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Sunday, February 23, 2014

Ancient

A Genetic Atlas of Human Admixture History

Garrett Hellenthal et al.
Science, 14 February 2014, Pages 747-751

Abstract:
Modern genetic data combined with appropriate statistical methods have the potential to contribute substantially to our understanding of human history. We have developed an approach that exploits the genomic structure of admixed populations to date and characterize historical mixture events at fine scales. We used this to produce an atlas of worldwide human admixture history, constructed by using genetic data alone and encompassing over 100 events occurring over the past 4000 years. We identified events whose dates and participants suggest they describe genetic impacts of the Mongol empire, Arab slave trade, Bantu expansion, first millennium CE migrations in Eastern Europe, and European colonialism, as well as unrecorded events, revealing admixture to be an almost universal force shaping human populations.

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Neanderthal Demographic Estimates

Jean-Pierre Bocquet-Appel & Anna Degioanni
Current Anthropology, December 2013, Pages S202-S213

Abstract:
This article offers a critical review of population estimates for the Neanderthal metapopulation based on (paleo-) biological, archaeological, climatic, and genetic data. What do these data tell us about putative Neanderthal demography? Biological data suggest a similar demographic frame (life-history traits, such as potential maximum longevity, age at menarche, and duration of gestation) between Neanderthals and modern humans. Archaeological data have revealed a contradiction between the mortality pattern corresponding to 45+ yr in Neanderthals and the longevity displayed by the manifest continuum of extant mammals, including primates. Paleoclimatic data suggest that the demography of Neanderthals, living as they did under highly fluctuating climatic conditions, was subject to frequent bottlenecks. This demographic instability combined with the fragmentation of geographical areas and variations in their distribution and extent could account for the fact that potential for technical creativity in the Neanderthal metapopulation would have been limited precisely because of its small numbers, leading it into what is known as a “Boserupian trap” in macrodemographic theory. Finally, genetic literature reports different — but always very low — estimations of the effective size (Ne) of the Neanderthal metapopulation. It is not easy to relate Ne to the census size of a population, but by combining different demographic values, this study produced nine different scenarios that were used to obtain an order of magnitude ranging from 5,000 to 70,000 individuals. The cause of the cultural limitation of the Neanderthal metapopulation, compared with that of modern humans, may well have resided in its small numbers alone.

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The Pre-History of Urban Scaling

Scott Ortman et al.
PLoS ONE, February 2014

Abstract:
Cities are increasingly the fundamental socio-economic units of human societies worldwide, but we still lack a unified characterization of urbanization that captures the social processes realized by cities across time and space. This is especially important for understanding the role of cities in the history of human civilization and for determining whether studies of ancient cities are relevant for contemporary science and policy. As a step in this direction, we develop a theory of settlement scaling in archaeology, deriving the relationship between population and settled area from a consideration of the interplay between social and infrastructural networks. We then test these models on settlement data from the Pre-Hispanic Basin of Mexico to show that this ancient settlement system displays spatial scaling properties analogous to those observed in modern cities. Our data derive from over 1,500 settlements occupied over two millennia and spanning four major cultural periods characterized by different levels of agricultural productivity, political centralization and market development. We show that, in agreement with theory, total settlement area increases with population size, on average, according to a scale invariant relation with an exponent in the range 2/3 ≤ α ≤ 5/6. As a consequence, we are able to infer aggregate socio-economic properties of ancient societies from archaeological measures of settlement organization. Our findings, from an urban settlement system that evolved independently from its old-world counterparts, suggest that principles of settlement organization are very general and may apply to the entire range of human history.

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The genome of a Late Pleistocene human from a Clovis burial site in western Montana

Morten Rasmussen et al.
Nature, 13 February 2014, Pages 225–229

Abstract:
Clovis, with its distinctive biface, blade and osseous technologies, is the oldest widespread archaeological complex defined in North America, dating from 11,100 to 10,700 14C years before present (BP) (13,000 to 12,600 calendar years BP). Nearly 50 years of archaeological research point to the Clovis complex as having developed south of the North American ice sheets from an ancestral technology. However, both the origins and the genetic legacy of the people who manufactured Clovis tools remain under debate. It is generally believed that these people ultimately derived from Asia and were directly related to contemporary Native Americans. An alternative, Solutrean, hypothesis posits that the Clovis predecessors emigrated from southwestern Europe during the Last Glacial Maximum. Here we report the genome sequence of a male infant (Anzick-1) recovered from the Anzick burial site in western Montana. The human bones date to 10,705 ± 35 14C years BP (approximately 12,707–12,556 calendar years BP) and were directly associated with Clovis tools. We sequenced the genome to an average depth of 14.4× and show that the gene flow from the Siberian Upper Palaeolithic Mal’ta population into Native American ancestors is also shared by the Anzick-1 individual and thus happened before 12,600 years BP. We also show that the Anzick-1 individual is more closely related to all indigenous American populations than to any other group. Our data are compatible with the hypothesis that Anzick-1 belonged to a population directly ancestral to many contemporary Native Americans. Finally, we find evidence of a deep divergence in Native American populations that predates the Anzick-1 individual.

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Convergent evolution in European and Rroma populations reveals pressure exerted by plague on Toll-like receptors

Hafid Laayouni et al.
Proceedings of the National Academy of Sciences, 18 February 2014, Pages 2668–2673

Abstract:
Recent historical periods in Europe have been characterized by severe epidemic events such as plague, smallpox, or influenza that shaped the immune system of modern populations. This study aims to identify signals of convergent evolution of the immune system, based on the peculiar demographic history in which two populations with different genetic ancestry, Europeans and Rroma (Gypsies), have lived in the same geographic area and have been exposed to similar environments, including infections, during the last millennium. We identified several genes under evolutionary pressure in European/Romanian and Rroma/Gipsy populations, but not in a Northwest Indian population, the geographic origin of the Rroma. Genes in the immune system were highly represented among those under strong evolutionary pressures in Europeans, and infections are likely to have played an important role. For example, Toll-like receptor 1 (TLR1)/TLR6/TLR10 gene cluster showed a strong signal of adaptive selection. Their gene products are functional receptors for Yersinia pestis, the agent of plague, as shown by overexpression studies showing induction of proinflammatory cytokines such as TNF, IL-1β, and IL-6 as one possible infection that may have exerted evolutionary pressures. Immunogenetic analysis showed that TLR1, TLR6, and TLR10 single-nucleotide polymorphisms modulate Y. pestis–induced cytokine responses. Other infections may also have played an important role. Thus, reconstruction of evolutionary history of European populations has identified several immune pathways, among them TLR1/TLR6/TLR10, as being shaped by convergent evolution in two human populations with different origins under the same infectious environment.

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Hominin Footprints from Early Pleistocene Deposits at Happisburgh, UK

Nick Ashton et al.
PLoS ONE, February 2014

Abstract:
Investigations at Happisburgh, UK, have revealed the oldest known hominin footprint surface outside Africa at between ca. 1 million and 0.78 million years ago. The site has long been recognised for the preservation of sediments containing Early Pleistocene fauna and flora, but since 2005 has also yielded humanly made flint artefacts, extending the record of human occupation of northern Europe by at least 350,000 years. The sediments consist of sands, gravels and laminated silts laid down by a large river within the upper reaches of its estuary. In May 2013 extensive areas of the laminated sediments were exposed on the foreshore. On the surface of one of the laminated silt horizons a series of hollows was revealed in an area of ca. 12 m2. The surface was recorded using multi-image photogrammetry which showed that the hollows are distinctly elongated and the majority fall within the range of juvenile to adult hominin foot sizes. In many cases the arch and front/back of the foot can be identified and in one case the impression of toes can be seen. Using foot length to stature ratios, the hominins are estimated to have been between ca. 0.93 and 1.73 m in height, suggestive of a group of mixed ages. The orientation of the prints indicates movement in a southerly direction on mud-flats along the river edge. Early Pleistocene human fossils are extremely rare in Europe, with no evidence from the UK. The only known species in western Europe of a similar age is Homo antecessor, whose fossil remains have been found at Atapuerca, Spain. The foot sizes and estimated stature of the hominins from Happisburgh fall within the range derived from the fossil evidence of Homo antecessor.

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Derived immune and ancestral pigmentation alleles in a 7,000-year-old Mesolithic European

Iñigo Olalde et al.
Nature, forthcoming

Abstract:
Ancient genomic sequences have started to reveal the origin and the demographic impact of farmers from the Neolithic period spreading into Europe. The adoption of farming, stock breeding and sedentary societies during the Neolithic may have resulted in adaptive changes in genes associated with immunity and diet. However, the limited data available from earlier hunter-gatherers preclude an understanding of the selective processes associated with this crucial transition to agriculture in recent human evolution. Here we sequence an approximately 7,000-year-old Mesolithic skeleton discovered at the La Braña-Arintero site in León, Spain, to retrieve a complete pre-agricultural European human genome. Analysis of this genome in the context of other ancient samples suggests the existence of a common ancient genomic signature across western and central Eurasia from the Upper Paleolithic to the Mesolithic. The La Braña individual carries ancestral alleles in several skin pigmentation genes, suggesting that the light skin of modern Europeans was not yet ubiquitous in Mesolithic times. Moreover, we provide evidence that a significant number of derived, putatively adaptive variants associated with pathogen resistance in modern Europeans were already present in this hunter-gatherer.

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Resurrecting Surviving Neandertal Lineages from Modern Human Genomes

Benjamin Vernot & Joshua Akey
Science, forthcoming

Abstract:
Anatomically modern humans overlapped and mated with Neandertals such that non-African humans inherit ~1-3% of their genomes from Neandertal ancestors. We identified Neandertal lineages that persist in the DNA of modern humans, in whole-genome sequences from 379 European and 286 East Asian individuals, recovering over 15 Gb of introgressed sequence that spans ~20% of the Neandertal genome (FDR = 5%). Analyses of surviving archaic lineages suggests that there were fitness costs to hybridization, admixture occurred both before and subsequent to divergence of non-African modern humans, and Neandertals were a source of adaptive variation for loci involved in skin phenotypes. Our results provide a new avenue for paleogenomics studies, allowing substantial amounts of population-level DNA sequence information to be obtained from extinct groups even in the absence of fossilized remains.

