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Thursday, October 2, 2014

Us versus them

Purpose in Life as a Resource for Increasing Comfort With Ethnic Diversity

Anthony Burrow et al.
Personality and Social Psychology Bulletin, forthcoming

Abstract:
Emerging demographic trends signal that White Americans will soon relinquish their majority status. As Whites’ acclimation to an increasingly diverse society is poised to figure prominently in their adjustment, identifying sources of greater comfort with diversity is important. Three studies (N = 519) revealed evidence that purpose in life bolsters comfort with ethnic diversity among White adults. Specifically, dispositional purpose was positively related to diversity attitudes and attenuated feelings of threat resulting from viewing demographic projections of greater diversity. In addition, when primed experimentally, purpose attenuated participants’ preferences for living in an ethnically homogeneous-White city, relative to a more diverse city when shown maps displaying ethno-demographic information. These effects persisted after controlling for positive affect and perceived connections to ethnic out-groups, suggesting the robust influence of purpose. Potential benefits of situating purpose as a unique resource for navigating an increasingly diverse society are discussed.

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Ethnic identity and self-esteem among Asian and European Americans: When a minority is the majority and the majority is a minority

Yiyuan Xu, Jo Ann Farver & Kristin Pauker
European Journal of Social Psychology, forthcoming

Abstract:
Three studies were conducted to examine the impact of being a numeric majority or minority in Hawai'i and U.S. mainland on the ethnic identity and self-esteem of Asian and European Americans. Results of Study 1 (N = 214, M age = 19.85 years) and Study 2 (N = 215, M age = 18.20 years) showed that Asian Americans who grew up on the U.S. mainland, where they are a numeric minority, reported higher ethnic identity than did Asian Americans who grew up in Hawai'i, where they are a numeric majority. In addition, ethnic identity was significantly associated with self-esteem for Asian Americans from the U.S. mainland and European Americans from Hawai'i (numeric minority), but not for Asian Americans from Hawai'i and European Americans from the U.S. mainland (numeric majority). Study 3 (N = 88, M age = 18.12) examined ethnic identity and self-esteem among Asian and European Americans who had moved from the U.S. mainland to attend a university in Hawai'i over a 1 year time period. The results showed significant relations between ethnic identity and self-esteem for Asian Americans when they initially moved to Hawai'i, but this relation decreased after they had lived in Hawai'i for 1 year. The findings highlight contextual variations in ethnic identity and self-esteem for members of both minority and majority groups in the U.S.

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Gendered Black Exclusion: The Persistence of Racial Stereotypes Among Daters

James Bany, Belinda Robnett & Cynthia Feliciano
Race and Social Problems, September 2014, Pages 201-213

Abstract:
Employing questionnaires of 381 college students, this study examines the reasons why Latinos, Asians, and whites choose to include or exclude blacks as potential dates. First, we find that past structural explanations for low rates of interracial intimacy explain current disparities less among young people today. Only 10 % of respondents cited a structural explanation, lack of familiarity, or contact, as the reason they excluded blacks as possible dates. Second, the reasons for black exclusion vary across racial–ethnic–gender groups. Among non-blacks, whites were the most open to dating blacks, followed by Latinos and Asians. Asians and Latinos were more likely to exclude blacks because of social disapproval, and whites were more likely to exclude blacks because of physical attraction. Black women were more highly excluded than black men and more excluded because of their perceived aggressive personalities or behavior and physical attraction. Black men were more excluded because of social disapproval. Thus, persistent racial ideology continues to drive the social distance between blacks and non-blacks, particularly toward black females.

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Implicit Closeness to Blacks, Support for Affirmative Action, Slavery Reparations, and Vote Intentions for Barack Obama in the 2008 Elections

Thomas Craemer
Basic and Applied Social Psychology, September/October 2014, Pages 413-424

Abstract:
Does pro-Black policy support require an individual to be unbiased? I distinguish two types of implicit attitudes based on whether the attitude-target is evaluated as an object (evaluative associations) or as an independent social agent (relational associations). In a series of studies (N = 3,073), a significant anti-Black evaluative association bias emerges. In contrast, relational associations are significantly pro-Black and are unrelated to evaluative associations. Relational associations predict opinions regarding affirmative action, government help for Blacks, slavery reparations, and intentions to vote for Barack Obama. Thus, minority representation based on relational associations may not require absence of anti-minority evaluative bias.

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Contextualizing the “Student Body”: Is Exposure to Older Students Associated With Body Dissatisfaction in Female Early Adolescents?

Jaine Strauss et al.
Psychology of Women Quarterly, forthcoming

Abstract:
Research on teens’ body dissatisfaction documents the role of proximal social influences (e.g., peers and family) and distal social influences (e.g., mass media) but largely ignores intermediate contextual factors such as school environment. Is there a link between individual body image and student body? We assessed drive for thinness, body dissatisfaction, thin-ideal internalization, and body objectification in an ethnically diverse sample of 1,536 female students educated in U.S. school districts varying in the degree to which younger students (fifth and sixth graders) are educated alongside older students (seventh and eighth graders). We studied three different grade groupings: junior high (Grades K–6 housed together/Grades 7–8 housed together), middle school (K–5/6–8), and extended middle school (K–4/5–8). As predicted, fifth and sixth graders attending schools with older students reported more negative body experiences than their age peers attending schools with younger students; similar effects were evident among seventh graders who had been educated with older peers during fifth and sixth grade. Our findings highlight the importance of considering contextual factors in understanding young women’s body image.

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Globally Themed Organizations as Labor Market Intermediaries: The Rise of Israeli-Palestinian Women's Employment in Retail

Erez Aharon Marantz, Alexandra Kalev & Noah Lewin-Epstein
Social Forces, forthcoming

Abstract:
This paper examines the labor-market incorporation of minority women. Industrial transformations and the expansion of service and retail have increased women's labor-market participation, but there remains a large variation between minority women groups, where multiple boundaries may hinder labor-market integration. Past research has explored the role of formal labor-market intermediates in overcoming social boundaries. But a precondition for labor-market intermediation is that majority employers perceive minorities as potential workers and minorities perceive the majority as potential employers. In this paper, we expand the concept of labor-market intermediation to include the social construction of groups as legitimate economic actors, and examine the role of organizational structures in this social construction. Using a comparative analysis of two Jewish malls and nearby shopping streets, and based on 190 interviews with various actors, we show that while supply of workers and demand for work are necessary factors, they are not sufficient for explaining the incorporation of Palestinian women into retail labor markets. Instead, we point to the unintended effect of the globally themed organization of the shopping malls on the erosion of social boundaries and the formation of consumption relations between Israeli-Palestinian women and Jewish employers, which turned into employment relations.

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Neighborhood linguistic diversity predicts infants’ social learning

Lauren Howard, Cristina Carrazza & Amanda Woodward
Cognition, November 2014, Pages 474–479

Abstract:
Infants’ direct interactions with caregivers have been shown to powerfully influence social and cognitive development. In contrast, little is known about the cognitive influence of social contexts beyond the infant’s immediate interactions with others, for example, the communities in which infants live. The current study addressed this issue by asking whether neighborhood linguistic diversity predicts infants’ propensity to learn from diverse social partners. Data were taken from a series of experiments in which 19-month-old infants from monolingual, English-speaking homes were tested in paradigms that assessed their tendency to imitate the actions of an adult who spoke either English or Spanish. Infants who lived in more linguistically diverse neighborhoods imitated more of the Spanish speaker’s actions. This relation was observed in two separate datasets and found to be independent from variation in infants’ general imitative abilities, age, median family income and population density. These results provide novel evidence suggesting that infants’ social learning is predicted by the diversity of the communities in which they live.

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Silent or Talking in the Classroom: Implicit Self-Stereotyping Among Asian and White Students

Thierry Devos & Yukiko Yokoyama
Basic and Applied Social Psychology, September/October 2014, Pages 386-396

Abstract:
In academic settings, Asian students are often described as less talkative than White students. We provide an account of this phenomenon based on research on cultural influences on the self, self-categorization, and implicit social cognition. We hypothesized that the classroom context activates a process of implicit self-stereotyping. Asian and White participants were asked to imagine themselves in a classroom or leisure context. Next, they completed Implicit Association Tests assessing their self-concept, ethnic stereotypes, and ethnic identification. In the classroom context only, ethnic stereotypes accounted for a more reserved self-concept among Asian participants and a more talkative self-concept among White participants.

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Does Unfairness Feel Different if it can be Linked to Group Membership? Cognitive, Affective, Behavioral and Physiological Implications of Discrimination and Unfairness

Tessa Dover et al.
Journal of Experimental Social Psychology, forthcoming

Abstract:
We assessed whether unfair treatment leads to different attributional, emotional, behavioral, and cardiovascular responses depending on whether or not the treatment is group-based. Latino and White men (N = 209) were treated fairly or unfairly by an ingroup or outgroup member. As expected, attributions to discrimination were greatest among those treated unfairly in an intergroup context. Moreover, among those treated unfairly in an intergroup context, Latinos who did not endorse the protestant work ethic (PWE) responded with more anger, had higher attributions to discrimination, and punished the offender more, compared to Whites and high-PWE Latinos. Cardiovascular responses to unfair intergroup treatment did not differ by ethnicity: unfair intergroup treatment was less threatening (more challenging) when low (vs. high) in PWE. Results suggest that for low-status group members responding to unfair intergroup treatment (i.e., discrimination), identifying the treatment as discriminatory and becoming angry may be more cardiovascularly-adaptive than not. Implications are discussed.

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Seen to Be Heard? Gender, Voice, and Body in Television Advertisements

Mark Pedelty & Morgan Kuecker
Communication and Critical/Cultural Studies, Summer 2014, Pages 250-269

Abstract:
A quantitative content analysis of 1,055 television ads reveals that male voiceovers outnumber female voiceovers 4:1. As has been the case for decades in television, a man is much more likely to serve as the disembodied and objective voice of authority, expertise, and reason. However, a woman's voice is twice as likely to be heard if her body is also represented on screen. Based on that finding, the authors argue that scopocentric sexism influences when and how gendered voices are presented. A woman's relative agency, her recourse to “voice” in both the literal and metaphoric sense, is conditioned by her visual presence. After completing the quantitative content analysis, a qualitative textual analysis was conducted on a subsample of ads in order to explore relationships between voice and body at a finer-grained level. The study provides an important update for critical ad research concerning voiceovers and is the first that systematically compares voice and body data. The authors conclude by presenting ideas for integrating critical sound research into media literacy curricula.

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Oxytocin increases liking for a country's people and national flag but not for other cultural symbols or consumer products

Xiaole Ma et al.
Frontiers in Behavioral Neuroscience, August 2014

Abstract:
The neuropeptide oxytocin enhances in-group favoritism and ethnocentrism in males. However, whether such effects also occur in women and extend to national symbols and companies/consumer products is unclear. In a between-subject, double-blind placebo controlled experiment we have investigated the effect of intranasal oxytocin on likeability and arousal ratings given by 51 adult Chinese males and females for pictures depicting people or national symbols/consumer products from both strong and weak in-groups (China and Taiwan) and corresponding out-groups (Japan and South Korea). To assess duration of treatment effects subjects were also re-tested after 1 week. Results showed that although oxytocin selectively increased the bias for overall liking for Chinese social stimuli and the national flag, it had no effect on the similar bias toward other Chinese cultural symbols, companies, and consumer products. This enhanced bias was maintained 1 week after treatment. No overall oxytocin effects were found for Taiwanese, Japanese, or South Korean pictures. Our findings show for the first time that oxytocin increases liking for a nation's society and flag in both men and women, but not that for other cultural symbols or companies/consumer products.

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The Relationship Between Culture, Geographic Region, and Gender on Body Image: A Comparison of College Students in the Southeast and Pacific Northwest Regions of the United States

Amber Paulk et al.
Sociological Spectrum, September/October 2014, Pages 442-452

Abstract:
Body image is a significant predictor of important psychological and physical outcomes. The current study sought to expand on previous research on cross-cultural differences in body image across countries by exploring differences in body image based on geographic region within the United States. A sample of 1,365 participants was recruited from universities in the Southeast and Pacific Northwest regions of the United States. Participants completed a survey that assessed their gender, geographic region, and body image. Women reported poorer body image than men, and young adults from the Southeast reported poorer body image than young adults from the Pacific Northwest. There were significant interaction effects for gender and geographic region with women from the Southeast reporting the poorest body image of any group. The authors suggest that sociocultural differences in standard of beauty in the Southeast as well as differences in dress related to climate may contribute to the findings.

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The status-legitimacy hypothesis revisited: Ethnic-group differences in general and dimension-specific legitimacy

Nikhil Sengupta, Danny Osborne & Chris Sibley
British Journal of Social Psychology, forthcoming

Abstract:
The status-legitimacy hypothesis, which predicts that low-status groups will legitimize inequality more than high-status groups, has received inconsistent empirical support. To resolve this inconsistency, we hypothesized that low-status groups would display enhanced legitimation only when evaluating the fairness of the specific hierarchy responsible for their disadvantage. In a New Zealand-based probability sample (N = 6,162), we found that low-status ethnic groups (Asians and Pacific Islanders) perceived ethnic-group relations to be fairer than the high-status group (Europeans). However, these groups did not justify the overall political system more than the high-status group. In fact, Māori showed the least support for the political system. These findings clarify when the controversial status-legitimacy effects predicted by System Justification Theory will – and will not – emerge.

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“Doing Race”: Latino Youth’s Identities and the Politics of Racial Exclusion

Nilda Flores-González, Elizabeth Aranda & Elizabeth Vaquera
American Behavioral Scientist, forthcoming

Abstract:
For most Latino youth, Latinos constitute a separate, while diverse, racial group. Our study demonstrates that, when asked about their identities, Latino youth do not follow conventional U.S. racial categories. Although they prefer to identify by national origin or panethnicity, they consider themselves to be part of a racial group rather than an ethnic group, as the U.S. Census designates them. Using findings from in-depth semistructured interviews with two samples of young adults in Chicago and Central Florida, this research joins the long-standing debate on the conceptual division between race and ethnicity arguing that there is a mismatch between existing sociological understandings of race and ethnicity and the current racial ideas and racial practices among Latino youth. There is also a mismatch between institutional measures of “race,” such as those found in the U.S. Census, and Latinos’ self-understandings of where they belong in the U.S. racial hierarchy. We suggest that not being officially designated as a racial group leads to the erosion of perceptions of belonging among Latinos to a nation in which being a member of a racial group allows for visibility and claims-making in a multiracial society.

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Out-group flies in the in-group’s ointment: Evidence of the motivational underpinnings of the in-group overexclusion effect

Mark Rubin & Stefania Paolini
Social Psychology, Fall 2014, Pages 265-273

Abstract:
People tend to misclassify ambiguous individuals as members of the out-group rather than the in-group. This in-group overexclusion effect (IO effect) is thought to occur because people are motivated to maintain their in-group’s positivity by protecting it from potential out-group intrusions. The present research tested this explanation by asking university students (N = 122) to complete a self-esteem scale and then recall the group memberships of individuals who belonged to minimal groups. Consistent with predictions, participants misassigned significantly fewer individuals to the in-group than to the out-group when the in-group was positive and the out-group was negative but not when these valences were reversed. In addition, self-esteem negatively predicted the IO effect. Alternative explanations of the IO effect are discussed.

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Social identity modifies face perception: An ERP study of social categorization

Belle Derks, Jeffrey Stedehouder & Tiffany Ito
Social Cognitive and Affective Neuroscience, forthcoming

Abstract:
Two studies examined whether social identity processes, i.e., group identification and social identity threat, amplify the degree to which people attend to social category information in early perception (assessed with ERPs). Participants were presented with faces of Muslims and non-Muslims in an evaluative priming task while event-related brain potentials were measured and implicit evaluative bias was assessed. Study 1 revealed that non-Muslims showed stronger differentiation between ingroup and outgroup faces in both early (N200) and later processing stages (implicit evaluations) when they identified more strongly with their ethnic group. Moreover, identification effects on implicit bias were mediated by inter-group differentiation in the N200. In Study 2, social identity threat (vs. control) was manipulated among Muslims. Results revealed that high social identity threat resulted in stronger differentiation of Muslims from non-Muslims in early (N200) and late (implicit evaluations) processing stages, with N200 effects again predicting implicit bias. Combined, these studies reveal how seemingly bottom-up early social categorization processes are affected by individual and contextual variables that affect the meaning of social identity. Implication of these results for the social identity perspective as well as social cognitive theories of person perception are discussed.

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“We have no quarrel with you”: Effects of group status on characterizations of “conflict” with an outgroup

Andrew Livingstone et al.
European Journal of Social Psychology, forthcoming

Abstract:
In three studies, we examined the effect of intergroup status on group members' tendencies to characterize the ingroup's relationship with an outgroup as conflictual following outgroup action. Findings from all three studies supported the prediction that the intergroup relationship would be characterized as less conflictual when the ingroup had relatively high rather than low status. Consistent with the hypothesis that the effect of status reflects strategic concerns, it was moderated by the perceived relevance of the outgroup's action to intergroup status relations (study 1), it was sensitive to audience (study 2), and it was partially mediated by status management concerns (study 3). The role of strategic, status-related factors in intergroup relations is discussed.

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Measuring Sexual Dimorphism With a Race–Gender Face Space

William Hopper et al.
Journal of Experimental Psychology: Human Perception and Performance, October 2014, Pages 1779-1788

Abstract:
Faces are complex visual objects, and faces chosen to vary in 1 regard may unintentionally vary in other ways, particularly if the correlation is a property of the population of faces. Here, we present an example of a correlation that arises from differences in the degree of sexual dimorphism. In Experiment 1, paired similarity ratings were collected for a set of 40 real face images chosen to vary in terms of gender and race (Asian vs. White). Multidimensional scaling (MDS) placed these stimuli in a “face space,” with different attributes corresponding to different dimensions. Gender was found to vary more for White faces, resulting in a negative or positive correlation between gender and race when only considering male or only considering female faces. This increased sexual dimorphism for White faces may provide an alternative explanation for differences in face processing between White and Asian faces (e.g., the own-race bias, face attractiveness biases, etc.). Studies of face processing that are unconfounded by this difference in the degree of sexual dimorphism require stimuli that are decorrelated in terms of race and gender. Decorrelated faces were created using a morphing technique, spacing the morphs uniformly around a ring in the 2-dimensional (2D) race–gender plane. In Experiment 2, paired similarity ratings confirmed the 2D positions of the morph faces. In Experiment 3, race and gender category judgments varied uniformly for these decorrelated stimuli. Our results and stimuli should prove useful for studying sexual dimorphism and for the study of face processing more generally.

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The development of race-based perceptual categorization: Skin color dominates early category judgments

Yarrow Dunham et al.
Developmental Science, forthcoming

Abstract:
Prior research on the development of race-based categorization has concluded that children understand the perceptual basis of race categories from as early as age 4 (e.g. Aboud, 1988). However, such work has rarely separated the influence of skin color from other physiognomic features considered by adults to be diagnostic of race categories. In two studies focusing on Black–White race categorization judgments in children between the ages of 4 and 9, as well as in adults, we find that categorization decisions in early childhood are determined almost entirely by attention to skin color, with attention to other physiognomic features exerting only a small influence on judgments as late as middle childhood. We further find that when skin color cues are largely eliminated from the stimuli, adults readily shift almost entirely to focus on other physiognomic features. However, 6- and 8-year-old children show only a limited ability to shift attention to facial physiognomy and so perform poorly on the task. These results demonstrate that attention to ‘race’ in younger children is better conceptualized as attention to skin color, inviting a reinterpretation of past work focusing on children's race-related cognition.

