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Monday, March 9, 2015

Blue horseshoe loves

Insider Trading in Supervised Industries

David Reeb, Yuzhao Zhang & Wanli Zhao
Journal of Law and Economics, August 2014, Pages 529-559

Abstract:
We investigate the impact of government agency oversight, such as by the Federal Reserve, on insider trading at the firm level. Regulatory supervision potentially limits trading based on material, nonpublic information, as it provides another layer of corporate governance to mitigate outflows of private information. Yet regulators themselves may serve as a source of information leakage, thereby facilitating insider-trading activity. We find, first, that in comparison to nonsupervised firms, supervised firms exhibit substantially greater trading based on inside information prior to earnings announcements. Second, in the first few days after firms provide private information to regulators or when regulators possess private information inaccessible to corporate insiders, these firms exhibit greater symptoms of insider trading. Finally, within a given supervised industry, insider-trading symptoms appear more pronounced when regulators exhibit greater leniency or operate in states with more political corruption. These insider-trading activities translate into over $1 billion in annual transfers.

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Thar SHE Blows? Gender, Competition, and Bubbles in Experimental Asset Markets

Catherine Eckel & Sascha Füllbrunn
American Economic Review, February 2015, Pages 906-920

Abstract:
Do women and men behave differently in financial asset markets? Our results from an asset market experiment show a marked gender difference in producing speculative price bubbles. Mixed markets show intermediate values, and a meta-analysis of 35 markets from different studies confirms the inverse relationship between the magnitude of price bubbles and the frequency of female traders in the market. Women's price forecasts also are significantly lower, even in the first period. Implications for financial markets and experimental methodology are discussed.

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Rumor Has It: Sensationalism in Financial Media

Kenneth Ahern & Denis Sosyura
Review of Financial Studies, forthcoming

Abstract:
The media has an incentive to publish sensational news. We study how this incentive affects the accuracy of media coverage in the context of merger rumors. Using a novel dataset, we find that accuracy is predicted by a journalist's experience, specialized education, and industry expertise. Conversely, less accurate stories use ambiguous language and feature well-known firms with broad readership appeal. Investors do not fully account for the predictive power of these characteristics, leading to an initial target price overreaction and a subsequent reversal, consistent with limited attention. Overall, we provide novel evidence on the determinants of media accuracy and its effect on asset prices.

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Do Sophisticated Investors Interpret Earnings Conference Call Tone Differently than Investors at Large? Evidence from Short Sales

Benjamin Blau, Jared DeLisle & McKay Price
Journal of Corporate Finance, April 2015, Pages 203–219

Abstract:
Recent research finds that investors, broadly defined, react to the linguistic tone of quarterly earnings conference calls; there is a positive relation between firms' stock returns and call tone (a measure of “sentiment” related word tabulations). However, this type of soft information can be subtle, context-specific, and difficult to interpret. Moreover, the literature suggests cross-sectional variation in information processing skills among investors. Thus, we test whether sophisticated investors interpret earnings conference call tone differently than investors at large by examining short selling activity and its relation to earnings conference call tone. We find that short sellers target firms with simultaneous high earnings surprise and abnormally high management tone. The combination of positive earnings surprise and unusually positive tone strengthens short sellers' return predictability. This result indicates that short sellers interpret revealed “inflated” call language by managers more completely than naïve investors. The incomplete stock price reaction by naïve investors due to the lack of reliability they place on this soft information results in overpricing of the stock. However, it also suggests that managers are unable to maintain prolonged overvaluation of their stock by striking an overly optimistic posture in the interactive conference call disclosure forum since short sellers' trades provide additional price discovery.

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Tips and Tells from Managers: How Analysts and the Market Read Between the Lines of Conference Calls

Marina Druz, Alexander Wagner & Richard Zeckhauser
NBER Working Paper, February 2015

Abstract:
Stock prices react significantly to the tone (negativity of words) managers use on earnings conference calls. This reaction reflects reasonably rational use of information. “Tone surprise” – the residual when negativity in managerial tone is regressed on the firm’s recent economic performance and CEO fixed effects – predicts future earnings and analyst uncertainty. Prices move more, as hypothesized, in firms where tone surprise predicts more strongly. Experienced analysts respond appropriately in revising their forecasts; inexperienced analysts overreact (underreact) to tone surprises in presentations (answers). Post-call price drift, like post-earnings announcement drift, suggests less-than-full-use of information embedded in managerial tone.

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The hidden face of the media: How financial journalists produce information

Congcong Li
University of Maryland Working Paper, December 2014

Abstract:
This study investigates how the media produces information. Using a sample of 296,497 Wall Street Journal news articles, I find that news articles written by experienced and reputable financial journalists are more informative about future earnings. I then examine the source of such information advantage by studying the detailed quotes from news articles. I further find that these journalists rely more heavily on first-hand access to management, institutional investors, and other external experts, an important channel through which they produce informative news. Interestingly, however, this information advantage is present only when the experienced and reputable journalists remain independent — for those journalists that repeatedly cover the same firm or rely primarily on information from management, the networking information advantage is completely muted. These results suggest that the quality of the media as an information intermediary depends critically on individual journalists’ ability to access information from industry networks and provide unbiased news.

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Hedge Funds and Stock Market Efficiency

Joni Kokkonen & Matti Suominen
Management Science, forthcoming

Abstract:
We measure misvaluation using the discounted residual income model. As shown in the literature, this measure of stocks' misvaluation significantly explains their future cross-sectional returns. We measure the market-level misvaluation (market inefficiency) by the misvaluation spread: the difference in the misvaluation of the most overvalued and undervalued shares. We show that the misvaluation spread is a strong predictor of a misvaluation-based long–short portfolio’s returns, reinforcing the hypothesis that it proxies for the level of mispricing in the stock market. Using data on hedge fund returns, hedge fund industry assets under management, flows, and individual hedge fund holdings, we present evidence that hedge funds' trading reduces market-level misvaluation. Our results are robust across different time periods and are not driven by market liquidity. Moreover, we find that mutual funds do not have the price-correcting effect that hedge funds have.

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Trust and Investment Management: The Effects of Manager Trustworthiness on Hedge Fund Investments

Ankur Pareek & Roy Zuckerman
Rutgers Working Paper, October 2014

Abstract:
This paper studies the effect of perceived manager trustworthiness on hedge fund investment. Controlling for past-performance, we find that hedge fund managers whose photographs are rated as more trustworthy are able to attract greater fund flows, in the medium performance range, and have a less convex flow-performance relationship compared to the managers rated as less trustworthy. We also find that "trustworthy" managers are more likely to survive given poor past-performance and generate lower risk-adjusted returns when compared to managers who are perceived as less trustworthy. We attribute this phenomenon to over-investment with "trustworthy" managers caused by an investor bias.

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Positive Mood and Investment Decisions: Evidence from Comedy Movie Attendance in the U.S.

Gabriele Lepori
Research in International Business and Finance, May 2015, Pages 142–163

Abstract:
Positive mood has been repeatedly shown to affect decision-making under risk. In this study I exploit the time-series variation in the domestic theatrical release of comedy movies as a natural experiment for testing the impact that happy mood (proxied by weekend comedy movie attendance) has on the demand for risky assets (proxied by the performance of the U.S. stock market). Using a sample of data from 1994 to 2010, I estimate that an increase in comedy attendance on a given weekend is followed by a decrease in equity returns on the subsequent Monday, which is consistent with the mood-maintenance hypothesis.

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Investor Mood and Demand for Stocks: Evidence from Popular TV Series Finales

Gabriele Lepori
Journal of Economic Psychology, forthcoming

Abstract:
In this paper I employ a novel discrete mood proxy to investigate the response of the U.S. stock market to exogenous daily variations in investor mood. Drawing upon the psychology and communication literature, which documents that the end of popular TV series causes negative emotional reactions in large numbers of television viewers, I employ major TV series finales (between 1967 and 2012) as mood-altering events. I find that an increase in the fraction of Americans watching a TV show finale on a given day is immediately followed by a decrease in U.S. stock returns. This effect is stronger in small-cap and high-volatility stocks, whose pricing is more sensitive to sentiment, and is consistent with the hypothesis that negative mood reduces the demand for risky assets.

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Contractual incompleteness, limited liability and asset price bubbles

James Dow & Jungsuk Han
Journal of Financial Economics, forthcoming

Abstract:
When should we expect bubbles? Can levered intermediaries bid up risky asset prices through asset substitution? We study an economy with financial intermediaries that issue debt and equity to buy risky assets. Asset substitution alone cannot cause bubbles because it is priced into the intermediaries׳ securities. But incomplete contracts and managerial agency problems can make intermediaries take excessive risk to exploit limited liability, bidding up risky asset prices. This destroys welfare through misallocation of resources. We argue that incentives for private monitoring cannot solve this problem. Finally, even without agency problems, debt subsidies will create similar effects.

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A Comparison of Buy-Side and Sell-Side Analysts

Jeffrey Hobbs & Vivek Singh
Review of Financial Economics, January 2015, Pages 42–51

Abstract:
There is very little research on the topic of buy-side analyst performance, and that which does exist yields mixed results. We use a large sample from both the buy- and sell-side and report several new results. First, while the contemporaneous returns to portfolios based on sell-side recommendations are positive, the returns for buy-side analysts, proxied by changes in institutional holdings, are negative. Second, the buy-side analysts’ underperformance is accentuated when they trade against sell-side analysts’ recommendations. Third, abnormal returns positively relate to both the portfolio size, and turnover of buy-side analysts’ institutions, suggesting that large institutions employ superior analysts and that superior analysts frequently change their recommendations. Abnormal returns are also positively related to buy-side portfolios with stocks that have higher analyst coverage, greater institutional holding, and lower earnings forecast dispersion. Fourth, there is substantial persistence in buy-side performance, but even the top decile performs poorly. These findings suggest that sell-side analysts still outperform buy-side analysts despite the severe conflicts of interest documented in the literature.

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Change You Can Believe In? Hedge Fund Data Revisions

Andrew Patton, Tarun Ramadorai & Michael Streatfield
Journal of Finance, forthcoming

Abstract:
We analyze the reliability of voluntary disclosures of financial information, focusing on widely-employed publicly available hedge fund databases. Tracking changes to statements of historical performance recorded between 2007 and 2011, we find that historical returns are routinely revised. These revisions are not merely random or corrections of earlier mistakes; they are partly forecastable by fund characteristics. Funds that revise their performance histories significantly and predictably underperform those that have never revised, suggesting that unreliable disclosures constitute a valuable source of information for investors. These results speak to current debates about mandatory disclosures by financial institutions to market regulators.

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Top VC IPO Underpricing

Daniel Bradley, Incheol Kim & Laurie Krigman
Journal of Corporate Finance, April 2015, Pages 186–202

Abstract:
Before the IPO bubble burst, the first day return for IPOs backed by top VCs firms was double that of non-top VCs IPOs. Top VC IPOs were also twice as likely to receive all-star analyst coverage and suffered twice as large negative returns upon lockup expiration. We argue that this was not a coincidence. Underwriters benefited from underpricing vis-à-vis allocation strategies whereas VCs gain from information momentum which allows them to cash-out at higher prices at lockup expiration. All-stars are a scarce resource underwriters allocate to their best clients (Top VCs) who bring them repeat business. Post-bubble, regulatory shocks restricted preferential IPO allocations and reduced the value of all-star coverage. Consequently, these relations disappeared indicating that regulatory changes likely had the desired effect.

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The Real Effects of Short-Selling Constraints

Gustavo Grullon, Sébastien Michenaud & James Weston
Review of Financial Studies, forthcoming

Abstract:
We use a regulatory experiment (Regulation SHO) that relaxes short-selling constraints on a random sample of U.S. stocks to test whether capital market frictions have an effect on stock prices and corporate decisions. We find that an increase in short-selling activity causes prices to fall, and that small firms react to these lower prices by reducing equity issues and investment. These results not only provide evidence that short-selling constraints affect asset prices, but also confirm that short-selling activity has a causal impact on financing and investment decisions.

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How Quickly Do Markets Learn? Private Information Dissemination in a Natural Experiment

Robert Jackson, Wei Jiang & Joshua Mitts
Columbia University Working Paper, December 2014

Abstract:
Using data from a unique episode in which the SEC disseminated securities filings to a small group of private investors before releasing them to the public, we provide a direct test of the process through which private information is impounded into stock prices. Because the delay between the time when the filings were privately distributed and when the filings were made public was randomly distributed, our setting provides a rare natural experiment for examining how markets process new private information. We find that it takes minutes — not seconds — for informed traders to incorporate fundamental information into stock prices. We also show that the private investors who had early access to fundamental information profited more, and convey more information into stock prices, when the delay before the filings are released to the public is longer. More importantly, the rate at which information is impounded into stock prices is more correlated with the length of the predicted delay before public release than the actual delay, suggesting that informed investors trade strategically. Our study serves as the modern counterpart to Koudijs’s (2014a) study on insider trading on eighteenth-century stock exchanges — except, in our case, week-long sailing voyages have been replaced by modern electronic transmission as the conduit for information flows.

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Joining the conversation: How quiet is the IPO quiet period?

Matthew Cedergren
NYU Working Paper, December 2014

Abstract:
This study evaluates the IPO quiet period, which restricts managers' ability to publicly communicate in the weeks immediately following the IPO. I investigate the effectiveness of and compliance with the quiet period for a sample of 3,380 IPOs from 1996 through 2011, and report several key findings. Firms significantly increase their communication immediately after the quiet period expires, and this manifests in more firm-specific information in returns. While this suggests the quiet period rules are effective on average, I find that there is non-random variation across firms in this effectiveness. In particular, the marginal effect of increased communication on firm-specific information processed by the market is greater for firms which are harder to value or receive less-than-expected attention in the aftermarket. Moreover, notwithstanding overall effectiveness, I find wide variation in the level of compliance with the quiet period, and that firms benefit from non-compliance. In particular, firms with more quiet period "loudness" obtain more analyst attention and are more likely to meet or beat future consensus forecasts. Collectively, the results suggest that [1] the quiet period rules prevent investors from learning useful information in a timely manner, and [2] a lack of SEC enforcement provides advantages to firms that violate the spirit, if not the letter, of the rules. This calls into question whether the IPO quiet period rules — essentially unchanged for over 80 years — remain relevant and useful in modern equity markets.

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Are Firms in "Boring" Industries Worth Less?

Jia Chen, Kewei Hou & René Stulz
NBER Working Paper, January 2015

Abstract:
Using theories from the behavioral finance literature to predict that investors are attracted to industries with more salient outcomes and that therefore firms in such industries have higher valuations, we find that firms in industries that have high industry-level dispersion of profitability have on average higher market-to-book ratios than firms in low dispersion industries. This positive relation between market-to-book ratios and industry profitability dispersion is economically large and statistically significant and is robust to controlling for variables used to explain firm-level valuation ratios in the literature. Consistent with the mispricing explanation of this finding, we show that firms in less boring industries have a lower implied cost of equity and lower realized returns. We explore alternative explanations for our finding, but find that these alternative explanations cannot explain our results.

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Should you globally diversify or let the globally diversified firm do it for you?

Javeria Farooqi, Daniel Huerta & Thanh Ngo
Quarterly Review of Economics and Finance, forthcoming

Abstract:
This paper examines whether investor-made international diversification outperforms corporate international diversification. Our results indicate that internationally diversified firms yield higher returns relative to investor-made internationally diversified portfolios. Our results partially offer an explanation for the ‘home bias puzzle’, which argues that international asset holdings in individual portfolios remain significantly lower than forecasted by analysts despite the integration of global capital markets. However, as firms increase the number of geographic segments, the excess returns are lower. Additionally, firms that belong to durables, energy, manufacturing, shops and telecommunication industries have higher excess returns relative to other industries. Overall, our results suggest that investors will earn higher returns by investing in globally diversified MNCs rather than by attempting to build mimicking internationally diversified portfolios.

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Home away from Home: Geography of Information and Local Investors

Gennaro Bernile, Alok Kumar & Johan Sulaeman
Review of Financial Studies, forthcoming

Abstract:
We develop a 10-K-based multidimensional measure of firm locations. Using this measure, we show that firm-level information is geographically distributed and institutional investors are able to exploit the resulting information asymmetry. Specifically, institutional investors overweigh firms whose 10-K frequently mentions the investors' state even when those firms are not headquartered locally and earn superior returns on those stocks. These ownership and performance patterns are stronger among hard-to-value firms. Local investor performance increases with the degree of local bias and with the local economic exposure of portfolio firms. Overall, geographical variation in firm-level information generates economically significant location-based information asymmetry.

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(How) has the market become more efficient?

Stephen Bertone, Imants Paeglis & Rahul Ravi
Journal of Banking & Finance, May 2015, Pages 72–86

Abstract:
Using a portfolio of Dow Jones Industrial Average index constituents and the index ETF, we document significant intraday deviations from the law of one price. These are especially pronounced at very short time intervals. The extent of deviations is related to volatility, liquidity, and transaction costs of both the index constituents and the ETF. Further, the influence of news arrival, and liquidity (volatility) shocks on the deviations persists for several hours. Finally, we document significant decline (by at least 80%) in the deviations between 1998 and 2010. We find that this decline is largely due to decimalization, the repeal of the uptick rule, and the introduction of automated updating of the NYSE order book. Overall, our findings indicate an increase in operational market efficiency.

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Does transparency imply efficiency? The case of the European soccer betting market

Anastasios Oikonomidis, Alistair Bruce & Johnnie Johnson
Economics Letters, March 2015, Pages 59–61

Abstract:
We discover mispricing in an apparently transparent market - the European soccer betting market. Efficiency differences between countries are accounted for by variations in league competitiveness. We conclude that barriers to efficiency (e.g., risk evaluation problems) may remain in transparent markets.

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Why Stay-at-Home Investing Makes Sense

Martha O’Hagan-Luff & Jenny Berrill
International Review of Financial Analysis, March 2015, Pages 1–14

Abstract:
Despite the benefits of international diversification investors continue to display a preference for home based investments. Given this preference we investigate whether it is possible to mimic the benefits of international diversification via domestically traded products. We test this from the perspective of US investors for 37 countries between 1996 and 2011. We seek to replicate the equity index of each country with domestically traded US products such as Industry Indices, Multinational Corporations, American Depository Receipts, single country iShares ETFs and Closed-End Country Funds to investigate whether the benefits of international diversification can be exhausted domestically. While the benefits of investing overseas vary significantly across sub-periods, portfolios of US-traded products can replicate 36 of the 37 foreign country indices. These findings are robust to variance in the performance and volatility of the US market relative to other markets. US investors do not need to invest overseas to reap the benefits of international diversification.

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Can the Bond Price Reaction to Earnings Announcements Predict Future Stock Returns?

Omri Even-Tov
University of California Working Paper, January 2015

Abstract:
In this paper I show that the bond price reaction to earnings announcements has predictive power for post-announcement stock returns and that it is incremental to previously documented accounting-related anomalies. I find that bonds’ predictive ability is driven by non-investment grade bonds, for which earnings releases provide more value-relevant information. It is also stronger in firms with a lower proportion of institutional shareholders and for bonds whose trading is more heavily dominated by sophisticated investors. This suggests that the greater level of investor sophistication in the bond market relative to the stock market is what gives bond returns the ability to predict future stock returns. By demonstrating that a firm’s bond price reaction to an earnings announcement can predict future stock returns, this paper adds to the literature which documents that various earnings components also have predictive ability for post-announcement stock returns.