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The complete genome sequence of a Neanderthal from the Altai Mountains

Kay Prüfer et al.
Nature, 2 January 2014, Pages 43–49

Abstract:
We present a high-quality genome sequence of a Neanderthal woman from Siberia. We show that her parents were related at the level of half-siblings and that mating among close relatives was common among her recent ancestors. We also sequenced the genome of a Neanderthal from the Caucasus to low coverage. An analysis of the relationships and population history of available archaic genomes and 25 present-day human genomes shows that several gene flow events occurred among Neanderthals, Denisovans and early modern humans, possibly including gene flow into Denisovans from an unknown archaic group. Thus, interbreeding, albeit of low magnitude, occurred among many hominin groups in the Late Pleistocene. In addition, the high-quality Neanderthal genome allows us to establish a definitive list of substitutions that became fixed in modern humans after their separation from the ancestors of Neanderthals and Denisovans.

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The Invisible Cliff: Abrupt Imposition of Malthusian Equilibrium in a Natural-Fertility, Agrarian Society

Cedric Puleston, Shripad Tuljapurkar & Bruce Winterhalder
PLoS ONE, January 2014

Abstract:
Analysis of a natural fertility agrarian society with a multi-variate model of population ecology isolates three distinct phases of population growth following settlement of a new habitat: (1) a sometimes lengthy copial phase of surplus food production and constant vital rates; (2) a brief transition phase in which food shortages rapidly cause increased mortality and lessened fertility; and (3) a Malthusian phase of indefinite length in which vital rates and quality of life are depressed, sometimes strikingly so. Copial phase duration declines with increases in the size of the founding group, maximum life expectancy and fertility; it increases with habitat area and yield per hectare; and, it is unaffected by the sensitivity of vital rates to hunger. Transition phase duration is unaffected by size of founding population and area of settlement; it declines with yield, life expectancy, fertility and the sensitivity of vital rates to hunger. We characterize the transition phase as the Malthusian transition interval (MTI), in order to highlight how little time populations generally have to adjust. Under food-limited density dependence, the copial phase passes quickly to an equilibrium of grim Malthusian constraints, in the manner of a runner dashing over an invisible cliff. The three-phase pattern diverges from widely held intuitions based on standard Lotka-Verhulst approaches to population regulation, with implications for the analysis of socio-cultural evolution, agricultural intensification, bioarchaeological interpretation of food stress in prehistoric societies, and state-level collapse.

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Immediate replacement of fishing with dairying by the earliest farmers of the northeast Atlantic archipelagos

Lucy Cramp et al.
Proceedings of the Royal Society: Biological Sciences, 7 April 2014

Abstract:
The appearance of farming, from its inception in the Near East around 12 000 years ago, finally reached the northwestern extremes of Europe by the fourth millennium BC or shortly thereafter. Various models have been invoked to explain the Neolithization of northern Europe; however, resolving these different scenarios has proved problematic due to poor faunal preservation and the lack of specificity achievable for commonly applied proxies. Here, we present new multi-proxy evidence, which qualitatively and quantitatively maps subsistence change in the northeast Atlantic archipelagos from the Late Mesolithic into the Neolithic and beyond. A model involving significant retention of hunter–gatherer–fisher influences was tested against one of the dominant adoptions of farming using a novel suite of lipid biomarkers, including dihydroxy fatty acids, ω-(o-alkylphenyl)alkanoic acids and stable carbon isotope signatures of individual fatty acids preserved in cooking vessels. These new findings, together with archaeozoological and human skeletal collagen bulk stable carbon isotope proxies, unequivocally confirm rejection of marine resources by early farmers coinciding with the adoption of intensive dairy farming. This pattern of Neolithization contrasts markedly to that occurring contemporaneously in the Baltic, suggesting that geographically distinct ecological and cultural influences dictated the evolution of subsistence practices at this critical phase of European prehistory.

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Helminths and human ancestral immune ecology: What is the evidence for high helminth loads among foragers?

Douglas London & Daniel Hruschka
American Journal of Human Biology, March/April 2014, Pages 124–129

Objectives: Recent theories of human immune ecology have invoked high helminth loads as an important selection factor among early humans. However, few studies have assessed this assumption among extant human foragers.

Methods: We review the current evidence for high helminth loads in documented forager populations and present new data from members of a Kawymeno Waorani forager group in Amazonian Ecuador (n = 16) compared with neighboring Kichwa subsistence farmers (n = 63).

Results: Stool samples indicated a near absence of helminths among the Kawymeno foraging group (6.25% with Ascaris lumbricoides and 0% with Ancylostoma duodenale or Trichuris trichiura). In contrast neighboring, isolated Kichwa subsistence farmers in a similar ecosystem had abundant helminth infestations (76.1% with Ascaris lumbricoides, 11.1% with Ancylostoma duodenale, and 1.5% with Trichuris trichiura). The presence of helminths among the Waorani and Kichwa was triangulated across multiple data sources, including presence in stool samples, medical exams, and 3 years of participant observation.

Conclusions: These findings, coupled with the modern forager literature, raise questions as to whether helminths were prevalent enough in Paleolithic humans to be a unique evolutionary selective force in human physiology.

By KEVIN LEWIS | 09:00:00 AM

Saturday, February 22, 2014

All bets are off

Anticipating Early Fatality: Friends', Schoolmates' and Individual Perceptions of Fatality on Adolescent Risk Behaviors

Dana Haynie, Brian Soller & Kristi Williams
Journal of Youth and Adolescence, February 2014, Pages 175-192

Abstract:
Past research indicates that anticipating adverse outcomes, such as early death (fatalism), is associated positively with adolescents' likelihood of engaging in risky behaviors. Health researchers and criminologists have argued that fatalism influences present risk taking in part by informing individuals' motivation for delaying gratification for the promise of future benefits. While past findings highlight the association between the anticipation of early death and a number of developmental outcomes, no known research has assessed the impact of location in a context characterized by high perceptions of fatality. Using data from Add Health and a sample of 9,584 adolescents (51 % female and 71 % white) nested in 113 schools, our study builds upon prior research by examining the association between friends', school mates', and individual perceptions of early fatality and adolescent risk behaviors. We test whether friends' anticipation of being killed prior to age 21 or location in a school where a high proportion of the student body subscribes to attitudes of high fatality, is associated with risky behaviors. Results indicate that friends' fatalism is positively associated with engaging in violent delinquency, non-violent delinquency, and drug use after controlling for individual covariates and prior individual risk-taking. Although friends' delinquency accounts for much of the effect of friends' fatalism on violence, none of the potential intervening variables fully explain the effect of friends' fatalism on youth involvement in non-violent delinquency and drug use. Our results underscore the importance of friendship contextual effects in shaping adolescent risk-taking behavior and the very serious consequences perceptions of fatality have for adolescents' involvement in delinquency and drug use.

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Peers Increase Adolescent Risk Taking Even When the Probabilities of Negative Outcomes Are Known

Ashley Smith, Jason Chein & Laurence Steinberg
Developmental Psychology, forthcoming

Abstract:
The majority of adolescent risk taking occurs in the presence of peers, and recent research suggests that the presence of peers may alter how the potential rewards and costs of a decision are valuated or perceived. The current study further explores this notion by investigating how peer observation affects adolescent risk taking when the information necessary to make an informed decision is explicitly provided. We used a novel probabilistic gambling task in which participants decided whether to play or pass on a series of offers for which the reward and loss outcome probabilities were made explicit. Adolescent participants completed the task either alone or under the belief that they were being observed by an unknown peer in a neighboring room. Participants who believed a peer was observing them chose to gamble more often than participants who completed the task alone, and this effect was most evident for decisions with a greater probability of loss. These results suggest that the presence of peers can increase risk taking among adolescents even when specific information regarding the likelihood of positive and negative outcomes is provided. The findings expand our understanding of how peers influence adolescent decision making and have important implications regarding the value of educational programs aimed at reducing risky behaviors during adolescence.

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Carry on winning: The gamblers' fallacy creates hot hand effects in online gambling

Juemin Xu & Nigel Harvey
Cognition, May 2014, Pages 173-180

Abstract:
People suffering from the hot-hand fallacy unreasonably expect winning streaks to continue whereas those suffering from the gamblers' fallacy unreasonably expect losing streaks to reverse. We took 565,915 sports bets made by 776 online gamblers in 2010 and analyzed all winning and losing streaks up to a maximum length of six. People who won were more likely to win again (apparently because they chose safer odds than before) whereas those who lost were more likely to lose again (apparently because they chose riskier odds than before). However, selection of safer odds after winning and riskier ones after losing indicates that online sports gamblers expected their luck to reverse: they suffered from the gamblers' fallacy. By believing in the gamblers' fallacy, they created their own hot hands.

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Playing 'Tetris' reduces the strength, frequency and vividness of naturally occurring cravings

Jessica Skorka-Brown, Jackie Andrade & Jon May
Appetite, forthcoming

Abstract:
Elaborated Intrusion Theory (EI) postulates that imagery is central to craving, therefore a visually based task should decrease craving and craving imagery. This study provides the first laboratory test of this hypothesis in naturally occurring, rather than artificially induced, cravings. Participants reported if they were experiencing a craving and rated the strength, vividness and intrusiveness of their craving. They then either played 'Tetris' or they waited for a computer program to load (they were told it would load, but it was designed not to). Before task completion, craving scores between conditions did not differ; after, however, participants who had played 'Tetris' had significantly lower craving and less vivid craving imagery. The findings support EI theory, showing that a visuospatial working memory load reduces naturally occurring cravings, and that Tetris might be a useful task for tackling cravings outside the laboratory. Methodologically, the findings show that craving can be studied in the laboratory without using craving induction procedures.

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In-School Neurofeedback Training for ADHD: Sustained Improvements From a Randomized Control Trial

Naomi Steiner et al.
Pediatrics, forthcoming

Objective: To evaluate sustained improvements 6 months after a 40-session, in-school computer attention training intervention using neurofeedback or cognitive training (CT) administered to 7- to 11-year-olds with attention-deficit/hyperactivity disorder (ADHD).