By KEVIN LEWIS | 09:00:00 AM

Wednesday, October 1, 2014

Officers, directors, and gentlemen

Masculinity, Testosterone, and Financial Misreporting

Yuping Jia, Laurence van Lent & Yachang Zeng
Journal of Accounting Research, forthcoming

Abstract:
We examine the relation between a measure of male CEOs’ facial masculinity and financial misreporting. Facial masculinity is associated with a complex of masculine behaviors (including aggression, egocentrism, risk-seeking, and maintenance of social status) in males. One possible mechanism for this relation is that the hormone testosterone influences both behavior and the development of the face shape. We document a positive association between CEO facial masculinity and various misreporting proxies in a broad sample of S&P1500 firms during 1996–2010. We complement this evidence by documenting that a CEO's facial masculinity predicts his firm's likelihood of being subject to an SEC enforcement action. We also show that an executive's facial masculinity is associated with the likelihood of the SEC naming him as a perpetrator. We find that facial masculinity is not a measure of overconfidence. Finally, we demonstrate that facial masculinity also predicts the incidence of insider trading and option backdating.

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What Happens in Nevada? Self-Selecting into Lax Law

Michal Barzuza & David Smith
Review of Financial Studies, forthcoming

Abstract:
We find that Nevada, the second most popular state for out-of-state incorporations and a state with lax corporate law, attracts firms that are 30–40% more likely to report financial results that later require restatement than firms incorporated in other states, including Delaware. Our results suggest that firms favoring protections for insiders select Nevada as a corporate home, and these firms are prone to financial reporting failures. We provide some evidence that Nevada law also has a causal impact by increasing a Nevada firm's propensity to misreport financials after the firm has incorporated in Nevada.

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Strategic News Releases in Equity Vesting Months

Alex Edmans et al.
NBER Working Paper, September 2014

Abstract:
We show that CEOs strategically time corporate news releases to coincide with months in which their equity vests. These vesting months are determined by equity grants made several years prior, and thus unlikely driven by the current information environment. CEOs reallocate news into vesting months, and away from prior and subsequent months. They release 5% more discretionary news in vesting months than prior months, but there is no difference for non-discretionary news. These news releases lead to favourable media coverage, suggesting they are positive in tone. They also generate a temporary run-up in stock prices and market liquidity, potentially resulting from increased investor attention or reduced information asymmetry. The CEO takes advantage of these effects by cashing out shortly after the news releases.

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Female Board Representation and Corporate Acquisition Intensity

Guoli Chen, Craig Crossland & Sterling Huang
Strategic Management Journal, forthcoming

Abstract:
This study examines the impact of female board representation on firm-level strategic behavior within the domain of mergers and acquisitions (M&A). We build on social identity theory to predict that greater female representation on a firm's board will be negatively associated with both the number of acquisitions the firm engages in and, conditional on doing a deal, acquisition size. Using a comprehensive, multi-year sample of U.S. public firms, we find strong support for our hypotheses. We demonstrate the robustness of our findings through the use of a difference-in-differences analysis on a sub-sample of firms that experienced exogenous changes in board gender composition as a result of director deaths.

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Growth Through Rigidity: An Explanation for the Rise in CEO Pay

Kelly Shue & Richard Townsend
University of Chicago Working Paper, April 2014

Abstract:
We explore a rigidity-based explanation of the dramatic and off-trend growth in US executive compensation during the 1990s and early 2000s. We show that executive option and stock grants are rigid in the number of shares granted. In addition, salary and bonus exhibit downward nominal rigidity. Rigidity implies that the value of executive pay will grow with firm equity returns, which averaged 30% annually during the Tech Boom. Rigidity can also explain the increased dispersion in pay, the difference in growth rates between the US and other countries, and the increased correlation between pay and firm-specific equity returns. Regulatory changes requiring the disclosure of the value of option grants help explain the moderation in executive pay in the late 2000s. Finally, we find suggestive evidence that number-rigidity in executive pay is generated by money illusion and rule-of-thumb decision-making.

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Labor Unemployment Insurance and Earnings Management

Yiwei Dou, Mozaffar Khan & Youli Zou
Harvard Working Paper, August 2014

Abstract:
There is relatively little prior evidence on the potential impact of rank and file employees on financial reporting choices outside union negotiations. We contribute to the literature by providing new evidence that firms appear to manage long-run earnings upward in order to manage employee perceptions of employment security. In particular, we exploit exogenous state-level changes in unemployment insurance benefits and test for unwinding of prior upward earnings management when benefits increase. An increase in unemployment benefits makes unemployment relatively less costly and reduces employees’ unemployment risk, thereby reducing firms’ upward earnings management incentives. Consistent with the hypothesis, we find a significant reduction in abnormal accruals, increased recognition of special items and writedowns, and greater downward restatement likelihood, following an increase in state-level unemployment benefits. Cross-sectional tests suggest greater unwinding of prior upward earnings management for firms with higher labor intensity, higher layoff propensity and a higher percentage of low-wage workers. Collectively the results provide new evidence of the impact of rank and file employees on firms’ financial reporting choices.

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Geographic Location, Excess Control Rights, and Cash Holdings

Sabri Boubaker, Imen Derouiche & Meziane Lasfer
International Review of Financial Analysis, forthcoming

Abstract:
We assess the extent to which remotely-located firms are likely to discretionarily accumulate cash rather than distribute it to shareholders. We consider that these firms are less subject to shareholder scrutiny and, thus, will have high agency conflicts as the distance will facilitate the extraction of private benefits. Consistent with our predictions, we find a positive relation between the distance to the main metropolitan area and cash holdings, and this impact is more pronounced when the controlling shareholder has high levels of excess control rights (i.e., separation of cash-flow rights and control rights). Our results hold even after accounting for all control variables, including financial constraints, and suggest that geographic remoteness can be conducive to severe agency problems, particularly when there is a large separation of cash-flow rights and control rights.

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Outsourcing Shareholder Voting to Proxy Advisory Firms

David Larcker, Allan McCall & Gaizka Ormazabal
Stanford Working Paper, June 2014

Abstract:
This paper examines the economic consequences of institutional investors outsourcing research and voting decisions on matters submitted to a vote of public company shareholders to proxy advisory firms. These outsourcing decisions appear to be the result of the regulatory requirement that institutional investors vote their shares combined with incentives for these investors to minimize their cost of voting activity. We investigate the implications of these decisions in the context of shareholder say-on-pay voting required in 2011 under the Dodd-Frank Act. Analyzing a large sample of firms from the Russell 3000 that are subject to the initial say-on-pay vote mandated by the Dodd-Frank Act, we find three primary results. First, consistent with prior research, proxy advisory firm recommendations have a substantive impact on say-on-pay voting outcomes. Second, a significant number of firms change their compensation programs in the time period before the formal shareholder vote in a manner consistent with the features known to be favored by proxy advisory firms in an effort to avoid a negative voting recommendation. Third, the stock market reaction to these compensation program changes is statistically negative. These results suggest that the outsourcing of voting to proxy advisory firms appears to have the unintended economic consequence that boards of directors are induced to make choices that decrease shareholder value. While this evidence does not speak to the optimality of outsourcing all voting decisions compared to alternative regulatory constructs (e.g. prohibiting proxy advisors or reducing the number of items to be voted on), it does inform this debate by providing evidence on the potential negative economic consequences of outsourcing shareholder voting to proxy advisors.

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Contractual vs. Actual Separation Pay Following CEO Turnover

Eitan Moshe Goldman & Peggy Peiju Huang
Management Science, forthcoming

Abstract:
Using hand-collected data, we document the details of the ex ante severance contracts and the ex post separation pay given to S&P 500 chief executive officers (CEOs) upon departing from their companies. We analyze what determines whether or not a CEO receives separation pay in excess of the amount specified in the severance contract. We find that discretionary separation pay is given to about 40% of departing CEOs and is, on average, $8 million, which amounts to close to 242% of a CEO’s annual compensation. We investigate the determinants of discretionary separation pay and find, for example, that discretionary separation pay positively correlates with weak internal governance in cases of voluntary CEO turnover but not when the CEO is forced out. We also find that discretionary pay is higher when the CEO has a noncompete clause in her ex ante severance contract. Event study analysis suggests that shareholders benefit from discretionary separation pay in forced turnovers but not in voluntary ones. Our overall results help to shed light on the complex role of discretionary separation pay in the bargaining game between boards and departing executives.

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Playing it Safe? Managerial Preferences, Risk, and Agency Conflicts

Todd Gormley & David Matsa
University of Pennsylvania Working Paper, September 2014

Abstract:
This paper examines managers’ incentive to “play it safe” by taking value-destroying actions that reduce their firms’ risk of distress. We find that, after managers are insulated by the adoption of an antitakeover law, firms take on less risk. Stock volatility decreases, cash holdings increase, and diversifying acquisitions increase by more than a quarter relative to firms that operate in the same state and industry. The acquisitions target “cash cows,” have negative announcement returns, and are concentrated among firms with greater risk of distress and inside ownership. Our findings suggest that shareholders face governance challenges beyond motivating managerial effort, and that instruments typically used to motivate managers, like greater financial leverage and larger ownership stakes, intensify these challenges.

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Corporate Goodness and Shareholder Wealth

Philipp Krüger
Journal of Financial Economics, forthcoming

Abstract:
Using a unique data set, I study how stock markets react to positive and negative events concerned with a firm's corporate social responsibility (CSR). I show that investors respond strongly negatively to negative events and weakly negatively to positive events. I then show that investors do value “offsetting CSR,” that is positive CSR news concerning firms with a history of poor stakeholder relations. In contrast, investors respond negatively to positive CSR news which is more likely to result from agency problems. Finally, I provide evidence that CSR news with stronger legal and economic information content generates a more pronounced investor reaction.

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The Impact of Insider Trading Laws on Dividend Payout Policy

Paul Brockman, Jiri Tresl & Emre Unlu
Journal of Corporate Finance, forthcoming

Abstract:
We posit that firms use dividend payout policy to reduce information asymmetry and agency costs caused by country-level institutional weaknesses. Firms operating in countries with weak insider trading laws attempt to mitigate this institutional weakness by committing themselves to paying out large and stable cash dividends. We test this central hypothesis (among others) using an international sample of firms across 24 countries, as well as by conducting a case study during an enforcement action. The results show that weak insider trading laws lead to a higher propensity of paying dividends, larger dividend amounts and greater dividend smoothing. We also show that the market’s valuation of dividend payouts is significantly higher when insider trading protection is weak. It is important to note that these insider trading results are not due to cross-country variations in investor or creditor protection, nor are they contingent on the enforcement of insider trading laws. Overall, our evidence supports the view that dividend payouts serve as a substitute bonding mechanism when country-level legal protections fail.

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Corporate Governance and the Timing of Earnings Announcements

Roni Michaely, Amir Rubin & Alexander Vedrashko
Review of Finance, October 2014, Pages 2003-2044

Abstract:
Using comprehensive time stamp data on earnings announcements collected from newswires, we show that earnings news announced within trading hours results in approximately 50% smaller immediate reaction compared to similar earnings announced outside trading hours. Negative news tends to be announced during trading hours, which, together with the reduced response, may allow for managerial opportunistic behavior. We also provide evidence that announcement timing is affected by internal corporate governance. Recent regulations that tightened firms’ governance are associated with a significant shift to announcing outside trading hours, especially for firms with better corporate governance. Our surveys of corporate managers corroborate these results.

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Family Ownership and Corporate Misconduct in U.S. Small Firms

Shujun Ding & Zhenyu Wu
Journal of Business Ethics, August 2014, Pages 183-195

Abstract:
This study adds to the theory of family business management by exploring the effects of family ownership on the corporate misconduct of small firms in the United States. The empirical findings indicate that small family-owned firms are less likely to commit misconduct than small non-family-owned firms. We interpret this finding as family firms aiming to achieve the trans-generational succession of moral capital. Further investigation shows a nonlinear family-ownership–misconduct relationship. A negative relationship between them only appears in mature firms. We further show that for relatively mature firms, only family firms with older owners are less likely to commit corporate misconduct.

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Passing Probation: Earnings Management by Interim CEOs and Its Effect on Their Promotion Prospects

Guoli Chen et al.
Academy of Management Journal, forthcoming

Abstract:
Drawing on CEO succession research and the impression management literature, we examine earnings management by interim CEOs, its impact on interim CEOs' promotion prospects, and the moderating effect of governance mechanisms on the relationship between the two. Based on a sample of 145 interim CEO succession events in U.S. public firms from 2004 to 2008, we find that (1) an interim CEO is more likely than a non-interim CEO to engage in earnings management to improve firm earnings performance ("income-increasing earnings management"); (2) the greater the income-increasing earnings management, the more likely the interim CEO will be promoted to the permanent position; and (3) the relationship between earnings management and the likelihood of interim CEO promotion is weakened when effective internal and external governance mechanisms are in place.

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Debtholders’ Demand for Conservatism: Evidence from Changes in Directors’ Fiduciary Duties

Jagadison Aier, Long Chen & Mikhail Pevzner
Journal of Accounting Research, forthcoming

Abstract:
Debtholders’ demand has been widely discussed as a key determinant of conservatism but clear causal evidence is not yet established. Using a natural experiment setting, wherein a Delaware court ruled that the fiduciary duties of directors in near insolvent Delaware companies extend to creditors, we predict and find that firms subject to the ruling significantly increased their accounting conservatism. Additionally, our results suggest that the increase in conservatism is more pronounced in near insolvent Delaware firms with stronger boards, confirming that the court ruling takes effect through the channel of board of directors. Our results are robust to using alternative measures of conservatism and near insolvency status, and controlling for potential confounding factors and other stakeholders’ demand for conservatism. Overall, our study provides empirical evidence to support the causal relation between debtholders’ demand and accounting conservatism previously suggested in the literature, and offers some insights into the role of board of directors in financial reporting.

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Valuing Diversity: CEOs’ Career Experiences and Corporate Investment

Conghui Hu & Yu-Jane Liu
Journal of Corporate Finance, forthcoming

Abstract:
This paper investigates the impact of CEOs’ career experiences on corporate investment decisions. We hypothesize that CEOs with more diverse career experiences are less likely to be constrained by insufficient internal capital. The potential mechanism is that rich external experiences help CEOs accumulate social connections and these connections mitigate information asymmetry and lead to better access to external funds. Consistent with this argument, we find that firms with CEOs who have more diverse career experiences exhibit lower investment-cash flow sensitivity and exploit more outside funds, including both bank loans and trade credit. These effects are more pronounced among financially constrained firms. Even controlling for connections gained through financial institutions or government offices, the effect of diversity still remains very strong. Finally, we conduct several tests to mitigate the concern that our results are driven by the endogeneity of CEOs’ appointments.

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Do busy directors and CEOs shirk their responsibilities? Evidence from mergers and acquisitions

Bradley Benson et al.
Quarterly Review of Economics and Finance, forthcoming

Abstract:
We examine the effects of busy directors on merger premiums and conclude that busy directors are not uniformly detrimental. We provide evidence that busy CEOs of acquirer firms are associated with lower premiums suggesting they do not shirk their responsibilities. Busy CEOs of target firms either accept lower premiums or do not play a significant role in determining the price, indicating they may either shirk or have hidden self-incentives. We find that when the majority of directors in target firms are busy, they negotiate better deals. The results show that busyness does not fully explain whether a CEO or director shirks responsibility. Additionally, our results confirm previous findings that the market reacts more negatively to high merger premiums.

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Contractual Freedom and the Evolution of Corporate Control in Britain, 1862 to 1929

Timothy Guinnane, Ron Harris & Naomi Lamoreaux
NBER Working Paper, September 2014

Abstract:
British general incorporation law granted companies an extraordinary degree of contractual freedom to craft their own governance rules. In this paper we study the uses to which this flexibility was put by examining the articles of association written by three samples of companies from the late nineteenth and early twentieth centuries. We find that incorporators consistently wrote rules that shifted power from shareholders to directors, that the extent of this shift became greater over time, and that Parliament made little effort to restrain it. Although large firms were less likely to enact the most extreme provisions, such as entrenching specific directors for life, they too wrote articles that gave managers essentially unchecked power. These findings have implications for the literature on corporate control, for the “law-and-finance” argument that the common law was more conducive to financial development than the code-based systems of civil law countries, and for the debate on entrepreneurial failure in Britain during the late nineteenth and early twentieth centuries.

By KEVIN LEWIS | 09:00:00 AM

Tuesday, September 30, 2014

On the fence

Can Acetaminophen Reduce the Pain of Decision-Making?

Nathan DeWall, David Chester & Dylan White
Journal of Experimental Social Psychology, forthcoming

Abstract:
Psychological and behavioral economic theories have shown that people often make irrational and suboptimal decisions. To describe certain decisions, people often use words related to pain (“hurt,” “painful”). Neuroscientific evidence suggests common overlap between systems involved in physical pain and decision-making. Yet no prior studies have explored whether a pharmacological intervention aimed at reducing physical pain could reduce the pain of decision-making. The current investigation filled this gap by assigning participants to consume the physical painkiller acetaminophen or placebo and then exposing them to situations known to produce cognitive dissonance (Experiment 1) or loss aversion (Experiment 2). Both experiments showed that acetaminophen reduced the pain of decision-making, as indicated by lower attitude change that accompanies cognitive dissonance and lower selling prices when selling personal possessions.

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Public policy for thee, but not for me: Varying the grammatical person of public policy justifications influences their support

James Cornwell & David Krantz
Judgment and Decision Making, September 2014, Pages 433–444

Abstract:
Past research has shown that people consistently believe that others are more easily manipulated by external influences than they themselves are — a phenomenon called the “third-person effect” (Davison, 1983). The present research investigates whether support for public policies aimed at changing behavior using incentives and other decision “nudges” is affected by this bias. Across two studies, we phrased justification for public policy initiatives using either the second- or third-person plural. In Study 1, we found that support for policies is higher when their justification points to people in general rather than the general “you”, and in Study 2 we found that this former phrasing also improves support compared to a no-justification control condition. Policy support is mediated by beliefs about the likelihood of success of the policies (as opposed to beliefs about the policies’ unintended consequences), and, in the second-person condition, is inversely related to a sense of personal agency. These effects suggest that the third-person effect holds true for nudge-type and incentive-based public policies, with implications for their popular support.

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Indecision and the construction of self

Daniel Newark
Organizational Behavior and Human Decision Processes, forthcoming

Abstract:
This paper proposes a theoretically grounded definition of indecision and considers one of indecision’s potential functions. It argues that, despite a reputation as mere choice pathology, indecision may play an important role in identity formation and maintenance. In particular, the contemplations and conversations characteristic of indecision may help construct, discover, or affirm who one is, even if ostensibly they are intended only to clarify what one should do. In addition to positing an underexplored function of indecision, the possibility that indecision facilitates identity development suggests that concentrated identity work need not be an explicit objective or even a process of which one is cognizant; it can be an unwitting byproduct of frustrated attempts at choice.

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Getting older isn’t all that bad: Better decisions and coping when facing “sunk costs”

Wändi Bruine de Bruin, JoNell Strough & Andrew Parker
Psychology and Aging, Summer 2014, Pages 642-647

Abstract:
Because people of all ages face decisions that affect their quality of life, decision-making competence is important across the life span. According to theories of rational decision making, one crucial decision skill involves the ability to discontinue failing commitments despite irrecoverable investments also referred to as “sunk costs.” We find that older adults are better than younger adults at making decisions to discontinue such failing commitments especially when irrecoverable losses are large, as well as at coping with the associated irrecoverable losses. Our results are relevant to interventions that aim to promote better decision-making competence across the life span.

