, education, and other activities. We find that more connections two companies share with each other, more similar their capital investments are. To address endogeneity concerns, we find that companies invest less similarly when an individual connecting them dies. The results extend to other corporate finance policies. Furthermore, central companies in the social network invest in a less idiosyncratic way and exhibit better economic performance.

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Window­dressing individual backgrounds: Evidence from biographies of corporate directors

Ian Gowm, Aida Sijamic Wahid & Gwen Yu

Harvard Working Paper, April 2016

Abstract:
We examine disclosure of prior experience in the biographies of corporate directors. Using biographies in proxy statements filed with the SEC, we find that directors are less likely to disclose directorships held at firms that experienced adverse events such as accounting restatements, securities litigation, or bankruptcy. When directors disclose adverse­event directorships, stock reaction at appointment is more negative and the likelihood of loss of existing directorships in future years is higher. Non­disclosure of directorships is significantly reduced following changes to SEC rules in 2010, with the greatest change being for adverse­event directorships. These findings suggest that corporate directors make strategic disclosure choices with consequences in both capital and labor markets.

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Does the Market Value CEO Styles?

Antoinette Schoar & Luo Zuo

American Economic Review, May 2016, Pages 262-266

Abstract:
We study how investors perceive the skill set that different types of CEOs bring into their companies. We compare CEOs who started their careers during a recession with other CEOs. We show that the announcement return around the appointment of a recession CEO is very significant and positive, and this positive market reaction is driven by cases where a recession CEO replaces a non-recession CEO. Our results indicate that the market assigns a positive and economically meaningful value to a recession CEO, suggesting that there is a limited supply of these types of CEOs in the executive labor market.

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Analyst Coverage and Real Earnings Management: Quasi-Experimental Evidence

Rustom Irani & David Oesch

Journal of Financial and Quantitative Analysis, April 2016, Pages 589-627

Abstract:
We study how securities analysts influence managers' use of different types of earnings management. To isolate causality, we employ a quasi-experiment that exploits exogenous reductions in analyst following resulting from brokerage house mergers. We find that managers respond to the coverage loss by decreasing real earnings management while increasing accrual manipulation. These effects are significantly stronger among firms with less coverage and for firms close to the zero-earnings threshold. Our causal evidence suggests that managers use real earnings management to enhance short-term performance in response to analyst pressure, effects that are not uncovered when focusing solely on accrual-based methods.

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Does Institutional Shareholder Activism Stimulate Corporate Information Flow? Evidence from Labor Union Proxy Activism

Andrew Prevost, Udomsak Wongchoti & Ben Marshall

Journal of Banking & Finance, forthcoming

Abstract:
Activist shareholders have an incentive to communicate and cooperate with other major shareholders. However, the impact of their activity on information flow surrounding targeted firms is largely unknown. We explore this aspect using a prolific proponent: labor unions. Following the mailing of proxies containing union-sponsored shareholder proposals, trading volume increases significantly and at-issue bond yield spreads of targeted firms are lower compared to matched firms. Subsequent difference-in-differences analyses show that stock prices of targeted firms become more informative as a result of activism, affirming the intuition that activism results in a reduction of differential information between outside investors.

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Firm Selection and Corporate Cash Holdings

Juliane Begenau & Berardino Palazzo

Harvard Working Paper, May 2016

Abstract:
The gradual replacement of traditional U.S. public companies by more R&D-intensive firms is key to understanding the secular trend in average cash-holdings. Over the last 35 years, an increasing share of R&D-intensive firms has entered the stock market with progressively higher cash-balances. This positive entry-effect dominates the negative within-firm effect post IPO. We build a firm industry model with endogenous entry to quantify the importance of two competing selection mechanisms: an increasing share of R&D-intensive firms in the overall economy and more favorable IPO conditions. Only the combination of both mechanisms successfully generates a sizable secular increase.

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Managerial Ability and Credit Risk Assessment

Samuel Bonsall, Eric Holzman & Brian Miller

Management Science, forthcoming

Abstract:
Research on the credit rating process has primarily focused on how rating agencies incorporate firm characteristics into their rating opinions. We contribute to this literature by examining the impact of managerial ability on the credit rating process. Given debt market participants' interest in assessing default risk, we begin by documenting that higher managerial ability is associated with lower variability in future earnings and stock returns. We then show that higher managerial ability is associated with higher credit ratings (i.e., lower assessments of credit risk). To provide more direct identification of the impact of managerial ability, we examine chief executive officer (CEO) replacements and document that ratings increase (decrease) when CEOs are replaced with more (less) able CEOs. Finally, we show that managerial ability also has capital market implications by documenting that managerial ability is associated with bond offering credit spreads. Collectively, our evidence suggests that managerial ability is an important factor that bond market participants impound into their assessments of firm credit risk.

By KEVIN LEWIS | 09:00:00 AM

Sunday, June 26, 2016

That's helpful

Prosocial Conformity: Prosocial Norms Generalize Across Behavior and Empathy

Erik Nook et al.