Methods: One hundred four children were randomly assigned to receive neurofeedback, CT, or a control condition and were evaluated 6 months postintervention. A 3-point growth model assessed change over time across the conditions on the Conners 3-Parent Assessment Report (Conners 3-P), the Behavior Rating Inventory of Executive Function Parent Form (BRIEF), and a systematic double-blinded classroom observation (Behavioral Observation of Students in Schools). Analysis of variance assessed community-initiated changes in stimulant medication.

Results: Parent response rates were 90% at the 6-month follow-up. Six months postintervention, neurofeedback participants maintained significant gains on Conners 3-P (Inattention effect size [ES] = 0.34, Executive Functioning ES = 0.25, Hyperactivity/Impulsivity ES = 0.23) and BRIEF subscales including the Global Executive Composite (ES = 0.31), which remained significantly greater than gains found among children in CT and control conditions. Children in the CT condition showed delayed improvement over immediate postintervention ratings only on Conners 3-P Executive Functioning (ES = 0.18) and 2 BRIEF subscales. At the 6-month follow-up, neurofeedback participants maintained the same stimulant medication dosage, whereas participants in both CT and control conditions showed statistically and clinically significant increases (9 mg [P = .002] and 13 mg [P < .001], respectively).

Conclusions: Neurofeedback participants made more prompt and greater improvements in ADHD symptoms, which were sustained at the 6-month follow-up, than did CT participants or those in the control group. This finding suggests that neurofeedback is a promising attention training treatment for children with ADHD.

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Cortisol shifts financial risk preferences

Narayanan Kandasamy et al.
Proceedings of the National Academy of Sciences, forthcoming

Abstract:
Risk taking is central to human activity. Consequently, it lies at the focal point of behavioral sciences such as neuroscience, economics, and finance. Many influential models from these sciences assume that financial risk preferences form a stable trait. Is this assumption justified and, if not, what causes the appetite for risk to fluctuate? We have previously found that traders experience a sustained increase in the stress hormone cortisol when the amount of uncertainty, in the form of market volatility, increases. Here we ask whether these elevated cortisol levels shift risk preferences. Using a double-blind, placebo-controlled, cross-over protocol we raised cortisol levels in volunteers over 8 d to the same extent previously observed in traders. We then tested for the utility and probability weighting functions underlying their risk taking and found that participants became more risk-averse. We also observed that the weighting of probabilities became more distorted among men relative to women. These results suggest that risk preferences are highly dynamic. Specifically, the stress response calibrates risk taking to our circumstances, reducing it in times of prolonged uncertainty, such as a financial crisis. Physiology-induced shifts in risk preferences may thus be an underappreciated cause of market instability.

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Sweet delusion. Glucose drinks fail to counteract ego depletion

Florian Lange & Frank Eggert
Appetite, April 2014, Pages 54-63

Abstract:
Initial acts of self-control have repeatedly been shown to reduce individuals' performance on a consecutive self-control task. In addition, sugar containing drinks have been demonstrated to counteract this so-called ego-depletion effect, both when being ingested and when merely being sensed in the oral cavity. However, since the underlying evidence is less compelling than suggested, replications are crucially required. In Experiment 1, 70 participants consumed a drink containing either sugar or a non-caloric sweetener between two administrations of delay-discounting tasks. Experiment 2 (N = 115) was designed to unravel the psychological function of oral glucose sensing by manipulating the temporal delay between a glucose mouth rinse and the administration of the consecutive self-control task. Despite applying powerful research designs, no effect of sugar sensing or ingestion on ego depletion could be detected. These findings add to previous challenges of the glucose model of self-control and highlight the need for independent replications.

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Longitudinal trajectories of sensation seeking, risk taking propensity, and impulsivity across early to middle adolescence

Anahi Collado et al.
Addictive Behaviors, forthcoming

Abstract:
Adolescent substance use and abuse show associations with increases in disinhibitory constructs, including sensation seeking, risk taking propensity, and impulsivity. However, the longitudinal trajectories of these constructs from early to middle adolescence remain largely unknown. Thus, the current study examined these developmental trajectories in 277 adolescents (Mage = 11.00 at Wave 1), over five consecutive yearly waves. Controlling for age, Hierarchical Linear Modeling analyses showed that sensation seeking increased linearly, whereas risk taking propensity and impulsivity demonstrated curvilinear changes. Specifically, risk taking propensity increased in the first four waves of assessment but did not evidence changes at the last assessment wave. Impulsivity, on the other hand peaked at wave four before subsequently declining. A comparison between females and males and Black and White adolescents suggested that these groups' trajectories were similar. Black adolescents' sensation seeking trajectory differed from adolescents who belonged to the "Other" racial group (i.e., adolescents who neither self-identified as Black or White). Generally, the study findings replicate and extend earlier work indicating that these risk factors increase across early adolescence and begin to level-off during middle adolescence. The importance of understanding the natural course of these core constructs is of great importance for directing future relevant prevention and intervention work.

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Exciting Fear in Adolescence: Does Pubertal Development Alter Threat Processing?

Jeffrey Spielberg et al.
Developmental Cognitive Neuroscience, forthcoming

Abstract:
Adolescent development encompasses an ostensible paradox in threat processing. Risk taking increases dramatically after the onset of puberty, contributing to a 200% increase in mortality. Yet, pubertal maturation is associated with increased reactivity in threat-avoidance systems. In the first part of this paper we propose a heuristic model of adolescent affective development that may help to reconcile aspects of this paradox, which focuses on hypothesized pubertal increases in the capacity to experience (some) fear-evoking experiences as an exciting thrill. In the second part of this paper, we test key features of this model by examining brain activation to threat cues in a longitudinal study that disentangled pubertal and age effects. Pubertal increases in testosterone predicted increased activation to threat cues, not only in regions associated with threat avoidance (i.e., amygdala), but also regions associated with reward pursuit (i.e., nucleus accumbens). These findings are consistent with our hypothesis that puberty is associated with a maturational shift toward more complex processing of threat cues - which may contribute to adolescent tendencies to explore and enjoy some types of risky experiences.

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Differential influence of safe versus threatening facial expressions on decision-making during an inhibitory control task in adolescence and adulthood

J.E. Cohen-Gilbert et al.
Developmental Science, forthcoming

Abstract:
Social cognition matures dramatically during adolescence and into early adulthood, supported by continued improvements in inhibitory control. During this time, developmental changes in interpreting and responding to social signals such as facial expressions also occur. In the present study, subjects performed a Go No-Go task that required them to respond or inhibit responding based on threat or safety cues present in facial expressions. Subjects (N = 112) were divided into three age groups: adolescent (12-15 years), emerging adult (18-25 years) and adult (26-44 years). Analyses revealed a significant improvement in accuracy on No-Go trials, but not Go trials, during both safe and threat face conditions, with changes evident through early adulthood. In order to better identify the decision-making processes responsible for these changes in inhibitory control, a drift diffusion model (DDM) was fit to the accuracy and reaction time data, generating measures of caution, response bias, nondecision time (encoding + motor response), and drift rate (face processing efficiency). Caution and nondecision time both increased significantly with age while bias towards the Go response decreased. Drift rate analyses revealed significant age-related improvements in the ability to map threat faces to a No-Go response while drift rates on all other trial types were equivalent across age groups. These results suggest that both stimulus-independent and stimulus-dependent processes contribute to improvements in inhibitory control in adolescence with processing of negative social cues being specifically impaired by self-regulatory demands. Findings from this novel investigation of emotional responsiveness integrated with inhibitory control may provide useful insights about healthy development that can be applied to better understand adolescent risk-taking behavior and the elevated incidence of related forms of psychopathology during this period of life.

By KEVIN LEWIS | 09:00:00 AM

Friday, February 21, 2014

Going for the gold

Is the United States Still a Land of Opportunity? Recent Trends in Intergenerational Mobility

Raj Chetty et al.
NBER Working Paper, January 2014

Abstract:
We present new evidence on trends in intergenerational mobility in the U.S. using administrative earnings records. We find that percentile rank-based measures of intergenerational mobility have remained extremely stable for the 1971-1993 birth cohorts. For children born between 1971 and 1986, we measure intergenerational mobility based on the correlation between parent and child income percentile ranks. For more recent cohorts, we measure mobility as the correlation between a child’s probability of attending college and her parents’ income rank. We also calculate transition probabilities, such as a child’s chances of reaching the top quintile of the income distribution starting from the bottom quintile. Based on all of these measures, we find that children entering the labor market today have the same chances of moving up in the income distribution (relative to their parents) as children born in the 1970s. However, because inequality has risen, the consequences of the “birth lottery” – the parents to whom a child is born – are larger today than in the past.

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Where is the Land of Opportunity? The Geography of Intergenerational Mobility in the United States

Raj Chetty et al.
NBER Working Paper, January 2014

Abstract:
We use administrative records on the incomes of more than 40 million children and their parents to describe three features of intergenerational mobility in the United States. First, we characterize the joint distribution of parent and child income at the national level. The conditional expectation of child income given parent income is linear in percentile ranks. On average, a 10 percentile increase in parent income is associated with a 3.4 percentile increase in a child's income. Second, intergenerational mobility varies substantially across areas within the U.S. For example, the probability that a child reaches the top quintile of the national income distribution starting from a family in the bottom quintile is 4.4% in Charlotte but 12.9% in San Jose. Third, we explore the factors correlated with upward mobility. High mobility areas have (1) less residential segregation, (2) less income inequality, (3) better primary schools, (4) greater social capital, and (5) greater family stability. While our descriptive analysis does not identify the causal mechanisms that determine upward mobility, the new publicly available statistics on intergenerational mobility by area developed here can facilitate future research on such mechanisms.