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Do Children Who Experience Regret Make Better Decisions? A Developmental Study of the Behavioral Consequences of Regret

Eimear O'Connor, Teresa McCormack & Aidan Feeney
Child Development, September/October 2014, Pages 1995–2010

Abstract:
Although regret is assumed to facilitate good decision making, there is little research directly addressing this assumption. Four experiments (N = 326) examined the relation between children's ability to experience regret and the quality of their subsequent decision making. In Experiment 1 regret and adaptive decision making showed the same developmental profile, with both first appearing at about 7 years. In Experiments 2a and 2b, children aged 6–7 who experienced regret decided adaptively more often than children who did not experience regret, and this held even when controlling for age and verbal ability. Experiment 3 ruled out a memory-based interpretation of these findings. These findings suggest that the experience of regret facilitates children's ability to learn rapidly from bad outcomes.

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The Emotional Roots of Conspiratorial Perceptions, System Justification, and Belief in the Paranormal

Jennifer Whitson, Adam Galinsky & Aaron Kay
Journal of Experimental Social Psychology, forthcoming

Abstract:
We predicted that experiencing emotions that reflect uncertainty about the world (e.g., worry, surprise, fear, hope), compared to certain emotions (e.g., anger, happiness, disgust, contentment), would activate the need to imbue the world with order and structure across a wide range of compensatory measures. To test this hypothesis, three experiments orthogonally manipulated the uncertainty and the valence of emotions. Experiencing uncertain emotions increased government defense (Experiment 1) and led people to embrace conspiracies and the paranormal (Experiment 2). Self-affirmation eliminated the effects of uncertain emotions on compensatory control (Experiment 3). Across all experiments, the valence of the emotions had no main effects on compensatory control and never interacted with the uncertainty of emotions. These studies establish a link between the experience of emotions and the desire for structure.

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Wine as an Experience Good: Price Versus Enjoyment in Blind Tastings of Expensive and Inexpensive Wines

Robert Ashton
Journal of Wine Economics, August 2014, Pages 171-182

Abstract:
Economic theorists maintain that wine is an experience good, a product whose quality can be evaluated only after purchase and consumption. Theory holds that consumers often rely on the price of experience goods as one cue to judge their quality. In this paper, however, I provide evidence that an important segment of wine consumers do not consider price a useful cue to quality. Specifically, I test the robustness of Goldstein et al.'s (2008) finding that, in blind tastings, average wine drinkers consider less expensive wines to taste better than more expensive wines. Four blind tastings of 2006 red Bordeaux and 2009 white Burgundy with a price range of $20–$119 were conducted, in which members of a wine club rated their extent of enjoyment of each wine. In three of the tastings, there was no relationship between price and enjoyment, while in the other the relationship was negative, lending additional credibility to the contention that an important segment of wine consumers do not find enjoyment to increase with price.

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Differential Influence of Sadness and Disgust on Music Preference

Christa Taylor & Ronald Friedman
Psychology of Popular Media Culture, October 2014, Pages 195-205

Abstract:
Studies investigating the effects of negative affect on selective exposure to music have produced conflicting findings. In an effort to delineate whether this could be due to the common conceptualization of affect and related constructs as a 1-dimensional function of valence, the current study sought to determine if distinct forms of negative affect would influence music preference differentially. Participants were induced to feel sad, disgusted, or neutral via audio-guided visualization and asked to indicate their preferences for expressively happy and sad music selections. As expected, a significant interaction between condition (sad vs. disgust vs. neutral) and music emotion (sad vs. happy) was found. Participants induced to feel disgusted or neutral demonstrated a significantly greater desire to listen to happy (opposed to sad) music, whereas this effect was not present in individuals induced to feel sad. Results also elucidate the conflicting findings of studies investigating sadness in particular. These findings have important implications for understanding how affect influences music preference.

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It’s OK if ‘my brain made me do it’: People’s intuitions about free will and neuroscientific prediction

Eddy Nahmias, Jason Shepard & Shane Reuter
Cognition, November 2014, Pages 502–516

Abstract:
In recent years, a number of prominent scientists have argued that free will is an illusion, appealing to evidence demonstrating that information about brain activity can be used to predict behavior before people are aware of having made a decision. These scientists claim that the possibility of perfect prediction based on neural information challenges the ordinary understanding of free will. In this paper we provide evidence suggesting that most people do not view the possibility of neuro-prediction as a threat to free will unless it also raises concerns about manipulation of the agent’s behavior. In Experiment 1 two scenarios described future brain imaging technology that allows perfect prediction of decisions and actions based on earlier neural activity, and this possibility did not undermine most people’s attributions of free will or responsibility, except in the scenario that also allowed manipulation. In Experiment 2 the scenarios increased the salience of the physicalist implications of neuro-prediction, while in Experiment 3 the scenarios suggested dualism, with perfect prediction by mindreaders. The patterns of results for these two experiments were similar to the results in Experiment 1, suggesting that participants do not understand free will to require specific metaphysical conditions regarding the mind–body relation. Most people seem to understand free will in a way that is not threatened by perfect prediction based on neural information, suggesting that they believe that just because “my brain made me do it,” that does not mean that I didn’t do it of my own free will.

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Framing effect in evaluation of others’ predictions

Saiwing Yeung
Judgment and Decision Making, September 2014, Pages 445–464

Abstract:
This paper explored how frames influence people’s evaluation of others’ probabilistic predictions in light of the outcomes of binary events. Most probabilistic predictions (e.g., “there is a 75% chance that Denver will win the Super Bowl”) can be partitioned into two components: A qualitative component that describes the predicted outcome (“Denver will win the Super Bowl”), and a quantitative component that represents the chance of the outcome occurring (“75% chance”). Various logically equivalent variations of a single prediction can be created through different combinations of these components and their logical or numerical complements (e.g., “25% chance that Denver will lose the Super Bowl”, “75% chance that Seattle will lose the Super Bowl”). Based on the outcome of the predicted event, these logically equivalent predictions can be categorized into two classes: Congruently framed predictions, in which the qualitative component matches the outcome, and incongruently framed predictions, in which it does not. Although the two classes of predictions are logically equivalent, we hypothesize that people would judge congruently framed predictions to be more accurate. The paper tested this hypothesis in seven experiments and found supporting evidence across a number of domains and experimental manipulations, and even when the congruently framed prediction was logically inferior. It also found that this effect held even for subjects who saw both congruently framed and incongruently framed versions of a prediction and judged the two to be logically equivalent.

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Do we follow others when we should outside the lab? Evidence from the AP top 25

Daniel Stone & Basit Zafar
Journal of Risk and Uncertainty, August 2014, Pages 73-102

Abstract:
We use data from the Associated Press college American football poll to analyze two types of ex-post optimality of social learning in a non-lab setting. The poll is a weekly subjective ranking of the top 25 teams, voted on by over 60 sports journalists. Voters potentially can learn from their peers by observing the aggregate ranks before updating their individual ranks. Our results indicate that, while voters do learn from their peers to some extent, the informativeness of peer ranks appears to be under-valued.

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A Self-regulation Perspective on Hidden-profile Problems: If–Then Planning to Review Information Improves Group Decisions

Lukas Thürmer, Frank Wieber & Peter Gollwitzer
Journal of Behavioral Decision Making, forthcoming

Abstract:
In hidden-profile (HP) problems, groups squander their potential to make superior decisions because members fail to capitalize on each other's unique knowledge (unshared information). A new self-regulation perspective suggests that hindrances in goal striving (e.g., failing to seize action opportunities) contribute to this problem. Implementation intentions (if–then plans) are known to help deal with hindrances in goal striving; therefore, supporting decision goals with if–then plans should improve the impact of unshared information on group decisions. Indeed, in line with past research, control participants in two experiments rarely identified the best alternative despite monetary incentives and setting decision goals. In contrast, simply adding if–then plans to review advantages of the non-preferred alternatives before making the final decision significantly increased solution rates. Process manipulations (Experiment 1) and measures (Experiment 2) indicate that conceptualizing HP problems as a self-regulation challenge provides explanatory power beyond existing accounts.

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Extensive Imitation is Irrational and Harmful

Erik Eyster & Matthew Rabin
Quarterly Journal of Economics, forthcoming

Abstract:
Rationality leads people to imitate those with similar tastes but different information. But people who imitate common sources develop correlated beliefs, and rationality demands that later social learners take this correlation into account. This implies severe limits to rational imitation. We show that (i) in most natural observation structures besides the canonical single-file case, full rationality dictates that people must “anti-imitate” some of those they observe; and (ii) in every observation structure full rationality dictates that people imitate, on net, at most one person and are imitated by, on net, at most one person, over any set of interconnected players. We also show that in a very broad class of settings, any learning rule in which people regularly do imitate more than one person without anti-imitating others will lead to a positive probability of people converging to confident and wrong long-run beliefs.

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Referent Status Neglect: Winners Evaluate Themselves Favorably Even When the Competitor is Incompetent

Ethan Zell, Mark Alicke & Jason Strickhouser
Journal of Experimental Social Psychology, January 2015, Pages 18–23

Abstract:
People evaluate themselves more favorably when they outperform a referent (downward comparison) than when they underperform a referent (upward comparison). However, research has yet to examine whether people are sensitive to the status of the referent during social comparison. That is, does defeating a highly skilled referent yield more favorable self-evaluations than defeating an unskilled referent? Does losing to an unskilled referent yield less favorable self-evaluations than losing to a skilled referent? To address these questions, participants learned that they performed better or worse than another person (social comparison) who ranked above average or below average (referent status). Social comparison information had a more pronounced influence on self-evaluations than referent status information. Furthermore, consistent with self-enhancement theories, participants selectively highlighted referent status information when it had favorable implications for the self. These findings demonstrate that people neglect referent status information, leading winners to evaluate themselves favorably even when the competitor is incompetent.

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Gift Cards and Mental Accounting: Green-lighting Hedonic Spending

Chelsea Helion & Thomas Gilovich
Journal of Behavioral Decision Making, October 2014, Pages 386–393

Abstract:
In three studies, we examine the mental accounting rules that govern how gift cards are used. We predicted that their identity as gift cards would shift consumption from utilitarian to hedonic goods even in contexts where both types of goods are available and the consumer's needs are unchanged. In Study 1a, participants were asked to imagine that they had both a gift card and a specified amount of cash and needed to purchase both a hedonic item and a utilitarian item. When asked which currency they would use to buy which item, respondents were significantly more likely to say they would use the gift card to buy the hedonic item. Study 1b replicated this result and found that it was tied to participants' beliefs how different types of money should be used. In Study 2, we found that participants who were required to spend a certain amount of their compensation in a laboratory store spent more on hedonic goods if their payment was in the form of a gift card. In Study 3, we analyzed transactions at a campus bookstore and found that shoppers tended to spend disproportionately on hedonic goods when using their gift cards than when making credit card purchases. Taken together, these studies indicate that people tend to assign the monetary value of a gift card to a hedonic mental account and spend it accordingly.

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Increasing Hand Washing Compliance With a Simple Visual Cue

Eric Ford et al.
American Journal of Public Health, October 2014, Pages 1851-1856

Abstract:
We tested the efficacy of a simple, visual cue to increase hand washing with soap and water. Automated towel dispensers in 8 public bathrooms were set to present a towel either with or without activation by users. We set the 2 modes to operate alternately for 10 weeks. Wireless sensors were used to record entry into bathrooms. Towel and soap consumption rates were checked weekly. There were 97 351 hand-washing opportunities across all restrooms. Towel use was 22.6% higher (P = .05) and soap use was 13.3% higher (P = .003) when the dispenser presented the towel without user activation than when activation was required. Results showed that a visual cue can increase hand-washing compliance in public facilities.

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Analytic thinking reduces belief in conspiracy theories

Viren Swami et al.
Cognition, December 2014, Pages 572–585

Abstract:
Belief in conspiracy theories has been associated with a range of negative health, civic, and social outcomes, requiring reliable methods of reducing such belief. Thinking dispositions have been highlighted as one possible factor associated with belief in conspiracy theories, but actual relationships have only been infrequently studied. In Study 1, we examined associations between belief in conspiracy theories and a range of measures of thinking dispositions in a British sample (N = 990). Results indicated that a stronger belief in conspiracy theories was significantly associated with lower analytic thinking and open-mindedness and greater intuitive thinking. In Studies 2–4, we examined the causational role played by analytic thinking in relation to conspiracist ideation. In Study 2 (N = 112), we showed that a verbal fluency task that elicited analytic thinking reduced belief in conspiracy theories. In Study 3 (N = 189), we found that an alternative method of eliciting analytic thinking, which related to cognitive disfluency, was effective at reducing conspiracist ideation in a student sample. In Study 4, we replicated the results of Study 3 among a general population sample (N = 140) in relation to generic conspiracist ideation and belief in conspiracy theories about the July 7, 2005, bombings in London. Our results highlight the potential utility of supporting attempts to promote analytic thinking as a means of countering the widespread acceptance of conspiracy theories.

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Anchoring Effects in Simulated Academic Promotion Decisions: How the Promotion Criterion Affects Ratings and the Decision to Support an Application

Zhe Chen & Simon Kemp
Journal of Behavioral Decision Making, forthcoming

Abstract:
Six experiments investigated the effect of the promotion criterion in simulated academic promotion decisions. In total, 547 undergraduate students and 33 university faculty members rated a promotion application, and some also indicated their decisions to support or to reject it. Performance ratings were reliably affected by the criterion, with a high criterion resulting in higher ratings than a low criterion, and this criterion effect was found regardless of the evaluator's expertise, whether he or she took the role of an independent assessor or the line manager to the applicant, or whether the criterion was provided by the experimenter or randomly generated by the participant. The criterion also affected the level of support for a candidate when the position applied for was perceived to be extremely competitive, or when a lesser position was considered at a later time. These results provide evidence that the use of a criterion, a fairly common practice in decision-making processes, may bias performance evaluations, which in turn may have ripple effects that affect the outcome of a chain of events. Our results also shed light on the possible mechanisms that underlie the rating biases in performance appraisal.

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Individual Characteristics and the Disposition Effect: The Opposing Effects of Confidence and Self-Regard

Kathryn Kadous et al.
Journal of Behavioral Finance, Summer 2014, Pages 235-250

Abstract:
We conduct two experiments to examine potential causes of the disposition effect. In Experiment 1, we rule out beliefs in mean reversion as a cause of the disposition effect. Although a belief in the mean reversion of stock prices should be independent of whether an investor owns or only follows the stock, we show only investors who own the stock behave as though prices will reverse. In Experiment 2, participants buy and sell securities over multiple periods. We find that self-regard and investing confidence (two types of self-esteem) have opposing influences on investors’ tendency to hold losing investments. Investors with lower self-regard hold losing investments longer than those with higher self-regard, and investors with higher confidence hold losing investments longer than those with lower confidence. We focus on investors’ tendency to hold losing stocks too long because prior research suggests the gain versus loss sides of the disposition effect are driven by different biases.

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Motivated perception of probabilistic information

Heather Lench et al.
Cognition, November 2014, Pages 429–442

Abstract:
Desirability bias is the tendency to judge that, all else being equal, positive outcomes are more likely to occur than negative outcomes. The provision of probabilistic information about the likelihood that events will occur is typically viewed as a way to influence judgments by grounding them in objective information. Yet probabilistic information may be perceived differently when people are motivated to arrive at a particular conclusion, enabling the desirability bias. The present investigation explored how probabilistic information is used and perceived when people are motivated. In a game of chance, desirability bias was present for judgments about the likelihood of outcomes occurring to the self but not an unaffiliated other despite equal probabilities (Study 1). Probabilities were perceived as having more variance, both subjectively and in terms of probability spread (Studies 2, 3a, and 5), when participants were motivated to arrive at a particular conclusion (for the self or another person on the same team). Further, desirability bias was greater when probabilities were perceived as having more variance, either due to wide versus narrow probability ranges or subjective uncertainty (Studies 3b and 4). Together, these findings demonstrate that people perceive probabilistic information as having more variance when they are motivated to arrive at a conclusion and that this greater perceived variability contributes to bias in judgment.

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Affect and overconfidence: A laboratory investigation

John Ifcher & Homa Zarghamee
Journal of Neuroscience, Psychology, and Economics, September 2014, Pages 125-150

Abstract:
We conduct 2 incentivized random-assignment experiments to investigate whether overconfidence is impacted by (a) incidental mild positive affect, or (b) incidental mild negative affects — anger, fear, and sadness. We measure overconfidence using overestimation of past quiz-performance and overestimation of past quiz-performance compared to peers. The results of the first experiment indicate that the effect of positive affect on both measures of overconfidence is positive and significant for male subjects. Although mood-inducement is equally successful for female subjects, their overconfidence is unaffected by positive affect. These positive affect results are robust to various specification checks. In the second experiment, we find consistent evidence of neither anger, fear, nor sadness’s effect on overconfidence; the lack of a result is attributable either to a genuine lack of relationship between these affects and overconfidence or to confounded mood-inducements. The effect of positive affect on overconfidence may help explain the relationship between mood and speculative bubbles and between mood and trading volume. Further, our results have implications for the effect of happiness on overconfidence and the role of emotions in economic decision-making, in general. Finally, we examine the neural evidence supported by our data.

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From East to West: Accessibility and Bias in Self–Other Comparative Judgments

Colton Christian, I-Ching Lee & Sara Hodges
Personality and Social Psychology Bulletin, forthcoming

Abstract:
People often weight information about the self more heavily than information about other people when making social comparative judgments. One possible explanation for this egocentrism is that information about the self is more accessible than information about others. We examine this egocentrism in samples from the United States and Taiwan. Study 1 finds egocentrism in comparisons of the self with the average other person in both cultures. Study 2 measured reaction times, demonstrating that (a) information about the self is more accessible than information about the average other and (b) as the accessibility of self-information increases, so does the influence of that information. Study 3 replicates Study 2, using comparisons with a specific other person. Egocentrism occurred in both cultures, suggesting that heavier weighting of self-information occurs across the traditional East–West cultural divide.

By KEVIN LEWIS | 09:00:00 AM

Monday, September 29, 2014

Not my job

Labor Market Fluidity and Economic Performance

Steven Davis & John Haltiwanger
NBER Working Paper, September 2014

Abstract:
U.S. labor markets became much less fluid in recent decades. Job reallocation rates fell more than a quarter after 1990, and worker reallocation rates fell more than a quarter after 2000. The declines cut across states, industries and demographic groups defined by age, gender and education. Younger and less educated workers had especially large declines, as did the retail sector. A shift to older businesses, an aging workforce, and policy developments that suppress reallocation all contributed to fluidity declines. Drawing on previous work, we argue that reduced fluidity has harmful consequences for productivity, real wages and employment. To quantify the effects of reallocation intensity on employment, we estimate regression models that exploit low frequency variation over time within states, using state-level changes in population composition and other variables as instruments. We find large positive effects of worker reallocation rates on employment, especially for men, young workers, and the less educated. Similar estimates obtain when dropping data from the Great Recession and its aftermath. These results suggest the U.S. economy faced serious impediments to high employment rates well before the Great Recession, and that sustained high employment is unlikely to return without restoring labor market fluidity.

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The Changing Roles of Education and Ability in Wage Determination

Gonzalo Castex & Evgenia Kogan Dechter
Journal of Labor Economics, October 2014, Pages 685-710

Abstract:
This study examines changes in returns to formal education and cognitive skills over the past 20 years using the 1979 and 1997 waves of the National Longitudinal Survey of Youth. We show that cognitive skills had a 30%–50% larger effect on wages in the 1980s than in the 2000s. Returns to education were higher in the 2000s. These developments are not explained by changing distributions of workers’ observable characteristics or by changing labor market structure. We show that the decline in returns to ability can be attributed to differences in the growth rate of technology between the 1980s and 2000s.