By KEVIN LEWIS | 09:00:00 AM

Sunday, March 8, 2015

For old times' sake

Levantine cranium from Manot Cave (Israel) foreshadows the first European modern humans

Israel Hershkovitz et al.
Nature, forthcoming

Abstract:
A key event in human evolution is the expansion of modern humans of African origin across Eurasia between 60 and 40 thousand years (kyr) before present (BP), replacing all other forms of hominins. Owing to the scarcity of human fossils from this period, these ancestors of all present-day non-African modern populations remain largely enigmatic. Here we describe a partial calvaria, recently discovered at Manot Cave (Western Galilee, Israel) and dated to 54.7 ± 5.5 kyr BP (arithmetic mean ± 2 standard deviations) by uranium–thorium dating, that sheds light on this crucial event. The overall shape and discrete morphological features of the Manot 1 calvaria demonstrate that this partial skull is unequivocally modern. It is similar in shape to recent African skulls as well as to European skulls from the Upper Palaeolithic period, but different from most other early anatomically modern humans in the Levant. This suggests that the Manot people could be closely related to the first modern humans who later successfully colonized Europe. Thus, the anatomical features used to support the ‘assimilation model’ in Europe might not have been inherited from European Neanderthals, but rather from earlier Levantine populations. Moreover, at present, Manot 1 is the only modern human specimen to provide evidence that during the Middle to Upper Palaeolithic interface, both modern humans and Neanderthals contemporaneously inhabited the southern Levant, close in time to the likely interbreeding event with Neanderthals.

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Human-like hand use in Australopithecus africanus

Matthew Skinner et al.
Science, 23 January 2015, Pages 395-399

Abstract:
The distinctly human ability for forceful precision and power “squeeze” gripping is linked to two key evolutionary transitions in hand use: a reduction in arboreal climbing and the manufacture and use of tools. However, it is unclear when these locomotory and manipulative transitions occurred. Here we show that Australopithecus africanus (~3 to 2 million years ago) and several Pleistocene hominins, traditionally considered not to have engaged in habitual tool manufacture, have a human-like trabecular bone pattern in the metacarpals consistent with forceful opposition of the thumb and fingers typically adopted during tool use. These results support archaeological evidence for stone tool use in australopiths and provide morphological evidence that Pliocene hominins achieved human-like hand postures much earlier and more frequently than previously considered.

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Fingerprints, sex, state, and the organization of the Tell Leilan ceramic industry

Akiva Sanders
Journal of Archaeological Science, forthcoming

Abstract:
The goal of this research is to elucidate the organization of ceramic production at Tell Leilan, Northeast Syria with respect to gender roles from 3400 to 1700 BCE through a study of fingerprint impressions on pottery. Using the distribution of epidermal ridge densities, a technique has been developed and tested to determine the proportion of men and women who formed and finished vessels in a ceramic assemblage. Analysis of 106 fingerprints preserved on sherds indicates that there is a discrete change in the sex ratio of potters at Leilan coincident with the rise of urbanism and state formation in northern Mesopotamia. No change in this pattern, however, are yet correlated with other political shifts, such as changes in the various regimes that had hegemony over the site during the Early and Middle Bronze Age. These results provide new information about the effect of state authority on the public and private organization of crafts as well as the division of society along gender lines. Surprisingly, this transformation in gender roles, which coincides with the rise of the state at Tell Leilan, is not visible at village sites in the Tell Leilan Regional Survey. This indicates that the changes in social fabric that occurred at urban sites with the establishment of state institutions did not occur to the same extent in smaller settlements even though the state did control some of the ceramic production at these sites, at least during the Akkadian period. This methodology and research has implications beyond northern Mesopotamia and provides an innovative technique to empirically test the highly theoretical literature on the relationship of gender to craft production in the archaeological record.

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Alluvial fan records from southeast Arabia reveal multiple windows for human dispersal

Ash Parton et al.
Geology, forthcoming

Abstract:
The dispersal of human populations out of Africa into Arabia was most likely linked to episodes of climatic amelioration, when increased monsoon rainfall led to the activation of drainage systems, improved freshwater availability, and the development of regional vegetation. Here we present the first dated terrestrial record from southeast Arabia that provides evidence for increased rainfall and the expansion of vegetation during both glacial and interglacial periods. Findings from extensive alluvial fan deposits indicate that drainage system activation occurred during Marine Isotope Stage (MIS) 6 (ca. 160–150 ka), MIS 5 (ca. 130–75 ka), and during early MIS 3 (ca. 55 ka). The development of active freshwater systems during these periods corresponds with monsoon intensity increases during insolation maxima, suggesting that humid periods in Arabia were not confined to eccentricity-paced deglaciations, and providing paleoenvironmental support for multiple windows of opportunity for dispersal out of Africa during the late Pleistocene.

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Sedimentary DNA from a submerged site reveals wheat in the British Isles 8000 years ago

Oliver Smith et al.
Science, 27 February 2015, Pages 998-1001

Abstract:
The Mesolithic-to-Neolithic transition marked the time when a hunter-gatherer economy gave way to agriculture, coinciding with rising sea levels. Bouldnor Cliff, is a submarine archaeological site off the Isle of Wight in the United Kingdom that has a well-preserved Mesolithic paleosol dated to 8000 years before the present. We analyzed a core obtained from sealed sediments, combining evidence from microgeomorphology and microfossils with sedimentary ancient DNA (sedaDNA) analyses to reconstruct floral and faunal changes during the occupation of this site, before it was submerged. In agreement with palynological analyses, the sedaDNA sequences suggest a mixed habitat of oak forest and herbaceous plants. However, they also provide evidence of wheat 2000 years earlier than mainland Britain and 400 years earlier than proximate European sites. These results suggest that sophisticated social networks linked the Neolithic front in southern Europe to the Mesolithic peoples of northern Europe.

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Effects of the demographic transition on the genetic variances and covariances of human life-history traits

Elisabeth Bolund et al.
Evolution, forthcoming

Abstract:
The recent demographic transitions to lower mortality and fertility rates in most human societies have led to changes and even quick reversals in phenotypic selection pressures. This can only result in evolutionary change if the affected traits are heritable, but changes in environmental conditions may also lead to subsequent changes in the genetic variance and covariance (the G matrix) of traits. It currently remains unclear if there have been concomitant changes in the G matrix of life-history traits following the demographic transition. Using 300 years of genealogical data from Finland, we found that four key life-history traits were heritable both before and after the demographic transition. The estimated heritabilities allow a quantifiable genetic response to selection during both time periods, thus facilitating continued evolutionary change. Further, the G matrices remained largely stable but revealed a trend for an increased additive genetic variance and thus evolutionary potential of the population after the transition. Our results demonstrate the validity of predictions of evolutionary change in human populations even after the recent dramatic environmental change, and facilitate predictions of how our biology interacts with changing environments, with implications for global public health and demography.

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Climate-driven introduction of the Black Death and successive plague reintroductions into Europe

Boris Schmid et al.
Proceedings of the National Academy of Sciences, forthcoming

Abstract:
The Black Death, originating in Asia, arrived in the Mediterranean harbors of Europe in 1347 CE, via the land and sea trade routes of the ancient Silk Road system. This epidemic marked the start of the second plague pandemic, which lasted in Europe until the early 19th century. This pandemic is generally understood as the consequence of a singular introduction of Yersinia pestis, after which the disease established itself in European rodents over four centuries. To locate these putative plague reservoirs, we studied the climate fluctuations that preceded regional plague epidemics, based on a dataset of 7,711 georeferenced historical plague outbreaks and 15 annually resolved tree-ring records from Europe and Asia. We provide evidence for repeated climate-driven reintroductions of the bacterium into European harbors from reservoirs in Asia, with a delay of 15 ± 1 y. Our analysis finds no support for the existence of permanent plague reservoirs in medieval Europe.

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Late Pliocene fossiliferous sedimentary record and the environmental context of early Homo from Afar, Ethiopia

Erin DiMaggio et al.
Science, forthcoming

Abstract:
Sedimentary basins in eastern Africa preserve a record of continental rifting and contain important fossil assemblages for interpreting hominin evolution. However, the record of hominin evolution between 3 and 2.5 million years ago (Ma) is poorly documented in surface outcrops, particularly in Afar, Ethiopia. Here we present the discovery of 2.84-2.58 Ma fossil and hominin-bearing sediments in the Ledi-Geraru research area that have produced the earliest record of the genus Homo. Vertebrate fossils record a faunal turnover indicative of more open and probable arid habitats than those reconstructed earlier in this region, in broad agreement with hypotheses addressing the role of environmental forcing in hominin evolution at this time. Geological analyses constrain depositional and structural models of the Afar and date the LD 350-1 Homo mandible to 2.80-2.75 Ma.

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The process, biotic impact, and global implications of the human colonization of Sahul about 47,000 years ago

J.F. O’Connell & J. Allen
Journal of Archaeological Science, forthcoming

Abstract:
Comprehensive review of archaeological data shows that Sahul (Pleistocene Australia-New Guinea) was first occupied by humans ca. 47 ka (47,000 years ago); evidence for earlier arrival is weak. Colonizing populations remained low – perhaps two orders of magnitude below those estimated at European contact – for many millennia, and were long restricted to relatively favorable habitats. Though human arrival coincided with changes in native flora and fauna, these were mainly the products of climatic factors, not human interference. The genetic makeup of founding populations and their arrival date are consistent with the Late Dispersal Model of anatomically modern humans beyond SW Asia, beginning ca. 50 ka. Early Dispersal Models (120-70 ka) are not refuted, but draw no support from the Sahul record as currently understood.

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Evidence for recent, population-specific evolution of the human mutation rate

Kelley Harris
Proceedings of the National Academy of Sciences, forthcoming

Abstract:
As humans dispersed out of Africa they adapted to new environmental challenges, including changes in exposure to mutagenic solar radiation. Humans in temperate latitudes have acquired light skin that is relatively transparent to UV light, and some evidence suggests that their DNA damage response pathways have also experienced local adaptation. This raises the possibility that different populations have experienced different selective pressures affecting genome integrity. Here, I present evidence that the rate of a particular mutation type has recently increased in the European population, rising in frequency by 50% during the 40,000–80,000 y since Europeans began diverging from Asians. A comparison of SNPs private to Africa, Asia, and Europe in the 1000 Genomes data reveals that private European variation is enriched for the transition 5′-TCC-3′ → 5′-TTC-3′. Although it is not clear whether UV played a causal role in changing the European mutational spectrum, 5′-TCC-3′ → 5′-TTC-3′ is known to be the most common somatic mutation present in melanoma skin cancers, as well as the mutation most frequently induced in vitro by UV. Regardless of its causality, this change indicates that DNA replication fidelity has not remained stable even since the origin of modern humans and might have changed numerous times during our recent evolutionary history.

By KEVIN LEWIS | 09:00:00 AM

Saturday, March 7, 2015

Quixotic

More Than Resisting Temptation: Beneficial Habits Mediate the Relationship Between Self-Control and Positive Life Outcomes

Brian Galla & Angela Duckworth
Journal of Personality and Social Psychology, forthcoming

Abstract:
Why does self-control predict such a wide array of positive life outcomes? Conventional wisdom holds that self-control is used to effortfully inhibit maladaptive impulses, yet this view conflicts with emerging evidence that self-control is associated with less inhibition in daily life. We propose that one of the reasons individuals with better self-control use less effortful inhibition, yet make better progress on their goals is that they rely on beneficial habits. Across 6 studies (total N = 2,274), we found support for this hypothesis. In Study 1, habits for eating healthy snacks, exercising, and getting consistent sleep mediated the effect of self-control on both increased automaticity and lower reported effortful inhibition in enacting those behaviors. In Studies 2 and 3, study habits mediated the effect of self-control on reduced motivational interference during a work–leisure conflict and on greater ability to study even under difficult circumstances. In Study 4, homework habits mediated the effect of self-control on classroom engagement and homework completion. Study 5 was a prospective longitudinal study of teenage youth who participated in a 5-day meditation retreat. Better self-control before the retreat predicted stronger meditation habits 3 months after the retreat, and habits mediated the effect of self-control on successfully accomplishing meditation practice goals. Finally, in Study 6, study habits mediated the effect of self-control on homework completion and 2 objectively measured long-term academic outcomes: grade point average and first-year college persistence. Collectively, these results suggest that beneficial habits — perhaps more so than effortful inhibition — are an important factor linking self-control with positive life outcomes.

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Minds “At Attention”: Mindfulness Training Curbs Attentional Lapses in Military Cohorts

Amishi Jha et al.
PLoS ONE, February 2015

Abstract:
We investigated the impact of mindfulness training (MT) on attentional performance lapses associated with task-unrelated thought (i.e., mind wandering). Periods of persistent and intensive demands may compromise attention and increase off-task thinking. Here, we investigated if MT may mitigate these deleterious effects and promote cognitive resilience in military cohorts enduring a high-demand interval of predeployment training. To better understand which aspects of MT programs are most beneficial, three military cohorts were examined. Two of the three groups were provided MT. One group received an 8-hour, 8-week variant of Mindfulness-based Mind Fitness Training (MMFT) emphasizing engagement in training exercises (training-focused MT, n = 40), a second group received a didactic-focused variant emphasizing content regarding stress and resilience (didactic-focused MT, n = 40), and the third group served as a no-training control (NTC, n = 24). Sustained Attention to Response Task (SART) performance was indexed in all military groups and a no-training civilian group (CIV, n = 45) before (T1) and after (T2) the MT course period. Attentional performance (measured by A’, a sensitivity index) was lower in NTC vs. CIV at T2, suggesting that performance suffers after enduring a high-demand predeployment interval relative to a similar time period of civilian life. Yet, there were significantly fewer performance lapses in the military cohorts receiving MT relative to NTC, with training-focused MT outperforming didactic-focused MT at T2. From T1 to T2, A’ degraded in NTC and didactic-focused MT but remained stable in training-focused MT and CIV. In sum, while protracted periods of high-demand military training may increase attentional performance lapses, practice-focused MT programs akin to training-focused MT may bolster attentional performance more than didactic-focused programs. As such, training-focused MT programs should be further examined in cohorts experiencing protracted high-demand intervals.

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Increasing propensity to mind-wander with transcranial direct current stimulation

Vadim Axelrod et al.
Proceedings of the National Academy of Sciences, forthcoming

Abstract:
Humans mind-wander quite intensely. Mind wandering is markedly different from other cognitive behaviors because it is spontaneous, self-generated, and inwardly directed (inner thoughts). However, can such an internal and intimate mental function also be modulated externally by means of brain stimulation? Addressing this question could also help identify the neural correlates of mind wandering in a causal manner, in contrast to the correlational methods used previously (primarily functional MRI). In our study, participants performed a monotonous task while we periodically sampled their thoughts to assess mind wandering. Concurrently, we applied transcranial direct current stimulation (tDCS). We found that stimulation of the frontal lobes [anode electrode at the left dorsolateral prefrontal cortex (DLPFC), cathode electrode at the right supraorbital area], but not of the occipital cortex or sham stimulation, increased the propensity to mind-wander. These results demonstrate for the first time, to our knowledge, that mind wandering can be enhanced externally using brain stimulation, and that the frontal lobes play a causal role in mind-wandering behavior. These results also suggest that the executive control network associated with the DLPFC might be an integral part of mind-wandering neural machinery.

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Age Differences in Risk: Perceptions, Intentions and Domains

Emily Bonem, Phoebe Ellsworth & Richard Gonzalez
Journal of Behavioral Decision Making, forthcoming

Abstract:
Although it is commonly assumed that older people are more cautious and risk averse than their younger counterparts, the research on age differences in risk taking is mixed. While some research has found that older adults are less risk seeking, other research has found the opposite or no differences. One explanation is that age differences vary across risk domains. In two studies, we surveyed three adult age groups ranging in age from 18 to 83 on their risk perceptions and intentions of risky behaviors across several domains. Our studies showed that compared with young adults, older adults tend to see more risk in behaviors in health and ethical domains but less risk in behaviors from the social domain. A similar pattern occurred for participants' intentions of engaging in the risky behaviors. Older adults rated risky behaviors from health and ethical domains as less enjoyable and less likely to produce gains than young adults, whereas they rated risky behaviors from the social domain as more enjoyable, less unpleasant, and less likely to produce losses than young adults. These results suggest that age differences in risk preferences may vary across domains and may result from differing motivations.

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DRD4 Long Allele Carriers Show Heightened Attention to High-priority Items Relative to Low-priority Items

Marissa Gorlick et al.
Journal of Cognitive Neuroscience, March 2015, Pages 509-521

Abstract:
Humans with seven or more repeats in exon III of the DRD4 gene (long DRD4 carriers) sometimes demonstrate impaired attention, as seen in attention-deficit hyperactivity disorder, and at other times demonstrate heightened attention, as seen in addictive behavior. Although the clinical effects of DRD4 are the focus of much work, this gene may not necessarily serve as a “risk” gene for attentional deficits, but as a plasticity gene where attention is heightened for priority items in the environment and impaired for minor items. Here we examine the role of DRD4 in two tasks that benefit from selective attention to high-priority information. We examine a category learning task where performance is supported by focusing on features and updating verbal rules. Here, selective attention to the most salient features is associated with good performance. In addition, we examine the Operation Span (OSPAN) task, a working memory capacity task that relies on selective attention to update and maintain items in memory while also performing a secondary task. Long DRD4 carriers show superior performance relative to short DRD4 homozygotes (six or less tandem repeats) in both the category learning and OSPAN tasks. These results suggest that DRD4 may serve as a “plasticity” gene where individuals with the long allele show heightened selective attention to high-priority items in the environment, which can be beneficial in the appropriate context.

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Spontaneous activity in the waiting brain: A marker of impulsive choice in attention-deficit/hyperactivity disorder?

Chia-Fen Hsu, Nicholas Benikos, Edmund Sonuga-Barke
Developmental Cognitive Neuroscience, April 2015, Pages 114–122

Background: Spontaneous very low frequency oscillations (VLFO), seen in the resting brain, are attenuated when individuals are working on attention demanding tasks or waiting for rewards ( Hsu et al., 2013). Individuals with attention-deficit/hyperactivity disorder (ADHD) display excess VLFO both when working on attention tasks. They also have difficulty waiting for rewards. Here we examined the waiting brain signature in ADHD and its association with impulsive choice.

Methods: DC-EEG from 21 children with ADHD and 21 controls (9–15 years) were collected under four conditions: (i) resting; (ii) choosing to wait; (iii) being “forced” to wait; and (iv) working on a reaction time task. A questionnaire measured two components of impulsive choice.

Results: Significant VLFO reductions were observed in controls within anterior brain regions in both working and waiting conditions. Individuals with ADHD showed VLFO attenuation while working but to a reduced level and none at all when waiting. A closer inspection revealed an increase of VLFO activity in temporal regions during waiting. Excess VLFO activity during waiting was associated with parents’ ratings of temporal discounting and delay aversion.

Conclusions: The results highlight the potential role for waiting-related spontaneous neural activity in the pathophysiology of impulsive decision-making of ADHD.