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The Demise of U.S. Economic Growth: Restatement, Rebuttal, and Reflections

Robert Gordon
NBER Working Paper, February 2014

Abstract:
The United States achieved a 2.0 percent average annual growth rate of real GDP per capita between 1891 and 2007. This paper predicts that growth in the 25 to 40 years after 2007 will be much slower, particularly for the great majority of the population. Future growth will be 1.3 percent per annum for labor productivity in the total economy, 0.9 percent for output per capita, 0.4 percent for real income per capita of the bottom 99 percent of the income distribution, and 0.2 percent for the real disposable income of that group. The primary cause of this growth slowdown is a set of four headwinds, all of them widely recognized and uncontroversial. Demographic shifts will reduce hours worked per capita, due not just to the retirement of the baby boom generation but also as a result of an exit from the labor force both of youth and prime-age adults. Educational attainment, a central driver of growth over the past century, stagnates at a plateau as the U.S. sinks lower in the world league tables of high school and college completion rates. Inequality continues to increase, resulting in real income growth for the bottom 99 percent of the income distribution that is fully half a point per year below the average growth of all incomes. A projected long-term increase in the ratio of debt to GDP at all levels of government will inevitably lead to more rapid growth in tax revenues and/or slower growth in transfer payments at some point within the next several decades. There is no need to forecast any slowdown in the pace of future innovation for this gloomy forecast to come true, because that slowdown already occurred four decades ago. In the eight decades before 1972 labor productivity grew at an average rate 0.8 percent per year faster than in the four decades since 1972. While no forecast of a future slowdown of innovation is needed, skepticism is offered here, particularly about the techno-optimists who currently believe that we are at a point of inflection leading to faster technological change. The paper offers several historical examples showing that the future of technology can be forecast 50 or even 100 years in advance and assesses widely discussed innovations anticipated to occur over the next few decades, including medical research, small robots, 3-D printing, big data, driverless vehicles, and oil-gas fracking.

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Marry Your Like: Assortative Mating and Income Inequality

Jeremy Greenwood et al.
NBER Working Paper, January 2014

Abstract:
Has there been an increase in positive assortative mating? Does assortative mating contribute to household income inequality? Data from the United States Census Bureau suggests there has been a rise in assortative mating. Additionally, assortative mating affects household income inequality. In particular, if matching in 2005 between husbands and wives had been random, instead of the pattern observed in the data, then the Gini coefficient would have fallen from the observed 0.43 to 0.34, so that income inequality would be smaller. Thus, assortative mating is important for income inequality. The high level of married female labor-force participation in 2005 is important for this result.

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Inequality and growth: The neglected time dimension

Daniel Halter, Manuel Oechslin & Josef Zweimüller
Journal of Economic Growth, March 2014, Pages 81-104

Abstract:
Inequality affects economic performance through many mechanisms, both beneficial and harmful. Moreover, some of these mechanisms tend to set in fast while others are rather slow. The present paper (i) introduces a simple theoretical model to study how changes in inequality affect economic growth over different time horizons; (ii) empirically investigates the inequality–growth relationship, thereby relying on specifications derived from the theory. Our empirical findings are in line with the theoretical predictions: Higher inequality helps economic performance in the short term but reduces the growth rate of GDP per capita farther in the future. The long-run (or total) effect of higher inequality tends to be negative.

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Income Inequality and Child Maltreatment in the United States

John Eckenrode et al.
Pediatrics, forthcoming

Objective: To examine the relation between county-level income inequality and rates of child maltreatment.

Methods: Data on substantiated reports of child abuse and neglect from 2005 to 2009 were obtained from the National Child Abuse and Neglect Data System. County-level data on income inequality and children in poverty were obtained from the American Community Survey. Data for additional control variables were obtained from the American Community Survey and the Health Resources and Services Administration Area Resource File. The Gini coefficient was used as the measure of income inequality. Generalized additive models were estimated to explore linear and nonlinear relations among income inequality, poverty, and child maltreatment. In all models, state was included as a fixed effect to control for state-level differences in victim rates.

Results: Considerable variation in income inequality and child maltreatment rates was found across the 3142 US counties. Income inequality, as well as child poverty rate, was positively and significantly correlated with child maltreatment rates at the county level. Controlling for child poverty, demographic and economic control variables, and state-level variation in maltreatment rates, there was a significant linear effect of inequality on child maltreatment rates (P < .0001). This effect was stronger for counties with moderate to high levels of child poverty.

Conclusions: Higher income inequality across US counties was significantly associated with higher county-level rates of child maltreatment. The findings contribute to the growing literature linking greater income inequality to a range of poor health and well-being outcomes in infants and children.

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The international mobility of billionaires

Tino Sanandaji
Small Business Economics, February 2014, Pages 329-338

Abstract:
This paper uses data from Forbes Magazine’s list of billionaires, supplemented with other publicly available information, to study the migratory behavior of the very rich. Billionaires are more likely to move to countries that share a language and a culture with their country of birth and to countries with larger markets, higher incomes, and lower capital taxes. In total, only 15 % of self-made billionaires — almost all of whom are entrepreneurs — migrated to another country. One explanation for the modest rate of migration may be the country-specificity of entrepreneurs’ human capital. Eight out of ten migrants select a destination country with higher per capita income than that of their birth country, and seven out of ten move to a country with lower capital taxes.

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Employer's choice: Selection through job advertisements in the nineteenth and twentieth centuries

Wiebke Schulz, Ineke Maas & Marco van Leeuwen
Research in Social Stratification and Mobility, forthcoming

Abstract:
Dominant theories in stratification research suppose modernization processes to have caused societies to become more open. Employers are assumed to have increasingly selected from among applicants on the basis of job-related characteristics, such as their skills, rather than on characteristics unrelated to the job, such as social origin. We address this issue by studying employers’ selection criteria in job advertisements. We do so for the heyday of modernization, the nineteenth and twentieth centuries. Employers are found to have selected more on job-related than on other characteristics even at the start of the period, but the extent to which they did so did not increase over time. Job-related characteristics were no more important as selection criteria in modern occupations, nor in modern municipalities. Despite what modernization theories suggest, employers were no more and no less inclined to select their personnel through job advertisements. Employers did, however, select more on job-related characteristics for occupations with a high status.

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Economic Inequality and the Social Capital Gap in the United States across Time and Space

Matthew Wright
Political Studies, forthcoming

Abstract:
Although researchers have demonstrated that economic inequality and social capital are inversely related in an aggregate sense across time and space, to date little is known about the relationship between inequality and the socio-economic disparity in social capital outcomes. Using yearly cross-sectional surveys of American twelfth graders fielded during 1976–2009, I show that social capital is strongly related to parental socio-economic status, and that this relationship grows in strength as economic inequality increases. This relationship is confirmed both over time and cross-sectionally. Finally, I argue that, between resource-based and psychological accounts of why this relationship exists, the former appears more promising.

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How Risky Are Recessions for Top Earners?

Fatih Guvenen, Greg Kaplan & Jae Song
NBER Working Paper, January 2014

Abstract:
How sensitive are the earnings of top earners to business cycles? And, how does the business cycle sensitivity of top earners vary by industry? We use a confidential dataset on earnings histories of US males from the Social Security Administration. On average, individuals in the top 1% of the earnings distribution are slightly more cyclical than the population average. But there are large differences across sectors: Top earners in Finance, Insurance, and Real Estate (FIRE) and Construction face substantial business cycle volatility, whereas those in Services (who make up 40% of individuals in the top 1 percent) have earnings that are less cyclical than the average worker.

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Income distribution and housing prices: An assignment model approach

Niku Määttänen & Marko Terviö
Journal of Economic Theory, forthcoming

Abstract:
We present a framework for studying the relation between the distributions of income and house prices that is based on an assignment model where households are heterogeneous by incomes and houses by quality. Each household owns one house and wishes to live in one house; thus everyone is potentially both a buyer and a seller. In equilibrium, the distribution of prices depends on both distributions in a tractable but nontrivial manner. We show how the impact of increased income inequality on house prices depends on the shapes of the distributions, and can be inferred from data. In our empirical application we find that increased income inequality between 1998 and 2007 had a negative impact on average house prices in 6 US metropolitan areas.

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Does Greater Inequality Lead to More Household Borrowing? New Evidence from Household Data

Olivier Coibion et al.
NBER Working Paper, January 2014

Abstract:
One suggested hypothesis for the dramatic rise in household borrowing that preceded the financial crisis is that low-income households increased their demand for credit to finance higher consumption expenditures in order to “keep up” with higher-income households. Using household level data on debt accumulation during 2001-2012, we show that low-income households in high-inequality regions accumulated less debt relative to income than their counterparts in lower-inequality regions, which negates the hypothesis. We argue instead that these patterns are consistent with supply-side interpretations of debt accumulation patterns during the 2000s. We present a model in which banks use applicants’ incomes, combined with local income inequality, to infer the underlying type of the applicant, so that banks ultimately channel more credit toward lower-income applicants in low-inequality regions than high-inequality regions. We confirm the predictions of the model using data on individual mortgage applications in high- and low-inequality regions over this time period.

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Income Inequality and Gambling: A Panel Study in the United States (1980–1997)

Thijs Bol, Bram Lancee & Sander Steijn
Sociological Spectrum, January/February 2014, Pages 61-75

Abstract:
While there are many studies that examine the consequences of increasing income inequality, its effects on gambling behavior have not yet been studied. In this article, we argue that income inequality increases the average expenditure on gambling. Using longitudinal state-level data for the United States (1980–1997), we estimate fixed-effects models to analyze two types of gambling expenditure: pari-mutuel betting and lottery spending. Our findings show a positive effect of increasing income inequality on lottery expenditure. For pari-mutuel betting, the result is not linear, as for higher levels of income inequality, the positive effect decreases, suggesting that the effect flattens out when the increase in income inequality is highest. We argue that there are three reasons why we find a positive effect of income inequality of gambling expenditure: increasing mobility aspirations, availability of resources in the upper part of the distribution, and status anxiety in the lower part of the distribution.