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Skill Gaps, Skill Shortages and Skill Mismatches: Evidence for the US

Peter Cappelli
NBER Working Paper, August 2014

Abstract:
Concerns that there are problems with the supply of skills, especially education-related skills, in the US labor force have exploded in recent years with a series of reports from employer-associated organizations but also from independent and even government sources making similar claims. These complaints about skills are driving much of the debate around labor force and education policy, yet they have not been examined carefully. The discussion below examines the range of these charges as well as other evidence about skills in the labor force. There is very little evidence consistent with the complaints about skills and a wide range of evidence suggesting that they are not true. Indeed, a reasonable conclusion is that over-education remains the persistent and even growing situation of the US labor force with respect to skills. I consider three possible explanations for the employer complaints as well as the implications associated with those changes.

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Endogenous age discrimination

Christian Manger
Journal of Population Economics, October 2014, Pages 1087-1106

Abstract:
This paper shows that hiring discrimination against old workers occurs in imperfect labour markets even if individual productivity does not decrease with age and in the absence of a taste for discrimination. Search and informational frictions generate unemployment, with less productive workers facing higher risks of unemployment. Therefore, the employment status provides a signal for expected productivity. This stigma of unemployment becomes stronger with individual age and reduces the hiring opportunities of older workers. Political measures such as a reduction in dismissal protection can help to restore efficiency.

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Demographics and Entrepreneurship

James Liang, Hui Wang & Edward Lazear
NBER Working Paper, September 2014

Abstract:
Entrepreneurship requires creativity and business acumen. Creativity may decline with age, but business skills increase with experience in high level positions. Having too many older workers in society slows entrepreneurship. Not only are older workers less innovative, but more significant is that when older workers occupy key positions they block younger workers from acquiring business skills. A formal theoretical structure is presented and tested using the Global Entrepreneurship Monitor data. The results imply that a one-standard deviation decrease in the median age of a country increases the rate of new business formation by 2.5 percentage points, which is about forty percent of the mean rate. Furthermore, older societies have lower rates of entrepreneurship at every age.

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A New Method of Estimating Potential Real GDP Growth: Implications for the Labor Market and the Debt/GDP Ratio

Robert Gordon
NBER Working Paper, August 2014

Abstract:
Forecasts for the two or three years after mid-2014 have converged on growth rates of real GDP in the range of 3.0 to 3.5 percent, a major stepwise increase from realized growth of 2.1 percent between mid-2009 and mid-2014. However, these forecasts are based on the demand for goods and services. Less attention has been paid to how the accelerated growth of real GDP will be supplied. Will the unemployment rate, which has declined at roughly one percent per year, decline even faster from 6.1 percent in June, 2014 to 3.0 percent or below in 2017? Will the supply-side support for the demand-side optimism be provided instead by a major rebound of productivity growth from the average of 1.2 percent over the past decade and 0.6 percent for the last four years, or perhaps by a reversal of the minus 0.8 percent growth rate since 2007 of the labor-force participation rate? The paper develops a new and surprisingly simple method of calculating the growth rate of potential GDP over the next decade and concludes that projections of potential output growth for the same decade in the most recent reports of the Congressional Budget Office (CBO) are much too optimistic. If the projections in this paper are close to the mark, the level of potential GDP in 2024 will be almost 10 percent below the CBO’s current forecast. Further, the new potential GDP series implies that the debt/GDP ratio in 2024 will be closer to 87 percent than the CBO’s current forecast of 78 percent. This paper also has profound implications for the Federal Reserve. The unemployment rate has declined rapidly, particularly within the last year. Faster real GDP growth will accelerate the decline in the unemployment rate and soon reduce it beyond any estimate of the constant-inflation NAIRU, even if productivity growth experiences a rebound and the labor force participation rate stabilizes. The macro economy is on a collision course between demand-side optimism and supply-side pessimism.

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Import Competition and the Great U.S. Employment Sag of the 2000s

Daron Acemoglu et al.
NBER Working Paper, August 2014

Abstract:
Even before the Great Recession, U.S. employment growth was unimpressive. Between 2000 and 2007, the economy gave back the considerable gains in employment rates it had achieved during the 1990s, with major contractions in manufacturing employment being a prime contributor to the slump. The U.S. employment “sag” of the 2000s is widely recognized but poorly understood. In this paper, we explore the contribution of the swift rise of import competition from China to sluggish U.S. employment growth. We find that the increase in U.S. imports from China, which accelerated after 2000, was a major force behind recent reductions in U.S. manufacturing employment and that, through input-output linkages and other general equilibrium effects, it appears to have significantly suppressed overall U.S. job growth. We apply industry-level and local labor market-level approaches to estimate the size of (a) employment losses in directly exposed manufacturing industries, (b) employment effects in indirectly exposed upstream and downstream industries inside and outside manufacturing, and (c) the net effects of conventional labor reallocation, which should raise employment in non-exposed sectors, and Keynesian multipliers, which should reduce employment in non-exposed sectors. Our central estimates suggest net job losses of 2.0 to 2.4 million stemming from the rise in import competition from China over the period 1999 to 2011. The estimated employment effects are larger in magnitude at the local labor market level, consistent with local general equilibrium effects that amplify the impact of import competition.

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Long Workweeks and Strange Hours

Daniel Hamermesh & Elena Stancanelli
NBER Working Paper, September 2014

Abstract:
American workweeks are long compared to other rich countries’. Much less well-known is that Americans are more likely to work at night and on weekends. We examine the relationship between these two phenomena using the American Time Use Survey and time-diary data from 5 other countries. Adjusting for demographic differences, Americans’ incidence of night and weekend work would drop by about 10 percent if European workweeks prevailed. Even if no Americans worked long hours, the incidence of unusual work times in the U.S. would far exceed those in continental Europe.

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The Changing Benefits of Early Work Experience

Charles Baum & Christopher Ruhm
NBER Working Paper, August 2014

Abstract:
We examine whether the benefits of high school work experience have changed over the last 20 years by comparing effects for the 1979 and 1997 cohorts of the National Longitudinal Survey of Youth. Our main specifications suggest that the future wage benefits of working 20 hours per week in the senior year of high school have fallen from 8.3 percent for the earlier cohort, measured in 1987-1989, to 4.4 percent for the later one, in 2008-2010. Moreover, the gains of work are largely restricted to women and have diminished over time for them. We are able to explain about five-eighths of the differential between cohorts, with most of this being attributed to the way that high school employment is related to subsequent adult work experience and occupational attainment.

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The Effects of Minimum Wages over the Business Cycle

Joseph Sabia
Journal of Labor Research, September 2014, Pages 227-245

Abstract:
This study examines whether the low-skilled employment effects of minimum wage increases differ over the state business cycle. Controlling for spatial heterogeneity via state-specific productivity shocks to the low-skilled sector and state-specific non-linear time trends, the results suggest that minimum wage increases between 1989 and 2012 reduce low-skilled employment more during recessions than expansions. Estimated employment elasticities with respect to the minimum wage range from 0 to −0.2 during state economic expansions, but reach as high as −0.3 during troughs in the business cycle.

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A life-cycle model of unemployment and disability insurance

Sagiri Kitao
Journal of Monetary Economics, November 2014, Pages 1–18

Abstract:
A general equilibrium life-cycle model is developed, in which individuals choose a sequence of saving and labor supply faced with search frictions and uncertainty in longevity, health status and medical expenditures. Unemployed individuals decide whether to apply for disability insurance (DI) benefits if eligible. We investigate the effects of cash transfer and in-kind Medicare component of the DI system on the life-cycle employment. Without Medicare benefits, DI coverage could fall significantly. We also study how DI interacts with reforms of Social Security and Medicare and find that DI enrollment amplifies the effects of reforms.

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Taxation and the quality of entrepreneurship

Andrea Asoni & Tino Sanandaji
Journal of Economics, October 2014, Pages 101-123

Abstract:
We study the effect of taxation on entrepreneurship, investigating how taxes affect both the number of start-ups and their average quality. We show theoretically that even with risk neutral agents and no tax evasion progressive taxes can increase entrepreneurial entry, while reducing average firm quality. So called “success taxes” encourage start-ups with lower value business ideas by reducing the option value of pursuing better projects. This suggests that the most common measure used in the literature, the likelihood of entry into self-employment, may underestimate the adverse effect of taxation.

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Short-Time Compensation as a Tool to Mitigate Job Loss? Evidence on the U.S. Experience During the Recent Recession

Katharine Abraham & Susan Houseman
Industrial Relations, October 2014, Pages 543–567

Abstract:
During the recent recession only seventeen states offered short-time compensation (STC) — prorated unemployment benefits for workers whose hours are reduced for economic reasons. Federal legislation passed in 2012 will encourage the expansion of STC. Exploiting cross-state variation in STC, we present new evidence indicating that jobs saved during the recession as a consequence of STC may have been significant in manufacturing, but that the overall scale of the STC program was generally too small to have substantially mitigated aggregate job losses in the seventeen states. Expansion of the program is necessary for STC to be an effective countercyclical tool in the future.

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Do Tips Increase Workers' Income?

Oz Shy
Management Science, forthcoming

Abstract:
This paper constructs a model of service providers who compete in service and labor markets simultaneously to analyze the effects of tipping on hourly wages and total tip-inclusive hourly worker compensation. An increase in the tipping rate reduces hourly wages. Total worker compensation increases at different rates depending on the market structure, market coverage, and employment level, with the exception of price-taking (competitive) service providers, where the tip-inclusive hourly income declines with the tipping rate. The paper develops an index of “effective tipping” that measures the net percentage change in total hourly worker compensation associated with each tipping rate.

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Unemployed but Optimistic: Optimal Insurance Design with Biased Beliefs

Johannes Spinnewijn
Journal of the European Economic Association, forthcoming

Abstract:
This paper analyzes how biased beliefs about employment prospects affect the optimal design of unemployment insurance. Empirically, I find that the unemployed greatly overestimate how quickly they will find work. As a consequence, they would search too little for work, save too little for unemployment and deplete their savings too rapidly when unemployed. I analyze the use of the “sufficient-statistics” formula to characterize the optimal unemployment policy when beliefs are biased and revisit the desirability of providing liquidity to the unemployed. I also find that the optimal unemployment policy may involve increasing benefits during the unemployment spell.

By KEVIN LEWIS | 09:00:00 AM

Sunday, September 28, 2014

Smarty pants

Only in America: Cold Winters Theory, race, IQ and well-being

Bryan Pesta & Peter Poznanski
Intelligence, September–October 2014, Pages 271–274

Abstract:
Cold Winters Theory (CWT; Lynn, 1991) offers a viable explanation for race differences in intelligence. It proposes that IQ gaps exist because of different evolutionary pressures faced by the ancestral humans who left Africa, compared with those who remained. Support for CWT comes by showing correlations between national temperature and IQ. Here we test whether temperature correlates with IQ (and other well-being variables) across the 50 U.S. states. Although human evolution is recent, copious and regional (Wade, 2014), insufficient time has passed for it to have operated on non-native residents of the USA. Instead, CWT must predict no difference — or remain agnostic — on the existence of state-level correlations between temperature and IQ. Nonetheless, even after controlling for race, temperature strongly predicts state: IQ, religiosity, crime, education, health, income and global well-being. Evolution is therefore not necessary for temperature and IQ/well-being to co-vary meaningfully across geographic space.

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Why complex cognitive ability increases with absolute latitude

Federico León & Andrés Burga León
Intelligence, September–October 2014, Pages 291–299

Abstract:
Evolutionary psychologists attribute the superior IQs of light-skinned populations to genetic imprints left by millenary processes promoted by cold. But a novel theory that explains IQ gains observed across recent generations ascribes them to a latitude → UVB radiation → vitamin D3 → parents' sexual hormones → family size → child's intellectual environment → IQ chain of effects. Analyses of 506,347 Peruvian children's math and reading scores from a national census confirmed that complex cognitive ability increases with absolute latitude even under tropical megathermal climates and decreases with high altitude above sea level, birth rate and social development mediate most of the effects, and reading is more strongly influenced than math. The findings weaken the evolutionary cold hypothesis and strengthen the view that contraception has the potential to reduce latitudinal IQ gaps.

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Crimes and the Bell Curve: The Role of People with High, Average, and Low Intelligence

Nik Ahmad Sufian Burhan et al.
Intelligence, November–December 2014, Pages 12–22

Abstract:
The present study examines whether crime rates can be reduced by increasing the IQ of people with high, average, and low IQ. Previous studies have shown that as a determinant of the national level of income per capita growth and technological achievement, the IQ of the intellectual class (those at the 95th percentile of the bell curve distribution of population intelligence) is more important than the IQ of those with average ability at the 50th percentile. Extending these findings, our study incorporates the non-intellectual class (IQ at the 5th percentile) to examine the role of IQ classes in determining crime rates across countries. We conducted hierarchical multiple regression analyses with IQ, seven types of crimes, and nine control variables: urbanization, alcohol consumption, unemployment rate, young to old population ratio, income inequality, education attainment, drug consumption, police rate, and income per capita. Regardless of types of crimes, we found evidence that raising IQ will lessen crime rates, with raises in the 95th percentile group having the most number of significant impacts, followed by the 50th and then the 5th percentile groups. Furthermore, none of the nine control factors was stronger than the 95th percentile group in predicting crime rates. We conclude that the intellectual class influences rates of more types of crime than the non-intellectual class does. The intellectual class has the highest authority in determining law enforcement and development policies. Therefore, increasing the IQ of politicians and leaders from this class than other social classes will have a more significant influence in reducing crime rates, through enhanced functionality and quality of institutions across countries.

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Evaluation of tests of perceptual speed/accuracy and spatial ability for use in military occupational classification

Janet Held, Thomas Carretta & Michael Rumsey
Military Psychology, May 2014, Pages 199-220

Abstract:
With the exception of Assembling Objects (AO), a spatial ability test used only by the Navy in enlisted occupational classification, the Armed Services Vocational Aptitude Battery (ASVAB) is academic and knowledge-based, somewhat limiting its utility for occupational classification. This article presents the case for integrating the AO test into military classification composites and for expanding the breadth of ASVAB content by including a former ASVAB speed/accuracy test, Coding Speed (CS). Empirical evidence is presented that shows AO and CS (a) increment the validity of the ASVAB in predicting training grades for a broad array of occupations, (b) reduce adverse impact defined as test score barriers for women and minorities, and (c) improve classification in terms of matching recruits to occupations. Some cognitive theory is presented to support AO and CS, as well as nonverbal reasoning and working memory tests for inclusion in or adjuncts to the ASVAB.

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Replication of the Jensen effect on dysgenic fertility: An analysis using a large sample of American youth

Hannah Peach, Jordan Lyerly & Charlie Reeve
Personality and Individual Differences, December 2014, Pages 56–59

Abstract:
The purpose of this study is to replicate recent findings demonstrating that the dysgenic fertility trend is a Jensen effect. Data were drawn from Project TALENT. Present analyses included data from a total sample of 79,734 participants with complete data regarding number of biological children at the 11 year follow up, and analyses were further split by sex and race to examine possible differential trends among subgroups. Correlated vectors analyses revealed strong Jensen effects such that subtests with higher g-saturation were associated with larger dysgenic fertility gradients. This effect was evident in the total sample, and within all race/gender subgroups except for Asian males. Such findings yield further confirmation that g is in fact the principal factor by which the dysgenic fertility gradient operates.

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General intelligence, disease heritability, and health: A preliminary test

Satoshi Kanazawa
Personality and Individual Differences, December 2014, Pages 83–85

Abstract:
Cognitive epidemiology shows that more intelligent individuals stay healthier and live longer, but it is not known why. The system integrity theory predicts that more intelligent individuals are more protected from diseases that are more heritable, while the evolutionary novelty theory predicts that they are more protected from diseases that are less heritable. The paper proposes a new method of testing the competing hypotheses. An analysis of two large-scale population data sets from Sweden (n = 1 million for individual data and n = 9.6 million for heritability data) shows that intelligence is more important for health when the cancer heritability is low, supporting the evolutionary novelty theory. While the present results are merely suggestive, not conclusive, the proposed method can be extended to include other diseases and causes of death.

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Common genetic variants associated with cognitive performance identified using the proxy-phenotype method

Cornelius Rietveld et al.
Proceedings of the National Academy of Sciences, 23 September 2014, Pages 13790–13794

Abstract:
We identify common genetic variants associated with cognitive performance using a two-stage approach, which we call the proxy-phenotype method. First, we conduct a genome-wide association study of educational attainment in a large sample (n = 106,736), which produces a set of 69 education-associated SNPs. Second, using independent samples (n = 24,189), we measure the association of these education-associated SNPs with cognitive performance. Three SNPs (rs1487441, rs7923609, and rs2721173) are significantly associated with cognitive performance after correction for multiple hypothesis testing. In an independent sample of older Americans (n = 8,652), we also show that a polygenic score derived from the education-associated SNPs is associated with memory and absence of dementia. Convergent evidence from a set of bioinformatics analyses implicates four specific genes (KNCMA1, NRXN1, POU2F3, and SCRT). All of these genes are associated with a particular neurotransmitter pathway involved in synaptic plasticity, the main cellular mechanism for learning and memory.

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Metabolic costs and evolutionary implications of human brain development

Christopher Kuzawa et al.
Proceedings of the National Academy of Sciences, 9 September 2014, Pages 13010–13015

Abstract:
The high energetic costs of human brain development have been hypothesized to explain distinctive human traits, including exceptionally slow and protracted preadult growth. Although widely assumed to constrain life-history evolution, the metabolic requirements of the growing human brain are unknown. We combined previously collected PET and MRI data to calculate the human brain’s glucose use from birth to adulthood, which we compare with body growth rate. We evaluate the strength of brain–body metabolic trade-offs using the ratios of brain glucose uptake to the body’s resting metabolic rate (RMR) and daily energy requirements (DER) expressed in glucose-gram equivalents (glucosermr% and glucoseder%). We find that glucosermr% and glucoseder% do not peak at birth (52.5% and 59.8% of RMR, or 35.4% and 38.7% of DER, for males and females, respectively), when relative brain size is largest, but rather in childhood (66.3% and 65.0% of RMR and 43.3% and 43.8% of DER). Body-weight growth (dw/dt) and both glucosermr% and glucoseder% are strongly, inversely related: soon after birth, increases in brain glucose demand are accompanied by proportionate decreases in dw/dt. Ages of peak brain glucose demand and lowest dw/dt co-occur and subsequent developmental declines in brain metabolism are matched by proportionate increases in dw/dt until puberty. The finding that human brain glucose demands peak during childhood, and evidence that brain metabolism and body growth rate covary inversely across development, support the hypothesis that the high costs of human brain development require compensatory slowing of body growth rate.

By KEVIN LEWIS | 09:00:00 AM

Saturday, September 27, 2014

With abandon

Sense of Control Under Uncertainty Depends on People's Childhood Environment: A Life History Theory Approach

Chiraag Mittal & Vladas Griskevicius
Journal of Personality and Social Psychology, October 2014, Pages 621-637

Abstract:
Past research found that environmental uncertainty leads people to behave differently depending on their childhood environment. For example, economic uncertainty leads people from poor childhoods to become more impulsive while leading people from wealthy childhoods to become less impulsive. Drawing on life history theory, we examine the psychological mechanism driving such diverging responses to uncertainty. Five experiments show that uncertainty alters people's sense of control over the environment. Exposure to uncertainty led people from poorer childhoods to have a significantly lower sense of control than those from wealthier childhoods. In addition, perceptions of control statistically mediated the effect of uncertainty on impulsive behavior. These studies contribute by demonstrating that sense of control is a psychological driver of behaviors associated with fast and slow life history strategies. We discuss the implications of this for theory and future research, including that environmental uncertainty might lead people who grew up poor to quit challenging tasks sooner than people who grew up wealthy.