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Group Therapy for Adolescents With Attention-Deficit/Hyperactivity Disorder: A Randomized Controlled Trial

Raquel Vidal et al.
Journal of the American Academy of Child & Adolescent Psychiatry, forthcoming

Objective: To determine the efficacy of a group cognitive-behavioral therapy (CBT) on adolescents with attention-deficit/hyperactivity disorder (ADHD) who were in pharmacological treatment but still presented persistent symptoms.

Method: We conducted a multicenter, randomized rater-blinded controlled trial between April 2012 and May 2014 on a cohort of 119 adolescents (15-21 years). Participants were randomly assigned to 12 manualized group CBT sessions (n=45) or a waiting list control group (n=44). Primary outcomes were assessed by a blind evaluator (ADHD Rating Scale [ADHD-RS], Clinical Global Impression Scale for Severity [CGI-S], Global Assessment Functioning [GAF]) before and after treatment as well as by self-report and parent informant ratings.

Results: Of the initial 119 participants enrolled, 89 completed treatment. A mixed-effect model analysis revealed that participants who were assigned to the group CBT sessions experienced significantly reduced ADHD symptoms compared to the control group (ADHD-RS Adolescent: −7.46 [95% CI, −9.56 to −5.36]; p<0.001; d=7.5 and ADHD-RS Parents: −9.11 [95% CI, −11.48 to −6.75]; p<0.001; d=8.38. CGI-S Self-Report: −0.68 [95% CI, −0.98 to −0.39]; p<0.001; d=3.75 and CGI-S Clinician: −0.79 [95% CI, −0.95 to −0.62]; p<0.001; d=7.71). Functional impairment decreased significantly in the CBT group according to parents (Weiss Functional Impairment Scale −4.02 [95% CI, −7.76 to −0.29]; p < 0.05; d=2.29) and according to the blinded evaluator (GAF: −7.58 [95% CI, −9.1 to −6.05]; p<0.001; d=7.51).

Conclusion: Group CBT associated with pharmacological treatment is an efficacious intervention for reducing ADHD symptoms and functional impairment in adolescents.

By KEVIN LEWIS | 09:00:00 AM

Friday, March 6, 2015

Top dollar

Executive Compensation, Fat Cats, and Best Athletes

Jerry Kim, Bruce Kogut & Jae-Suk Yang
American Sociological Review, forthcoming

Abstract:
Income gains in the top 1 percent are the primary cause for the rapid growth in U.S. inequality since the late 1970s. Managers and executives of firms account for a large proportion of these top earners. Chief executive officers (CEOs), in particular, have seen their compensation increase faster than the growth in firm size. We propose that changes in the macro patterns of the distribution of CEO compensation resulted from a process of diffusion within localized networks, propagating higher pay among corporate executives. We compare three possible explanations for diffusion: director board interlocks, peer groups, and educational networks. The statistical results indicate that corporate director networks facilitate social comparisons that generate the observed pay patterns. Peer and education network effects do not survive a novel endogeneity test that we execute. A key implication is that local diffusion through executive network structures partially explains the changes in macro patterns of income distribution found in the inequality data.

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Does Corporate Social Responsibility Lead to Superior Financial Performance? A Regression Discontinuity Approach

Caroline Flammer
Management Science, forthcoming

Abstract:
This study examines the effect of shareholder proposals related to corporate social responsibility (CSR) on financial performance. Specifically, I focus on CSR proposals that pass or fail by a small margin of votes. The passage of such “close call” proposals is akin to a random assignment of CSR to companies and hence provides a quasi-experiment to study the effect of CSR on performance. I find that the adoption of close call CSR proposals leads to positive announcement returns and superior accounting performance, implying that these proposals are value enhancing. When I examine the channels through which companies benefit from CSR, I find that labor productivity and sales growth increase after the vote. Finally, I document that close call CSR proposals differ from non-close proposals along several dimensions. Accordingly, although my results imply that adopting close call CSR proposals is beneficial to companies, they do not necessarily imply that CSR proposals are beneficial in general.

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Market (In)Attention and Earnings Announcement Timing

Ed DeHaan, Terry Shevlin & Jacob Thornock
Stanford Working Paper, October 2014

Abstract:
We revisit a long-standing question: do managers “hide” bad news by announcing earnings during periods of low market attention? Or conversely, do managers “highlight” good news by reporting during periods of higher attention? We posit three necessary conditions for an effective hiding/highlighting strategy: (i) managers must change their earnings announcement timing frequently enough that to do so would not attract unwanted attention to bad news; (ii) there must be ex-ante predictable variation in market attention; and (iii) we must observe that managers tend to release more negative (positive) earnings news during periods of lower (higher) expected attention. The first and second conditions have not been directly examined. Prior studies examining the third condition have produced mixed results. We examine three times during which prior research has speculated that market attention is lower: after trading hours, on Fridays, and on “busy” days when numerous other firms are reporting earnings. We find that earnings announcement timing are highly variable, which supports the first necessary condition. Using four measures of market attention, we find that attention does appear to be lower after hours and on busy reporting days. However, we find that attention is the same or even higher on Fridays, which is inconsistent with the second condition. Finally, we find that unexpected earnings are lower in all three settings. In additional tests, we find negative returns around the scheduling of a forthcoming earnings announcement for a Friday, which is consistent with investors inferring that earnings news tends to be worse on Fridays. In sum, the results are consistent with managers strategically reporting bad news during times when they expect that attention is limited, and conversely, reporting good news in periods of higher attention. However, given that attention is the same or higher on Fridays than other days, it is unlikely that managers are able to effectively hide bad news by reporting immediately prior to the weekend. Instead, the preponderance of strategically reporting bad news on Fridays is possibly due to managers incorrectly perceiving attention as lower on Friday.

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Evidence on Contagion in Earnings Management

Simi Kedia, Kevin Koh & Shivaram Rajgopal
Accounting Review, forthcoming

Abstract:
We examine contagion in earnings management using 2,376 restatements announced during the years 1997-2008. Controlling for industry and firm characteristics, firms are more likely to begin managing earnings after the public announcement of a restatement by another firm in their industry or neighborhood. Such contagion is absent when the restating firm is disciplined by the SEC or class action lawsuits, suggesting deterrent effects of enforcement activity. Contagion among peers is observed (i) in the same account as the one restated by the target firm; or (ii) when larger target firms restate or the restatement in prominently disclosed; or (iii) when the target firm's restatement is less severe. Contagion stops during the years 2003-2005, possibly due to the enforcement associated with the Sarbanes-Oxley (SOX) Act but reappears during 2006-2008, perhaps because the sting associated with SOX has worn off. In sum, peers' actions appear to affect a firm's earnings management decisions.

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CEO Network Centrality and Merger Performance

Rwan El-Khatib, Kathy Fogel & Tomas Jandik
Journal of Financial Economics, forthcoming

Abstract:
We study the effects on M&A outcomes of CEO network centrality, which measures the extent and strength of a CEO's personal connections. High network centrality can allow CEOs to efficiently gather and control private information, facilitating value-creating acquisition decisions. We show, however, that M&A deals initiated by high-centrality CEOs, in addition to being more frequent, carry greater value losses to both the acquirer and the combined entity than deals initiated by low-centrality CEOs. We also document that high-centrality CEOs are capable of avoiding the discipline of the markets for corporate control and the executive labor market, and that the mitigating effect of internal governance on CEO actions is limited. Our evidence suggests that corporate decisions can be influenced by a CEO's position in the social hierarchy, with high-centrality CEOs using their power and influence to increase entrenchment and reap private benefits.

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Board interlocking network and the design of executive compensation packages

Ling Heng Henry Wong, André Gygax & Peng Wang
Social Networks, forthcoming

Abstract:
The standard approach used to model interlocks in the business and management literature is to treat each interlock of a network as an independent data point. However, such an approach ignores the complex inter-dependencies among the common director interlocks. We propose that an interlocking board network is an important inter-corporate setting that has bearing on how company boards make corporate decisions. Using a sample of 725 large U.S.-based public companies over the period 2007–2010, board member information, executive compensation information, and exponential random graph modeling (ERGM) techniques for social networks, we present evidence that board interlocks are positively linked with similarities in the design of executive compensation packages in interlocked firms, particularly the proportions of the options component. We also find evidence that board interlocks are positively linked with similarities in a number of board characteristics.

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Tax Rates and Corporate Decision Making

John Graham et al.
MIT Working Paper, January 2015

Abstract:
It has long been suspected that managers use short-cuts (e.g., heuristics) to make many decisions and that their decisions are affected by behavioral biases such as a tendency to overly rely on ‘salient’ or vivid metrics/information. We document that managers do indeed exhibit these behavioral biases when incorporating taxes into their decision processes. For example, we find that many firms employ the more salient average tax rate (i.e., the GAAP effective tax rate) to evaluate incremental decisions rather than the more theoretically correct marginal tax rate. We estimate that behavioral biases that influence firms to use the average tax rate for decision-making lead to deadweight losses that average $10 million for poor capital structure decisions and $25 million for suboptimal acquisitions, and also reduce the responsiveness of corporate investment to growth opportunities.

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The Benefits of Selective Disclosure: Evidence from Private Firms

Joan Farre-Mensa
Harvard Working Paper, January 2015

Abstract:
I investigate an unexplored benefit of being privately-held: Non-SEC-filing private firms’ ability to disclose confidential information to selected investors minimizes the scope for information asymmetry between the firms and their investors. This decreases private firms’ exposure to misvaluation and leads them to hold lower levels of precautionary cash than similar-sized public firms, as private firms do not need to optimize the timing of their equity issues. Consistent with these predictions, I use a unique panel of non-SEC-filing private U.S. firms to show that the average public firm holds twice as much cash as the average private firm. This cash gap is driven by small- and medium-sized public firms, which are most equity dependent, and is larger in industries with higher exposure to misvaluation shocks.

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Dynamics of CEO Compensation: Old is Gold

Hari Adhikari et al.
Quarterly Review of Economics and Finance, forthcoming

Abstract:
There is an ongoing debate regarding the hiring and compensation of younger versus older employees. In this paper, we examine this question for Chief Executive Officers (CEOs) in the context of the Sarbanes-Oxley Act (SOX) of 2002. We argue that the increased complexities in the post-SOX era (regulatory, technological, and the ever-changing business environment) have forced corporate boards to incentivize top executives for the increased burden. We contend that older CEOs are perceived as more reliable, efficient, and trustworthy (to fulfill the regulatory requirements demanded by SOX) than their younger counterparts. Consistent with our contention, we find that the total compensation of CEOs of U.S. firms has increased significantly for older CEOs as compared to their younger counterparts after the introduction of SOX. Our results are robust to sophisticated econometric techniques and also consistent with the logic that in order to motivate older CEOs (who would have raised substantial personal wealth over time) to keep working rather than retiring or moving to a competitor, their compensation package must be highly competitive.

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The Structure of Voluntary Disclosure Narratives: Evidence from Tone Dispersion

Kristian Allee & Matthew DeAngelis
Journal of Accounting Research, forthcoming

Abstract:
We examine tone dispersion, or the degree to which tone words are spread evenly within a narrative, to evaluate whether narrative structure provides insight into managers’ voluntary disclosures and users’ responses to those disclosures. We find that positive and negative tone dispersion are associated with current aggregate and disaggregated performance and future performance, managers’ financial reporting decisions and managers’ incentives and actions to manage perceptions. Furthermore, we find that tone dispersion is associated with analysts’ and investors’ responses to conference call narratives. Our results suggest that tone dispersion both reflects and affects the information that managers convey through their narratives.

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Managerial Ownership and Earnings Management: Evidence from Stock Ownership Plans

Phillip Quinn
University of Washington Working Paper, December 2014

Abstract:
Stock ownership plans require executives to hold a minimum level of stock. I exploit the changes in stock ownership following plan adoptions to examine the relation between managerial ownership and earnings management. In contrast to prior work that suggests equity incentives induce opportunistic earnings management, I find evidence of a reduction in earnings management for adoption firms relative to a propensity-matched control sample. Splitting adopters into firms with plans that required increases in ownership and firms with plans that did not, I find the reductions in earnings management are concentrated in firms that required increases in managerial ownership. Thus, I document evidence that mandatory managerial ownership increases lead to a reduction in earnings management.

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The market response to corporate scandals involving CEOs

Surendranath Jory et al.
Applied Economics, Spring 2015, Pages 1723-1738

Abstract:
This article examines corporate scandals of both a financial and nonfinancial nature between 1993 and 2011 which is expressly linked to a firm’s CEO. Findings suggest that in the short run, investors react adversely to such events and that recalcitrant CEOs end up costing their shareholders dearly. Such scandals are more likely to occur among large firms, firms with insiders on the board and where the value of options granted to a firm’s managers is substantial. However, firms with more cash flows are less likely to be mired in such scandals, and their stock returns are less likely to be affected. There is an increase in stock price volatility of affected firms in the days following the announcement of the scandal. A point of respite for investors is the damage being confined to the short run. The stock price performance of the firms affected by the scandals matches the performance of control firms in the long run post-announcement. However, the operating performance of the sample firms is better than their matched counterparts in the years after the scandal. We contribute to the extant literature by considering corporate scandal events that are the doings of a firm’s CEO and not necessarily financially motivated.

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Which Skills Matter in the Market for CEOs? Evidence from Pay for CEO Credentials

Antonio Falato, Dan Li & Todd Milbourn
Management Science, forthcoming

Abstract:
Market-based theories predict that differences in CEO skills lead to potentially large differences in pay, but it is challenging to quantify the CEO skill premium in pay. In a first step toward overcoming this empirical challenge, we code detailed biographical information for a large sample of CEOs for a panel of S&P 1500 firms between 1993 and 2005 to identify specific reputational, career, and educational credentials that are indicative of skills. Newly appointed CEOs earn up to a 5% or $280,000 total pay premium per credential decile, which is concentrated among CEOs with better reputational and career credentials, those with the very best credentials, and those who run large firms. Consistent with the unique economic mechanism of market-based theories, CEO credentials have a positive impact on firm performance. The performance differential for newly appointed CEOs is up to 0.5% per credential decile and is also concentrated among CEOs with better reputational and career credentials and those at large firms. Credentials are positively correlated with unobserved CEO heterogeneity in pay and performance, which further validates our hypothesis that boards use them as publicly observable signals of otherwise hard-to-gauge CEO skills. In all, our results offer direct evidence in support of market-based explanations of the overall rise in CEO pay.

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M&A Negotiations and Lawyer Expertise

Christel Karsten, Ulrike Malmendier & Zacharias Sautner
University of California Working Paper, September 2014

Abstract:
We shed light on the effects of lawyer expertise on contract design in the context of M&A negotiations. Using proprietary data on 151 private transactions, we document that lawyer expertise significantly affects contract design. More lawyer expertise is associated with more beneficial contractual outcomes in terms of warranties, implicit risk-shifting, and in terms of length of the negotiation among other outcomes. In order to address concerns about the endogenous allocation of lawyers to deals or clients, we exploit firms’ inclination to work with the same lawyer (“house lawyer”) on subsequent deals and restrict the analysis to repeated deals. We also perform lawyer fixed-effect and client fixed-effect analyses. Our results help explain the importance of league table rankings and the variation in legal fees within the legal M&A services industry.

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Does Takeover Activity Cause Managerial Discipline? Evidence from International M&A Laws

Ugur Lel & Darius Miller
Review of Financial Studies, forthcoming

Abstract:
This paper exploits the staggered initiation of takeover laws across countries to examine whether the threat of takeover enhances managerial discipline. We show that following the passage of takeover laws, poorly performing firms experience more frequent takeovers; the propensity to replace poorly performing CEOs increases, especially in countries with weak investor protection; and directors of targeted firms are more likely to lose board seats following corporate-control events. Our findings suggest that the threat of takeover causes managerial discipline through the incentives that the market for corporate control provides to boards to monitor managers.

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Gender Diversity and Securities Fraud

Douglas Cumming, Tak Leung & Oliver Rui
Academy of Management Journal, forthcoming

Abstract:
We formulate theory on the effect of board of director gender diversity on the broad spectrum of securities fraud and generate three main insights. First, based on ethicality, risk aversion, and diversity, we hypothesize that gender diversity on boards can operate as a significant moderator for the frequency of fraud. Second, we hypothesize that the stock market response to fraud from a more gender-diverse board is significantly less pronounced. Third, we hypothesize that women are more effective in male-dominated industries in reducing both the frequency and severity of fraud. Our first-ever empirical tests, based on data from a large sample of Chinese firms that committed securities fraud, are largely consistent with each of these hypotheses.

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Who Withdraws Shareholder Proposals and Does It Matter? An Analysis of Sponsor Identity and Pay Practices

Rob Bauer, Frank Moers & Michael Viehs
Corporate Governance, forthcoming

Research Question/Issue: We study more than 12,000 shareholder proposals that were filed to S&P1500 companies from 1997 to 2009, and investigate the determinants of proposal withdrawal by the sponsoring shareholder. We also study the effectiveness of withdrawn proposals as a corporate governance device.

Research Findings/Insights: We find that proposals filed by influential investors are more likely to be withdrawn than proposals filed by private investors. Our empirical results show that institutional ownership (in particular by long-term, passively investing institutions) is positively related to a proposal's withdrawal likelihood if the sponsoring shareholder is an institutional investor. We also document a negative relation between CEO ownership and the withdrawal likelihood. This effect is most pronounced for corporate governance proposals. We also show that withdrawn proposals on executive compensation change subsequent corporate pay practices.

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Board Independence and Corporate Investments

Jun Lu & Wei Wang
Review of Financial Economics, January 2015, Pages 52–64

Abstract:
This research investigates whether and how board independence influences corporate investment decisions in a Seemingly Unrelated Regression (SUR) framework, where the capital investment and the research and development (R&D) investment are examined simultaneously. We argue that the free cash flow problem primarily inflicts capital investments, while the managerial conservatism mainly undercuts the more risky R&D investments. Consistent with independent board mitigating both agency problems, we find that firms with a higher degree of board independence is negatively associated with capital investments but positively associated with R&D investments, after controlling for common determinants of investments. We address the endogeneity of board independence by exploiting an exogenous change in board structure brought about by the Sarbanes-Oxley Act (SOX) and continue to find consistent results.

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Out-of-the-Money CEOs: How Do Proxy Contests Affect Insider Option Exercises

Vyacheslav Fos & Wei Jiang
Columbia University Working Paper, June 2014

Abstract:
When a proxy contest is looming, the rate at which CEOs exercise options in order to sell (hold) the resulting shares slows down by 80% (accelerates by 60%), consistent with their desire to maintain or strengthen voting rights when facing control challenges. Such deviations are closely aligned with features unique to proxy contests, e.g., the record dates and nomination status. Moreover, a contest triples the probability that an insider exercises options out-of-the-money, an irrational strategy under conventional models. The various distortions suggest that incumbents (with private benefits of control) value their stocks 5% – 20% higher than the market price.