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Intergenerational Analysis of Social Interaction and Social Skills: An Analysis of U.S. and U.K. Panel Data

Sarah Brown, Jolian McHardy & Karl Taylor
Economics of Education Review, forthcoming

Abstract:
A body of empirical evidence supports a positive relationship between educational attainment and social interaction. We build on this literature by exploring the relationship between the social interaction of parents and their offspring from an empirical perspective. Using two U.K. and U.S. panel data sets, we find robust evidence of intergenerational links between the social interaction of parents and their offspring supporting the existence of positive intergenerational effects in social interaction. These links exist after controlling for an extensive set of factors covering family background including income and wealth as well as attempting to control for issues related to reverse causality and endogeneity. Our empirical evidence indicates that higher levels of parental social interaction are associated with higher levels of child social interaction. Our findings indicate an important influence on this facet of children's human capital, namely social skills, with positive consequences expected for educational attainment.

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Compulsory Voting and Income Inequality

John Carey & Yusaku Horiuchi
Dartmouth College Working Paper, January 2014

Abstract:
What difference does it make if more, or fewer, people vote? What difference would it make if the state makes people vote? These questions are central both to normative debates about the rights and duties of citizens in a democracy and to contemporary policy debates in a variety of countries over what actions states should take to encourage electoral participation. To address them, this paper focuses on the phenomenon of compulsory voting – legal requirements that compel citizens to vote in elections. Specifically, by focusing on a rare case of abolishing compulsory voting in Venezuela, we show that not forcing people to vote yielded a more unequal distribution of income. Our evidence supports Arend Lijphart’s claim, advanced in his 1996 presidential address to the American Political Science Association, that compulsory voting can offset class bias in turnout and, in turn, contribute to the equality of influence.

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Do positional goods inhibit saving? Evidence from a life–cycle experiment

Nick Feltovich & Ourega-Zoé Ejebu
Journal of Economic Behavior & Organization, forthcoming

Abstract:
We investigate the effect of positional goods (goods for which one's consumption relative to others’ matters) on saving, based on results from a life-cycle consumption/saving experiment. In a Group treatment, we allow inter-personal comparisons by assigning subjects to groups and displaying rankings based partly on consumption. A baseline Individual treatment is similar, but without the additional information. We find more under-saving (saving less than the optimal amount), and lower money earnings for subjects, in the Group treatment. Both effects are economically relevant, with magnitudes of roughly 6–7% of expected income and 7–8% of average earnings respectively. Additional analysis shows that the result is driven by those subjects who are not ranked in the top three in their group (“keeping up with the Joneses”), and males in particular.

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Group Inequality

Samuel Bowles, Glenn Loury & Rajiv Sethi
Journal of the European Economic Association, February 2014, Pages 129–152

Abstract:
We explore the combined effect of segregation in social networks, peer effects, and the relative size of a historically disadvantaged group on the incentives to invest in market-rewarded skills and the dynamics of inequality between social groups. We identify conditions under which group inequality will persist in the absence of differences in ability, credit constraints, or labor market discrimination. Under these conditions, group inequality may be amplified even if initial group differences are negligible. Increases in social integration may destabilize an unequal state and make group equality possible, but the distributional and human capital effects of this depend on the demographic composition of the population. When the size of the initially disadvantaged group is sufficiently small, integration can lower the long-run costs of human capital investment in both groups and result in an increase the aggregate skill share. In contrast, when the initially disadvantaged group is large, integration can induce a fall in the aggregate skill share as the costs of human capital investment rise in both groups. We consider applications to concrete cases and policy implications.

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The long-lasting effects of family background: A European cross-country comparison

Fabrizio Mazzonna
Economics of Education Review, forthcoming

Abstract:
This paper investigates how and to what extent the association between family socio-economic status (SES) during childhood and old age health, income and cognition varies across 11 European countries. It uses the Survey on Health, Aging and Retirement in Europe (SHARE) and SHARELIFE, which collects retrospective information on respondents’ family backgrounds during their childhood. We also analyze which factors lead to intergenerational persistence of human capital by accounting for childhood health and school performance, education and labor market outcomes. The results show a strong relationship between family SES during childhood and old age outcomes and a large cross-country heterogeneity. Education appears as the main channel for this gradient and explains most of the estimated cross-country heterogeneity. Moreover, we show evidence of a strong correlation between income inequality and our estimates of intergenerational persistence of human capital.

By KEVIN LEWIS | 09:00:00 AM

Thursday, February 20, 2014

Level playing field

(Re)Calling London: The Gender Frame Agenda within NBC’s Primetime Broadcast of the 2012 Olympiad

Andrew Billings et al.
Journalism & Mass Communication Quarterly, March 2014, Pages 38-58

Abstract:
All sixty-nine hours of National Broadcasting Company’s (NBC) 2012 primetime Summer Olympic telecast were analyzed, revealing significant gender trends. For the first time in any scholarly study of NBC’s coverage of the games, women athletes received the majority of the clock-time and on-air mentions. However, dialogues surrounding the attributions of success and failure of athletes, as well as depictions of physicality and personality, contained some divergences by gender.

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An “Obama effect” on the GRE General Test?

Lawrence Stricker & Donald Rock
Social Influence, forthcoming

Abstract:
Previous research assessing Obama's effectiveness as a role model in alleviating the effects of stereotype threat on Black Americans' test performance yielded provocative though conflicting results. A field study with research participants observed that Black–White mean differences were not detectable at points in his 2008 presidential campaign when he clearly succeeded — his nomination and election, although they persisted at other points. But a laboratory experiment found that prompts to think positively about Obama had no effect. The present study extended this research to actual test-takers and an operational test (GRE General Test). Black–White mean differences just after the election in November 2008 were substantial and comparable to earlier differences, in November 2006; the level of Black test-takers' performance was also unchanged.

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Discrimination in the Credential Society: An Audit Study of Race, Social Class, and College Selectivity in the Labor Market

Michael Gaddis
University of North Carolina Working Paper, January 2014

Abstract:
Racial inequality in economic outcomes, particularly among the college educated, persists throughout U.S. society. Scholars debate whether this inequality stems from racial differences in human capital (e.g. college selectivity, GPA, college major) or employer discrimination against black job candidates. However, limited measures of human capital and the inherent difficulties in measuring discrimination using observational data make determining the cause of racial differences in labor market outcomes a difficult endeavor. In this research, I examine employment opportunities for white and black graduates of elite top-ranked universities versus less selective institutions. Using an audit design, I create matched candidate pairs and apply for 1,008 jobs on a national job search website. I also take advantage of existing birth record data to test differences across social class within racialized names. The results show that although a credential from an elite university results in more employer responses for all candidates, black candidates from elite universities only do as well as white candidates from less selective universities. Moreover, race results in a double penalty: when employers respond to black candidates it is for jobs with lower starting salaries and lower prestige than those of white peers. The results hold for lower- and middle-class names, but lower-class black names are discriminated against the most. These racial differences suggest that a bachelor’s degree, even one from an elite institution, cannot fully counteract the importance of race in U.S. society. Thus, both discrimination and differences in human capital contribute to racial economic inequality.

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The Negative Effects of Privilege on Educational Attainment: Gender, Race, Class, and the Bachelor's Degree

William Mangino
Social Science Quarterly, forthcoming

Objective: To show that in the contemporary United States, traditionally privileged categories of people — men, whites, and the super-rich — complete four-year college degrees at rates lower than their nonprivileged counterparts — women, nonwhites, and the “99 percent.”

Methods: Logistic regression and an educational transitions method are used on the National Longitudinal Study of Adolescent Health (Waves 1 and 4) to predict, given college entrance, who completes a bachelor's degree.

Results: Women, the lower 99 percent of the income distribution, and when economic resources are present, nonwhites all complete college at higher rates than men, the richest 1 percent, and whites, respectively. In a final model, rich white men as a single category are shown to complete college less than everyone else.

Conclusion: As previously excluded categories of people have gained access to higher education, the privileged are shifting their reproduction strategies away from schooling.

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Think Leader, Think White? Capturing and Weakening an Implicit Pro-White Leadership Bias

Seval Gündemir et al.
PLoS ONE, January 2014

Abstract:
Across four studies, we found evidence for an implicit pro-White leadership bias that helps explain the underrepresentation of ethnic minorities in leadership positions. Both White-majority and ethnic minority participants reacted significantly faster when ethnically White names and leadership roles (e.g., manager; Study 1) or leadership traits (e.g., decisiveness; Study 2 & 3) were paired in an Implicit Association Test (IAT) rather than when ethnic minority names and leadership traits were paired. Moreover, the implicit pro-White leadership bias showed discriminant validity with the conventional implicit bias measures (Study 3). Importantly, results showed that the pro-White leadership bias can be weakened when situational cues increase the salience of a dual identity (Study 4). This, in turn, can diminish the explicit pro-White bias in promotion related decision making processes (Study 4). This research offers a new tool to measure the implicit psychological processes underlying the underrepresentation of ethnic minorities in leadership positions and proposes interventions to weaken such biases.

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Collaborating with people like me: Ethnic co-authorship within the US

Richard Freeman & Wei Huang
NBER Working Paper, February 2014

Abstract:
This study examines the ethnic identity of the authors of over 1.5 million scientific papers written solely in the US from 1985 to 2008. In this period the proportion of US-based authors with English and European names fell while the proportion of US-based authors with names from China and other developing countries increased. The evidence shows that persons of similar ethnicity co- author together more frequently than can be explained by chance given their proportions in the population of authors. This homophily in research collaborations is associated with weaker scientific contributions. Researchers with weaker past publication records are more likely to write with members of ethnicity than other researchers. Papers with greater homophily tend to be published in lower impact journals and to receive fewer citations than others, even holding fixed the previous publishing performance of the authors. Going beyond ethnic homophily, we find that papers with more authors in more locations and with longer lists of references tend to be published in relatively high impact journals and to receive more citations than other papers. These findings and those on homophily suggest that diversity in inputs into papers leads to greater contributions to science, as measured by impact factors and citations.