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Guilt Enhances the Sense of Control and Drives Risky Judgments

Maryam Kouchaki, Christopher Oveis & Francesca Gino
Journal of Experimental Psychology: General, forthcoming

Abstract:
In the present studies, we investigate the hypothesis that guilt influences risk taking by enhancing one's sense of control. Across multiple inductions of guilt, we demonstrate that experimentally induced guilt enhances optimism about risks for the self (Study 1), preferences for gambles versus guaranteed payoffs (Studies 2, 4, and 6), and the likelihood that one will engage in risk-taking behaviors (Study 5). In addition, we demonstrate that guilt enhances the sense of control over uncontrollable events, an illusory control (Studies 3, 4, and 5), and found that a model with illusory control as a mediator is consistent with the data (Studies 5 and 6). We also found that a model with feelings of guilt as a mediator but not generalized negative affect fits the data (Study 4). Finally, we examined the relative explanatory power of different appraisals and found that appraisals of illusory control best explain the influence of guilt on risk taking (Study 6). These results provide the first empirical demonstration of the influence of guilt on sense of control and risk taking, extend previous theorizing on guilt, and more generally contribute to the understanding of how specific emotions influence cognition and behavior.

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Extraverted populations have lower savings rates

Jacob Hirsh
Personality and Individual Differences, forthcoming

Abstract:
Savings rates in the U.S. have reached an historic low, posing challenges to long-term economic well-being. Among individuals, impulsive spending is associated with preferences for immediate gratification, driven by a heightened sensitivity to immediate rewards. Three studies examined whether population levels of trait Extraversion, reflecting dispositional sensitivity to rewards, are associated with aggregate savings rates. In Study 1, cross-cohort increases in U.S. Extraversion, assessed from 16,846 individuals over 28 years, were associated with declining personal savings rates. In Study 2, regional variation in Extraversion as assessed from a sample of 619,397 participants was negatively associated with state-level household saving, although only Openness remained a significant predictor when all traits were simultaneously entered into a regression model. In Study 3, higher nationally-aggregated Extraversion predicted lower gross national savings in a global sample of 17,837 individuals from 53 nations.

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Self-regulation and Health

Henry Saffer
NBER Working Paper, September 2014

Abstract:
The purposes of this paper are to measure self-regulation, to investigate whether self-regulation differs across different health related choices, to estimate its effect on health choices and to estimate the effect of self-regulation on health-demographic gradients. The theory and empirical approach to self-regulation employed in this paper relies on a broad literature which includes economics, psychology and experimental studies. In addition, a novel empirical approach is employed to create a single measure of self-regulation that can vary across domains. A single measure of self-regulation in place of a set of proxy variables allows for the study of how self-regulation is correlated across different health choices. The results show that there is a high correlation in self-regulation for smoking, drinking, drug use, crime and gambling, but that self-regulation for BMI (body mass index) and obesity are different than self-regulation for the other outcomes. The results show that self-regulation has a significant negative effect on all choices. The results also show that self-regulation generally reduces the effect of education on health but education retains a negative and significant relationship with all outcomes. The research presented in this paper also raises questions about the effect of omitted individual heterogeneity in measuring the effects of public policy.

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Discounting, Cognition, and Financial Awareness: New Evidence from a Change in the Military Retirement System

Curtis Simon, John Warner & Saul Pleeter
Economic Inquiry, forthcoming

Abstract:
The choice given military personnel between an immediate cash payment of $30,000 or a more generous retirement pension permits us to estimate individuals' personal discount rates (PDRs). The resulting PDRs, about 7% for enlisted personnel and 2%-4.3% for officers, are precise and are correlated with a variety of other financial behaviors. The PDR is negatively related to educational attainment and the Armed Forces Qualification Test, but cognition seems to operate through channels other than being better informed; better-informed individuals were not always measured to be more patient.

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Mindset induction effects on cognitive control: A neurobehavioral investigation

Hans Schroder et al.
Biological Psychology, December 2014, Pages 27-37

Abstract:
Messages about how much our abilities can change - or "mindset" messages - affect learning, achievement, and performance interpretations. However, the neurocognitive mechanisms responsible for these effects remain unexplored. To address this gap, we assessed how a mindset induction influenced cognitive control brain activity. Participants were randomly assigned to read that intelligence was either malleable (growth-mindset condition) or immutable (fixed-mindset condition) before completing a reaction-time task while electroencephalogram was recorded. Findings revealed that inducing a growth mindset resulted in enhanced attention to task-relevant stimuli, whereas inducing a fixed mindset enhanced attention to responses. Despite enhanced attention to responses in the fixed mindset group, this attention allocation was unrelated to adaptive performance adjustments. In contrast, the growth mindset induction produced a relatively strong coupling between error-related attention allocation and adaptive post-error performance. These results suggest that growth- and fixed-mindset messages have differential effects on the neural dynamics underlying cognitive control.

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Using priming manipulations to affect time preferences and risk aversion: An experimental study

Avi Israel, Mosi Rosenboim & Tal Shavit
Journal of Behavioral and Experimental Economics, December 2014, Pages 36-43

Abstract:
The objective of this paper is to test how priming manipulation affects time preference (subjective discount rates) and risk aversion. In this study, we exposed subjects to visual (pictorial) and textual priming for vacation and for old age in order to influence their time preference. The results indicate that our pictorial priming manipulations did affect time preference and subjective discount rates: vacation scenes increased present preference, and pictures of older people reduced present preference. The pictorial priming with vacation scenes also increased risk aversion. On the other hand, textual priming did not affect time preference or risk aversion.

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Neuroanatomy Predicts Individual Risk Attitudes

Sharon Gilaie-Dotan et al.
Journal of Neuroscience, 10 September 2014, Pages 12394-12401

Abstract:
Over the course of the last decade a multitude of studies have investigated the relationship between neural activations and individual human decision-making. Here we asked whether the anatomical features of individual human brains could be used to predict the fundamental preferences of human choosers. To that end, we quantified the risk attitudes of human decision-makers using standard economic tools and quantified the gray matter cortical volume in all brain areas using standard neurobiological tools. Our whole-brain analysis revealed that the gray matter volume of a region in the right posterior parietal cortex was significantly predictive of individual risk attitudes. Participants with higher gray matter volume in this region exhibited less risk aversion. To test the robustness of this finding we examined a second group of participants and used econometric tools to test the ex ante hypothesis that gray matter volume in this area predicts individual risk attitudes. Our finding was confirmed in this second group. Our results, while being silent about causal relationships, identify what might be considered the first stable biomarker for financial risk-attitude. If these results, gathered in a population of midlife northeast American adults, hold in the general population, they will provide constraints on the possible neural mechanisms underlying risk attitudes. The results will also provide a simple measurement of risk attitudes that could be easily extracted from abundance of existing medical brain scans, and could potentially provide a characteristic distribution of these attitudes for policy makers.

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The Role of Hope in Financial Risk Seeking

Martin Reimann et al.
Journal of Experimental Psychology: Applied, forthcoming

Abstract:
One construct validation study and four experiments showed that the relationship between hope and financial risk seeking depended on whether or not the possibility of a hoped-for outcome was threatened. Whereas high (vs. low) hope decreased financial risk seeking when the possibility of a hoped-for outcome was not threatened, high (vs. low) hope increased financial risk seeking when the outcome's possibility was threatened. These effects were observed in different contexts (i.e., gambling, stock investing, bidding, retirement investing), when applying different operationalizations of hope and threats to possibility, and when controlling for alternative explanations. We also showed that individuals' motivations to either achieve gains or avoid losses mediated the effects of hope on financial risk seeking. This research, which is the first to study the role of hope in financial decision making, adds to the extant literature by underscoring the psychological impact of threats to the possibility of attaining a hoped-for financial outcome.

By KEVIN LEWIS | 09:00:00 AM

Friday, September 26, 2014

For your health

“I Want You to Save My Kid!”: Illness Management Strategies, Access, and Inequality at an Elite University Research Hospital

Amanda Gengler
Journal of Health and Social Behavior, September 2014, Pages 342-359

Abstract:
Using data drawn from interviews and observations with 18 families whose children were diagnosed with life-threatening, often rare diseases, I examine how families accessed and negotiated medical care at a top 10–ranked university research hospital. Access to highly specialized and technologically advanced care was essential in these critical cases. Combining analysis of these high-stakes cases with recent work highlighting the interactional dynamics of care delivery, I show how families followed different paths to elite care and used different illness management strategies throughout the treatment process depending on their ability to mobilize what Janet Shim terms cultural health capital. These diverging illness management strategies reproduced inequality even at the top of the U.S. healthcare system by allowing some families to secure microadvantages throughout the illness experience. These findings suggest a complex interplay between structures of care delivery and families’ illness management strategies and point to the need for broader conceptualizations of healthcare advantages.

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A Comparison Of Hospital Administrative Costs In Eight Nations: US Costs Exceed All Others By Far

David Himmelstein et al.
Health Affairs, September 2014, Pages 1586-1594

Abstract:
A few studies have noted the outsize administrative costs of US hospitals, but no research has compared these costs across multiple nations with various types of health care systems. We assembled a team of international health policy experts to conduct just such a challenging analysis of hospital administrative costs across eight nations: Canada, England, Scotland, Wales, France, Germany, the Netherlands, and the United States. We found that administrative costs accounted for 25.3 percent of total US hospital expenditures — a percentage that is increasing. Next highest were the Netherlands (19.8 percent) and England (15.5 percent), both of which are transitioning to market-oriented payment systems. Scotland and Canada, whose single-payer systems pay hospitals global operating budgets, with separate grants for capital, had the lowest administrative costs. Costs were intermediate in France and Germany (which bill per patient but pay separately for capital projects) and in Wales. Reducing US per capita spending for hospital administration to Scottish or Canadian levels would have saved more than $150 billion in 2011. This study suggests that the reduction of US administrative costs would best be accomplished through the use of a simpler and less market-oriented payment scheme.

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Who pays the high health costs of older workers? Evidence from prostate cancer screening mandates

James Bailey
Applied Economics, Fall 2014, Pages 3931-3941

Abstract:
Between 1992 and 2009, 30 US states adopted laws mandating that health insurance plans cover screenings for prostate cancer. Because prostate cancer screenings are used almost exclusively by men over age 50, these mandates raise the cost of insuring older men relative to other groups. This article uses a triple-difference empirical strategy to take advantage of this quasi-random natural experiment in raising the cost of employing older workers. Using Integrated Public Use Microdata Series data from the March Supplement of the Current Population Survey, I find that the increased cost of insuring older workers results in their receiving 2.8% lower hourly wages, being 2% less likely to be employed and being 0.7% less likely to have employer-sponsored health insurance.

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Does Privatized Health Insurance Benefit Patients or Producers? Evidence from Medicare Advantage

Marika Cabral, Michael Geruso & Neale Mahoney
NBER Working Paper, September 2014

Abstract:
The debate over privatizing Medicare stems from a fundamental disagreement about whether privatization would primarily generate consumer surplus for individuals or producer surplus for insurance companies and health care providers. This paper investigates this question by studying an existing form of privatized Medicare called Medicare Advantage (MA). Using difference-in-differences variation brought about by payment floors established by the 2000 Benefits Improvement and Protection Act, we find that for each dollar in increased capitation payments, MA insurers reduced premiums to individuals by 45 cents and increased the actuarial value of benefits by 8 cents. Using administrative data on the near-universe of Medicare beneficiaries, we show that advantageous selection into MA cannot explain this incomplete pass-through. Instead, our evidence suggests that insurer market power is an important determinant of the division of surplus, with premium pass-through rates of 13% in the least competitive markets and 74% in the markets with the most competition.

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Controlling Health Care Costs Through Limited Network Insurance Plans: Evidence from Massachusetts State Employees

Jonathan Gruber & Robin McKnight
NBER Working Paper, September 2014

Abstract:
Recent years have seen enormous growth in limited network plans that restrict patient choice of provider, particularly through state exchanges under the ACA. Opposition to such plans is based on concerns that restrictions on provider choice will harm patient care. We explore this issue in the context of the Massachusetts GIC, the insurance plan for state employees, which recently introduced a major financial incentive to choose limited network plans for one group of enrollees and not another. We use a quasi-experimental analysis based on the universe of claims data over a three-year period for GIC enrollees. We find that enrollees are very price sensitive in their decision to enroll in limited network plans, with the state’s three month “premium holiday” for limited network plans leading 10% of eligible employees to switch to such plans. We find that those who switched spent considerably less on medical care; spending fell by almost 40% for the marginal complier. This reflects both reductions in quantity of services used and prices paid per service. But spending on primary care actually rose for switchers; the reduction in spending came entirely from spending on specialists and on hospital care, including emergency rooms. We find that distance traveled falls for primary care and rises for tertiary care, although there is no evidence of a decrease in the quality of hospitals used by patients. The basic results hold even for the sickest patients, suggesting that limited network plans are saving money by directing care towards primary care and away from downstream spending. We find such savings only for those whose primary care physicians are included in limited network plans, however, suggesting that networks that are particularly restrictive on primary care access may fare less well than those that impose only stronger downstream restrictions.

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The Impact of Massachusetts Health Care Reform on Access, Quality, and Costs of Care for the Already-Insured

Karen Joynt et al.
Health Services Research, forthcoming

Objective: To assess the impact of Massachusetts Health Reform (MHR) on access, quality, and costs of outpatient care for the already-insured.

Study Design: We performed a retrospective difference-in-differences analysis of quantity of outpatient visits, proportion of outpatient quality metrics met, and costs of care for Medicare patients with ≥1 chronic disease in 2006 versus 2009. We used the remaining states in New England as controls.

Principal Findings: MHR was not associated with a decrease in outpatient visits per year compared to controls (9.4 prereform to 9.6 postreform in MA vs. 9.4–9.5 in controls, p = .32). Quality of care in MA improved more than controls for hemoglobin A1c monitoring, mammography, and influenza vaccination, and similarly to controls for diabetic eye examination, colon cancer screening, and pneumococcal vaccination. Average costs for patients in Massachusetts increased from $9,389 to $10,668, versus $8,375 to $9,114 in control states (p < .001).

Conclusions: MHR was not associated with worsening in access or quality of outpatient care for the already-insured, and it had modest effects on costs. This has implications for other states expanding insurance coverage under the Affordable Care Act.

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Process Learning and the Implementation of Medicaid Reform

Timothy Callaghan & Lawrence Jacobs
Publius, Fall 2014, Pages 541-563

Abstract:
As the implementation of health care reform proceeds in the face of ongoing political conflict, variations in state decisions are shaping important aspects of its pace and scope. This article investigates five potential explanations for state implementation of the Medicaid expansion — state party control, economic affluence, the trajectory of established policy, state administrative capacity, and the process of learning from intergovernmental bargaining. Our analysis of fifty states finds, not surprisingly, that party control of government influences state decisions. We also find, however, several additional and striking influences on states — namely, the trajectory of established policy for vulnerable populations and, of particular importance, state learning about the process of intergovernmental bargaining.

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Small Primary Care Physician Practices Have Low Rates Of Preventable Hospital Admissions

Lawrence Casalino et al.
Health Affairs, September 2014, Pages 1680-1688

Abstract:
Nearly two-thirds of US office-based physicians work in practices of fewer than seven physicians. It is often assumed that larger practices provide better care, although there is little evidence for or against this assumption. What is the relationship between practice size — and other practice characteristics, such as ownership or use of medical home processes — and the quality of care? We conducted a national survey of 1,045 primary care–based practices with nineteen or fewer physicians to determine practice characteristics. We used Medicare data to calculate practices’ rate of potentially preventable hospital admissions (ambulatory care–sensitive admissions). Compared to practices with 10–19 physicians, practices with 1–2 physicians had 33 percent fewer preventable admissions, and practices with 3–9 physicians had 27 percent fewer. Physician-owned practices had fewer preventable admissions than hospital-owned practices. In an era when health care reform appears to be driving physicians into larger organizations, it is important to measure the comparative performance of practices of all sizes, to learn more about how small practices provide patient care, and to learn more about the types of organizational structures — such as independent practice associations — that may make it possible for small practices to share resources that are useful for improving the quality of care.

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Trends in Hospitalizations and Outcomes for Acute Cardiovascular Disease and Stroke: 1999-2011

Harlan Krumholz, Sharon-Lise Normand & Yun Wang
Circulation, 16 September 2014, Pages 966-975

Background: The past decade focused intensely on improving the quality of care for people with, or at risk for, cardiovascular disease and stroke. We sought to quantify the changes in hospitalization rates and outcomes during this period.

Methods and Results: We used national Medicare data to identify all Fee-For-Service patients aged ≥65 years hospitalized with unstable angina, myocardial infarction, heart failure, ischemic stroke, and all other conditions from 1999 through 2011 (2010 for 1-year mortality). For each condition, we examined trends in adjusted rates of hospitalization per patient-year and, for each hospitalization, rates of 30-day mortality, 30-day readmission, and 1-year mortality overall and by demographic subgroups and regions. Rates of adjusted hospitalization declined for cardiovascular conditions (38.0% for 2011 compared with 1999 [95% CI] [37.2% to 38.8%] for myocardial infarction; 83.8% [83.3% to 84.4%] for unstable angina; 30.5% [29.3% to 31.6% ] for heart failure; and 33.6% [32.9% to 34.4%] for ischemic stroke compared with 10.2% [10.1% to 10.2%] for all other conditions). Adjusted 30-day mortality rates declined 29.4% [28.1% to 30.6%] for myocardial infarction; 13.1% [1.1% to 23.7%] for unstable angina; 16.4% [15.1% to 17.7%] for heart failure; and 4.7% for ischemic stroke [3.0% to 6.4%]. There were also reductions in rates of 1-year mortality and 30-day readmission and consistency in declines among the demographic subgroups.

Conclusions: Hospitalizations for acute cardiovascular disease and stroke from 1999 through 2011 declined more rapidly than for other conditions. For these conditions, mortality and readmission outcomes improved.

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Is Health Care an Individual Necessity? Evidence from Social Security Notch

Yuping Tsai
Centers for Disease Control and Prevention Working Paper, August 2014

Abstract:
This paper exploits Social Security legislation changes to identify the causal effect of Social Security income on out-of-pocket medical expenditures of the elderly. Using the household level consumption data from the 1986-1994 Consumer Expenditure Survey and an instrumental variables strategy, the empirical results show that the estimated income elasticities of out-of-pocket total medical costs, medical service expenses, and prescription drug expenses are about 0.89, 1.05, and 0.86, respectively. The estimated elasticities increase substantially and are statistically significant for elderly individuals with less than a high school education. The corresponding income elasticities are 2.49, 3.66, and 1.38, respectively. The findings are in sharp contrast to existing studies that use micro-level data and provide evidence that health care is a luxury good among the low education elderly.

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Risk Corridors and Reinsurance in Health Insurance Marketplaces: Insurance for Insurers

Timothy Layton, Thomas McGuire & Anna Sinaiko
NBER Working Paper, September 2014

Abstract:
In order to encourage entry and lower prices, most regulated markets for health insurance include policies that seek to reduce the uncertainty faced by insurers. In addition to risk adjustment of premiums paid to plans, the Health Insurance Marketplaces established by the Affordable Care Act implement reinsurance and risk corridors. Reinsurance limits insurer costs associated with specific individuals, while risk corridors protect against aggregate losses. Both tighten the insurer’s distribution of expected costs. This paper considers the economic costs and consequences of reinsurance and risk corridors. Drawing a parallel to individual insurance principles first described by Arrow (1963) and Zeckhauser (1970), we first discuss the optimal insurance policy for insurers. Then, we simulate the insurer’s cost distribution under reinsurance and risk corridors using health care utilization data for a group of individuals likely to enroll in Marketplace plans from the Medical Expenditure Panel Survey. We compare reinsurance and risk corridors in terms of insurer risk reduction and incentives for cost containment, finding that one-sided risk corridors achieve more risk reduction for a given level of cost containment incentives than both reinsurance and two-sided risk corridors. We also find that the ACA policies being implemented in the Marketplaces (a mix of reinsurance and two-sided risk corridor policies) substantially limit insurer risk but that they are outperformed by a simpler one-sided risk corridor policy according to our measures of insurer risk and incentives.