By KEVIN LEWIS | 09:00:00 AM

Thursday, March 5, 2015

Bad influences

This Ad is for You: Targeting and the Effect of Alcohol Advertising on Youth Drinking

Eamon Molloy
Health Economics, forthcoming

Abstract:
Endogenous targeting of alcohol advertisements presents a challenge for empirically identifying a causal effect of advertising on drinking. Drinkers prefer a particular media; firms recognize this and target alcohol advertising at these media. This paper overcomes this challenge by utilizing novel data with detailed individual measures of media viewing and alcohol consumption and three separate empirical techniques, which represent significant improvements over previous methods. First, controls for the average audience characteristics of the media an individual views account for attributes of magazines and television programs alcohol firms may consider when deciding where to target advertising. A second specification directly controls for each television program and magazine a person views. The third method exploits variation in advertising exposure due to a 2003 change in an industry-wide rule that governs where firms may advertise. Although the unconditional correlation between advertising and drinking by youth (ages 18–24) is strong, models that include simple controls for targeting imply, at most, a modest advertising effect. Although the coefficients are estimated less precisely, estimates with models including more rigorous controls for targeting indicate no significant effect of advertising on youth drinking.

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The price elasticity of demand for heroin: Matched longitudinal and experimental evidence

Todd Olmstead et al.
Journal of Health Economics, May 2015, Pages 59–71

Abstract:
This paper reports estimates of the price elasticity of demand for heroin based on a newly constructed dataset. The dataset has two matched components concerning the same sample of regular heroin users: longitudinal information about real-world heroin demand (actual price and actual quantity at daily intervals for each heroin user in the sample) and experimental information about laboratory heroin demand (elicited by presenting the same heroin users with scenarios in a laboratory setting). Two empirical strategies are used to estimate the price elasticity of demand for heroin. The first strategy exploits the idiosyncratic variation in the price experienced by a heroin user over time that occurs in markets for illegal drugs. The second strategy exploits the experimentally-induced variation in price experienced by a heroin user across experimental scenarios. Both empirical strategies result in the estimate that the conditional price elasticity of demand for heroin is approximately 0.80.

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A Natural Experiment of Peer Influences on Youth Alcohol Use

Guang Guo et al.
Social Science Research, July 2015, Pages 193–207

Abstract:
This study estimates peer effects on alcohol use, drawing from a database of about 2,000 randomly-assigned roommates on a college campus. The estimation of peer influences also takes into consideration ego’s history of alcohol use and friendship with the peer. College students averaged an additional two-fifths of a binge drinking episode per month and an additional one-half of a drinking episode per month when randomly assigned a roommate who drank in high school than when assigned a roommate who did not drink in high school. An individual’s prior history of alcohol use proves important. Peer effects on binge drinking as well as drinking for those who already drank in high school were about twice as large as average peer effects. When one did not have a history of alcohol use, negative peer influences were absent. Also important is the friendship between peers. When a peer is considered a best friend, the step-up effect (or positive interaction effect) increased by 1.25-1.61 drinking episodes per month. However, even when a peer is not considered a best friend, a drinking peer still increased ego’s drinking episodes by 0.75-1.00 per month.

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Ethnic Differences in Associations Among Popularity, Likability, and Trajectories of Adolescents' Alcohol Use and Frequency

Sophia Choukas-Bradley et al.
Child Development, forthcoming

Abstract:
Two-part latent growth models examined associations between two forms of peer status (popularity, likability) and adolescents' alcohol use trajectories throughout high school; ethnicity was examined as a moderator. Ninth-grade low-income adolescents (N = 364; Mage = 15.08; 52.5% Caucasian; 25.8% African American; 21.7% Latino) completed sociometric nominations of peer status and aggression at baseline, and reported their alcohol use every 6 months. After controlling for gender, aggression, ethnicity, and socioeconomic status, popularity — but not likability — prospectively predicted alcohol use trajectories. However, these effects were moderated by ethnicity, suggesting popularity as a risk factor for alcohol use probability and frequency among Caucasian and Latino, but not African American adolescents. Results suggest that developmental correlates of peer status should be considered within cultural context.

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Complexity, Efficiency, and Fairness in Multiproduct Liquor Pricing

Eugenio Miravete, Katja Seim & Jeff Thurk
University of Pennsylvania Working Paper, February 2014

Abstract:
The Pennsylvania Liquor Control Board administers the purchase and sale of wine and spirits and is mandated to charge a uniform 30% markup on all products. We use an estimated discrete choice model of demand for spirits, together with information on wholesale prices, to assess the implications of this policy. We find that failure to account for the correlation between demographics and consumption patterns leads to lower prices than those charged by a profit-maximizing, multi-product monopolist. Using product-specific markups leads to higher prices on average, less quantity consumed, an 11% increase in total profits, and greater welfare. The current one-size-fits-all pricing rule ignores variations in demand elasticities resulting in the implicit taxation of high-income and educated households by raising the prices of spirits they prefer (vodka and whiskey) while lowering the price of products favored by low-income and minority households (gin and rum).

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A differential susceptibility analysis reveals the “who and how” about adolescents' responses to preventive interventions: Tests of first- and second-generation Gene × Intervention hypotheses

Gene Brody, Tianyi Yu & Steven Beach
Development and Psychopathology, February 2015, Pages 37-49

Abstract:
This study was designed to investigate a genetic moderation effect of dopamine receptor 4 gene (DRD4) alleles that have seven or more repeats (long alleles) on an intervention to deter drug use among rural African American adolescents in high-risk families. Adolescents (N = 291, M age = 17) were assigned randomly to the Adults in the Making (AIM) program or to a control condition and were followed for 27.5 months. Adolescents provided data on drug use and vulnerability cognitions three times after pretest. Pretest assessments of caregiver depressive symptoms, disruption in the home, and support toward the adolescent were used to construct a family risk index. Adolescents living in high-risk families who carried at least one DRD4 long allele and were assigned to the control condition evinced greater escalations in drug use than did (a) adolescents who lived in high-risk families, carried the DRD4 long allele, and were assigned to AIM, or (b) adolescents assigned to either condition who carried no DRD4 long alleles. AIM-induced reductions in vulnerability cognitions were responsible for the Family Risk × AIM × DRD4 status drug use prevention effects. These findings support differential susceptibility predictions and imply that prevention effects on genetically susceptible individuals may be underestimated.

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A population-based Swedish Twin and Sibling Study of cannabis, stimulant and sedative abuse in men

Kenneth Kendler et al.
Drug and Alcohol Dependence, forthcoming

Background: Prior studies, utilizing interview-based assessments, suggest that most of the genetic risk factors for drug abuse (DA) are non-specific with a minority acting specifically on risk for abuse of particular psychoactive substance classes. We seek to replicate these findings using objective national registry data.

Methods: We examined abuse of cannabis, stimulants (including cocaine) and sedatives ascertained from national Swedish registers in male–male monozygotic (1720 pairs) and dizygotic twins (1219 pairs) combined with near-age full siblings (76,457 pairs) to provide sufficient power. Modeling was performed using Mx.

Results: A common pathway model fitted better than an independent pathway model. The latent liability to DA was highly heritable but also influenced by shared environment. Cannabis, stimulant and sedative abuse all loaded strongly on the common factor. Estimates for the total heritability for the three forms of substance abuse ranged from 64 to 70%. Between 75 and 90% of that genetic risk was non-specific, coming from the common factor with the remainder deriving from substance specific genetic risk factors. By contrast, all of the shared environmental effects, which accounted for 18–20% of the variance in liability, were non-specific.

Conclusions: In accord with prior studies based on personal interviews, the large preponderance of genetic risk factors for abuse of specific classes of psychoactive substance are non-specific. These results suggest that genetic variation in the primary sites of action of the psychoactive drugs, which differ widely across most drug classes, play a minor role in human individual differences in risk for DA.

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The relation between tobacco taxes and youth and young adult smoking: What happened following the 2009 U.S. federal tax increase on cigarettes?

Martijn van Hasselt et al.
Addictive Behaviors, June 2015, Pages 104–109

Background: On April 1, 2009, the federal government raised cigarette taxes from $0.39 to $1.01 per pack. This study examines the impact of this increase on a range of smoking behaviors among youth aged 12 to 17 and young adults aged 18 to 25.

Methods: Data from the 2002–2011 National Survey on Drug Use and Health (NSDUH) were used to estimate the impact of the tax increase on five smoking outcomes: (1) past year smoking initiation, (2) past month smoking, (3) past year smoking cessation, (4) number of days cigarettes were smoked during the past month, and (5) average number of cigarettes smoked per day. Each model included individual and state-level covariates and other tobacco control policies that coincided with the tax increase. We examined the impact overall and by race and gender.

Results: The odds of smoking initiation decreased for youth after the tax increase (Odds Ratio(OR) = 0.83, p < 0.0001). The odds of past-month smoking also decreased (youth: OR = 0.83, p < 0.0001; young adults: OR = 0.92, p < 0.0001), but the odds of smoking cessation remained unchanged. Current smokers smoked on fewer days (youth: coefficient = -0.97, p = 0.0001; young adults: coefficient = -0.84, p < 0.0001) and smoked fewer cigarettes per day after the tax increase (youth: coefficient = -1.02, p = 0.0011; young adults: coefficient = -0.92, p < 0.0001).

Conclusions: The 2009 federal cigarette tax increase was associated with a substantial reduction in smoking among youths and young adults. The impact of the tax increase varied across male, female, white and black subpopulations.

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The Effect of Alcohol Consumption on Labor Market Outcomes of Young Adults: Evidence from Minimum Legal Drinking Age Laws

Ceren Ertan Yörük
B.E. Journal of Economic Analysis & Policy, forthcoming

Abstract:
This paper uses a regression discontinuity design to estimate the impact of the minimum legal drinking age (MLDA) laws on alcohol consumption and labor market outcomes of young adults. Using confidential data from the National Longitudinal Survey of Youth 1997 Cohort (NLSY97), I find that granting legal access to alcohol at age 21 leads to an increase in several measures of alcohol consumption. The discrete jump in the alcohol consumption at the MLDA has also negative spillover effects on the labor market outcomes of young adults. In particular, I document that the MLDA is associated with a 1 hour decrease in weekly working hours. However, the effect of the MLDA laws on wages is negative only under certain specifications. These results suggest that the policies designed to curb drinking may not only have desirable effects in reducing alcohol consumption among young adults but also have positive spillover effects on their labor market outcomes.

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Should pathological gambling and obesity be considered addictive disorders? A factor analytic study in a nationally representative sample

Carlos Blanco et al.
Drug and Alcohol Dependence, forthcoming

Objective: Pathological gambling (PG) is now aligned with substance use disorders in the DSM-5 as the first officially recognized behavioral addiction. There is growing interest in examining obesity as an addictive disorder as well. The goal of this study was to investigate whether epidemiological data provide support for the consideration of PG and obesity as addictive disorders.

Method: Factor analysis of data from a large, nationally representative sample of US adults (N = 43,093), using nicotine dependence, alcohol dependence, drug dependence, PG and obesity as indicators. It was hypothesized that nicotine dependence, alcohol dependence and drug use dependence would load on a single factor. It was further hypothesized that if PG and obesity were addictive disorders, they would load on the same factor as substance use disorders, whereas failure to load on the addictive factor would not support their conceptualization as addictive disorders.

Results: A model with one factor including nicotine dependence, alcohol dependence, drug dependence and PG, but not obesity, provided a very good fit to the data, as indicated by CFI = 0.99, TLI = 0.99 and RMSEA=.01 and loadings of all indicators >0.4.

Conclusion: Data from this study support the inclusion of PG in a latent factor with substance use disorders but do not lend support to the consideration of obesity, as defined by BMI, as an addictive disorder. Future research should investigate whether certain subtypes of obesity are best conceptualized as addictive disorders and the shared biological and environmental factors that account for the common and specific features of addictive disorders.

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Polygenic Score × Intervention Moderation: An application of discrete-time survival analysis to modeling the timing of first tobacco use among urban youth

Rashelle Musci et al.
Development and Psychopathology, February 2015, Pages 111-122

Abstract:
The present study examines the interaction between a polygenic score and an elementary school-based universal preventive intervention trial. The polygenic score reflects the contribution of multiple genes and has been shown in prior research to be predictive of smoking cessation and tobacco use (Uhl et al., 2014). Using data from a longitudinal preventive intervention study, we examined age of first tobacco use from sixth grade to age 18. Genetic data were collected during emerging adulthood and were genotyped using the Affymetrix 6.0 microarray. The polygenic score was computed using these data. Discrete-time survival analysis was employed to test for intervention main and interaction effects with the polygenic score. We found a main effect of the intervention, with the intervention participants reporting their first cigarette smoked at an age significantly later than controls. We also found an Intervention × Polygenic Score interaction, with participants at the higher end of the polygenic score benefitting the most from the intervention in terms of delayed age of first use. These results are consistent with Belsky and colleagues' (e.g., Belsky, Bakermans-Kranenburg, & van IJzendoorn, 2007; Belsky & Pleuss, 2009, 2013; Ellis, Boyce, Belsky, Bakermans-Kranenburg, & van IJzendoorn, 2011) differential susceptibility hypothesis and the concept of “for better or worse,” wherein the expression of genetic variants are optimally realized in the context of an enriched environment, such as provided by a preventive intervention.

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Abrupt Decline in Oxycodone-caused Mortality after Implementation of Florida's Prescription Drug Monitoring Program

Chris Delcher et al.
Drug and Alcohol Dependence, forthcoming

Background: In Florida, oxycodone-caused deaths declined substantially in 2012. Multiple important law enforcement, pharmaceutical, policy, and public health actions occurred concurrently, including implementation of a statewide prescription drug monitoring program (PDMP). The effects of the PDMP on oxycodone-caused mortality in Florida were evaluated.

Methods: A time-series, quasi-experimental research design with autoregressive integrated moving average (ARIMA) statistical models, including internal and external covariates. Data included 120 repeated monthly observations. Monthly counts of oxycodone-caused deaths, obtained from the Florida Medical Examiners Commission (MEC) was the outcome variable. Models included market-entry of tamper-resistant oxycodone HC1 controlled release tablets (OxyContin®), enforcement crackdowns (Operation Pill Nation), and regulation by FL House Bill 7095, measured by the monthly count of Florida pain management clinics closed. Two approaches were used to test the PDMP's hypothesized effect: (1) a binary indicator variable (0 = pre-implementation, 1 = post-implementation), and (2) a continuous indicator consisting of the number of PDMP queries by health care providers.

Results: Oxycodone-caused mortality abruptly declined 25% the month after implementation of Florida's PDMP (p = 0.008). The effect remained after integrating other related historical events into the model. Results indicate that for a system-wide increase of one PDMP query per health care provider, oxycodone-caused deaths declined by 0.229 persons per month (p = 0.002).

Conclusions: This is the first study to demonstrate that the PDMP had a significant effect in reducing oxycodone-caused mortality in Florida. Results have implications for national efforts to address the prescription drug epidemic.

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Alcohol reduces aversion to ambiguity

Tadeusz Tyszka, Anna Macko & Maciej Stańczak
Frontiers in Psychology, January 2015

Abstract:
Several years ago, Cohen et al. (1958) demonstrated that under the influence of alcohol drivers became more risk prone, although their risk perception remained unchanged. Research shows that ambiguity aversion is to some extent positively correlated with risk aversion, though not very highly (Camerer and Weber, 1992). The question addressed by the present research is whether alcohol reduces ambiguity aversion. Our research was conducted in a natural setting (a restaurant bar), where customers with differing levels of alcohol intoxication were offered a choice between a risky and an ambiguous lottery. We found that alcohol reduced ambiguity aversion and that the effect occurred in men but not women. We interpret these findings in terms of the risk-as-value hypothesis, according to which, people in Western culture tend to value risk, and suggest that alcohol consumption triggers adherence to socially and culturally valued patterns of conduct different for men and women.

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DAT1 and alcohol use: Differential responses to life stress during adolescence

John Stogner
Criminal Justice Studies, Winter 2015, Pages 18-38

Abstract:
Stressful life events can impact both substance use initiation and the quantity of substances consumed by adolescents; however, the effect of stress on substance use may be contingent on other factors including social support, peers, and genotype. DAT1, a polymorphic dopamine transporter gene, is one such factor that may be responsible for differential susceptibility to cumulative life pressures. Data from the National Longitudinal Study of Adolescent Health were utilized to determine whether adolescents with the 10-repeat allele are more likely to respond to life stresses by engaging in alcohol use than those without the allele. Respondents’ self-reports of key stressors were used to create a composite life stress scale. The interaction of this measure with the number of 10-repeat DAT1 alleles was evaluated in series of logistic regression models. A significant interaction emerged between stressful life experiences and DAT1 for alcohol use among females, but this pattern was not seen in males. Females with the 10-repeat allele appear to be more sensitive to life stress as compared to those without the allele. It appears that variation in the DAT1 gene may help explain why some women are more likely to consume alcohol when confronted with stress. It, however, does not appear to condition the reaction of men, in terms of alcohol use, to stress.

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Recall of Anti-Tobacco Advertisements and Effects on Quitting Behavior: Results From the California Smokers Cohort

Eric Leas et al.
American Journal of Public Health, February 2015, Pages e90-e97

Objectives: We assessed whether an anti-tobacco television advertisement called “Stages,” which depicted a woman giving a brief emotional narrative of her experiences with tobacco use, would be recalled more often and have a greater effect on smoking cessation than 3 other advertisements with different intended themes.

Methods: Our data were derived from a sample of 2596 California adult smokers. We used multivariable log-binomial and modified Poisson regression models to calculate respondents’ probability of quitting as a result of advertisement recall.

Results: More respondents recalled the “Stages” ad (58.5%) than the 3 other ads (23.1%, 23.4%, and 25.6%; P < .001). Respondents who recalled “Stages” at baseline had a higher probability than those who did not recall the ad of making a quit attempt between baseline and follow-up (adjusted risk ratio [RR] = 1.18; 95% confidence interval [CI] = 1.03, 1.34) and a higher probability of being in a period of smoking abstinence for at least a month at follow-up (adjusted RR = 1.55; 95% CI = 1.02, 2.37).

Conclusions: Anti-tobacco television advertisements that depict visceral and personal messages may be recalled by a larger percentage of smokers and may have a greater impact on smoking cessation than other types of advertisements.

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Substance Use and Teen Pregnancy in the United States: Evidence from the NSDUH 2002–2012

Christopher Salas-Wright et al.
Addictive Behaviors, June 2015, Pages 218–225

Introduction: Few, if any, studies have systematically examined the relationship between substance use and teen pregnancy using population-based samples. We aim to provide a comprehensive examination of substance use among pregnant adolescents in the United States.

Method: Employing data from the National Survey on Drug Use and Health between 2002 and 2012 (n = 97,850), we examine the prevalence of past 12-month and past 30-day substance use and substance use disorders among pregnant and non-pregnant adolescents (ages 12–17). We also examine psychosocial and pregnancy-related correlates of current substance use among the subsample of pregnant adolescents (n = 810).

Results: Pregnant teens were significantly more likely to have experimented with a variety of substances and meet criteria for alcohol (AOR = 1.65, 95% CI = 1.26-2.17), cannabis (AOR = 2.29, 95% CI = 1.72-3.04), and other illicit drug use disorders (AOR = 2.84, 95% CI = 1.92-4.19). Pregnant early adolescents (ages 12–14; AOR = 4.34, 95% CI = 2.28-8.26) were significantly more likely and pregnant late adolescents (ages 15–17; AOR = 0.71, 95% CI = 0.56-0.90) significantly less likely than their non-pregnant counterparts to be current substance users.