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Asian Americans’ and Caucasians’ implicit leadership theories: Asian stereotypes, transformational, and authentic leadership

Kimberly Burris et al.
Asian American Journal of Psychology, December 2013, Pages 258-266

Abstract:
This study evaluated how both Caucasians and Asian Americans characterize successful managers and how this compares to general perceptions of Asian American and Caucasian managers. Ninety-three Asian Americans and 94 Caucasians provided their perceptions of 1 of 3 different manager types (Asian American, Caucasian, or successful) and comparisons were explored using models of effective leadership (i.e., transformational and authentic leadership) and Asian stereotypes. Results showed that for Caucasian respondents, a higher degree of resemblance was found between their descriptions of Caucasian managers and successful managers than between their descriptions of Asian American managers and successful managers. Specifically, Caucasians perceived Asian American managers as equally competent, yet less sociable, less transformational, and less authentic than Caucasians. Asian Americans also endorsed the antisocial stereotype of Asian American managers. In addition, Asian American respondents perceived Caucasian managers as less authentic leaders. The discussion explored the complex experiences of the Asian American minority group and the enduring need to foster understanding of ethnic differences in the workplace.

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Competition and Gender Prejudice: Are Discriminatory Employers Doomed to Fail?

Andrea Weber & Christine Zulehner
Journal of the European Economic Association, forthcoming

Abstract:
According to Becker's famous theory on discrimination (Gary Becker, The Economics of Discrimination, University of Chicago Press), entrepreneurs with a strong prejudice against female workers forgo profits by submitting to their tastes. In a competitive market their firms lack efficiency and are therefore forced to leave. We present new empirical evidence for this prediction by studying the survival of start-up firms in longitudinal matched employer–employee data. We find that firms with strong preferences for discrimination approximated by a low share of female employees relative to the industry average have significantly shorter survival rates. This is especially relevant for firms starting out with female shares in the lower tail of the distribution. Competition at the industry level additionally reduces firm survival and accelerates the rate at which prejudiced firms are weeded out. We also find evidence for employer learning as highly discriminatory start-up firms that manage to survive submit to market powers and increase their female workforce over time.

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Recognizing Academic Potential in Students of Color: Findings of U-STARS~PLUS

Christine Harradine, Mary Ruth Coleman & Donna-Marie Winn
Gifted Child Quarterly, January 2014, Pages 24-34

Abstract:
Students of color are often underrepresented in academic programs for gifted and talented students. This study explored the impact of The Teacher’s Observation of Potential in Students (TOPS) tool on teachers’ ability to systematically observe and document the academic strengths of 5- to 9-year-old students across nine domains. Teachers indicated that without the TOPS, they would have overlooked the academic potential of 22% (1,741) of their children of color and 53% of African American boys, in particular. After using the TOPS, a majority of the teachers (74%) felt they could more readily recognize high-potential students from culturally or linguistically different and economically disadvantaged families. Barriers that might have kept teachers from seeing students’ strengths were also examined. Results indicate two statistically significant relationships between teacher race and perceptions of student behavior. This study has implications for supporting teachers’ more effective identification of strengths in all children.

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Age-Based Hiring Discrimination as a Function of Equity Norms and Self-Perceived Objectivity

Nicole Lindner, Alexander Graser & Brian Nosek
PLoS ONE, January 2014

Abstract:
Participants completed a questionnaire priming them to perceive themselves as either objective or biased, either before or after evaluating a young or old job applicant for a position linked to youthful stereotypes. Participants agreed that they were objective and tended to disagree that they were biased. Extending past research, both the objective and bias priming conditions led to an increase in age discrimination compared to the control condition. We also investigated whether equity norms reduced age discrimination, by manipulating the presence or absence of an equity statement reminding decision-makers of the legal prohibitions against discrimination “on the basis of age, disability, national or ethnic origin, race, religion, or sex.” The presence of equity norms increased enthusiasm for both young and old applicants when participants were not already primed to think of themselves as objective, but did not reduce age-based hiring discrimination. Equity norms had no effect when individuals thought of themselves as objective – they preferred the younger more than the older job applicant. However, the presence of equity norms did affect individuals’ perceptions of which factors were important to their hiring decisions, increasing the perceived importance of applicants’ expertise and decreasing the perceived importance of the applicants’ age. The results suggest that interventions that rely exclusively on decision-makers' intentions to behave equitably may be ineffective.

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Changes in Levels of Affirmative Action in College Admissions in Response to Statewide Bans and Judicial Rulings

Grant Blume & Mark Long
Educational Evaluation and Policy Analysis, forthcoming

Abstract:
Affirmative action in college admissions was effectively banned in Texas by the Hopwood ruling in 1997, by voter referenda in California and Washington in 1996 and 1998, and by administrative decisions in Florida in 1999. The Hopwood and Johnson rulings also had possible applicability to public colleges throughout Alabama, Georgia, Louisiana, and Mississippi. The Supreme Court’s 2003 decision in the Grutter and Gratz cases reaffirmed but limited the legal basis for affirmative action in colleges. This article uses nationally representative data on the admissions decisions of high school students in 1992 and 2004 to estimate the magnitude of the change in affirmative action in college admission decisions (i.e., how these policy changes affected the relative likelihood of admission of minority and nonminority applicants). We find substantial declines in levels of affirmative action practiced by highly selective colleges in the states affected by bans and the Hopwood and Johnson rulings, and no evidence of declines outside these states (and thus modest and generally insignificant declines nationwide). We show how the decline in affirmative action in these particular states affects not only students in these states but also those students who live in adjacent states, particularly when the adjacent states lack highly selective colleges.

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Preferential Admission and MBA Outcomes: Mismatch Effects by Race and Gender

Wayne Grove & Andrew Hussey
B.E. Journal of Economic Analysis & Policy, forthcoming

Abstract:
We consider the “mismatch” hypothesis in the context of graduate management education. Both blacks and Hispanics, conditional on a rich set of human capital variables, prior earnings and work experience, and non-cognitive attributes, are favored in admission to top 50 Master of Business Administration (MBA) programs. To test for mismatch effects, we provide two comparisons: (1) comparable individuals (in terms of race, gender, and credentials) at different quality MBA programs and (2) individuals of differing race or gender (but with similar credentials) at comparable MBA programs. Despite admission preferences, blacks and Hispanics enjoy similar or even higher returns to selectivity than whites.

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Overplaying the diversity card: When a superordinate group overrepresents the prevalence of a minority group

Jennifer Spoor, Jolanda Jetten & Matthew Hornsey
Group Processes & Intergroup Relations, March 2014, Pages 161-177

Abstract:
Despite the fact that groups and organizations often portray themselves as more diverse than they really are, the consequences of such practices for the minority who is overrepresented are not well understood. Focusing on Asian university students in Australia, we conducted three experiments to examine minority group members’ perceptions when the superordinate group (the university) overrepresents the minority group in advertising. Minority group members tended to be less favorable toward overrepresentation compared to other types of representation (Studies 1 and 2), an effect that was most pronounced for those who strongly identified with their minority group (Study 3). The negative effect of minority overrepresentation was not detected among majority group members. If anything, in Study 1, majority group members were more positive toward overrepresentation and were more willing to help the superordinate group in an overrepresentation than a no minority representation condition. Future research directions and practical implications are discussed.

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Utilitarianism and discrimination

Alon Harel & Uzi Segal
Social Choice and Welfare, February 2014, Pages 367-380

Abstract:
Since Becker (1971), a common argument against asymmetric norms that promote minority rights over those of the majority is that such policies reduce total welfare. While this may be the case, we show that there are simple environments where aggregate sum of individual utilities is actually maximized under asymmetric norms that favor minorities. We thus maintain that without information regarding individual utilities one cannot reject or promote segregation-related policies based on utilitarian arguments.

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When do female-owned businesses out-survive male-owned businesses? A disaggregated approach by industry and geography

Arturs Kalnins & Michele Williams
Journal of Business Venturing, forthcoming

Abstract:
Studies have invoked several theoretical perspectives to explain differences between female-owned businesses and male-owned businesses. Yet, few have considered the possibility that differential outcomes between female-owned businesses and male-owned businesses vary from setting to setting, an insight that we derive by combining social constructionism with feminist theory. We articulate hypotheses regarding the outcome of business survival duration based on this insight. Then, using a dataset of one million Texan proprietorships, we test these hypotheses by estimating separate gender effects for many individual industries and geographic areas. We find that female-owned businesses consistently out-survive male-owned businesses in many industries and areas.

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The Absence of the African-American Owned Business: An Analysis of the Dynamics of Self-Employment

Robert Fairlie
University of California Working Paper, January 2014

Abstract:
Estimates from the Panel Study of Income Dynamics (PSID) indicate that African-American men are one-third as likely to be entrepreneurs as white men. The large discrepancy is due to a black transition rate into self-employed business ownership that is approximately one half the white rate and a black transition rate out of self-employed business ownership that is twice the white rate. Using a new variation of the Blinder-Oaxaca decomposition technique, I find that racial differences in asset levels and probabilities of having self-employed fathers explain a large part of the black/white gap in the entry rate, but almost none of the gap in the exit rate.

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Gender Differences in Competition and Sabotage

Simon Dato & Petra Nieken
Journal of Economic Behavior & Organization, forthcoming

Abstract:
We study the differences in behavior of males and females in a two-player tournament with sabotage in a controlled lab experiment. Implementing a real-effort design and a principal who is paid based on the agent's output, we find that males and females do not differ in their performance in the real effort task but in their choice of sabotage. Males select significantly more sabotage, leading to an, on average, higher winning probability but not to higher profits. If the gender of the opponent is revealed before the tournament, males increase their performance in the real-effort task especially if the opponent is female. The gender gap in sabotage is persistent. We discuss possible explanations for our findings and their implications.