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Should Hospitals Keep Their Patients Longer? The Role of Inpatient and Outpatient Care in Reducing Readmissions

Ann Bartel, Carri Chan & Song-Hee (Hailey) Kim
NBER Working Paper, September 2014

Abstract:
Twenty percent of Medicare patients are readmitted to the hospital within 30 days of discharge, resulting in substantial costs to the U.S. government. As part of the 2010 Affordable Care Act, the Hospital Readmissions Reduction Program financially penalizes hospitals with higher than expected readmissions. Utilizing data on the over 6.6 million Medicare patients treated between 2008 and 2011, we estimate the reductions in readmission and mortality rates of an inpatient intervention (keeping patients in the hospital for an extra day) versus providing outpatient interventions. We find that for heart failure patients, the inpatient and outpatient interventions have practically identical impact on reducing readmissions. For heart attack and pneumonia patients, keeping patients for one more day can potentially save 5 to 6 times as many lives over outpatient programs. Moreover, we find that even if the outpatient programs were cost-free, incurring the additional costs of an extra day may be a more cost-effective option to save lives. While some outpatient programs can be very effective at reducing hospital readmissions, we find that inpatient interventions can be just as, if not more, effective.

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Health Care Use, Out-of-Pocket Expenditure, and Macroeconomic Conditions during the Great Recession

Juan Du & Takeshi Yagihashi
B.E. Journal of Economic Analysis & Policy, forthcoming

Abstract:
We study how macroeconomic conditions during the Great Recession affected health care utilization and out-of-pocket expenditures of American households. We use two data sources: the Consumer Expenditure (CE) Survey and the Survey of Income and Program Participation (SIPP); each has its own advantages. The CE contains quarterly frequency variables, and the SIPP provides panel data at the individual level. Consistent evidence across the two datasets shows that utilization of routine medical care was counter-cyclical, whereas hospital care was pro-cyclical during the Great Recession. When we examine the pre-recession period, the relationship between macroeconomic conditions and health care use was either non-existent or in opposite directions, suggesting that this relationship may have been unique to the Great Recession.

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Healthcare system and the wealth–health gradient: A comparative study of older populations in six countries

Dina Maskileyson
Social Science & Medicine, October 2014, Pages 18–26

Abstract:
The present study provides a comparative analysis of the association between wealth and health in six healthcare systems (Sweden, the United Kingdom, Germany, the Czech Republic, Israel, the United States). National samples of individuals fifty years and over reveal considerable cross-country variations in health outcomes. In all six countries wealth and health are positively associated. The findings also show that state-based healthcare systems produce better population health outcomes than private-based healthcare systems. The results indicate that in five out of the six countries studied, the wealth–health gradients were remarkably similar, despite significant variations in healthcare system type. Only in the United States was the association between wealth and health substantially different from, and much greater than that in the other five countries. The findings suggest that private-based healthcare system in the U.S. is likely to promote stronger positive associations between wealth and health.

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Rising inequality in mortality among working-age men and women in Sweden: A national registry-based repeated cohort study, 1990–2007

Naoki Kondo, Mikael Rostila & Monica Åberg Yngwe
Journal of Epidemiology & Community Health, forthcoming

Background: In the past two decades, health inequality has persisted or increased in states with comprehensive welfare.

Methods: We conducted a national registry-based repeated cohort study with a 3-year follow-up between 1990 and 2007 in Sweden. Information on all-cause mortality in all working-age Swedish men and women aged between 30 and 64 years was collected. Data were subjected to temporal trend analysis using joinpoint regression to statistically confirm the trajectories observed.

Results: Among men, age-standardised mortality rate decreased by 38.3% from 234.9 to 145 (per 100 000 population) over the whole period in the highest income quintile, whereas the reduction was only 18.3% (from 774.5 to 632.5) in the lowest quintile. Among women, mortality decreased by 40% (from 187.4 to 112.5) in the highest income group, but increased by 12.1% (from 280.2 to 314.2) in the poorest income group. Joinpoint regression identified that the differences in age-standardised mortality between the highest and the lowest income quintiles decreased among men by 18.85 annually between 1990 and 1994 (p trend=0.02), whereas it increased later, with a 2.88 point increase per year (p trend <0.0001). Among women, it continuously increased by 9.26/year (p trend <0.0001). In relative terms, age-adjusted mortality rate ratios showed a continuous increase in both genders.

Conclusions: Income-based inequalities among working-age male and female Swedes have increased since the late 1990s, whereas in absolute terms the increase was less remarkable among men. Structural and behavioural factors explaining this trend, such as the economic recession in the early 1990s, should be studied further.

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Economies of Dying: The Moralization of Economic Scarcity in U.S. Hospice Care

Roi Livne
American Sociological Review, forthcoming

Abstract:
As efforts are made to contain health care spending, the decision to stop trying to cure severely ill patients and focus on comfort care has become an economic as well as a moral issue. This article examines the intricate intersection of economics and morality in U.S. hospice care. Using historical, interview, and ethnographic methods, I explain the resonance between hospice practitioners’ moral motivations and policymakers’, insurers’, and providers’ efforts to economize near the end of life. Drawing on theoretical literature on morality in markets, I analyze the moralization of economic scarcity. I argue that rather than posing an external financial constraint on the achievement of moral goals, scarcity itself can bear moral meanings. In the case of hospice care, the view that “less is better” and the wish to save patients from over-treatment converge with financial interests to limit spending on end-of-life care and imbue financial constraints with positive moral meanings.

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The Association Between Residency Training and Internists’ Ability to Practice Conservatively

Brenda Sirovich et al.
JAMA Internal Medicine, forthcoming

Objective: To assess whether graduates of residency programs characterized by low-intensity practice patterns are more capable of managing patients’ care conservatively, when appropriate, and whether graduates of these programs are less capable of providing appropriately aggressive care.

Design, Setting, and Participants: Cross-sectional comparison of 6639 first-time takers of the 2007 American Board of Internal Medicine certifying examination, aggregated by residency program (n = 357).

Exposures: Intensity of practice, measured using the End-of-Life Visit Index, which is the mean number of physician visits within the last 6 months of life among Medicare beneficiaries 65 years and older in the residency program’s hospital referral region.

Main Outcomes and Measures: The mean score by program on the Appropriately Conservative Management (ACM) (and Appropriately Aggressive Management [AAM]) subscales, comprising all American Board of Internal Medicine certifying examination questions for which the correct response represented the least (or most, respectively) aggressive management strategy. Mean scores on the remainder of the examination were used to stratify programs into 4 knowledge tiers. Data were analyzed by linear regression of ACM (or AAM) scores on the End-of-Life Visit Index, stratified by knowledge tier.

Results: Within each knowledge tier, the lower the intensity of health care practice in the hospital referral region, the better residency program graduates scored on the ACM subscale (P < .001 for the linear trend in each tier). In knowledge tier 4 (poorest), for example, graduates of programs in the lowest-intensity regions had a mean ACM score in the 38th percentile compared with the 22nd percentile for programs in the highest-intensity regions; in tier 2, ACM scores ranged from the 75th to the 48th percentile in regions from lowest to highest intensity. Graduates of programs in low-intensity regions tended, more weakly, to score better on the AAM subscale (in 3 of 4 knowledge tiers).

Conclusions and Relevance: Regardless of overall medical knowledge, internists trained at programs in hospital referral regions with lower-intensity medical practice are more likely to recognize when conservative management is appropriate. These internists remain capable of choosing an aggressive approach when indicated.

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The Effect of Any Willing Provider and Freedom of Choice Laws on Prescription Drug Expenditures

Jonathan Klick & Joshua Wright
American Law and Economics Review, forthcoming

Abstract:
Pharmacy benefit managers (PBMs) potentially lower costs associated with prescription drugs through increased bargaining power with manufacturers. PBMs engage in selective contracting with pharmacies which has the potential to reduce retail competition, leading to increased prices. Proponents of “Any Willing Provider (AWP)” and “Freedom of Choice (FOC)” laws limiting this selective contracting claim increased retail competition will lower prescription drug spending. Examining the passage of such laws over the period 1991–2009, we find that AWP laws increase spending on prescription drugs by ∼5% beyond any pre-existing trends in spending while FOC laws have no significant effect.

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Health Insurance and Chronic Conditions in Low-Income Urban Whites

J.R. Smolen et al.
Journal of Urban Health, August 2014, Pages 637-647

Abstract:
Little is known about how health insurance contributes to the prevalence of chronic disease in the overlooked population of low-income urban whites. This study uses cross-sectional data on 491 low-income urban non-elderly non-Hispanic whites from the Exploring Health Disparities in Integrated Communities—Southwest Baltimore (EHDIC-SWB) study to examine the relationship between insurance status and chronic conditions (defined as participant report of ever being told by a doctor they had hypertension, diabetes, stroke, heart attack, anxiety or depression, asthma or emphysema, or cancer). In this sample, 45.8 % were uninsured, 28.3 % were publicly insured, and 25.9 % had private insurance. Insured participants had similar odds of having any chronic condition (odds ratios (OR) 1.06; 95 % confidence intervals (CI) 0.70–1.62) compared to uninsured participants. However, those who had public insurance had a higher odds of reporting any chronic condition compared to the privately insured (OR 2.29; 95 % CI 1.21–4.35). In low-income urban areas, the health of whites is not often considered. However, this is a significant population whose reported prevalence of chronic conditions has implications for the Medicaid expansion and the implementation of health insurance exchanges.

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Do Patient-Centered Medical Homes Reduce Emergency Department Visits?

Guy David et al.
Health Services Research, forthcoming

Objective: To assess whether adoption of the patient-centered medical home (PCMH) reduces emergency department (ED) utilization among patients with and without chronic illness.

Data Sources: Data from approximately 460,000 Independence Blue Cross patients enrolled in 280 primary care practices, all converting to PCMH status between 2008 and 2012.

Research Design: We estimate the effect of a practice becoming PCMH-certified on ED visits and costs using a difference-in-differences approach which exploits variation in the timing of PCMH certification, employing either practice or patient fixed effects. We analyzed patients with and without chronic illness across six chronic illness categories.

Principal Findings: Among chronically ill patients, transition to PCMH status was associated with 5–8 percent reductions in ED utilization. This finding was robust to a number of specifications, including analyzing avoidable and weekend ED visits alone. The largest reductions in ED visits are concentrated among chronic patients with diabetes and hypertension.

Conclusions: Adoption of the PCMH model was associated with lower ED utilization for chronically ill patients, but not for those without chronic illness. The effectiveness of the PCMH model varies by chronic condition. Analysis of weekend and avoidable ED visits suggests that reductions in ED utilization stem from better management of chronic illness rather than expanding access to primary care clinics.

By KEVIN LEWIS | 09:00:00 AM

Thursday, September 25, 2014

It's a local issue

A History of Violence: The Culture of Honor and Homicide in the U.S. South

Pauline Grosjean
Journal of the European Economic Association, October 2014, Pages 1285–1316

Abstract:
The paper tests the popular hypothesis that the high prevalence of homicide in the South of the United States originates from the settlement by herders from the fringes of Britain in the 18th century. I find that historical Scots-Irish presence is associated with higher contemporary homicide, particularly by white offenders, and that a culture of violence was transmitted to subsequent generations — but only in the South and, more generally, where historical institutional quality was low. The interpretation is that the Scots-Irish culture of honor prevailed and persisted as an adaptive behavior to weak institutions. As institutional quality converged between the South and North over the last 200 years, the influence of the culture of honor has been fading over time. The results are robust to controlling for state fixed effects and for a large number of historical and contemporary factors, as well as to relying on instrumental variables for historical settlements. The results are also specific to a particular type of homicide and background of settlers.

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Focusing on the Negative: Cultural Differences in Expressions of Sympathy

Birgit Koopmann-Holm & Jeanne Tsai
Journal of Personality and Social Psychology, forthcoming

Abstract:
Feeling concern about the suffering of others is considered a basic human response, and yet we know surprisingly little about the cultural factors that shape how people respond to the suffering of another person. To this end, we conducted 4 studies that tested the hypothesis that American expressions of sympathy focus on the negative less and positive more than German expressions of sympathy, in part because Americans want to avoid negative states more than Germans do. In Study 1, we demonstrate that American sympathy cards contain less negative and more positive content than German sympathy cards. In Study 2, we show that European Americans want to avoid negative states more than Germans do. In Study 3, we demonstrate that these cultural differences in “avoided negative affect” mediate cultural differences in how comfortable Americans and Germans feel focusing on the negative (vs. positive) when expressing sympathy for the hypothetical death of an acquaintance’s father. To examine whether greater avoided negative affect results in lesser focus on the negative and greater focus on the positive when responding to another person’s suffering, in Study 4, American and German participants were randomly assigned to 1 of 2 conditions: (a) to “push negative images away” (i.e., increasing desire to avoid negative affect) from or (b) to “pull negative images closer” (i.e., decreasing desire to avoid negative affect) to themselves. Participants were then asked to pick a card to send to an acquaintance whose father had hypothetically just died. Across cultures, participants in the “push negative away” condition were less likely to choose sympathy cards with negative (vs. positive) content than were those in the “pull negative closer” condition. Together, these studies suggest that cultures differ in their desire to avoid negative affect and that these differences influence the degree to which expressions of sympathy focus on the negative (vs. positive). We discuss the implications of these findings for current models of sympathy, compassion, and helping.

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The Agricultural Origins of Time Preference

Oded Galor & Ömer Özak
NBER Working Paper, August 2014

Abstract:
This research explores the origins of the distribution of time preference across regions. It advances the hypothesis, and establishes empirically, that geographical variations in natural land productivity and their impact on the return to agricultural investment have had a persistent effect on the distribution of long-term orientation across societies. In particular, exploiting a natural experiment associated with the expansion of suitable crops for cultivation in the course of the Columbian Exchange, the research establishes that agro-climatic characteristics in the pre-industrial era that were conducive to higher return to agricultural investment, triggered selection and learning processes that had a persistent positive effect on the prevalence of long-term orientation in the contemporary era.

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Public Opinion and the French Capital Punishment Debate of 1908

James Donovan
Law and History Review, August 2014, Pages 575-609

Abstract:
Academics have traditionally associated capital punishment most closely with authoritarian regimes. They have assumed an incompatibility between the death penalty and the presumably humane values of modern liberal democracy. However, recent scholarship on the United States by David Garland has suggested that a considerable degree of direct democratic control over a justice system actually tends to favor the retention and application of the death penalty. The reason why the United States has retained capital punishment after it has been abolished in other Western nations is not because public opinion is more supportive of the death penalty in America than in Europe or in Canada. Rather, it is because popular control over the justice system is greater in the United States than in other countries and this strengthens the influence of America's retentionist majority. However, the experience of the United States in this regard has not been unique. The same link between democratic control and retention of the death penalty can be seen in the history of the effort to abolish capital punishment in France. In 1908, a bill in the Chamber of Deputies (the lower house of the French Parliament) to abolish capital punishment was defeated, in large part because of strong opposition from the public. In 1981, majority public opinion in France still favored retention of the death penalty, but in that year, the nation's Parliament defied popular sentiment and outlawed the ultimate punishment. Historians have so far provided little insight into why abolition succeeded in 1981 when it failed in 1908. The explanation for the different outcome appears to have been the greater degree of influence public opinion exerted over the nation's justice system at the turn of the twentieth century than at its end.

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Individualist–Collectivist Culture and Trust Radius: A Multilevel Approach

André van Hoorn
Journal of Cross-Cultural Psychology, forthcoming

Abstract:
We apply a multilevel approach to examine empirically the nexus between individualist and collectivist culture on the one hand and people’s radius of trust on the other. People’s trust level (i.e., the intensity with which people trust other people) has been extensively studied. Increasingly, however, researchers are seeing a need to move beyond trust level and study trust radius (i.e., the width of the circle of people among whom a certain trust level exists) as the second quintessential component of trust. Results for up to 44,845 individuals from 36 countries show, first, that we can validly apply multilevel modeling to the study of trust radius. Second, consistent with prior theoretical expectations, individualism is associated with a broader trust radius, whereas collectivism is associated with a narrower trust radius. Considering the strength of the associations found, trust radius might be best understood as an inherent part of the individualism–collectivism cultural syndrome. The key contribution of this note is to reveal how exactly individualism–collectivism relates to trust, specifically its radius. In addition, the note demonstrates the feasibility of a multilevel approach to studying trust radius with much potential for follow-up research on this most vital trust construct.

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Arab Jew in Palestine

Menachem Klein
Israel Studies, Fall 2014, Pages 134-153

Abstract:
Using sources on everyday life of average citizens, the article shows that an Arab–Jewish hybrid identity already existed in Palestine in the late nineteenth century, prior to the introduction of Arab or Jewish national movements. Afterwards it competed with them over the loyalty of its original members. Arab–Jewish identity was part of Palestine’s modernizing order rather than its old one. It prevailed in joint neighborhoods, religious festivals, spoken languages, schools, and joint coffee shops. Unlike other Middle East Arab–Jewish communities, in Palestine it included both Ashkenazi Jews and a certain type of Zionist.

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Can Cultural Norms Reduce Conflicts? Confucianism and Peasant Rebellions in Qing China

James Kai-sing Kung & Chicheng Ma
Journal of Development Economics, November 2014, Pages 132–149

Abstract:
Can culture mitigate conflicts triggered by economic shocks? In light of the extraordinary emphasis that Confucianism places on subordination and pacifism, we examine its role in possibly attenuating peasant rebellion within the historical context of China (circa 1651–1910). Our analysis finds that, while crop failure triggers peasant rebellion, its effect is significantly smaller in counties characterized by stronger Confucian norms as proxied by Confucian temples and chaste women. This result remains robust after controlling for a long list of covariates and instrumenting Confucian norms using ancient Confucian sages (500 B.C.-A.D. 550) to address concerns of measurement error and reverse causality.

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Being Different Leads to Being Connected: On the Adaptive Function of Uniqueness in “Open” Societies

Kosuke Takemura
Journal of Cross-Cultural Psychology, forthcoming

Abstract:
The current research proposes that high need for uniqueness (NFU) brings individuals positive life outcomes by helping them be connected with, rather than isolated from, others in societies where social relationships are mobile and generally open to outsiders. In societies characterized by a high mobility of relationships (relational mobility) that may result in market-like competitive circumstances (e.g., America), NFU may increase chances of social success by leading individuals to develop their unique “selling points.” In contrast, high NFU may bring worse results in closed societies (e.g., Japan) because of the associated risk of being ostracized. This hypothesis was examined and confirmed by three studies that employed cross-national as well as cross-regional comparisons within a single nation. A pilot study first confirmed that for societies higher in relational mobility, a high NFU person was viewed more favorably as a friend. Studies 1 and 2 found that NFU was more positively associated with life satisfaction, relationship satisfaction (Study 2), as well as income (Study 2) in societies higher in relational mobility.