Conclusions: Study findings point not only to a relationship between pregnancy and prior substance use, but also suggest that substance use continues for many teens during pregnancy. We found that substance use is particularly problematic among early adolescents that the prevalence of substance use attenuates dramatically as youth progress from the first to the second and third trimesters of pregnancy.

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Smoking normalizes cerebral blood flow and oxygen consumption after 12-hour abstention

Manouchehr Vafaee et al.
Journal of Cerebral Blood Flow & Metabolism, forthcoming

Abstract:
Acute nicotine administration stimulates [14C]deoxyglucose trapping in thalamus and other regions of rat brain, but acute effects of nicotine and smoking on energy metabolism have rarely been investigated in human brain by positron emission tomography (PET). We obtained quantitative PET measurements of cerebral blood flow (CBF) and metabolic rate of oxygen (CMRO2) in 12 smokers who had refrained from smoking overnight, and in a historical group of nonsmokers, testing the prediction that overnight abstinence results in widespread, coupled reductions of CBF and CMRO2. At the end of the abstention period, global grey-matter CBF and CMRO2 were both reduced by 17% relative to nonsmokers. At 15 minutes after renewed smoking, global CBF had increased insignificantly, while global CMRO2 had increased by 11%. Regional analysis showed that CMRO2 had increased in the left putamen and thalamus, and in right posterior cortical regions at this time. At 60 and 105 minutes after smoking resumption, CBF had increased by 8% and CMRO2 had increased by 11-12%. Thus, we find substantial and global impairment of CBF/CMRO2 in abstaining smokers, and acute restoration by resumption of smoking. The reduced CBF and CMRO2 during acute abstention may mediate the cognitive changes described in chronic smokers.

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Psychological Distress and Problem Drinking

Emmanouil Mentzakis et al.
Health Economics, forthcoming

Abstract:
We examine the influence of harmful alcohol use on mental health using a flexible two-step instrumental variables approach and household survey data from nine countries of the former Soviet Union. Using alcohol advertisements to instrument for alcohol, we show that problem drinking has a large detrimental effect on psychological distress, with problem drinkers exhibiting a 42% increase in the number of mental health problems reported and a 15% higher chance of reporting very poor mental health. Ignoring endogeneity leads to an underestimation of the damaging effect of excessive drinking. Findings suggest that more effective alcohol polices and treatment services in the former Soviet Union may have added benefits in terms of reducing poor mental health.

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On the demand for smoking quitlines

Rajeev Goel
Journal of Economics and Finance, January 2015, Pages 201-210

Abstract:
Using recent cross-state U.S. data, this paper estimates the demand for calls to smoking quitlines. Besides formal insights into the determinants of quitline demand, another key contribution is to provide unique insights on the role of related internet resources, using two novel measures. Results show that higher cigarette prices, lower income, and greater government resources increase the demand for quitline calls, with the internet measures having positive but statistically insignificant effects. In terms of magnitude, the elasticity of quitline calls with respect to cigarette prices was about four times greater than that with respect to public funds for quitlines. Policy implications are discussed.

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Effects of Ostracism and Sex on Alcohol Consumption in a Clinical Laboratory Setting

Amy Bacon, Alexi Cranford & Heidemarie Blumenthal
Psychology of Addictive Behaviors, forthcoming

Abstract:
Drinking to cope with negative affect is a drinking pattern that leads to problematic alcohol use both in college and after graduation. Despite theory and correlational evidence to this effect, establishing a link between stress and alcohol consumption among college students in the laboratory has yielded both a limited number of studies and, at times, inconsistent results. The present study attempts to resolve these issues through investigating the effects of an ecologically relevant stressor — ostracism — on alcohol consumption in a clinical laboratory setting. Social drinking college students (N = 40; 55% female) completed a 5-min game of Cyberball and were randomly assigned either to be included or excluded in the virtual ball-toss game. The amount (in ml) of beer consumed in a subsequent mock taste test served as our primary dependent variable, with breath alcohol concentration (BrAC) as a secondary dependent variable. Results indicated that excluded participants reported a trend toward an increase in negative affect from pre- to post-Cyberball, and endorsed significantly lower self-esteem, belonging, control, and belief in a meaningful existence compared to included participants. A significant Sex × Condition effect indicated that excluded women consumed less beer than both included women and excluded men, supported by a nonsignificant trend in BrAC. Men did not differ in their consumption of beer as a result of Cyberball condition. Implications of sex and social context on alcohol use are discussed, as well as ostracism as a method for investigating relationships between social stress and alcohol use.

By KEVIN LEWIS | 09:00:00 AM

Wednesday, March 4, 2015

Down and out

Minimum wages, poverty, and material hardship: New evidence from the SIPP

Joseph Sabia & Robert Nielsen
Review of Economics of the Household, March 2015, Pages 95-134

Abstract:
While a number of policymakers have argued that raising the minimum wage will reduce material hardship, empirical evidence to support or refute this claim is scant. Using data drawn from the Survey of Income and Program Participation, we examine the effect of minimum wage increases on poverty, material hardship, and government program participation. Difference-in-difference estimates provide little evidence that state and federal minimum wage increases between 1996 and 2007 reduced poverty, material hardship, or receipt of public program benefits among all individuals, workers, younger individuals without high school degrees, or younger black individuals. Our findings are robust across several measures of hardship, including poverty, financial hardship, housing stress, food insecurity, durable goods deprivation, and health insecurity. We find some evidence of modest redistribution effects of the minimum wage among low-skilled individuals.

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Does Welfare Spending Crowd Out Charitable Activity? Evidence from Historical England under the Poor Laws

Nina Boberg-Fazlic & Paul Sharp
Economic Journal, forthcoming

Abstract:
This paper examines the relationship between government spending and charitable activity. We present a novel way of testing the ‘crowding out hypothesis’, making use of the fact that welfare provision under the Old Poor Laws was decided on the parish level, thus giving heterogeneity within a single country. Using data on poor relief spending combined with data on charitable incomes by county before and after 1800, we find a positive relationship: areas with more public provision also enjoyed higher levels of charitable income. These results are confirmed when instrumenting for Poor Law spending, and when looking at first differences.

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Bounding the Labor Supply Responses to a Randomized Welfare Experiment: A Revealed Preference Approach

Patrick Kline & Melissa Tartari
NBER Working Paper, January 2015

Abstract:
We study the short-term impact of Connecticut's Jobs First welfare reform experiment on women’s labor supply and program participation decisions. A non-parametric optimizing model is shown to restrict the set of counterfactual choices compatible with each woman's actual choice. These revealed preference restrictions yield informative bounds on the frequency of several intensive and extensive margin responses to the experiment. We find that welfare reform induced many women to work but led some others to reduce their earnings in order to receive assistance. The bounds on this latter “opt-in” effect imply that intensive margin labor supply responses are non-trivial.

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Housing Instability and Birth Weight among Young Urban Mothers

Bianca Carrion et al.
Journal of Urban Health, February 2015, Pages 1-9

Abstract:
Housing instability is an understudied social condition that may be a severe stressor during pregnancy. Aims of this study are to identify correlates of housing instability and to explore the association between housing instability and birth weight among pregnant teens and young mothers. Participants included pregnant women ages 14–21 from seven community hospitals and health centers in New York City (N = 623). Data were collected via structured surveys during the second trimester of pregnancy (14 to 24 weeks gestation, M = 19.35, SD = 3.20). Birth weight was obtained through labor and delivery logs. Housing instability was operationalized as two or more moves within the past year. More than one in four (28.5 %) pregnant teens and young women in this sample reported housing instability. Women who reported housing instability were less likely to be enrolled in school, have parents as main source of financial support, live in a single-family home or apartment, or be food secure; they were more likely to smoke (all p < 0.05). After adjusting for important clinical, behavioral, and demographic factors typically associated with lower birth weight, housing instability remained a significant predictor of lower birth weight (B (SE) = −83.96(35.47), p = 0.018). Results highlight the importance of housing stability during pregnancy for infant health. Future interventions and policies should ensure that women are housing stable before, during, and after pregnancy.

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Health Effects of Unemployment Benefit Program Generosity

Jonathan Cylus, Maria Glymour & Mauricio Avendano
American Journal of Public Health, February 2015, Pages 317-323

Objectives: We assessed the impact of unemployment benefit programs on the health of the unemployed.

Methods: We linked US state law data on maximum allowable unemployment benefit levels between 1985 and 2008 to individual self-rated health for heads of households in the Panel Study of Income Dynamics and implemented state and year fixed-effect models.

Results: Unemployment was associated with increased risk of reporting poor health among men in both linear probability (b = 0.0794; 95% confidence interval [CI] = 0.0623, 0.0965) and logistic models (odds ratio = 2.777; 95% CI = 2.294, 3.362), but this effect is lower when the generosity of state unemployment benefits is high (b for interaction between unemployment and benefits = −0.124; 95% CI = −0.197, −0.0523). A 63% increase in benefits completely offsets the impact of unemployment on self-reported health.

Conclusions: Results suggest that unemployment benefits may significantly alleviate the adverse health effects of unemployment among men.

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More Money, Fewer Lives: The Cost Effectiveness of Welfare Reform in the United States

Peter Muennig et al.
American Journal of Public Health, February 2015, Pages 324-328

Objectives: We evaluated the economic benefits of Temporary Assistance to Needy Families (TANF) relative to the previous program, Aid to Families with Dependent Children (AFDC).

Methods: We used pooled mortality hazard ratios from 2 randomized controlled trials — Connecticut Jobs First and the Florida Transition Program, which had follow-up from the early and mid-1990s through December 2011 — and previous estimates of health and economic benefits of TANF and AFDC. We entered them into a Markov model to evaluate TANF’s economic benefits relative to AFDC and weigh them against the potential health threats of TANF.

Results: Over the working life of the average cash assistance recipient, AFDC would cost approximately $28 000 more than TANF from the societal perspective. However, it would also bring 0.44 additional years of life. The incremental cost effectiveness of AFDC would be approximately $64 000 per life-year saved relative to TANF.

Conclusions: AFDC may provide more value as a health investment than TANF. Additional attention given to the neediest US families denied cash assistance could improve the value of TANF.

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The Effect of Disability Payments on Household Earnings and Income: Evidence from the Supplemental Security Income Children's Program

Manasi Deshpande
MIT Working Paper, November 2014

Abstract:
I estimate the effect of removing children with disabilities from the Supplemental Security Income (SSI) program on parental earnings and household income. Using administrative data from the Social Security Administration, I implement both a regression discontinuity design and a difference-in-differences design based on changes in the budget for medical reviews, which increase the likelihood of removal from SSI. I find that a loss of $1,000 in the child’s SSI payment increases parental earnings — exclusively on the intensive margin — by $700-$1,400, indicating that parents fully offset the SSI loss with increased earnings. The loss of the child’s SSI payment also discourages parents and siblings from applying for disability insurance. In addition, I find evidence that family members often apply for disability insurance at the same time, which suggests the importance of household-level shocks in the decision to apply. Using the unique institutional context of the SSI program, I provide suggestive evidence that the large response in parental earnings is driven mostly by an income effect rather than a substitution effect.

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Does Welfare Inhibit Success? The Long-Term Effects of Removing Low-Income Youth from Disability Insurance

Manasi Deshpande
MIT Working Paper, December 2014

Abstract:
I estimate the long-term effects of removing low-income youth with disabilities from Supplemental Security Income (SSI) on the level and variance of their earnings and income in adulthood. Using administrative data from the Social Security Administration, I implement a regression discontinuity design based on a change in the probability of SSI removal at age 18 created by the welfare reform law of 1996. I find that SSI youth who are removed earn on average $4,000 per year, an increase of just $2,600 relative to those who remain on SSI. This increase in earnings covers only one-third of the $7,700 they lose in annual SSI income, and they lose an additional 10% each year in other transfer income. As a result, removed SSI youth experience a present discounted income loss of $73,000, or 80% of the original SSI income loss, over the 16 years following removal. In addition to the large drop in income levels, the within-person variance of income quadruples as a result of the SSI loss. Based on back-of-the-envelope calculations assuming risk aversion and limited intertemporal consumption smoothing, I find that up to one-quarter of the recipient's welfare loss from SSI removal is attributable to the increase in income volatility rather than to the fall in income levels. This result suggests that ignoring the income stabilization effects of welfare and disability programs could substantially underestimate their value to recipients.

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Hungry today, unhappy tomorrow? Childhood hunger and subjective wellbeing later in life

Marco Bertoni
Journal of Health Economics, March 2015, Pages 40–53

Abstract:
I use anchoring vignettes to show that, on data for eleven European countries, exposure to episodes of hunger in childhood leads people to adopt lower subjective standards to evaluate satisfaction with life in adulthood. I also show that, as a consequence, estimates of the association between childhood starvation and late-life wellbeing that do not allow for reporting heterogeneity are biased towards finding a positive correlation. These results highlight the need to consider rescaling when drawing inference on subjective outcomes.

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Adolescent neighborhood context and young adult economic outcomes for low-income African Americans and Latinos

George Galster et al.
Journal of Economic Geography, forthcoming

Abstract:
We quantify how young adult employment and educational outcomes for low-income African Americans and Latinos relate to their adolescent neighborhood conditions. Data come from surveys of Denver Housing Authority (DHA) households who lived in public housing scattered throughout Denver County. Because DHA allocations mimic random assignment to neighborhood, this program represents a natural experiment for overcoming geographic selection bias. We use the neighborhood originally offered by DHA to instrument for neighborhood experienced during adolescence. Our control function logistic analyses found that higher percentages of foreign-born neighbors predicted higher odds of no post-secondary education and (less reliably) neither working nor attending school. Neighborhood occupational prestige predicted lower odds of young adults receiving public assistance and (less reliably) neither primarily working nor attending school. Effects differed for African Americans and Latinos. We consider potential causal processes underlying our results and suggest why they differ from those from the Moving To Opportunity demonstration.

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Eviction's Fallout: Housing, Hardship, and Health

Matthew Desmond & Rachel Tolbert Kimbro
Social Forces, forthcoming

Abstract:
Millions of families across the United States are evicted each year. Yet, we know next to nothing about the impact eviction has on their lives. Focusing on low-income urban mothers, a population at high risk of eviction, this study is among the first to examine rigorously the consequences of involuntary displacement from housing. Applying two methods of propensity score analyses to data from a national survey, we find that eviction has negative effects on mothers in multiple domains. Compared to matched mothers who were not evicted, mothers who were evicted in the previous year experienced more material hardship, were more likely to suffer from depression, reported worse health for themselves and their children, and reported more parenting stress. Some evidence suggests that at least two years after their eviction, mothers still experienced significantly higher rates of material hardship and depression than peers.

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Instrumental Variable Estimation of the Causal Effect of Hunger Early in Life on Health Later in Life

Gerard van den Berg, Pia Pinger & Johannes Schoch
Economic Journal, forthcoming

Abstract:
We estimate average causal effects of early-life hunger on late-life health by applying instrumental variable estimation, using data with self-reported periods of hunger earlier in life, with famines as instruments. The data contain samples from European countries and include birth cohorts exposed to various famines in the 20th century. We use two-sample IV estimation to deal with imperfect recollection of conditions at very early stages of life. The estimated average causal effects may exceed famine effects by at least a factor three.

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Receipt of independent living services among older youth in foster care: An analysis of national data from the U.S.

Nathanael Okpych
Children and Youth Services Review, April 2015, Pages 74–86

Abstract:
Fifteen years has passed since the Chafee Foster Care Independence Program was created under the Social Security Act, which marked an increased role of the U.S. federal government in supporting foster care youth to independence. It was not until the National Youth in Transition Database (NYTD) was launched in 2010 that all 50 states reported standard data on receipt of the 13 types of Chafee independent living services. This paper, which draws on the first two years of NYTD data, analyzes Chafee service receipt across the U.S. among youth in foster care (ages 16–21). About half of the 131,204 youth included in this analysis received at least one type of Chafee service, and considerable variation existed in the proportion of youth that received each of the 13 specific types of services. Females were more likely than males to receive all but one type of service, and African Americans were less likely to receive most of the services. An interaction effect indicated that Black youth were significantly less likely to receive services in large urban areas than other racial/ethnic groups. Young people with disabilities or medical/psychological conditions were generally more likely to receive services than youth without disabilities. Youth in large urban regions receive fewer services than youth residing in other areas, and substantial variation exists between states in proportions of service recipients. Recommendations are made for targeting services, future data collection, and research, including suggestions on ways to improve measurement of Chafee services.

By KEVIN LEWIS | 09:00:00 AM

Tuesday, March 3, 2015

Something to chew on

Supplemental Nutrition Assistance Program and Childhood Obesity in the U.S.: Evidence from the National Longitudinal Survey of Youth 1997

Maoyong Fan & Yanhong Jin
American Journal of Health Economics, forthcoming

Abstract:
Using the National Longitudinal Survey of Youth 1997, this paper employs difference-in-difference propensity score matching to examine whether the Supplementary Nutrition Assistance Program (SNAP) contributes to childhood obesity. We find no statistically significant SNAP effect among the 12- to 20-year-old participants when controlling for selection bias and more accurately defining the treatment and comparison groups. The results are robust to various robustness checks including redefining the treatment and comparison groups by excluding those who previously enrolled in the SNAP, using an alternative treatment definition based on SNAP benefits received, using different specifications of the propensity score equation, and employing different estimation techniques (covariate matching and inverse probability weighting). This study differs from previous research in the three major aspects. First, we carefully examine the intensity of SNAP participation (full-time vs. part-time) and the amount of SNAP benefits received for one-, two-, and three-year durations. Second, we focus on the change in the BMI or the obesity status rather than the level and control for the pre-treatment BMI to avoid the confounding effects of the time-invariant factors. Third, instead of making parametric assumptions on the outcomes, we employ a variety of semi-parametric estimators to control for the selection bias of program participation. The results show that the SNAP is not responsible for the higher prevalence of obesity among adolescents of low-income households. Proposed SNAP changes such as more frequent benefit distribution and a focus on fresh fruits and vegetables are likely to be ineffective in reducing childhood obesity, although they might encourage healthy dietary practices among SNAP participants.

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A Prospective Study of Fitness, Fatness, and Depressive Symptoms

Katie Becofsky et al.
American Journal of Epidemiology, 1 March 2015, Pages 311-320

Abstract:
Being overweight or obese might be a risk factor for developing depression. It is also possible that low cardiorespiratory fitness, rather than overweight or obesity, is the better predictor of depressive symptom onset. Adults in the Aerobics Center Longitudinal Study (Dallas, Texas) underwent fitness and fatness assessments between 1979 and 1998 and later completed a questionnaire about depressive symptoms in 1990, 1995, or 1999. Separate logistic regression models were used to test the associations between 3 fatness measures (body mass index, waist circumference, and percentage of body fat) and the onset of depressive symptoms. Analyses were repeated using fitness as the predictor variable. Additional analyses were performed to study the joint association of fatness and fitness with the onset of depressive symptoms. After controlling for fitness, no measure of fatness was associated with the onset of depressive symptoms. In joint analyses, low fitness was more strongly associated with the onset of elevated depressive symptoms than was fatness, regardless of the measure of fatness used. Overall, results from the present study suggest that low fitness is more strongly associated with the onset of elevated depressive symptoms than is fatness. To reduce the risk of developing depression, individuals should be encouraged to improve their fitness regardless of body fatness.