Personality and Social Psychology Bulletin, forthcoming

Abstract:
Generosity is contagious: People imitate others' prosocial behaviors. However, research on such prosocial conformity focuses on cases in which people merely reproduce others' positive actions. Hence, we know little about the breadth of prosocial conformity. Can prosocial conformity cross behavior types or even jump from behavior to affect? Five studies address these questions. In Studies 1 to 3, participants decided how much to donate to charities before learning that others donated generously or stingily. Participants who observed generous donations donated more than those who observed stingy donations (Studies 1 and 2). Crucially, this generalized across behaviors: Participants who observed generous donations later wrote more supportive notes to another participant (Study 3). In Studies 4 and 5, participants observed empathic or non-empathic group responses to vignettes. Group empathy ratings not only shifted participants' own empathic feelings (Study 4), but they also influenced participants' donations to a homeless shelter (Study 5). These findings reveal the remarkable breadth of prosocial conformity.

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When Lending a Hand Depletes the Will: The Daily Costs and Benefits of Helping

Klodiana Lanaj, Russell Johnson & Mo Wang

Journal of Applied Psychology, forthcoming

Abstract:
Employees help on a regular daily basis while at work, yet surprisingly little is known about how responding to help requests affects helpers. Although recent theory suggests that helping may come at a cost to the helper, the majority of the helping literature has focused on the benefits of helping. The current study addresses the complex nature of helping by simultaneously considering its costs and benefits for helpers. Using daily diary data across 3 consecutive work weeks, we examine the relationship between responding to help requests, perceived prosocial impact of helping, and helpers' regulatory resources. We find that responding to help requests depletes regulatory resources at an increasing rate, yet perceived prosocial impact of helping can replenish resources. We also find that employees' prosocial motivation moderates these within-person relationships, such that prosocial employees are depleted to a larger extent by responding to help requests, and replenished to a lesser extent by the perceived prosocial impact of helping. Understanding the complex relationship of helping with regulatory resources is important because such resources have downstream effects on helpers' behavior in the workplace. We discuss the implications of our findings for both theory and practice.

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The effect of effectiveness: Donor response to aid effectiveness in a direct mail fundraising experiment

Dean Karlan & Daniel Wood

Journal of Behavioral and Experimental Economics, forthcoming

Abstract:
We test how donors respond to new information about a charity's effectiveness. Freedom from Hunger implemented a test of its direct marketing solicitations, varying letters by whether they include a discussion of their program's impact as measured by scientific research. The base script, used for both treatment and control, included a standard qualitative story about an individual beneficiary. Adding scientific impact information has no effect on average likelihood of giving or average gift amount. However, we find important heterogeneity: large prior donors both are more likely to give and also give more, whereas small prior donors are less likely to give. This pattern is consistent with two different types of donors: warm glow donors who respond negatively to analytical effectiveness information, and altruism donors who respond positively to such information.

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In Pursuit of Good Karma: When Charitable Appeals to Do Right Go Wrong

Katina Kulow & Thomas Kramer

Journal of Consumer Research, forthcoming

Abstract:
This research examines the implications of consumers' belief in karma - the belief that the universe bestows rewards for doing right and exacts punishments for doing wrong - in the context of prosocial behavior. Although intuitively, believing in karma should result in greater intentions to do right by supporting a charity, karmic beliefs are found to facilitate prosocial behavior only in contexts not associated with self-gains. A series of experiments shows that those with strong (vs. weak) beliefs in karma actually respond less favorably to charitable appeals that rely on common marketing tools meant to enhance consumer responses but that also cue self-gains by offering incentives or by highlighting self-benefits. However, these effects are only obtained for donations of time, which represent a means to enhance social connections, but not for donations of money. Consistent with the proposition that prosocial behaviors motivated by self-gains do not engender karmic rewards, lower intentions to do right among those with strong karmic beliefs are driven by a shift from other-focused to self-focused attention following appeals that cue self-gains, as compared to appeals that do not. Results imply that marketers need to take into account consumers' karmic beliefs when seeking to incentivize prosocial behavior.

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The emotional consequences of donation opportunities

Lara Aknin, Guy Mayraz & John Helliwell

Journal of Positive Psychology, forthcoming

Abstract:
Charities often circulate widespread donation appeals, but who is most likely to donate and how do appeals impact the well-being of individual donors and non-donors, as well as the entire group exposed to the campaign? Here, we investigate three factors that may influence donations (recent winnings, the presence of another person, and matched earnings) in addition to the changes in affect reported by individuals who donate in response to a charitable opportunity and those who do not. Critically, we also investigate the change in affect reported by the entire sample to measure the net impact of the donation opportunity. Results reveal that people winning more money donate a smaller percentage to charity, and the presence of another person does not influence giving. In addition, large donors experience hedonic boosts from giving, and the substantial fraction of large donors translates to a net positive influence on well-being for the entire sample.

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Saving the masses: The impact of perceived efficacy on charitable giving to single vs. multiple beneficiaries

Eesha Sharma & Vicki Morwitz

Organizational Behavior and Human Decision Processes, July 2016, Pages 45-54

Abstract:
People are more generous toward single than toward multiple beneficiaries, and encouraging greater giving to multiple targets is challenging. We identify one factor, perceived efficacy, which enhances generosity toward multiple beneficiaries. We investigate relationships between perceived self-efficacy (believing one can take steps to make an impact), response efficacy (believing those steps will be effective), and charitable giving. Four studies show that increasing perceived self-efficacy increases perceived response efficacy (Studies 1 and 2) and increases donations for multiple beneficiaries (Studies 1-4). Further, results show that boosting perceived self-efficacy enhances giving to a greater extent for multiple than for single beneficiaries (Studies 3 and 4). These effects emerge using various charitable giving contexts, efficacy manipulations, and measures of generosity.

By KEVIN LEWIS | 09:00:00 AM


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