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How You Downsize Is Who You Downsize: Biased Formalization, Accountability, and Managerial Diversity

Alexandra Kalev
American Sociological Review, February 2014, Pages 109-135

Abstract:
Scholars and pundits argue that women and minorities are more likely to lose their jobs in downsizing because of segregation or outright discrimination. In contrast, this article explores how the formalization and legalization of downsizing affect inequalities. According to bureaucracy theory and management practitioners, formalization constrains decision-makers’ bias, but neo-structural and feminist theories of inequality argue that formalization can itself be gendered and racially biased. Accountability theory advances this debate, pointing to organizational and institutional processes that motivate executives to minimize inequality. Building on these theories, and drawing on unique data from a national sample of 327 downsized establishments between 1971 and 2002, I analyze how layoff formalization and actors’ antidiscrimination accountability affect women’s and minorities’ representation in management after downsizing. Results demonstrate that, first, downsizing significantly reduces managerial diversity. Second, formalization exacerbates these negative effects when layoff rules rely on positions or tenure, but not when layoff rules require an individualized evaluation. Finally, antidiscrimination accountability generated by internal legal counsels or compliance awareness prods executives to override formal rules and reduce inequalities. I conclude that although downsizing has been increasingly managed by formal rules and monitored by legal experts, this has often meant the institutionalization of unequal, rather than equal, opportunity.

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Zero Benefit: Estimating the Effect of Zero Tolerance Discipline Polices on Racial Disparities in School Discipline

Stephen Hoffman
Educational Policy, January 2014, Pages 69-95

Abstract:
This study estimates the effect of zero tolerance disciplinary policies on racial disparities in school discipline in an urban district. Capitalizing on a natural experiment, the abrupt expansion of zero tolerance discipline policies in a mid-sized urban school district, the study demonstrates that Black students in the district were disproportionately affected, with an additional 70 Black students per year recommended for expulsion following the policy change. Furthermore, the study uses negative binomial regression discontinuity analysis to explore the effect of expanding zero tolerance on the proportion of days students are suspended. Following the policy change, the already sizeable difference in the proportion of days suspended between Black students and White students increased.

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Wage Discrimination Against Workers with Sensory Disabilities

Marjorie Baldwin & Chung Choe
Industrial Relations, January 2014, Pages 101–124

Abstract:
We link information on occupation-specific job demands to data from the Survey of Income and Program Participation to provide first-ever estimates of wage discrimination against workers with sensory disabilities. Estimates are derived from wage models that control for job demands related to sensory abilities, and interactions between job demands and workers' sensory limitations. Results indicate approximately one third (one tenth) of the male (female) disability-related wage differential is potentially attributed to discrimination. The results differ from estimates of discrimination against workers with physical disabilities obtained with similar methods, underscoring the importance of accounting for heterogeneity of the disabled population in discrimination studies.

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Schools, Peers, and Prejudice in Adolescence

Aprile Benner, Robert Crosnoe & Jacquelynne Eccles
Journal of Research on Adolescence, forthcoming

Abstract:
Adolescents' perceptions of the prejudice in their social environments can factor into their developmental outcomes. The degree to which others in the environment perceive such prejudice — regardless of adolescents' own perceptions — also matters by shedding light on the contextual climate in which adolescents spend their daily lives. Drawing on the National Longitudinal Study of Adolescent Health, this study revealed that school-wide perceptions of peer prejudice, which tap into the interpersonal climate of schools, appeared to be particularly risky for adolescents' academic achievement. In contrast, adolescents' own perceptions of peer prejudice at schools were associated with their feelings of alienation in school. Importantly, these patterns did not vary substantially by several markers of vulnerability to social stigmatization.

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Female leadership and gender equity: Evidence from plant closure

Geoffrey Tate & Liu Yang
Journal of Financial Economics, forthcoming

Abstract:
We use unique worker-plant matched panel data to measure differences in wage changes experienced by workers displaced from closing plants. We observe larger losses among women than men, comparing workers who move from the same closing plant to the same new firm. However, we find a significantly smaller gap in hiring firms with female leadership. The results are strongest among women who are displaced from male-led plants and from less competitive industries. Our results suggest an important externality to having women in leadership positions: They cultivate more female-friendly cultures inside their firms.

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The Revised MRS: Gender Complementarity at College

Laura Hamilton
Gender & Society, forthcoming

Abstract:
Using an ethnographic and longitudinal interview study of college women and in-depth interviews with their parents, I argue that mid-tier flagship universities still push women toward gender complementarity — a gender-traditional model of economic security pairing a career oriented man with a financially dependent woman. Combining multilevel and intersectional theories, I show that the infrastructure and campus peer culture at Midwest University supports this gendered logic of class reproduction, which reflects an affluent, white, and heterosexual femininity. I argue that this logic may only work for a minority of students, and plays a role in reinforcing class inequities among women.

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The Origins of Race-conscious Affirmative Action in Undergraduate Admissions: A Comparative Analysis of Institutional Change in Higher Education

Lisa Stulberg & Anthony Chen
Sociology of Education, January 2014, Pages 36-52

Abstract:
What explains the rise of race-conscious affirmative action policies in undergraduate admissions? The dominant theory posits that adoption of such policies was precipitated by urban and campus unrest in the North during the late 1960s. Based on primary research in a sample of 17 selective schools, we find limited support for the dominant theory. Affirmative action arose in two distinct waves during the 1960s. A first wave was launched in the early 1960s by northern college administrators inspired by nonviolent civil rights protests in the South. A second wave of affirmative action emerged in the late 1960s, primarily as a response to campus-based student protests. Most late-adopting schools were those most favored by the Protestant upper class. Our findings are most consistent with a theoretical perspective on institutional change in which social movements’ effects are mediated by the moral and ideological beliefs of key administrators.

By KEVIN LEWIS | 09:00:00 AM

Wednesday, February 19, 2014

Worldwide web

American Economic Power Hasn't Declined - It Globalized! Summoning the Data and Taking Globalization Seriously

Sean Starrs
International Studies Quarterly, December 2013, Pages 817-830

Abstract:
This paper argues that a fundamental failing in the debate on the decline of American economic power is not taking globalization seriously. With the rise of transnational corporations (TNCs), transnational modular production networks, and the globalization of corporate ownership, we can no longer give the same relevance to national accounts such as balance of trade and GDP in the twenty-first century as we did in the mid-twentieth. Rather, we must summon data on the TNCs themselves to encompass their transnational operations. This will reveal, for example, that despite the declining global share of United States GDP from 40% in 1960 to below a quarter from 2008 onward, American corporations continue to dominate sector after sector. In fact, in certain advanced sectors such as aerospace and software - even in financial services - American dominance has increased since 2008. There are no serious contenders, including China. By looking at the wrong data, many have failed to see that American economic power has not declined - it has globalized.

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Compensation or Constraint? How Different Dimensions of Economic Globalization Affect Government Spending and Electoral Turnout

John Marshall & Stephen Fisher
British Journal of Political Science, forthcoming

Abstract:
This article extends theoretical arguments regarding the impact of economic globalization on policy making to electoral turnout and considers how distinct dimensions of globalization may produce different effects. It theorizes that constraints on government policy that reduce incentives to vote are more likely to be induced by foreign ownership of capital, while compensation through increased government spending is more likely (if at all) to be the product of structural shifts in production associated with international trade. Using data from twenty-three OECD countries from 1970-2007, the study finds strong support for the ownership-constraint hypothesis in which foreign ownership reduces turnout, both directly and - in strict opposition to the compensation hypothesis - indirectly by reducing government spending (and thus the importance of politics). The results suggest that increased foreign ownership, especially the most mobile capital flows, can explain up to two-thirds of the large declines in turnout over recent decades.

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International Trade and Labour Income Risk in the U.S.

Pravin Krishna & Mine Zeynep Senses
Review of Economic Studies, January 2014, Pages 186-218

Abstract:
This article studies empirically the links between international trade and labour income risk faced by manufacturing sector workers in the U.S. We use longitudinal data on workers to estimate time-varying individual income risk at the industry level. We then combine our estimates of persistent labour income risk with measures of exposure to international trade to analyse the relationship between trade and labour income risk. We also study risk estimates from various subsamples of workers, such as those who switched to a different manufacturing industry (or out of the manufacturing sector altogether). Finally, we use these estimates to conduct a welfare analysis evaluating the benefits or costs of trade through the income risk channel. We find import penetration to have a statistically significant association with labour income risk in the U.S. Our welfare calculations suggest that these effects are economically significant.

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The march of an economic idea? Protectionism isn't counter-cyclic (anymore)

Andrew Rose
Economic Policy, October 2013, Pages 569-612

Abstract:
Conventional wisdom holds that protectionism is counter-cyclic; tariffs, quotas and the like grow during recessions. While that may have been a valid description of the data before the First World War, it is now inaccurate. Since the Second World War, protectionism has not been counter-cyclic; tariffs and non-tariff barriers simply do not rise systematically during downturns. I document this new stylised fact with a panel of data covering over 180 countries and 40 years, using over a dozen measures of protectionism and six of business cycles. I test and reject a number of potential reasons why protectionism is no longer counter-cyclic. A 'diagnosis of exclusion' leads me to believe that modern economics may well be responsible for the decline in protectionism's cyclic behaviour; economists are more united in their disdain for protectionism than virtually any other concept. This in turn leaves one optimistic that the level of protectionism will continue to decline along with its cyclicality.

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Borders, Ethnicity and Trade

Jenny Aker et al.
Journal of Development Economics, March 2014, Pages 1-16

Abstract:
This paper uses unique high-frequency data on prices of two agricultural goods to examine the additional costs incurred in cross-border trade between Niger and Nigeria, as well as trade between ethnically distinct markets within Niger. We find a sharp and significant conditional price change of about 20 to 25 percent between markets immediately across the national border. This price change is significantly lower when markets on either side of the border share a common ethnicity. Within Niger, trade between ethnically distinct regions exhibits an ethnic border effect that is comparable, in its magnitude, to the national border effect between Niger and Nigeria. Our results suggest that having a common ethnicity may reduce the transaction costs associated with agricultural trade, especially the costs associated with communicating and providing credit.

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Free Trade Agreements and the Consolidation of Democracy

Xuepeng Liu & Emanuel Ornelas
American Economic Journal: Macroeconomics, forthcoming

Abstract:
We study the relationship between participation in free trade agreements (FTAs) and the sustainability of democracy. Our model shows that FTAs can critically reduce the incentive of authoritarian groups to seek power by destroying protectionist rents, thus making democracies last longer. This gives governments in unstable democracies an extra motive to form FTAs. Hence, greater democratic instability induces governments to boost their FTA commitments. In a dataset with 116 countries over 1960-2007, we find robust support for these predictions. They help to rationalize the rapid simultaneous growth of regionalism and of worldwide democratization since the late 1980s.