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Can Changing Economic Factors Explain the Rise in Obesity?

Charles Courtemanche et al.
NBER Working Paper, January 2015

Abstract:
A growing literature examines the effects of economic variables on obesity, typically focusing on only one or a few factors at a time. We build a more comprehensive economic model of body weight, combining the 1990-2010 Behavioral Risk Factor Surveillance System with 27 state-level variables related to general economic conditions, labor supply, and the monetary or time costs of calorie intake, physical activity, and cigarette smoking. Controlling for demographic characteristics and state and year fixed effects, changes in these economic variables collectively explain 37% of the rise in BMI, 43% of the rise in obesity, and 59% of the rise in class II/III obesity. Quantile regressions also point to large effects among the heaviest individuals, with half the rise in the 90th percentile of BMI explained by economic factors. Variables related to calorie intake – particularly restaurant and supercenter/warehouse club densities – are the primary drivers of the results.

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Big box stores and obesity

Michael Marlow
Applied Economics Letters, forthcoming

Abstract:
This article examines whether obesity prevalence is influenced by the market structure of retail food outlets. A few studies have examined the effects of ‘big box’ stores on prices, food choices and obesity, but the present study extends empirical examination to all types of stores to determine if there are significant differences in their effects on obesity prevalence. Four types of retail food outlets are examined: supermarkets, supercentres and warehouse club stores (i.e. ‘big box’ stores), convenience stores and specialty stores. Counties with more retail food stores experience lower prevalence of adult obesity, but this inverse relationship appears to stem from greater numbers of supermarkets and specialty food stores. Obesity prevalence is positively associated with market shares of ‘big box’ and convenience stores.

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Body Weight Misperception in Adolescence and Incident Obesity in Young Adulthood

Angelina Sutin & Antonio Terracciano
Psychological Science, forthcoming

Abstract:
Misperceptions of one’s weight are common in adolescence. Adolescents of normal weight who misperceive themselves as being overweight tend to engage in unhealthy dieting practices and behaviors that are conducive to obesity. To examine whether this misperception is associated with a risk of obesity during early adulthood, we analyzed data from the National Longitudinal Study of Adolescent Health (N = 6,523; mean age at baseline = 16 years; 58% female). Adolescents who misperceived themselves as being overweight had a 40% greater risk of becoming obese over the 12-year follow-up period than adolescents who perceived their weight accurately (odds ratio = 1.41, 95% confidence interval = [1.22, 1.64]). Although the risk associated with misperception of weight was apparent for both sexes, it was significantly stronger among boys (89% higher risk) than among girls (29% higher risk). The present research indicates that weight-based self-stigmatization, much like weight-based social stigmatization, is a powerful risk factor for incident obesity. This finding underscores the importance of addressing inaccurate body weight perceptions, even among adolescents of normal weight.

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Chronic Exposure of Grandparents to Poverty and Body Mass Index Trajectories of Grandchildren: A Prospective Intergenerational Study

Miao Li
American Journal of Epidemiology, forthcoming

Abstract:
In this study, I used the growth curve model to examine the association between grandparents' (first generation (G1)) life-course exposure to chronic poverty and grandchildren's (third generation (G3)) body mass index (BMI; weight (kg)/height (m)2) growth trajectories. This association was estimated separately for male and female grandchildren. Analyses were based on prospective data from a US longitudinal survey, the Panel Study of Income Dynamics (1968–2011), and 2 of its supplemental studies: the Child Development Supplement (1997–2011) and the Transition into Adulthood Study (1997–2011). A prospectively enrolled nationally representative cohort of 2,613 G3 youth (1,323 male, 1,290 female) sampled in the 2 supplemental studies was linked to 1,719 grandparents from the Panel Study of Income Dynamics core sample. Chronic exposure to poverty among grandparents was prospectively ascertained annually over a 30-year period prior to the collection of data on grandchildren. Findings suggested that grandparents' chronic poverty exposure was positively associated with the slope of the BMI trajectory among granddaughters (β = 0.10, 95% confidence interval: 0.03, 0.17) but not among grandsons (β = 0.02, 95% confidence interval: −0.04, 0.08). The association between grandparents' chronic poverty exposure and granddaughters' BMI growth slope remained even after controlling for parental (second generation (G2)) socioeconomic status and BMI.

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Sugar-sweetened beverage consumption and age at menarche in a prospective study of US girls

J.L Carwile et al.
Human Reproduction, March 2015, Pages 675-683

Study design, size, duration: The Growing up Today Study, a prospective cohort study of 16 875 children of Nurses' Health Study II participants residing in all 50 US states. This analysis followed 5583 girls, aged 9–14 years and premenarcheal at baseline, between 1996 and 2001. During 10 555 person-years of follow-up, 94% (n = 5227) of girls reported their age at menarche, and 3% (n = 159) remained premenarcheal in 2001; 4% (n = 197) of eligible girls were censored, primarily for missing age at menarche.

Participants/materials, setting, methods: Cumulative updated SSB consumption (composed of non-carbonated fruit drinks, sugar-sweetened soda and iced tea) was calculated using annual Youth/Adolescent Food Frequency Questionnaires from 1996 to 1998. Age at menarche was self-reported annually. The association between SSB consumption and age at menarche was assessed using Cox proportional hazards regression.

Main results and the role of chance: More frequent SSB consumption predicted earlier menarche. At any given age between 9 and 18.5 years, premenarcheal girls who reported consuming >1.5 servings of SSBs per day were, on average, 24% more likely [95% confidence interval (CI): 13, 36%; P-trend: <0.001] to attain menarche in the next month relative to girls consuming ≤2 servings of SSBs weekly, adjusting for potential confounders including height, but not BMI (considered an intermediate). Correspondingly, girls consuming >1.5 SSBs daily had an estimated 2.7-month earlier menarche (95% CI: −4.1, −1.3 months) relative to those consuming ≤2 SSBs weekly. The frequency of non-carbonated fruit drink (P-trend: 0.03) and sugar-sweetened soda (P-trend: 0.001), but not iced tea (P-trend: 0.49), consumption also predicted earlier menarche. The effect of SSB consumption on age at menarche was observed in every tertile of baseline BMI. Diet soda and fruit juice consumption were not associated with age at menarche.

Wider implications of the findings: More frequent SSB consumption may predict earlier menarche through mechanisms other than increased BMI. Our findings provide further support for public health efforts to reduce SSB consumption.

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The Effects of Prospective Mate Quality on Investments in Healthy Body Weight Among Single Women

Matthew Harris & Christopher Cronin
University of Tennessee Working Paper, October 2014

Abstract:
This paper examines how a single female's investment in healthy body weight is affected by the quality of single males in her marriage market. A principle concern in estimation is the presence of market-level unobserved heterogeneity that may be correlated with changes in single male quality. To address this concern, we employ a differencing strategy that normalizes the exercise behaviors of single women to those of their married counterparts. Our main results suggest that when potential mate quality in a marriage market decreases, single black women invest less in healthy body weight. For example, we find that a ten percentage point increase in the proportion of low quality single black males leads to a 5% to 10% decrease in vigorous exercise taken by single black females. No significant response is found for single white women. These results highlight the relationship between male and female human capital acquisition that is driven by participation in the marriage market. Our results suggest that programs designed to improve the economic prospects of single males may yield positive externalities in the form of improved health behaviors, such as more exercise, particularly for single black females.

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An experimental field study of weight salience and food choice

Angela Incollingo Rodriguez et al.
Appetite, forthcoming

Abstract:
Laboratory research has found that individuals will consume more calories and make unhealthy food choices when in the presence of an overweight individual, sometimes even regardless of what that individual is eating. This study expanded these laboratory paradigms to the field to examine how weight salience influences eating in the real world. More specifically, we tested the threshold of the effect of weight salience of food choice to see if a more subtle weight cue (e.g., images) would be sufficient to affect food choice. Attendees (N = 262) at Obesity Week 2013, a weight-salient environment, viewed slideshows containing an image of an overweight individual, an image of a thin individual, or no image (text only), and then selected from complimentary snacks. Results of ordinal logistic regression analysis showed that participants who viewed the image of the overweight individual had higher odds of selecting the higher calorie snack compared to those who viewed the image of the thin individual (OR = 1.77, 95% CI = [1.04, 3.04]), or no image (OR = 2.42, 95% CI = [1.29, 4.54]). Perceiver BMI category did not moderate the influence of image on food choice, as these results occurred regardless of participant BMI. These findings suggest that in the context of societal weight salience, weight-related cues alone may promote unhealthy eating in the general public.

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The Role of Physicians in Promoting Weight Loss

Joshua Berning
Economics & Human Biology, forthcoming

Abstract:
There are numerous costs resulting from being overweight or obese. A relevant question is how to effectively reduce rates of obesity. I examine the effect of advice from a physician or heath care provider to lose weight on individual weight outcomes using survey data. I account for selection bias using a control function approach and rely on data restrictions to control for simultaneity. I find robust results indicating that advice has a significant effect on weight loss. Several studies suggest physicians may not adequately advise their patients about weight loss. The results of this paper highlight an important opportunity for physicians to advise at-risk patients.

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Does providing nutrition information at vending machines reduce calories per item sold?

Deirdre Dingman et al.
Journal of Public Health Policy, February 2015, Pages 110–122

Abstract:
In 2010, the United States (US) enacted a restaurant menu labeling law. The law also applied to vending machine companies selling food. Research suggested that providing nutrition information on menus in restaurants might reduce the number of calories purchased. We tested the effect of providing nutrition information and ‘healthy’ designations to consumers where vending machines were located in college residence halls. We conducted our study at one university in Southeast US (October–November 2012). We randomly assigned 18 vending machines locations (residence halls) to an intervention or control group. For the intervention we posted nutrition information, interpretive signage, and sent a promotional email to residents of the hall. For the control group we did nothing. We tracked sales over 4 weeks before and 4 weeks after we introduced the intervention. Our intervention did not change what the residents bought. We recommend additional research about providing nutrition information where vending machines are located, including testing formats used to present information.

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Trends in overweight and obesity in soldiers entering the US Army, 1989-2012

Adela Hruby et al.
Obesity, March 2015, Pages 662–670

Objective: The US Army recruits new soldiers from an increasingly obese civilian population. The change in weight status at entry into the Army between 1989 and 2012 and the demographic characteristics associated with overweight/obesity at entry were examined.

Methods: 1,741,070 unique individuals with complete sex, age, and anthropometric information contributed data to linear and logistic regressions examining time trends and associations between demographic characteristics and overweight/obesity.

Results: The prevalence of overweight (body mass index 25-<30 kg/m2) generally increased, from 25.8% (1989) to 37.2% (2012), peaking at 37.9% (2011). The prevalence of obesity (body mass index ≥30 kg/m2) also increased from 5.6% (1989) to 8.0% (2012), peaking at 12.3% (2009); 2005-2009 annual prevalence exceeded 10%. The most consistent demographic characteristics predicting overweight/obesity were male sex, older age, Hispanic or Asian/Pacific Island race/ethnicity, and being married. There were no distinct geographic trends.

Conclusions: The US Army is not immune to the US obesity epidemic. Demographic characteristics associated with being overweight or obese should be considered when developing military-sponsored weight management programs for new soldiers.

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Changes in Body Mass Index Associated With Head Start Participation

Julie Lumeng et al.
Pediatrics, February 2015, Pages e449-e456

Objectives: The goal of this study was to determine if Head Start participation is associated with healthy changes in BMI.

Methods: The sample included children participating in Head Start between 2005 and 2013 and children from 2 comparison groups drawn from a Michigan primary care health system: 5405 receiving Medicaid and 19 320 not receiving Medicaid. Change in BMI z score from the beginning to the end of each of 2 academic years and the intervening summer was compared between groups by using piecewise linear mixed models adjusted for age, gender, and race/ethnicity.

Results: The total sample included 43 748 children providing 83 239 anthropometric measures. The Head Start sample was 64.9% white, 10.8% black, and 14.4% Hispanic; 16.8% of the children were obese and 16.6% were overweight at the initial observation. Children who entered Head Start as obese exhibited a greater decline in the BMI z score during the first academic year versus the comparison groups (β = –0.70 [SE: 0.05] vs –0.07 [0.08] in the Medicaid group [P < .001] and –0.15 [SE: 0.05] in the Not Medicaid group [P < .001]); patterns were similar for overweight children. Head Start participants were less obese, less overweight, and less underweight at follow-up than children in the comparison groups.

Conclusions: Preschool-aged children with an unhealthy weight status who participated in Head Start had a significantly healthier BMI by kindergarten entry age than comparison children in a primary care health system (both those receiving and those not receiving Medicaid).

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Shape Up Somerville: Change in Parent Body Mass Indexes During a Child-Targeted, Community-Based Environmental Change Intervention

Edward Coffield et al.
American Journal of Public Health, February 2015, Pages e83-e89

Objectives: We investigated the body mass index (BMI; weight in pounds/[height in inches]2 × 703) of parents whose children participated in Shape Up Somerville (SUS), a community-based participatory research study that altered household, school, and community environments to prevent and reduce childhood obesity.

Methods: SUS was a nonrandomized controlled trial with 30 participating elementary schools in 3 Massachusetts communities that occurred from 2002 to 2005. It included first-, second-, and third-grade children. We used an inverse probability weighting estimator adjusted for clustering effects to isolate the influence of SUS on parent (n = 478) BMI. The model’s dependent variable was the change in pre- and postintervention parent BMI.

Results: SUS was significantly associated with decreases in parent BMIs. SUS decreased treatment parents’ BMIs by 0.411 points (95% confidence interval = −0.725, −0.097) relative to control parents.

Conclusions: The benefits of a community-based environmental change childhood obesity intervention can spill over to parents, resulting in decreased parental BMI. Further research is warranted to examine the effects of this type of intervention on parental health behaviors and health outcomes.

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Constrained choices? Linking employees' and spouses' work time to health behaviors

Wen Fan et al.
Social Science & Medicine, February 2015, Pages 99–109

Abstract:
There are extensive literatures on work conditions and health and on family contexts and health, but less research asking how a spouse or partners' work conditions may affect health behaviors. Drawing on the constrained choices framework, we theorized health behaviors as a product of one's own time and spouses' work time as well as gender expectations. We examined fast food consumption and exercise behaviors using survey data from 429 employees in an Information Technology (IT) division of a U.S. Fortune 500 firm and from their spouses. We found fast food consumption is affected by men's work hours — both male employees' own work hours and the hours worked by husbands of women respondents — in a nonlinear way. The groups most likely to eat fast food are men working 50 h/week and women whose husbands work 45–50 h/week. Second, exercise is better explained if work time is conceptualized at the couple, rather than individual, level. In particular, neo-traditional arrangements (where husbands work longer than their wives) constrain women's ability to engage in exercise but increase odds of men exercising. Women in couples where both partners are working long hours have the highest odds of exercise. In addition, women working long hours with high schedule control are more apt to exercise and men working long hours whose wives have high schedule flexibility are as well. Our findings suggest different health behaviors may have distinct antecedents but gendered work-family expectations shape time allocations in ways that promote men's and constrain women's health behaviors. They also suggest the need to expand the constrained choices framework to recognize that long hours may encourage exercise if both partners are looking to sustain long work hours and that work resources, specifically schedule control, of one partner may expand the choices of the other.

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Priming healthy eating. You can't prime all the people all of the time

Suzanna Forwood et al.
Appetite, June 2015, Pages 93–102

Objective: In the context of a food purchasing environment filled with advertising and promotions, and an increased desire from policy makers to guide individuals toward choosing healthier foods, this study tests whether priming methods that use healthy food adverts to increase preference for healthier food generalize to a representative population.

Methods: In two studies (Study 1 n = 143; Study 2 n = 764), participants were randomly allocated to a prime condition, where they viewed fruit and vegetable advertisements, or a control condition, with no advertisements. A subsequent forced choice task assessed preference between fruits and other sweet snacks. Additional measures included current hunger and thirst, dietary restraint, age, gender, education and self-reported weight and height.

Results: In Study 1, hunger reduced preferences for fruits (OR (95% CI) = 0.38 (0.26–0.56), p < 0.0001), an effect countered by the prime (OR (95% CI) = 2.29 (1.33–3.96), p = 0.003). In Study 2, the effect of the prime did not generalize to a representative population. More educated participants, as used in Study 1, chose more fruit when hungry and primed (OR (95% CI) = 1.42 (1.13–1.79), p = 0.003), while less educated participants' fruit choice was unaffected by hunger or the prime.

Conclusion: This study provides preliminary evidence that the effects of adverts on healthy eating choices depend on key individual traits (education level) and states (hunger), do not generalize to a broader population and have the potential to increase health inequalities arising from food choice.

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Perceptions of overweight in US and global cultures

William Johnson et al.
Eating Behaviors, April 2015, Pages 125–129

Abstract:
We explored the hypothesis that perceptions of overweight vary in accord with the prevalence of overweight in specific populations. The present study investigated this relationship in samples from diverse groups in the US and four other countries. The perceptual threshold for overweight is the scalar point at which individuals determine the transition from normal to overweight. Perceptual thresholds for overweight were obtained from 812 adults in Korea, Mexico, Ukraine, Tanzania, and the US (Black, Hispanic, White and college student samples). A linear relationship was observed between the perceptual threshold for overweight and the population prevalence (r = 0.52, adjusted R2 = 0.22, F (1/15) = 5.24, p < .05), and this relationship was considerably stronger in the non-US samples. This finding links with the results of other studies documenting the influence of the social environment on both weight perception and weight transmission. Together, they suggest that the socio-cultural milieu and weight norms are components of the obesogenic environment and argue for the inclusion of weight norm interventions in weight management programs and public health initiatives.

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“I can almost taste it:” Why people with strong positive emotions experience higher levels of food craving, salivation and eating intentions

David Moore & Sara Konrath
Journal of Consumer Psychology, January 2015, Pages 42–59

Abstract:
The goal of this paper is to examine whether individual differences in affect intensity predict people's responses to food advertisements. In doing so, we aim to uncover individual differences and situational factors that are associated with higher food cravings and other consumption-related responses. Studies 1 and 2 identified three mediators (emotional memories, weak impulse control, and the intensity of pleasure anticipation) which indirectly link affect intensity to food cravings and behavioral intentions. Studies 3 and 4 identified two moderators (vividness of advertisement, dieting status of participants) of the relationship between affect intensity and consumption-related outcomes. In Study 3 high affect intensity individuals reported stronger food cravings only in response to vivid advertising appeals. In Study 4, respondents with high levels of positive affectivity, a sub-dimension of affect intensity, experienced increased salivation, but especially when they were dieters exposed to vivid food images. Implications for theory development and for marketing and public policy strategists are discussed.