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On Metacognition and Culture

Aner Sela & Jonah Berger
University of Pennsylvania Working Paper, July 2014

Abstract:
Metacognition impacts judgment and decision making, but might its effects vary by culture? Culture shapes the meaning people extract from experiences, and as a result, we suggest it may impact the inferences people draw from metacognitive perceptions. Specifically, whereas cultures with a disjoint agency model (e.g., European-American) see choice as diagnostic of the inner self, cultures with a conjoint agency model (e.g., South-East Asian) see choice more as reflecting external considerations. Consequently, conjoint agency contexts are less likely to use metacognitive experiences that accompany choice as an input to judgments about inner preferences and priorities. Accordingly, we show that Americans – but not Indians – interpreted metacognitive perceptions of choice difficulty, thoughtfulness, and decision-effort as an indication of inner states such as preference certainty and decision importance. Further, priming participants with agency models from the other culture reversed these effects. These findings further understanding of metacognition, culture, and the meaning of choice.

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Politics and Parents - Intergenerational Transmission of Values after a Regime Shift

Sarah Necker & Andrea Voskort
European Journal of Political Economy, December 2014, Pages 177–194

Abstract:
Exploiting the “natural experiment” of German reunification, we study whether socialism has an enduring effect on people’s basic values. Using data from the German Socio-Economic Panel, we show that individuals that lived in the German Democratic Republic assign different importance to six out of nine values. The first subsequent generation differs in a similar way from their West German control group. The positive association between parents’ and children’s values does not significantly differ between East and West German families. The finding is consistent with the notion that parents are motivated by the belief that their own values are the best for the child to have. The effect of intergenerational transmission on the persistence of values is small to moderate. The link tends to be higher if the importance of a domain is more disputed in the population.

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Knowledge and Belief Understanding Among Iranian and Australian Preschool Children

Ameneh Shahaeian et al.
Journal of Cross-Cultural Psychology, forthcoming

Abstract:
For more than three decades, considerable research effort has been expended in documenting children’s development of a theory of mind (ToM), or the recognition that behavior is determined by mental states. Studies comparing ToM development in children from Western and non-Western countries have shown differences in patterns of development in various ToM tasks. Specifically, Iranian children are slower than their Australian counterparts to acknowledge that people have diverse beliefs, but at the same time they have relatively advanced understanding of how people acquire new knowledge. In the current study, our aim was to further investigate this cross-cultural pattern by evaluating 3- and 4-year-old Australian and Iranian children’s belief and knowledge understanding across a range of distinct tasks designed to reflect culturally familiar situations. Results confirmed that the Iranian children were faster than the Australians in mastering tasks assessing the understanding of how and when knowledge is acquired. Iranian children, however, lag behind in passing diverse belief tasks. Scores in false belief tasks were comparable across both countries. These findings are discussed with reference to socio-cultural differences across the two countries.

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A Tear in the Iron Curtain: The Impact of Western Television on Consumption Behavior

Leonardo Bursztyn & Davide Cantoni
NBER Working Paper, August 2014

Abstract:
This paper examines the impact of exposure to foreign media on the economic behavior of agents in a totalitarian regime. We study private consumption choices focusing on former East Germany, where differential access to Western television was determined by geographic features. Using data collected after the transition to a market economy, we find no evidence of a significant impact of previous exposure to Western television on aggregate consumption levels. However, exposure to Western broadcasts affects the composition of consumption, biasing choices in favor of categories of goods with high intensity of pre-reunification advertisement. The effects vanish by 1998.

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Ethnicity Moderates the Outcomes of Self-Enhancement and Self-Improvement Themes in Expressive Writing

William Tsai et al.
Cultural Diversity and Ethnic Minority Psychology, forthcoming

Abstract:
The current study examined whether writing content related to self-enhancing (viz., downward social comparison and situational attributions) and self-improving (viz., upward social comparison and persistence) motivations were differentially related to expressive writing outcomes among 17 Asian American and 17 European American participants. Content analysis of the essays revealed no significant cultural group differences in the likelihood of engaging in self-enhancing versus self-improving reflections on negative personal experiences. However, cultural group differences were apparent in the relation between self-motivation processes and changes in anxiety and depressive symptoms at 3-month follow-up. Among European Americans, writing that reflected downward social comparison predicted positive outcomes, whereas persistence writing themes were related to poorer outcomes. For Asian Americans, writing about persistence was related to positive outcomes, whereas downward social comparison and situational attributions predicted poorer outcomes. Findings provide evidence suggesting culturally distinct mechanisms for the effects of expressive disclosure.

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Culture of Corruption? The Effects of Priming Corruption Images in a High Corruption Context

Ronald Fischer et al.
Journal of Cross-Cultural Psychology, forthcoming

Abstract:
We examine what situational cues may influence corruption intentions of individuals in a high corruption context. We primed Brazilian participants with images related to corruption, but with different behavioral connotations (either images suggesting political corruption or images of a Malandro, a powerless antihero who blurs moral boundaries by breaking the law to survive). Corruption intentions increased in Studies 1 and 2 when individuals were primed with political corruption images, compared with a control condition. In Study 2, Brazilians who strongly identified with their country were more likely to endorse corruption scenarios, particularly when primed with Malandro images due to the dual activation of positive national symbols and morally ambiguous connotations. These findings highlight that conceptually related symbols within a cultural system can be linked to differential behavioral patterns. We outline some implications for corruption and cultural research, in particular, the need to study intracultural variability of psychological processes.

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The Subtlety of Sound: Accent as a Marker for Culture

Morteza Dehghani et al.
Journal of Language and Social Psychology, forthcoming

Abstract:
Aspects of language, such as accent, play a crucial role in the formation and categorization of one’s cultural identity. Recent work on accent emphasizes the role of accent in person perception and social categorization, demonstrating that accent also serves as a meaningful indicator of an ethnic category. In this article, we investigate whether the accent of an interaction partner, as a marker for culture, can induce cultural frame-shifts in biculturals. We report the results of three experiments, performed among bicultural and monocultural individuals, in which we test the above hypothesis. Our results demonstrate that accent alone can affect people’s cognition.

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Are Americans and Indians more altruistic than the Japanese and Chinese? Evidence from a new international survey of bequest plans

Charles Yuji Horioka
Review of Economics of the Household, September 2014, Pages 411-437

Abstract:
This paper discusses three alternative assumptions concerning household preferences (altruism, self-interest, and a desire for dynasty building) and shows that these assumptions have very different implications for bequest motives and bequest division. After reviewing some of the literature on actual bequests, bequest motives, and bequest division, the paper presents data on the strength of bequest motives, stated bequest motives, and bequest division plans from a new international survey conducted in China, India, Japan, and the United States. It finds striking inter-country differences in bequest plans, with the bequest plans of Americans and Indians appearing to be much more consistent with altruistic preferences than those of the Japanese and Chinese and the bequest plans of the Japanese and Chinese appearing to be much more consistent with selfish preferences than those of Americans and Indians. These findings have important implications for the efficacy and desirability of stimulative fiscal policies, public pensions, and inheritance taxes.

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Cultural Differences in Perceptions of Intragroup Conflict and Preferred Conflict-Management Behavior: A Scenario Experiment

Aya Murayama et al.
Journal of Cross-Cultural Psychology, forthcoming

Abstract:
This study focused on cultural differences in perceived relationship and task conflict within groups and preferences for active and agreeable conflict-management behavior. Task conflict (low vs. high) and relationship conflict (low vs. high) were manipulated within subjects in a 2 × 2 × 2 (culture) mixed design. Japanese (n = 100) and American (n = 121) undergraduate students rated each scenario with respect to task conflict, relationship conflict, and preferred conflict-management behavior. Results showed that task and relationship conflict were mistaken for each other in both cultures; however, Americans misattributed strong task conflict to relationship conflict more than Japanese. Cultural differences in preferred conflict management also emerged. Japanese preferred active conflict management more than Americans in the strong (vs. weak) task conflict situation when relationship conflict was low (vs. high), whereas Americans preferred active conflict management more than Japanese when relationship conflict was high — regardless of task conflict. Finally, Americans preferred agreeable conflict-management behavior more than Japanese when both types of conflict were low.

By KEVIN LEWIS | 09:00:00 AM

Wednesday, September 24, 2014

Vaulting

Monetary Stability and the Rule of Law

Mark Koyama & Blake Johnson
Journal of Financial Stability, forthcoming

Abstract:
This paper investigates the relationship between the functioning of money and the rule of law. We explore the claim that monetary stability is a necessary condition for the rule of law to operate and that periods of rapid inflation and deflation stemming from monetary instability erode and undermine the rule of law. We support our argument with panel data evidence and four detailed case studies from the Roman empire, the Weimar Republic, the Great Depression and the Great Recession. Our conclusions examine what monetary institutions are most conducive to maintaining monetary stability and the rule of law.

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Mortgage Modification and Strategic Behavior: Evidence from a Legal Settlement with Countrywide

Christopher Mayer et al.
American Economic Review, September 2014, Pages 2830-2857

Abstract:
We investigate whether homeowners respond strategically to news of mortgage modification programs. We exploit plausibly exogenous variation in modification policy induced by settlement of US state government lawsuits against Countrywide Financial Corporation, which agreed to offer modifications to seriously delinquent borrowers. Using a difference-in-difference framework, we find that Countrywide's monthly delinquency rate increased more than 0.54 percentage points - a ten percent relative increase - immediately after the settlement's announcement. The estimated increase in default rates is largest among borrowers least likely to default otherwise. These results suggest that strategic behavior should be an important consideration in designing mortgage modification programs.

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The Information Content of Insider Trades around Government Intervention during the Financial Crisis

Alan Jagolinzer et al.
Stanford Working Paper, August 2014

Abstract:
This paper examines whether insiders at leading financial institutions anticipated the effect of government intervention during the Financial Crisis on their firms' share prices. While we find no evidence that insiders anticipated the Crisis, we find considerable evidence that insiders anticipated the recovery and bank bailouts. Specifically we find: (i) that the predictive ability of insider trades for future firm performance is higher during the nine months following the announcement of the Troubled Asset Relief Program (TARP) than at any other time from 2002 to 2010, (ii) that the increase in predictive ability associated with the announcement of TARP is concentrated in firms that previously performed poorly, and (iii) that insider trades at banks five days before the announcement of TARP capital infusions predict the market reaction to the infusion. Overall, our results suggest that once the government announced it would intervene during the Crisis, insiders of financial institutions anticipated the effect of this intervention on share prices.

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Failure to Refinance

Benjamin Keys, Devin Pope & Jaren Pope
NBER Working Paper, August 2014

Abstract:
Households that fail to refinance their mortgage when interest rates decline can lose out on substantial savings. Based on a large random sample of outstanding U.S. mortgages in December of 2010, we estimate that approximately 20% of households for whom refinancing would be optimal and who appeared unconstrained to do so, had not taken advantage of the lower rates. We estimate the present-discounted cost to the median household who fails to refinance to be approximately $11,500, making this a particularly large consumer financial mistake. To shed light on possible mechanisms and corroborate our main findings, we also provide results from a mail campaign targeted at a sample of homeowners that could benefit from refinancing.

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Savings and Prize-Linked Savings Accounts

Kadir Atalay et al.
Journal of Economic Behavior & Organization, November 2014, Pages 86-106

Abstract:
Many households have insufficient savings to handle moderate and routine consumption shocks. Many of these financially-fragile households also have the highest lottery expenditures as a proportion of income. This combination suggests that Prize-Linked Savings (PLS) accounts, combining security of principal with lottery-type jackpots, can increase savings among these at-risk households. Results from an online experiment show that the introduction of PLS accounts increase total savings and reduce lottery expenditures significantly, especially among individuals with the lowest levels of savings and income. The results imply that PLS accounts offer a plausible market-based solution to encourage individuals to increase savings.

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The Effect of Foreclosures on Nearby Housing Prices: Supply or Dis-amenity?

Daniel Hartley
Regional Science and Urban Economics, forthcoming

Abstract:
A number of studies have measured negative price effects of foreclosed residential properties on nearby property sales. However, only one other study addresses which mechanism is responsible for these effects. I measure separate effects for different types of foreclosed properties and use these estimates to decompose the effects of foreclosures on nearby home prices into a component that is due to additional available housing supply and a component that is due to dis-amenity stemming from deferred maintenance or vacancy. I estimate that each extra unit of supply decreases prices within 0.05 miles by about 1.2 percent while the dis-amenity stemming from a foreclosed property is near zero.

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A Century of Capital Structure: The Leveraging of Corporate America

John Graham, Mark Leary & Michael Roberts
Journal of Financial Economics, forthcoming

Abstract:
Unregulated US corporations dramatically increased their debt usage over the past century. Aggregate leverage - low and stable before 1945 - more than tripled between 1945 and 1970 from 11% to 35%, eventually reaching 47% by the early 1990s. The median firm in 1946 had no debt, but by 1970 had a leverage ratio of 31%. This increase occurred in all unregulated industries and affected firms of all sizes. Changing firm characteristics are unable to account for this increase. Rather, changes in government borrowing, macroeconomic uncertainty, and financial sector development play a more prominent role. Despite this increase among unregulated firms, a combination of stable debt usage among regulated firms and a decrease in the fraction of aggregate assets held by regulated firms over this period resulted in a relatively stable economy-wide leverage ratio during the 20th century.

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Do Parents Matter? Effects of Lender Affiliation Through the Mortgage Boom and Bust

Claudine Gartenberg
Management Science, forthcoming

Abstract:
It is widely acknowledged that the 2007 mortgage crisis was preceded by a broad deterioration in underwriting diligence. This paper shows that this deterioration varied by the industry affiliation of mortgage lenders. Loans issued by homebuilders and stand-alone lenders were significantly less likely to default than loans issued by depository banks and affiliates of major financial institutions. I argue that homebuilders and stand-alone lenders had the least financial capacity to hold mortgages, and their resulting need to sell loans quickly on the secondary market forced them to issue safer loans. Tests of other explanations, including differences in information and incentives to avoid foreclosure externalities, receive little support. This study highlights a novel means by which firm boundaries influence firm adaptation to changing market conditions by defining the boundaries of the internal capital markets and hence the relative constraints of constituent units.

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Do Restrictions on Home Equity Extraction Contribute to Lower Mortgage Defaults? Evidence from a Policy Discontinuity at the Texas' Border

Anil Kumar
Federal Reserve Working Paper, June 2014

Abstract:
Given that excessive borrowing helped precipitate the housing crisis, a key component of a policy agenda to prevent future meltdowns is effective regulation to curb unaffordable mortgage debt. Texas is the only US state that limits home equity borrowing to 80 percent of home value. Anecdotal reports have long suggested that home equity restrictions shielded Texas homeowners from the worst of the subprime mortgage crisis. But there is, as yet, no formal empirical investigation of these restrictions' role in curbing mortgage default. This paper is the first to empirically estimate the impact of Texas home equity restrictions on mortgage default using individual and loan level data from three different sources. The paper exploits the policy discontinuity around Texas' interstate borders induced by the home equity restrictions to identify the causal effect of home equity extraction on mortgage default in a border discontinuity design framework. The paper finds that limits on home equity borrowing in Texas lowered the likelihood of mortgage default by about 2 percentage points with a significantly larger impact on mortgage borrowers in the bottom quartile of the credit score distribution. Estimated default hazards for mortgages within 50 to 100 miles of the Texas' border decline sharply as one crosses into Texas. Overall, the paper finds evidence that Texas' home equity restrictions exert a robust negative impact on mortgage default.

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Home equity lines of credit and the unemployment rate: Have unemployed consumers borrowed themselves into the next financial crisis?

Norbert Michel et al.
Journal of Banking & Finance, October 2014, Pages 147-154

Abstract:
Some economists argue the recent recovery has been so meager because many consumers have lost their main source of income and maxed-out their home-equity borrowings. Further, banks that were able to make consumer loans did so with less security because home prices fell so dramatically. This paper argues that at least part of that recovery story is purely anecdotal and, in fact, incorrect. In spite of the precipitous decline in home prices, the original price increases were so large that many homeowners still have/had adequate equity in their homes to borrow. The paper presents evidence that the average quarterly increase in aggregate home equity line of credit (HELOC) lending after housing prices began their decline is, statistically, no different than the average quarterly increase in HELOC lending before housing prices began their downward trend. The evidence also suggests that increased HELOC lending during the recession is not correlated with higher unemployment.

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Does Banking Competition Affect Innovation?

Jess Cornaggia et al.
Journal of Financial Economics, forthcoming

Abstract:
We exploit the deregulation of interstate bank branching laws to test whether banking competition affects innovation. We find robust evidence that banking competition reduces state-level innovation by public corporations headquartered within deregulating states. Innovation increases among private firms that are dependent on external finance and that have limited access to credit from local banks. We argue that banking competition enables small, innovative firms to secure financing instead of being acquired by public corporations. Therefore, banking competition reduces the supply of innovative targets, which reduces the portion of state-level innovation attributable to public corporations. Overall, these results shed light on the real effects of banking competition and the determinants of innovation.

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The Politics of Financialization in the United States, 1949-2005

Christopher Witko
British Journal of Political Science, forthcoming

Abstract:
Financial activity has become increasingly important in affluent economies in recent decades. Because this 'financialization' distributes costs and benefits unevenly across groups, politics and policy likely affect the process. Therefore, this article discusses how changes in the power of organizations representing the 'winners' and 'losers' of financialization affect its pace. An analysis of the United States from 1949-2005, shows that when unions are stronger, and when the Democratic Party is in power and is more reliant on the support of working-class voters, financialization is slower. In contrast, when the financial industry is more highly mobilized into politics, financialization is faster. The study also finds that financial deregulation was one policy translating the political power of these actors into economic outcomes.

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Do Relationships Matter? Evidence from Loan Officer Turnover

Alejandro Drexler & Antoinette Schoar
Management Science, forthcoming

Abstract:
We show that the cost of employee turnover in firms that rely on decentralized knowledge and personal relationships depends on the firms' planning horizons and the departing employees' incentives to transfer information. Using exogenous shocks to the relationship between borrowers and loan officers, we document that borrowers whose loan officers are on leave are less likely to receive new loans from the bank, are more likely to apply for credit from other banks, and are more likely to miss payments or go into default. These costs are smaller when turnover is expected, as in the case of maternity leave, or when loan officers have incentives to transfer information, as in the case of voluntary resignations.

By KEVIN LEWIS | 09:00:00 AM

Tuesday, September 23, 2014

High and low

Is there a stepping stone effect in drug use? Separating state dependence from unobserved heterogeneity within and between illicit drugs

Monica Deza
Journal of Econometrics, forthcoming

Abstract:
Empirically, teenagers who use soft drugs are more likely to use hard drugs in the future. This pattern can be explained by a causal effect (i.e., state dependence between drugs or stepping-stone effects) or by unobserved characteristics that make people more likely to use both soft and hard drugs (i.e., correlated unobserved heterogeneity). I estimate a dynamic discrete choice model of alcohol, marijuana and hard drug use over multiple years, and separately identify the contributions of state dependence (within and between drugs) and unobserved heterogeneity. I find statistically significant “stepping-stone” effects from softer to harder drugs, and conclude that alcohol, marijuana and hard drugs are complements in utility.

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How different are smokers? An analysis based on personal finances

Scott Adams, Niloy Bose & Aldo Rustichini
Journal of Economic Behavior & Organization, November 2014, Pages 40–50

Abstract:
We study the association between smoking status and individual decisions, focusing on outcomes in the domain of personal finance. The study draws information on demographic variables, various financial outcomes including individual credit scores, time and risk preferences, and personality traits, from both population data and experimental data. The results suggest that smokers make poor decisions and experience worse outcomes with personal finances vis-à-vis non-smokers. This relationship is robust to controlling for a myriad of variables, including characteristics that are known to be correlated with smoking. Thus, smoking status contains more precise information about individuals that are not fully captured by available noisy economic and psychological measures. Since available estimates of personality traits have substantial measurement error, smoking status may effectively capture residual information.

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A Longitudinal Analysis of Drinking and Victimization in College Women: Is There a Reciprocal Relationship?