By KEVIN LEWIS | 09:00:00 AM

Monday, March 2, 2015

Treasury bills

Austerity in 2009-2013

Alberto Alesina et al.
NBER Working Paper, January 2015

Abstract:
The conventional wisdom is (i) that fiscal austerity was the main culprit for the recessions experienced by many countries, especially in Europe, since 2010 and (ii) that this round of fiscal consolidation was much more costly than past ones. The contribution of this paper is a clarification of the first point and, if not a clear rejection, at least it raises doubts on the second. In order to obtain these results we construct a new detailed "narrative" data set which documents the actual size and composition of the fiscal plans implemented by several countries in the period 2009-2013. Out of sample simulations, that project output growth conditional only upon the fiscal plans implemented since 2009 do reasonably well in predicting the total output fluctuations of the countries in our sample over the years 2010-13 and are also capable of explaining some of the cross-country heterogeneity in this variable. Fiscal adjustments based upon cuts in spending appear to have been much less costly, in terms of output losses, than those based upon tax increases. The difference between the two types of adjustment is very large. Our results, however, are mute on the question whether the countries we have studied did the right thing implementing fiscal austerity at the time they did, that is 2009-13. Finally we examine whether this round of fiscal adjustments, which occurred after a financial and banking crisis, has had different effects on the economy compared to earlier fiscal consolidations carried out in "normal" times. When we test this hypothesis we do not reject the null, although in some cases failure to reject is marginal. In other words, we don't find sufficient evidence to claim that the recent rounds of fiscal adjustment, when compared with those occurred before the crisis, have been especially costly for the economy.

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Economic Freedom and the Size of Government

James Mahon
Williams College Working Paper, January 2015

Abstract:
This paper explores the relationship between government size and economic freedom, relating these patterns to theories of fiscal politics. In order to address current political controversies, it uses data on pre-1990 OECD members (minus Norway) for central government tax revenues and spending, as well as indicators of economic freedom derived from the Fraser Institute, ICRG, Heritage Foundation, and the World Bank. It finds that it matters a great deal whether we define size as expenditures or taxation. Spending has no relationship with freedom, or a negative one, across this data set. Initial tax revenue levels, however, positively predict subsequent changes in economic freedom. We find similar patterns using different measures of economic freedom and whether we use annual data (1995-2010) or overlapping six-year averages going back to 1970-75. These results challenge the common preconception that taxes and economic freedom are negatively related. In addition, the divergence between tax revenue and spending in this regard is more consistent with a “fiscal contract” model of the state, in which taxation and economic freedom go together, as governments attend to their legitimacy and the health of the private sector in order to increase revenue, but flag in these efforts when they enjoy sources of income other than taxes.

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Territorial Tax System Reform and Corporate Financial Policies

Matteo Arena & George Kutner
Review of Financial Studies, forthcoming

Abstract:
We examine the effect of a permanent change to a country corporate income repatriation tax system on corporate financial policies. In 2009, Japan and the United Kingdom switched from a worldwide system to a territorial system for the taxation of repatriated foreign earnings, effectively reducing the tax liabilities of most multinational firms when repatriating earnings. We find that after the change firms accumulate less cash, pay out larger amounts through dividends and share repurchases, and invest less abroad. We do not find that the tax system change has significantly affected domestic investments even when controlling for capital constraints.

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Homeowners, Renters and the Political Economy of Property Taxation

Eric Brunner, Stephen Ross & Becky Simonsen
University of Connecticut Working Paper, December 2014

Abstract:
Studies that examine the demand for local public services that are financed by a property tax consistently find that renters are more supportive of public spending than homeowners, a finding commonly referred to as the “renter effect.” In this paper we use detailed micro-level survey data to provide new evidence on the renter effect. The renter effect suggests that, all else equal, renters should prefer property taxation over other forms of taxation. We test that hypothesis using voter responses to two key questions: their willingness to pay higher property taxes to fund public services and their willingness to pay higher sales taxes to fund those services. Using a difference-in-differences estimation strategy, we find first that renters are approximately 10 to 18 percentage points more likely than homeowners to favor a property tax increase over a sales tax increase, a finding consistent with the presence of a renter effect. However, these results are not driven by the voting behavior of renters. Analysis based on separate regressions for renters and homeowners reveals that renters are indifferent between a property tax increase and either a sales tax or state income tax increase, while homeowners strongly oppose a property tax increase relative to either a sales tax or state income tax increase. Further analysis reveals that the strong opposition among homeowners to the property tax is not associated with the relative tax burden faced by homeowners. Examining the variation in tax burden created by Proposition 13 in California, we find that homeowner aversion to the property tax does not increase with the homeowner’s relative tax burden. These findings of homeowner aversion to property taxes are consistent with recent work suggesting that salience matters when voters evaluate taxes, but also suggest that increased salience does not necessarily lead to more careful consideration of individual tax burdens.

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The Legal Salience of Taxation

Andrew Hayashi
University of Chicago Law Review, Fall 2014, Pages 1443-1507

Abstract:
Before an injury becomes a legal dispute, the injury must be named, a party must be blamed, and a right against that injury must be claimed. What motivates people to do these things and use legal institutions to seek redress? I provide a partial answer to this question, using a unique dataset to identify the effect that the salience of a tax — that is, its psychological prominence — has on whether a taxpayer will use legal means to lighten the tax’s burden. I term this effect its “legal salience.” I find that reducing property tax salience makes homeowners less likely to appeal their property-value assessments, making it more likely that homeowners will remain overassessed and overtaxed. These overtaxed homeowners never perceive — are never able to “name” — their injury and consequently never obtain the relief to which they might be entitled. Moreover, I show that the selective use of appeals caused by legal salience shifts the tax burden to racial minorities, immigrants, and working families with children. Scholars and lawmakers operate as if only substantive law drives the distribution of a tax burden. But I show that legal salience is one of a number of factors that also affects the tax distribution by motivating only certain individuals to seek tax relief, and I argue that tax laws should be evaluated after taking into account the effects of legal salience.

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Are Court Orders Responsible for the 'Return to the Central City'? The Consequence of School Finance Litigation

Zachary Liscow
Yale Working Paper, January 2015

Abstract:
Central cities’ populations have rebounded over the last few decades, but scholars are unsure why. I propose and offer econometric evidence for a novel hypothesis — legal changes have driven central cities’ resurgence. In particular, state fiscal aid for schools in poor cities, mandated by state courts, has made poor cities more desirable places to live by improving their schools and reducing their taxes. I test my hypothesis by taking advantage of the natural experiment resulting from the dramatic increase in transfers to some states’ poor cities in response to court-ordered school finance equalization, using Census data on over 20,000 cities and towns. The key threats to accurate measurement are that poor places may have grown differently than rich places in the absence of school finance redistribution, and places in high-redistribution states may have grown differently than places in low-redistribution states. To address these concerns, I use a continuous version of the “difference-in-difference-in-differences” econometric technique. The results show that redistribution had a large effect on urban population growth between 1980 and 2010, explaining about one-third of the “return to the central city.” I then conduct a case study on the local finances of Connecticut, and find that the state transfers for education led to tax reductions, as well as the intended increases in education spending. Finally, the paper suggests two reasons that state aid to poor places may be not only equitable but also efficient. First, financing schools locally discourages people from living in poor cities by requiring that their residents pay for the costs of providing services to the cities’ poor. The results show that the location choices of many people are affected by this local financing, suggesting that its efficiency costs may be large. Second, the paper shows that school finance redistribution promotes the positive externalities associated with central city living. These arguments could be used in future legislative debates or litigation to support more school finance redistribution.

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Confidence, Perception, and Politics in California: The Determinants of Attitudes toward Taxes by Level of Government

Kevin Wallsten & Gene Park
California Journal of Politics and Policy, forthcoming

Abstract:
California faced a tremendous fiscal challenge in the wake of the 2008 recession. With high political hurdles to raising taxes, the state and local governmentswere forced to appeal directly to voters through ballot initiatives. Debates over these ballot initiatives, however, took place against the backdrop of increassingly acrimonious disagreements about taxation at the federal level. Unfortunately, researchers have little idea about how the dynamics of public opinion on tax issues operate across these various levels of government. This article asks: do the factors that shape attitudes towards taxation in California vary depending on the level of government levying those taxes? Analyzing results from a 2012 poll, this article finds some differences and some commonalities in the determinants of tax attitudes at the federal, state and local level. More specifically, we find that: (1) attitudes toward taxes are more politicized at the federal level than at the state or local level; (2) confidence in government has a strong effect on tax attitudes but citizens draw clear distinctions between levels of government; (3) perceived self-interest does not influence tax attitudes at any level; and (4) there is a gender gap in attitudes toward taxation at the federal, state and local levels.

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The Window Tax: A Case Study in Excess Burden

Wallace Oates & Robert Schwab
Journal of Economic Perspectives, Winter 2015, Pages 163-180

Abstract:
The window tax provides a dramatic and transparent historical example of the potential distorting effects of taxation. Imposed in England in 1696, the tax — a kind of predecessor of the modern property tax — was levied on dwellings with the tax liability based on the number of windows. The tax led to efforts to reduce tax bills through such measures as the boarding up of windows and the construction of houses with very few windows. In spite of the pernicious health and aesthetic effects and despite widespread protests, the tax persisted for over a century and a half: it was finally repealed in 1851. Our purpose in this paper is threefold. First, we provide a brief history of the tax with a discussion of its rationale, its role in the British fiscal system, and its economic and political ramifications. Second, we have assembled a dataset from microfilms of local tax records during this period that indicate the numbers of windows in individual dwellings. Drawing on these data, we are able to test some basic hypotheses concerning the effect of the tax on the number of windows and to calculate an admittedly rough measure of the excess burden associated with the window tax. Third, we have in mind a pedagogical objective. The concept of excess burden (or "deadweight loss") is for economists part of the meat and potatoes of tax analysis. But to the laity the notion is actually rather arcane; public-finance economists often have some difficulty, for example, in explaining to taxpayers the welfare costs of tax-induced distortions in resource allocation. The window tax is a textbook example of how a tax can have serious adverse side effects on social welfare. In addition to its objectionable consequences for tax equity, the window tax resulted in obvious and costly misallocations of resources.

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The Effects of Changes in Property Tax Rates and School Spending on Residential and Business Property Value Growth

Sung Hoon Kang, Mark Skidmore & Laura Reese
Real Estate Economics, forthcoming

Abstract:
In this article, we examine the effects of changes in property tax rates and school spending on residential and business property value growth in southeast Michigan. We use panel data for 152 communities in the five counties surrounding Detroit between the years 1983 and 2002, a period during which state government mandated major changes to school finance. Using the mandated changes to identify causality, we find that: (1) residential property values are more responsive to school spending changes than property tax rate changes; (2) business property values are more responsive to tax rate changes than school spending changes; and (3) business property values are more sensitive to changes in tax rates as compared to residential property. We also examine tax competition effects on property value growth, showing that tax competition plays an important role in property value growth in the southeast Michigan region.

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U.S. Casino Revenue Taxes and Short-Run Labor Outcomes

Kahlil Philander et al.
Journal of Policy Modeling, forthcoming

Abstract:
This study examines the effect of casino tax rate levels on short-run labor decisions by casino firms. Using a panel data set consisting of all states with legal commercial casino gambling from 1998 to 2009, a 2SLS fixed-effect model that also uses aggregate and sin-based excise taxes as instruments is estimated. We find that maximum casino tax rates negatively affect casino employment with an inelastic average effect of -0.6. We estimate state tax revenue changes per employee from a 1% increase in the gross gaming revenue tax, finding that states with comparatively low tax rates could increase public revenue with relatively small losses in employment. Nevada, New Jersey, and South Dakota – each with maximum tax rates currently below 10% – could increase tax revenue by more than $430,000 per estimated employee lost from the tax change. Results from this study should be included in future analysis of casino tax impacts on economic efficiency.

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As Certain as Debt and Taxes: Estimating the Tax Sensitivity of Leverage from State Tax Changes

Florian Heider & Alexander Ljungqvist
Journal of Financial Economics, forthcoming

Abstract:
Using staggered corporate income tax changes across U.S. states, we show that taxes have a first-order effect on capital structure. Firms increase leverage by around 40 basis points for every percentage-point tax increase. Consistent with dynamic tradeoff theory, the effect is asymmetric: leverage does not respond to tax cuts. This is true even within-firm: tax increases that are later reversed nonetheless lead to permanent leverage increases. The treatment effects are heterogeneous and confirm the tax channel: tax sensitivity is greater among profitable and investment-grade firms which respectively have a greater marginal tax benefit and lower marginal cost of issuing debt.

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Public debt, economic growth and nonlinear effects: Myth or reality?

Balázs Égert
Journal of Macroeconomics, March 2015, Pages 226–238

Abstract:
This paper puts a variant of the Reinhart-Rogoff dataset to a formal econometric testing to see whether public debt has a negative nonlinear effect on growth if public debt exceeds 90% of GDP. Using nonlinear threshold models, we show that finding a negative nonlinear relationship between the public debt-to-GDP ratio and economic growth is extremely difficult and sensitive to modelling choices and data coverage. In the very rare cases when nonlinearity à la Reinhart and Rogoff can be detected, the negative nonlinear correlation kicks in at very low levels of public debt (between 20% and 60% of GDP). These results, based on bivariate regressions for central government debt from 1946 to 2009, are confirmed on a shorter dataset including general government debt (1960-2010) using a multivariate growth framework and Bayesian model averaging.

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Municipal Housekeeping: The Impact of Women's Suffrage on Public Education

Celeste Carruthers & Marianne Wanamaker
NBER Working Paper, January 2015

Abstract:
Gains in 20th century real wages and reductions in the black-white wage gap have been linked to the mid-century ascent of school quality. With a new dataset uniquely appropriate to identifying the impact of female voter enfranchisement on education spending, we attribute up to one-third of the 1920-1940 rise in public school expenditures to the Nineteenth Amendment. Yet the continued disenfranchisement of black southerners meant white school gains far outpaced those for blacks. As a result, women’s suffrage exacerbated racial inequality in education expenditures and substantially delayed relative gains in black human capital observed later in the century.

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Lottery tax windfalls, state-level fiscal policy, and consumption

Zhi Da, Mitch Warachka & Hayong Yun
Economics Letters, April 2015, Pages 9–12

Abstract:
We find that lottery tax windfalls finance higher state-government expenditures on supplemental security income that increase consumption, but only during bust periods. Wealth transfers from lottery winners to low income households enable fiscal policy to stabilize consumption during bust periods.

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The Effects of Regulatory Scrutiny on Tax Avoidance: An Examination of SEC Comment Letters

Thomas Kubick et al.
University of Kansas Working Paper, December 2014

Abstract:
This study examines the tax avoidance behavior of firms prior to the issuance, and following the resolution, of SEC tax comment letters. We find that firms that appear to engage in greater tax avoidance are more likely to receive a tax-related SEC comment letter. We also find that firms receiving a tax-related SEC comment letter subsequently decrease their tax avoidance behavior consistent with an increase in expected tax costs. Additionally, we document evidence consistent with other firms which receive non-tax related comment letters reacting to multiple publicly disclosed tax-related comment letters within their industry by lowering their reported level of tax avoidance, consistent with an indirect effect of regulatory scrutiny. Finally, we present evidence that investors positively value within-firm increases in tax avoidance but assign lower valuations after receipt of a tax-related comment letter, consistent with investors anticipating additional tax-related costs from regulatory scrutiny.

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The Politics of Local Government Stabilization Funds

Douglas Snow, Gerasimos Gianakis & Jonathan Haughton
Public Administration Review, March/April 2015, Pages 304–314

Abstract:
The adoption, maintenance, and prudent use of budgetary stabilization funds are fundamental financial management precepts, yet the variables that influence the size of these funds are poorly understood. This article contributes to the stabilization fund literature by examining the extent to which variation in stabilization fund balances across municipalities and over time can be explained by a community's political culture and financial management capacity. The balanced panel research design includes archival data for 239 Massachusetts municipalities for each of 18 fiscal years. Stabilization fund balances are lower in communities with either an anti-tax or a pro-spending political culture. Stabilization fund balances are higher in communities that have the financial management capacity to accumulate budget surpluses that can be made available for appropriation to stabilization funds. Communities with the open town meeting form of government also have higher stabilization fund balances.

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Another look at tax policy and state economic growth: The long-run and short-run of it

Bebonchu Atems
Economics Letters, February 2015, Pages 64–67

Abstract:
We use a spatial Durbin model to estimate the effects of taxes on state economic growth. Results indicate that taxes have negative short-run and long-run own-state and spatial spillover effects on state growth.

By KEVIN LEWIS | 09:00:00 AM

Sunday, March 1, 2015

Dark matter

The Memory Remains: How Heavy Metal Fans Buffer Against the Fear of Death

Julia Kneer & Diana Rieger
Psychology of Popular Media Culture, forthcoming

Abstract:
Heavy metal music is often associated with death and dying by nonfans whereas members of this subculture report that listening to metal music is their escape from depression and even helpful against death-related thoughts. According to terror management theory, self-esteem and cultural worldview serve as a symbolic, 2-component buffer system working against the fear of death. What remains unclear in recent research on terror management theory is if (a) the presentation of cultural goods directly after mortality salience is enough to help against the fear of death or if the buffer components still need to be activated and (b) if the activation of 1 buffer component is enough. Metal music can be seen as cultural good for fans and thereby can form part of their social identity. Two studies investigated whether heavy metal music is able to serve as a cultural worldview buffer against existential anguish by using implicit measurements. In Study 1, we found that fans had no further need to increase their cultural worldview but only if they listened to metal music after the induction of mortality salience. Results of Study 2 revealed that metal music made further support of self-esteem unnecessary for fans whereas nonfans still had the need to increase their self-esteem.

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Passive Facebook Usage Undermines Affective Well-Being: Experimental and Longitudinal Evidence

Philippe Verduyn et al.
Journal of Experimental Psychology: General, forthcoming

Abstract:
Prior research indicates that Facebook usage predicts declines in subjective well-being over time. How does this come about? We examined this issue in 2 studies using experimental and field methods. In Study 1, cueing people in the laboratory to use Facebook passively (rather than actively) led to declines in affective well-being over time. Study 2 replicated these findings in the field using experience-sampling techniques. It also demonstrated how passive Facebook usage leads to declines in affective well-being: by increasing envy. Critically, the relationship between passive Facebook usage and changes in affective well-being remained significant when controlling for active Facebook use, non-Facebook online social network usage, and direct social interactions, highlighting the specificity of this result. These findings demonstrate that passive Facebook usage undermines affective well-being.

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Assessing the Relationships among Race, Religion, Humility, and Self-Forgiveness: A Longitudinal Investigation

Neal Krause
Advances in Life Course Research, forthcoming

Abstract:
Social and behavioral scientists have shown a growing interest in the study of virtues due, in part, to the influence of positive psychology. The underlying premise in this research is that adopting key virtues promotes a better quality of life. Consistent with this orientation, the purpose of this study is to assess the relationship between humility and self-forgiveness over time. The analyses are organized around three issues. First, it is proposed that older Blacks will be more humble than older Whites and older Blacks will be more likely to forgive themselves than older Whites. Second, it is hypothesized that, over time, more humble older people are more likely to forgive themselves than individuals who are less humble. Third, it is proposed that greater involvement in religion is associated with greater humility and greater self-forgiveness. Data from a nationwide longitudinal survey of older adults provides support for all these hypotheses.

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Does Prescription Drug Coverage Improve Mental Health? Evidence from Medicare Part D

Padmaja Ayyagari & Dan Shane
Journal of Health Economics, May 2015, Pages 46–58

Abstract:
The introduction of the Medicare Prescription Drug program (Part D) in 2006 resulted in a significant increase in access to coverage for older adults in the U.S. Several studies have documented the impact of this program on prescription drug utilization, expenditures and medication adherence among older adults. However, few studies have evaluated the extent to which these changes have affected the health of seniors. In this study we use data from the Health and Retirement Study to identify the impact of the Medicare Part D program on mental health. Using a difference-in-difference approach, we find that the program significantly reduced depressive symptoms among older adults. We explore the mechanisms through which this effect operates and evaluate heterogeneity in impact.

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When Does Money Matter Most? Examining the Association Between Income and Life Satisfaction Over the Life Course

Felix Cheung & Richard Lucas
Psychology and Aging, forthcoming

Abstract:
Previous research shows that the correlation between income and life satisfaction is small to medium in size. We hypothesized that income may mean different things to people at different ages and, therefore, that the association between income and life satisfaction may vary at different points in the life course. We tested this hypothesis in 3 nationally representative panel studies. Multilevel modeling techniques were used to test whether age moderated both the within- and between-person associations. Consistent with past research, we found that individuals who earned more on average and individuals who earned more over time reported higher levels of life satisfaction. Importantly, these effects were strongest for midlife individuals (those in their 30s–50s) as compared with individuals who were younger or older.

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Young for one׳s grade: A risk factor for psychotic experiences among adults in the National Comorbidity Survey-Replication

Jordan DeVylder et al.
Psychiatry Research, forthcoming

Abstract:
School-related difficulties have received relatively little attention as environmental risk factors for psychotic experiences (PEs), despite being characterized by marginalization and social defeat during critical periods of psychological development. This study examined both childhood age relative to one׳s classmates and school mobility as risk factors for adult psychotic experiences in the National Comorbidity Survey-Replication (NCS-R). Weighted logistic regression models were used to explore the hypotheses that lifetime psychotic experiences reported on the World Health Organization psychosis screen would be more prevalent among those younger than their classmates during childhood and for those with frequent school mobility. Younger perceived relative age (odds ratio (OR)=2.05, 95% confidence interval=1.43–2.95) was independently associated with psychotic experiences in the fully adjusted model, but school mobility was not. School-related risk factors for psychosis provide promising points for community-level intervention, and support the claim that environmental factors characterized by disadvantage and marginalization contribute to psychosis etiology.

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Sad and Alone: Social Expectancies for Experiencing Negative Emotions Are Linked to Feelings of Loneliness

Brock Bastian et al.
Social Psychological and Personality Science, forthcoming

Abstract:
Western culture has become obsessed with happiness, while treating negative emotions like sadness, depression, or anxiety as pathological and nonnormative. These salient cultural norms communicate social expectations that people should feel “happy” and not “sad.” Previous research has shown that these “social expectancies” can increase feelings of sadness and reduce well-being. In this study, we examined whether these perceived social pressures might also lead people to feel socially disconnected — lonely — when they do experience negative emotions? Drawing on a large stratified sample prescreened for depressive symptoms and utilizing both trait measures and moment-to-moment “experience sampling” over a 7-day period, we found that people who felt more negative emotions and also believe that others in society disapprove of these emotions reported more loneliness. Our data suggest that social pressures to be happy and not sad can make people feel more socially isolated when they do feel sad.

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Stress and telomere shortening among central Indian conservation refugees

Sammy Zahran et al.
Proceedings of the National Academy of Sciences, forthcoming

Abstract:
Research links psychosocial stress to premature telomere shortening and accelerated human aging; however, this association has only been demonstrated in so-called “WEIRD” societies (Western, educated, industrialized, rich, and democratic), where stress is typically lower and life expectancies longer. By contrast, we examine stress and telomere shortening in a non-Western setting among a highly stressed population with overall lower life expectancies: poor indigenous people — the Sahariya — who were displaced (between 1998 and 2002) from their ancestral homes in a central Indian wildlife sanctuary. In this setting, we examined adult populations in two representative villages, one relocated to accommodate the introduction of Asiatic lions into the sanctuary (n = 24 individuals), and the other newly isolated in the sanctuary buffer zone after their previous neighbors were moved (n = 22). Our research strategy combined physical stress measures via the salivary analytes cortisol and α-amylase with self-assessments of psychosomatic stress, ethnographic observations, and telomere length assessment [telomere–fluorescence in situ hybridization (TEL-FISH) coupled with 3D imaging of buccal cell nuclei], providing high-resolution data amenable to multilevel statistical analysis. Consistent with expectations, we found significant associations between each of our stress measures — the two salivary analytes and the psychosomatic symptom survey — and telomere length, after adjusting for relevant behavioral, health, and demographic traits. As the first study (to our knowledge) to link stress to telomere length in a non-WEIRD population, our research strengthens the case for stress-induced telomere shortening as a pancultural biomarker of compromised health and aging.

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Genetic moderation of interpersonal psychotherapy efficacy for low-income mothers with major depressive disorder: Implications for differential susceptibility

Dante Cicchetti, Sheree Toth & Elizabeth Handley
Development and Psychopathology, February 2015, Pages 19-35

Abstract:
Genetic moderation of interpersonal psychotherapy (IPT) efficacy for economically disadvantaged women with major depressive disorder was examined. Specifically, we investigated whether genotypic variation in corticotropin releasing hormone receptor 1 (CRHR1) and the linked polymorphic region of the serotonin transporter gene (5-HTTLPR) moderated effects of IPT on depressive symptoms over time. We also tested genotype moderation of IPT mechanisms on social adjustment and perceived stress. Non-treatment-seeking urban women at or below the poverty level with infants were recruited from the community (N = 126; M age = 25.33 years, SD = 4.99; 54.0% African American, 22.2% Caucasian, and 23.8% Hispanic/biracial) and randomized to individual IPT or Enhanced Community Standard groups. The results revealed that changes in depressive symptoms over time depended on both intervention group and genotypes (5-HTTLPR and CRHR1). Moreover, multiple-group path analysis indicated that IPT improved depressive symptoms, increased social adjustment, and decreased perceived stress at posttreatment among women with the 0 copies of the CRHR1 TAT haplotype only. Finally, improved social adjustment at postintervention significantly mediated the effect of IPT on reduced depressive symptoms at 8 months postintervention for women with 0 copies of the TAT haplotype only. Post hoc analyses of 5-HTTLPR were indicative of differential susceptibility, albeit among African American women only.

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Childhood Emotional and Sexual Maltreatment Moderate the Relation of the Serotonin Transporter Gene to Stress Generation

Kate Harkness et al.
Journal of Abnormal Psychology, forthcoming

Abstract:
Emerging evidence suggests that the tendency to generate stressful life events may be, at least in part, genetically determined. However, the role of the early environment in shaping responses to later stressors is crucial to fully specifying biogenetic models of stress generation. The current study examined the moderating role of childhood emotional, physical, and sexual maltreatment on the relation of the serotonin-transporter-linked promoter region (5-HTTLPR) polymorphism of the serotonin transporter gene to proximal independent, dependent, and dependent-interpersonal life events. This question was tested in a cross-sectional community sample of 297 adolescents and young adults. Childhood maltreatment history and proximal life events were assessed with state-of-the-art interviews that provide independent and standardized ratings of the environmental context. Consistent with the stress generation hypothesis, individuals with the risk s-allele of the serotonin transporter gene reported significantly higher rates of dependent and dependent-interpersonal life events than those homozygous for the l-allele, but only in the context of a history of maternal emotional maltreatment or sexual maltreatment. Neither serotonin transporter gene polymorphisms or childhood maltreatment, or their interaction, were associated with reports of independent life events. The current results demonstrate the importance of considering specificity in the early environmental context when examining the relation of genetic factors to the generation of proximal stress.

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PTSD and depression symptoms are associated with binge eating among US Iraq and Afghanistan veterans

Katherine Hoerster et al.
Eating Behaviors, April 2015, Pages 115–118

Objective: US Iraq and Afghanistan Veterans with post-traumatic stress disorder (PTSD) and depression are at increased risk for obesity. Understanding the contribution of health behaviors to this relationship will enhance efforts to prevent and reduce obesity. Therefore, we examined the association of PTSD and depression symptoms with binge eating, a risk factor for obesity, among Iraq/Afghanistan Veterans.

Method: Iraq/Afghanistan Veterans were assessed at intake to the VA Puget Sound Healthcare System-Seattle post-deployment clinic (May 2004–January 2007). The Patient Health Questionnaire was used to measure depression and binge eating symptoms, and the PTSD Checklist-Military Version assessed PTSD symptoms.

Results: The majority of the sample (N = 332) was male (91.5%) and Caucasian (72.6%), with an average age of 31.1 (SD = 8.5) years; 16.3% met depression screening criteria, 37.8% met PTSD screening criteria, and 8.4% met binge eating screening criteria. In adjusted models, those meeting depression (odds ratio (OR) = 7.53; 95% CI = 2.69, 21.04; p < .001) and PTSD (OR = 3.37; 95% CI = 1.34, 8.46; p = .01) screening criteria were more likely to meet binge eating screening criteria. Continuous measures of PTSD and depression symptom severity were also associated with meeting binge eating screening criteria (ps < .05).

Conclusion: PTSD and depression are common conditions among Iraq/Afghanistan Veterans. In the present study, PTSD and depression symptoms were associated with meeting binge eating screening criteria, identifying a possible pathway by which psychiatric conditions lead to disproportionate burden of overweight and obesity in this Veteran cohort. Tailored dietary behavior interventions may be needed for Iraq/Afghanistan Veterans with co-morbid obesity and psychiatric conditions.

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Personality Change Following Unemployment

Christopher Boyce et al.
Journal of Applied Psychology, forthcoming

Abstract:
Unemployment has a strongly negative influence on well-being, but it is unclear whether it also alters basic personality traits. Whether personality changes arise through natural maturation processes or contextual/environmental factors is still a matter of debate. Unemployment, a relatively unexpected and commonly occurring life event, may shed light on the relevance of context for personality change. We examined, using a latent change model, the influence of unemployment on the five-factor model of personality in a sample of 6,769 German adults, who completed personality measures at 2 time points 4 years apart. All participants were employed at the first time point, and a subset became unemployed over the course of the study. By the second time point, participants had either remained in employment, been unemployed from 1 to 4 years, or had experienced some unemployment but become reemployed. Compared with those who had remained in employment, unemployed men and women experienced significant patterns of change in their mean levels of agreeableness, conscientiousness, and openness, whereas reemployed individuals experienced limited change. The results indicate that unemployment has wider psychological implications than previously thought. In addition, the results are consistent with the view that personality changes as a function of contextual and environmental factors.

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Menstrual Cycle Effects on Psychological Symptoms in Women With PTSD

Yael Nillni et al.
Journal of Traumatic Stress, February 2015, Pages 1–7

Abstract:
The menstrual cycle has been implicated as a sex-specific biological process influencing psychological symptoms across a variety of disorders. Limited research exists regarding the role of the menstrual cycle in psychological symptoms among women with posttraumatic stress disorder (PTSD). The current study examined the severity of a broad range of psychological symptoms in both the early follicular (Days 2–6) and midluteal (6–10 days postlutenizing hormone surge) phases of the menstrual cycle in a sample of trauma-exposed women with and without PTSD (N = 49). In the sample overall, total psychological symptoms (d = 0.63), as well as depression (d = 0.81) and phobic anxiety (d = 0.81) symptoms, specifically, were increased in the early follicular compared to midluteal phase. The impact of menstrual cycle phase on phobic anxiety was modified by a significant PTSD × Menstrual Phase interaction (d = 0.63). Women with PTSD reported more severe phobic anxiety during the early follicular versus midluteal phase, whereas phobic anxiety did not differ across the menstrual cycle in women without PTSD. Thus, the menstrual cycle appears to impact fear-related symptoms in women with PTSD. The clinical implications of the findings and future research directions are discussed.

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Hearth and campfire influences on arterial blood pressure: Defraying the costs of the social brain through fireside relaxation

Christopher Dana Lynn
Evolutionary Psychology, November 2014, Pages 983-1003

Abstract:
The importance of fire in human evolutionary history is widely acknowledged but the extent not fully explored. Fires involve flickering light, crackling sounds, warmth, and a distinctive smell. For early humans, fire likely extended the day, provided heat, helped with hunting, warded off predators and insects, illuminated dark places, and facilitated cooking. Campfires also may have provided social nexus and relaxation effects that could have enhanced prosocial behavior. According to this hypothesis, calmer, more tolerant people would have benefited in the social milieu via fireside interactions relative to individuals less susceptible to relaxation response. Using a randomized crossover design that disaggregated fire’s sensory properties, pre-posttest blood pressure measures were compared among 226 adults across three studies with respect to viewing simulated muted-fire, fire-with-sound, and control conditions, in addition to tests for interactions with hypnotizability, absorption, and prosociality. Results indicated consistent blood pressure decreases in the fire-with-sound condition, particularly with a longer duration of stimulus, and enhancing effects of absorption and prosociality. Findings confirm that hearth and campfires induce relaxation as part of a multisensory, absorptive, and social experience. Enhancements to relaxation capacities in the human social brain likely took place via feedback involving these and other variables.

By KEVIN LEWIS | 09:00:00 AM

Saturday, February 28, 2015

Out in the open

Legal Recognition of Same-Sex Couples and Family Formation

Mircea Trandafir
Demography, February 2015, Pages 113-151

Abstract:
It has long been debated how legalizing same-sex marriage would affect (different-sex) family formation. In this article, I use data on OECD member countries for the period 1980-2009 to examine the effects of the legal recognition of same-sex couples (through marriage or an alternative institution) on different-sex marriage, divorce, and extramarital births. Estimates from difference-in-difference models indicate that the introduction of same-sex marriage or of alternative institutions has no negative effects on family formation. These findings are robust to a multitude of specification checks, including the construction of counterfactuals using the synthetic control method. In addition, the country-by-country case studies provide evidence of homogeneity of the estimated effects.

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Facial Structure Predicts Sexual Orientation in Both Men and Women

Malvina Skorska et al.
Archives of Sexual Behavior, forthcoming

Abstract:
Biological models have typically framed sexual orientation in terms of effects of variation in fetal androgen signaling on sexual differentiation, although other biological models exist. Despite marked sex differences in facial structure, the relationship between sexual orientation and facial structure is understudied. A total of 52 lesbian women, 134 heterosexual women, 77 gay men, and 127 heterosexual men were recruited at a Canadian campus and various Canadian Pride and sexuality events. We found that facial structure differed depending on sexual orientation; substantial variation in sexual orientation was predicted using facial metrics computed by a facial modelling program from photographs of White faces. At the univariate level, lesbian and heterosexual women differed in 17 facial features (out of 63) and four were unique multivariate predictors in logistic regression. Gay and heterosexual men differed in 11 facial features at the univariate level, of which three were unique multivariate predictors. Some, but not all, of the facial metrics differed between the sexes. Lesbian women had noses that were more turned up (also more turned up in heterosexual men), mouths that were more puckered, smaller foreheads, and marginally more masculine face shapes (also in heterosexual men) than heterosexual women. Gay men had more convex cheeks, shorter noses (also in heterosexual women), and foreheads that were more tilted back relative to heterosexual men. Principal components analysis and discriminant functions analysis generally corroborated these results. The mechanisms underlying variation in craniofacial structure - both related and unrelated to sexual differentiation - may thus be important in understanding the development of sexual orientation.

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Ironic Effects of Sexual Minority Group Membership: Are Lesbians Less Susceptible to Invoking Negative Female Stereotypes than Heterosexual Women?

Claudia Niedlich et al.
Archives of Sexual Behavior, forthcoming

Abstract:
The traditional stereotype of the typical woman has been described as "nice, but incompetent." However, such general gender stereotypes are applied to individual targets only under certain conditions: They are used to "fill in the blanks" (Heilman, 2012) if little personal information is provided about a target. "Typical lesbians" are regarded to have more typically masculine (agentic) characteristics such as task competence than the typical woman does. We thus hypothesized that if a woman displays behavior coinciding with the stereotype of the typical woman, it is more readily interpreted as stereotypically female if performed by a heterosexual woman than by a lesbian. Participants (N = 296) read a hypothetical job interview in which we manipulated the target's sexual orientation (between subjects). Findings demonstrated that a lesbian was judged as more competent than a heterosexual woman in the presence of behavior that may be interpreted as gender-stereotypical (Experiments 1 and 2). This difference in competence judgments was not found in the absence of gender-stereotypical behavior (Experiment 1). Judging the heterosexual woman as low in masculinity was related to a judgment of lower competence (Experiment 2). Our findings demonstrate that there are conditions under which lesbians, a group often stereotyped negatively, are less susceptible to invoking negative female stereotypes than heterosexual women are.

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Academic performance of opposite-sex and same-sex twins in adolescence: A Danish national cohort study

Linda Ahrenfeldt et al.
Hormones and Behavior, March 2015, Pages 123-131

Abstract:
Testosterone is an important hormone in the sexual differentiation of the brain, contributing to differences in cognitive abilities between males and females. For instance, studies in clinical populations such as females with congenital adrenal hyperplasia (CAH) who are exposed to high levels of androgens in utero support arguments for prenatal testosterone effects on characteristics such as visuospatial cognition and behaviour. The comparison of opposite-sex (OS) and same-sex (SS) twin pairs can be used to help establish the role of prenatal testosterone. However, although some twin studies confirm a masculinizing effect of a male co-twin regarding for instance perception and cognition it remains unclear whether intra-uterine hormone transfer exists in humans. Our aim was to test the potential influences of testosterone on academic performance in OS twins. We compared ninth-grade test scores and teacher ratings of OS (n = 1812) and SS (n = 4054) twins as well as of twins and singletons (n = 13,900) in mathematics, physics/chemistry, Danish, and English. We found that males had significantly higher test scores in mathematics than females (.06-.15 SD), whereas females performed better in Danish (.33-.49 SD), English (.20 SD), and neatness (.45-.64 SD). However, we did not find that OS females performed better in mathematics than SS and singleton females, nor did they perform worse either in Danish or English. Scores for OS and SS males were similar in all topics. In conclusion, this study did not provide evidence for a masculinization of female twins with male co-twins with regard to academic performance in adolescence.

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Lateralization for Processing Facial Emotions in Gay Men, Heterosexual Men, and Heterosexual Women

Qazi Rahman & Sifat Yusuf
Archives of Sexual Behavior, forthcoming

Abstract:
This study tested whether male sexual orientation and gender nonconformity influenced functional cerebral lateralization for the processing of facial emotions. We also tested for the effects of sex of poser and emotion displayed on putative differences. Thirty heterosexual men, 30 heterosexual women, and 40 gay men completed measures of demographic variables, recalled childhood gender nonconformity (CGN), IQ, and the Chimeric Faces Test (CFT). The CFT depicts vertically split chimeric faces, formed with one half showing a neutral expression and the other half showing an emotional expression and performance is measured using a "laterality quotient" (LQ) score. We found that heterosexual men were significantly more right-lateralized when viewing female faces compared to heterosexual women and gay men, who did not differ significantly from each other. Heterosexual women and gay men were more left-lateralized for processing female faces. There were no significant group differences in lateralization for male faces. These results remained when controlling for age and IQ scores. There was no significant effect of CGN on LQ scores. These data suggest that gay men are feminized in some aspects of functional cerebral lateralization for facial emotion. The results were discussed in relation to the selectivity of functional lateralization and putative brain mechanisms underlying sexual attraction towards opposite-sex and same-sex targets.

By KEVIN LEWIS | 09:00:00 AM


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