Kathleen Parks et al.
Psychology of Addictive Behaviors, forthcoming

Abstract:
The purpose of the current study was to assess the relationship between drinking and severe physical and sexual victimization in a sample of 989 college women over 5 years. Participants completed a Web-based survey each fall semester, beginning as first-time incoming freshman, and continuing each year for 5 years. The survey was comprehensive in assessing drinking, victimization, and relevant covariates. Women were followed whether they remained at university or not. Prior year same type of severe victimization predicted current year victimization, both severe physical and sexual. However, prior year drinking did not predict current year severe victimization. Prior year severe sexual victimization predicted current year drinking. Our findings of a longitudinal relationship between severe sexual victimization and subsequent increases in drinking suggests that college women may be drinking to cope with negative sequelae that they experience as a result of the victimization. We did not find the same longitudinal relationship between drinking and severe physical or sexual victimization, suggesting that a reciprocal relationship does not exist between drinking and victimization among college women. We did find that severe sexual victimization decreased across college, suggesting that the year prior to and the first year of college may be a critical period for intervening to reduce risk for severe victimization.

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Medical Cannabis Laws and Opioid Analgesic Overdose Mortality in the United States, 1999-2010

Marcus Bachhuber et al.
JAMA Internal Medicine, forthcoming

Objective: To determine the association between the presence of state medical cannabis laws and opioid analgesic overdose mortality.

Design, Setting, and Participants: A time-series analysis was conducted of medical cannabis laws and state-level death certificate data in the United States from 1999 to 2010; all 50 states were included.

Main Outcomes and Measures: Age-adjusted opioid analgesic overdose death rate per 100 000 population in each state. Regression models were developed including state and year fixed effects, the presence of 3 different policies regarding opioid analgesics, and the state-specific unemployment rate.

Results: Three states (California, Oregon, and Washington) had medical cannabis laws effective prior to 1999. Ten states (Alaska, Colorado, Hawaii, Maine, Michigan, Montana, Nevada, New Mexico, Rhode Island, and Vermont) enacted medical cannabis laws between 1999 and 2010. States with medical cannabis laws had a 24.8% lower mean annual opioid overdose mortality rate (95% CI, −37.5% to −9.5%; P = .003) compared with states without medical cannabis laws. Examination of the association between medical cannabis laws and opioid analgesic overdose mortality in each year after implementation of the law showed that such laws were associated with a lower rate of overdose mortality that generally strengthened over time: year 1 (−19.9%; 95% CI, −30.6% to −7.7%; P = .002), year 2 (−25.2%; 95% CI, −40.6% to −5.9%; P = .01), year 3 (−23.6%; 95% CI, −41.1% to −1.0%; P = .04), year 4 (−20.2%; 95% CI, −33.6% to −4.0%; P = .02), year 5 (−33.7%; 95% CI, −50.9% to −10.4%; P = .008), and year 6 (−33.3%; 95% CI, −44.7% to −19.6%; P < .001). In secondary analyses, the findings remained similar.

Conclusions and Relevance: Medical cannabis laws are associated with significantly lower state-level opioid overdose mortality rates. Further investigation is required to determine how medical cannabis laws may interact with policies aimed at preventing opioid analgesic overdose.

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Exposure to violence, substance use, and neighborhood context

Abigail Fagan, Emily Wright & Gillian Pinchevsky
Social Science Research, January 2015, Pages 314–326

Abstract:
Adolescent exposure to violence and substance use are both public health problems, but how neighborhood context contributes to these outcomes is unclear. This study uses prospective data from 1,416 adolescents to examine the direct and interacting influences of victimization and neighborhood factors on adolescent substance use. Based on hierarchical Bernoulli regression models that controlled for prior substance use and multiple individual-level factors, exposure to violence significantly increased the likelihood of marijuana use but not alcohol use or binge drinking. There was little evidence that community norms regarding adolescent substance use influenced rates of substance use or moderated the impact of victimization. Community disadvantage did not directly impact substance use, but the relationship between victimization and marijuana use was stronger for those in neighborhoods with greater disadvantage. The results suggest that victimization is particularly likely to affect adolescents’ marijuana use, and that this relationship may be contingent upon neighborhood economic conditions.

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The Bright Side of Self-Discontinuity: Feeling Disconnected With the Past Self Increases Readiness to Change Addictive Behaviors (via Nostalgia)

Hyoun (Andrew) Kim & Michael Wohl
Social Psychological and Personality Science, forthcoming

Abstract:
Across three studies, we tested the possible benefits of self-discontinuity among people engaging in addictive behaviors. Specially, we examined self-discontinuity as a motivator of readiness to change. Moreover, nostalgia (i.e., longing for the past “nonaddicted” self) was assessed as a mediator of this effect. To this end, self-discontinuity was both measured (Study 1) and manipulated (Studies 2 and 3) among a sample of problem gamblers (Studies 1 and 2) and problem drinkers (Study 3). As predicted, in Studies 1 and 2, high levels of self-discontinuity resulted in greater readiness to change to the extent that problem gamblers felt nostalgic for the preaddicted self. Study 3 extended the generalizability of the mediation model by replicating these findings with a sample of problem drinkers. Results suggest that highlighting a sense of self-discontinuity among people engaging in addictive behaviors may be an important catalyst in moving people from addiction to action.

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Maternal Smoking During Pregnancy and Adverse Outcomes in Offspring: Genetic and Environmental Sources of Covariance

Ralf Kuja-Halkola et al.
Behavior Genetics, September 2014, Pages 456-467

Abstract:
Maternal smoking during pregnancy (SDP) has been associated with several psychiatric outcomes in the offspring; studies have questioned whether the associations are causal, however. We analyzed all children born in Sweden between 1983 and 2009 to investigate the effect of SDP on multiple indicators of adverse outcomes in three areas: pregnancy outcomes (birth weight, preterm birth and being born small for gestational age), long-term cognitive abilities (low academic achievement and general cognitive ability) and externalizing behaviors (criminal conviction, violent criminal conviction and drug misuse). SDP was associated with all outcomes. Within-family analyses of the pregnancy outcomes were consistent with a causal interpretation as the associations persisted when siblings discordant for SDP were compared. For the cognitive and externalizing outcomes, the results were not consistent with causal effects; when comparing differentially exposed siblings none of the associations remained significant. In quantitative genetic models genetic factors explained the majority of the associations between SDP and cognitive and externalizing outcomes. The results suggest that the associations between SDP in mothers and cognition and externalizing behaviors in their offspring is primarily due to genetic effects that influence the behaviors in both generations.

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Testing the Drug Substitution Switching-Addictions Hypothesis: A Prospective Study in a Nationally Representative Sample

Carlos Blanco et al.
JAMA Psychiatry, forthcoming

Importance: Adults who remit from a substance use disorder (SUD) are often thought to be at increased risk for developing another SUD. A greater understanding of the prevalence and risk factors for drug substitution would inform clinical monitoring and management.

Design, Setting, and Participants: A prospective cohort study where data were drawn from a nationally representative sample of 34 653 adults from the National Epidemiologic Survey on Alcohol and Related Conditions. Participants were interviewed twice, 3 years apart (wave 1, 2001–2002; wave 2, 2004–2005).

Results: Approximately one-fifth (n = 2741) of the total sample had developed a new-onset SUD at the wave 2 assessment. Individuals who remitted from 1 SUD during this period were significantly less likely than those who did not remit to develop a new SUD (13.1% vs 27.2%, P < .001). Results were robust to sample specification. An exception was that remission from a drug use disorder increased the odds of a new SUD (odds ratio [OR] = 1.46; 95% CI, 1.11-1.92). However, after adjusting for the number of SUDs at baseline, remission from drug use disorders decreased the odds of a new-onset SUD (OR = 0.66; 95% CI, 0.46-0.95) whereas the number of baseline SUDs increased those odds (OR=1.68; 95% CI, 1.43-1.98). Being male, younger in age, never married, having an earlier age at substance use onset, and psychiatric comorbidity significantly increased the odds of a new-onset SUD during the follow-up period.

Conclusions and Relevance: As compared with those who do not remit from an SUD, remitters have less than half the risk of developing a new SUD. Contrary to clinical lore, achieving remission does not typically lead to drug substitution but rather is associated with a lower risk of new SUD onsets.

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Pilot study of the 5-HT2AR agonist psilocybin in the treatment of tobacco addiction

Matthew Johnson et al.
Journal of Psychopharmacology, forthcoming

Abstract:
Despite suggestive early findings on the therapeutic use of hallucinogens in the treatment of substance use disorders, rigorous follow-up has not been conducted. To determine the safety and feasibility of psilocybin as an adjunct to tobacco smoking cessation treatment we conducted an open-label pilot study administering moderate (20 mg/70 kg) and high (30 mg/70 kg) doses of psilocybin within a structured 15-week smoking cessation treatment protocol. Participants were 15 psychiatrically healthy nicotine-dependent smokers (10 males; mean age of 51 years), with a mean of six previous lifetime quit attempts, and smoking a mean of 19 cigarettes per day for a mean of 31 years at intake. Biomarkers assessing smoking status, and self-report measures of smoking behavior demonstrated that 12 of 15 participants (80%) showed seven-day point prevalence abstinence at 6-month follow-up. The observed smoking cessation rate substantially exceeds rates commonly reported for other behavioral and/or pharmacological therapies (typically <35%). Although the open-label design does not allow for definitive conclusions regarding the efficacy of psilocybin, these findings suggest psilocybin may be a potentially efficacious adjunct to current smoking cessation treatment models. The present study illustrates a framework for future research on the efficacy and mechanisms of hallucinogen-facilitated treatment of addiction.

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Childhood Stress Exposure Among Preadolescents With and Without Family Histories of Substance Use Disorders

Nora Charles et al.
Psychology of Addictive Behaviors, forthcoming

Abstract:
Having a family history of substance use disorders (FH+) increases risk for developing a substance use disorder. This risk may be at least partially mediated by increased exposure to childhood stressors among FH+ individuals. However, measures typically used to assess exposure to stressors are narrow in scope and vary across studies. The nature of stressors that disproportionately affect FH+ children and how these stressors relate to later substance use in this population are not well understood. The purpose of this study was to assess exposure to a broad range of stressors among FH+ and FH− children to better characterize how exposure to childhood stressors relates to increased risk for substance misuse among FH+ individuals. A total of 386 children (305 FH+, 81 FH−; ages 10–12) were assessed using the Stressful Life Events Schedule before the onset of regular substance use. Both the number and severity of stressors were compared. Preliminary follow-up analyses were done for 53 adolescents who subsequently reported initiation of substance use. FH+ children reported more frequent and severe stressors than did FH- children, specifically in the areas of housing, family, school, crime, peers, and finances. Additionally, risk for substance use initiation during early adolescence was influenced directly by having a family history of substance use disorders and also indirectly through increased exposure to stressors among FH+ individuals. In conclusion, FH+ children experience greater stress across multiple domains, which contributes to their risk for substance misuse and related problems during adolescence and young adulthood.

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The Incentives Created by a Harm Reduction Approach to Smoking Cessation

Jennifer Maki
International Journal of Drug Policy, forthcoming

Background: Tobacco harm reduction involves advocating the use of a less harmful alternative to smoking for those users who are unwilling or unable to quit. The net effect of such an approach is unclear as it may create opposing incentives. Although some smokers may substitute toward this less harmful alternative, it may reduce the incentive to quit by undermining public health efforts and may act as a gateway to smoking. This research paper aims to answer the question: Does the availability of a less harmful alternative to smoking lead to cessation? To explore the opposing incentives created by a harm reduction approach to smoking cessation, I focus on the role of snus, a popular smokeless tobacco product in Scandinavia that is widely used in Sweden.

Methods: This paper exploits a quasi-natural experiment to examine the net effect resulting from these opposing incentives. While two Scandinavian countries, Sweden and Finland, joined the European Union (EU) in 1995, Finland was subject to a pre-existing EU ban on oral tobacco products while Sweden received an exemption. A difference in differences framework is used to estimate the change in the smoking rate in Finland due to the implementation of the ban. A secondary analysis uses Finnish smoking data to test for a structural break in trend.

Results: In the post-ban period, smoking was 3.47 percentage points higher in Finland relative to what it would have been in the absence of the ban.

Conclusion: The availability of snus, a less harmful alternative to smoking, appears to have had a positive impact (reduction) on the smoking rate. Offering acceptable alternatives to cigarettes is critical in reducing smoking prevalence.

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Cigarette Smoking Among Adults With Mobility Impairments: A US Population-Based Survey

Belinda Borrelli, Andrew Busch & Shira Dunsiger
American Journal of Public Health, October 2014, Pages 1943-1949

Objectives: Smokers with mobility impairments have greater health risks than the general population. We report the prevalence of cigarette smoking and quit attempts among people with mobility impairments.

Methods: We conducted an analysis of 13 308 adults (aged 21–85 years) with mobility impairments (special ambulatory equipment and difficulty walking 0.25 miles without equipment) responding to the National Health Interview Survey (2011).

Results: Among 21- to 44-year-old adults with mobility impairments, 39.2% were smokers, compared with only 21.5% of adults without mobility impairments (odds ratio [OR] = 1.64; 95% confidence interval [CI] = 1.07, 2.52). Among 45- to 64-year-old adults with mobility impairments, 31.2% were smokers versus 20.7% without mobility impairments (OR = 1.35; 95% CI = 1.09, 1.68). Women aged 21 to 44 years with mobility impairments had the highest smoking prevalence (45.9%), exceeding same-aged women without mobility impairments(18.9%; OR = 2.56; 95% CI = 1.32, 4.97). Men with mobility impairments had greater smoking prevalence (24.1%) than women with mobility impairments (15.1%; P < .01). Smokers with mobility impairments were less likely to attempt quitting (19.9%) than smokers without mobility impairments (27.3%; P < .01).

Conclusions: Smokers with mobility impairments should be targeted for cessation, particularly those who are younger and female.

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Correlates of Prescription Drug Market Involvement among Young Adults

Mike Vuolo et al.
Drug and Alcohol Dependence, October 2014, Pages 257–262

Background: While a significant minority of prescription drug misusers report purchasing prescription drugs, little is known about prescription drug selling. We build upon past research on illicit drug markets, which increasingly recognizes networks and nightlife as influential, by examining prescription drug market involvement

Methods: We use data from 404 young adult prescription drug misusers sampled from nightlife scenes. Using logistic regression, we examine recent selling of and being approached to sell prescription drugs, predicted using demographics, misuse, prescription access, and nightlife scene involvement

Results: Those from the wealthiest parental class and heterosexuals had higher odds (OR = 6.8) of selling. Higher sedative and stimulant misuse (ORs = 1.03), having a stimulant prescription (OR = 4.14), and having sold other illegal drugs (OR = 6.73) increased the odds of selling. College bar scene involvement increased the odds of selling (OR = 2.73) and being approached to sell (OR = 2.09). Males (OR = 1.93), stimulant users (OR = 1.03), and sedative prescription holders (OR = 2.11) had higher odds of being approached

Discussion: College bar scene involvement was the only site associated with selling and being approached; such participation may provide a network for prescription drug markets. There were also differences between actual selling and being approached. Males were more likely to be approached, but not more likely to sell than females, while the opposite held for those in the wealthiest parental class relative to lower socioeconomic statuses. Given that misuse and prescriptions of sedatives and stimulants were associated with prescription drug market involvement, painkiller misusers may be less likely to sell their drugs given the associated physiological dependence.

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Are Supply-Side Drug Control Efforts Effective? Evaluating OTC Regulations Targeting Methamphetamine Precursors

Carlos Dobkin, Nancy Nicosia & Matthew Weinberg
Journal of Public Economics, forthcoming

Abstract:
Enforcement efforts are the primary approach to reducing illegal drug use in the U.S., but evidence on their effectiveness is mixed. We provide new evidence on the effectiveness of enforcement efforts by using rich administrative records and the staggered implementation of state laws targeting over-the-counter medicines that can be used to produce methamphetamine. We estimate that the regulations reduced the number of methamphetamine laboratories operating in a state by 36%. We find no evidence of changes in methamphetamine consumption or arrests for drug possession, suggesting people were able to find methamphetamine produced elsewhere. Though we find evidence suggesting methamphetamine producers responded to regulation by obtaining precursors from neighboring states that lacked laws, they do not appear to have systematically moved production to neighboring states. This suggests that production shifted over national borders.

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Mortality and Economic Costs From Regular Cigar Use in the United States, 2010

James Nonnemaker et al.
American Journal of Public Health, September 2014, Pages e86-e91

Objectives: We estimated annual mortality, years of potential life lost, and associated economic costs attributable to regular cigar smoking among US adults aged 35 years or older.

Methods: We estimated cigar-attributable mortality for the United States in 2010 using the Centers for Disease Control and Prevention’s Smoking-Attributable Mortality, Morbidity, and Economic Costs methodology for smoking-related causes of death. We obtained cigar prevalence from the National Adult Tobacco Survey, relative risks from the Cancer Prevention Studies I and II, and annual US deaths from the National Vital Statistics System. We also estimated the economic cost of this premature mortality using the value of a statistical life-year.

Results: Regular cigar smoking was responsible for approximately 9000 premature deaths and more than 140 000 years of potential life lost among US adults aged 35 years or older in 2010. These years of life had an economic value of approximately $23 billion.

Conclusions: The health and economic burden of cigar smoking in the United States is large and may increase over time because of the increasing consumption of cigars in the United States.

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Heterogeneity in the smoking response to health shocks by out-of-pocket spending risk

Michael Richards & Joachim Marti
Health Economics, Policy and Law, October 2014, Pages 343-357

Abstract:
An existing literature demonstrates that adverse changes to health can lead to improvements in health behaviors. Although the exact explanations for these empirical findings are debated, some posit that individuals learn about their true health risks through health shocks. Updated health risk information can then induce changes in health behaviors. While we follow a learning framework, we argue that past work has neglected the role of health insurance and medically related financial risk within this decision making context. Using longitudinal data from 11 European countries, we investigate the impact of a new cardiovascular (CV) health shock on smoking decisions among older adults and examine whether personal exposure to medical spending risk influences the smoking response. We then explore two potential mechanisms for this link: larger updates to health risk beliefs and higher medical expenditures to incentivize behavior change. We find that CV shocks impact the propensity to smoke, with relatively more impact among individuals with high financial risk exposure to medical spending. We also see larger increases in out-of-pocket expenditures following a shock for this group – consistent with the latter mechanism for behavior change.

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Examining the relationship between the physical availability of medical marijuana and marijuana use across fifty California cities

Bridget Freisthler & Paul Gruenewald
Drug and Alcohol Dependence, October 2014, Pages 244–250

Background: The purpose of the current study is to assess statistical associations between individual demographic and personality characteristics, the city-level physical availability of medical marijuana (as measured through densities per roadway mile of storefront dispensaries and delivery services), and the incidence and prevalence of marijuana use.

Method: Individual level data on marijuana use were collected during a telephone survey of 8,853 respondents living in 50 mid-size cities in California. Data on medical marijuana dispensaries and delivery services were obtained via six different websites and official city lists. Three outcome variables pertaining to lifetime, past year use, and frequency of past year use were analyzed using random effects logistic models (for lifetime and past year use) and random effects tobit models (for frequency of past 365-day use).

Results: The current study finds that the total physical availability of medical marijuana through dispensaries and delivery services per roadway mile at the city-level is positively related to current marijuana use and greater frequency of use, controlling for a variety of demographic and personality characteristics. As expected, current physical availability of medical marijuana was unrelated to lifetime use.

Conclusions: Regulations on the number and densities of marijuana outlets may be a sufficient means to restrain overall levels of marijuana use within cities. However, alternative use of delivery services may also provide easy access to marijuana and mitigate these effects.

By KEVIN LEWIS | 09:00:00 AM


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