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Personal income tax mimicry: Evidence from international panel data

Denvil Duncan & Ed Gerrish
International Tax and Public Finance, February 2014, Pages 119-152

Abstract:
This paper investigates personal income tax (PIT) mimicry at the international level. It is the first to empirically investigate the extent to which PIT mimicry varies along the tax schedule and the first to include nations which are not part of the OECD. We use data on international personal income tax schedules from the world tax indicators to estimate marginal and average tax rates at various multiples of per capita gross domestic product (GDP). These tax rates are then used to estimate the extent to which countries respond to their neighbors' PIT policy. We find evidence of PIT mimicry using a balanced panel of 53 countries over 24 years. This finding is strongest for tax rates at lower multiples of per capita GDP and survives several robustness checks.

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Out of Sight, Not Out of Mind. Education Networks and International Trade

Marina Murat
World Development, June 2014, Pages 53-66

Abstract:
University students typically develop between them long-lasting ties of friendship and trust, as well as an attachment to their university. If they are foreign students, they also form a bond to their country of study. This paper investigates the impact of university ties on the UK's trade with 167 countries during 1999-2009. I find robust evidence that education network ties boost the UK's bilateral trade flows. Specifically, the impact of networks is stronger on trade between the United Kingdom and countries with dissimilar institutions and culture, and particularly with post-communist economies. Results are robust to different econometric specifications and regressors.

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Home Away from Home? Safe Haven Effects and London House Prices

Cristian Badarinza & Tarun Ramadorai
University of Oxford Working Paper, November 2013

Abstract:
Historical time-series data is short relative to the frequency of crises. This makes it difficult to use pure time-series methods to identify the impacts of safe haven demand on asset prices, in the face of confounding effects from a wide range of alternative drivers. We present a new method to identify safe-haven effects which relies on combining the cross-section of asset prices with time-series measures of economic and political risk. We employ this strategy on large databases of historical housing transactions in London, and show that economic and political risk in Southern Europe, China, the Middle East, Russia, and South Asia is an important factor in explaining the dynamics of London house prices over the past two decades.

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The Demand for Protectionism: Democracy, Import Elasticity, and Trade Barriers

Timothy Peterson & Cameron Thies
International Interactions, Winter 2014, Pages 103-126

Abstract:
Numerous studies suggest that democracies employ lower trade barriers than non-democracies. In this paper, we examine the conditioning role that the elasticity of import demand at the commodity level plays on the relationship between democracy and import barriers. Beginning with the assumption that democracies are more responsive than non-democracies to the preferences of mass publics, we demonstrate that the value of free trade as a public good depends on the elasticity of import demand. When import demand for a given commodity is inelastic, trade barriers are more harmful to consumers; as such, democracies will employ lower trade barriers than non-democracies. However, as import demand becomes more elastic, publics find it easier to adjust to higher prices; as a result, the difference in imposed trade barriers by regime type decreases. We find support for this argument in statistical analyses of cross-sectional data covering 4,656 commodities imported by 73 countries Furthermore, we find that democracies raise higher trade barriers than non-democracies on commodities for which import demand is very elastic.

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Antidumping and the Death of Trade

Tibor Besedeš & Thomas Prusa
NBER Working Paper, October 2013

Abstract:
We investigate the extent to which antidumping actions eliminate trade altogether. Using quarterly export data for products involved in U.S. antidumping cases we find that antidumping actions increase the hazard rate by more than fifty percent. We find strong evidence of investigation effects with the impact during the initiation and preliminary duty phases considerably larger than during the final duty phase. There are also important differences with respect to the size of duties. Cases with higher duties face a much higher hazard in the preliminary phase but there is little additional effect when the final duty is actually levied. By contrast, cases with lower duties have a smaller but more persistent effect on the hazard, which proves to be highly detrimental in the long run as many trade relationship cease during the duration of the order. Given the literature on heterogeneous firms and trade, our results imply antidumping protection imposes greater costs than previously recognized.

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Comparative Advantage, Service Trade, and Global Imbalances

Alessandro Barattieri
Journal of International Economics, January 2014, Pages 1-13

Abstract:
The large current account deficit of the U.S. is the result of a large deficit in the goods balance and a modest surplus in the service balance. The opposite is true for Japan, Germany, and China. Moreover, I document the emergence from the mid-nineties of a strong negative relation between specialization in the export of services and the current account balances of a large sample of OECD and developing countries. Starting from these new stylized facts, I propose in this paper a service hypothesis for global imbalances, a new explanation based on the interplay between the U.S. comparative advantage in services and the asymmetric trade liberalization process in goods trade versus service trade that took place starting in the mid-nineties. First, I use a structural gravity model to show that service trade liberalization lagged behind goods trade liberalization, and I quantify the extent of this asymmetry. Second, I show that a simple two-period model can rationalize the emergence of current account deficits in the presence of such asymmetric liberalization. The key inter-temporal mechanism is the asymmetric timing of trade policies, which affects savings decisions. Finally, I explore the quantitative relevance of this explanation for global imbalances. I introduce trade costs in an otherwise standard 2-sector 2-country international real business cycle model. When fed with the asymmetric trade liberalization path found in the data, the model generates a trade deficit of about 5% of GDP. I conclude that the service hypothesis for global imbalances is quantitatively relevant.

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China's dominance hypothesis and The emergence of a tri-polar global currency system

Marcel Fratzscher & Arnaud Mehl
Economic Journal, forthcoming

Abstract:
This paper assesses whether the international monetary system is already tri-polar by testing what we call China's "dominance hypothesis", i.e. whether the renminbi already influences exchange rate and monetary policies strongly in Asia, a direct reference to the old "German dominance hypothesis" which ascribed to the German mark a dominant role in Europe in the 1980s. Using a global factor model of exchange rates and a complementary event study, we find evidence that the renminbi has become a key driver of currency movements in Asia since the mid-2000s, especially since the global financial crisis, in line with China's dominance hypothesis.

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Are Commodity Futures Prices Barometers of the Global Economy?

Conghui Hu & Wei Xiong
NBER Working Paper, December 2013

Abstract:
This paper analyzes whether commodity futures prices traded in the United States reveal information relevant to stock prices of East Asian economies including China, Japan, Hong Kong, South Korea, and Taiwan. We find significant and positive predictive powers of overnight futures returns of copper and soybeans, albeit not crude oil, for stock prices of all these East Asian economies and across a broad range of industries after mid-2000s. Our analysis establishes commodity futures prices as barometers of global economic strength in recent years, but leaves open a deeper issue regarding whether through this informational channel noise from futures market trading can feed back to the real economy.

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Green Dreams: Myth and Reality in China's Agricultural Investment in Africa

Deborah Bräutigam & Haisen Zhang
Third World Quarterly, Fall 2013, Pages 1676-1696

Abstract:
What role does China play in the recent rush for land acquisition in Africa? Conventional wisdom suggests a large role for the Chinese government and its firms. Our research suggests the opposite. Land acquisitions by Chinese companies have so far been quite limited, and focused on production for African consumption. We trace the evolution of strategy and incentives for Chinese agricultural engagement in Africa, and examine more closely several of the more well known cases, sorting out the myths and the realities.

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Idea Flows, Economic Growth, and Trade

Fernando Alvarez, Francisco Buera & Robert Lucas
NBER Working Paper, November 2013

Abstract:
We provide a theoretical description of a process that is capable of generating growth and income convergence among economies, and where freer trade has persistent, positive effects on productivity, beyond the standard efficiency gains due to reallocation effects. We add to a standard Ricardian model a theory of endogenous growth where the engine of growth is the flow of ideas. Ideas are assumed to diffuse by random meetings where people get new ideas by learning from the people they do business with or compete with. Trade then has a selection effect of putting domestic producers in contact with the most efficient foreign and domestic producers. We analyze the way that trade in goods, and impediments to it, affect this diffusion. We find that exclusion of a country from trade reduces productivity growth, with large long-term effects. Smaller trade costs have moderate effects on productivity.

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Neighbors and the Evolution of the Comparative Advantage of Nations: Evidence of International Knowledge Diffusion?

Dany Bahar, Ricardo Hausmann & Cesar Hidalgo
Journal of International Economics, January 2014, Pages 111-123

Abstract:
The literature on knowledge diffusion shows that knowledge decays strongly with distance. In this paper we document that the probability a product is added to a country's export basket is, on average, 65% larger if a neighboring country is a successful exporter of that same product. For existing products, growth of exports in a country is 1.5 percent higher per annum if it has a neighbor with comparative advantage in these products. While these results could be driven by a common third factor that escapes our controls, they align with our expectations of the localized character of knowledge diffusion.

By KEVIN LEWIS | 09:00:00 AM

Tuesday, February 18, 2014

Checkered past

The word on the street: Rumor, “race” and the anticipation of urban unrest

Stephen Young, Alasdair Pinkerton & Klaus Dodds
Political Geography, January 2014, Pages 57–67

Abstract:
This paper analyzes the emergence of Rumor Control Centers (RCCs) across the US during the late-1960s. The Centers, which were operated by municipal government agencies, were formed in response to the racialized violence that flared up in many cities between 1963 and 1967. State officials encouraged citizens to call their local center if they heard a “rumor” that suggested social tensions might be increasing in their neighborhood. Preemptive measures could then be taken to prevent these tensions from escalating into a riot. The paper outlines how the same anticipatory logics that underpinned Cold War civil defense were flexibly redeployed in response to the radicalizing of the civil rights movement within the US. It also shows how security infrastructures are sometimes fragile and may be reworked or rolled back due to political pressure or more mundane reasons such as failing to hold the attention of citizens and political elites.

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Originalism and Brown v. Board of Education

Steven Calabresi & Michael Perl
Northwestern University Working Paper, August 2013

Abstract:
This article offers an originalist justification for the Supreme Court’s landmark decision almost sixty years ago in Brown v. Board of Education. We examine the thirty-seven State constitutions that were in effect in 1868, when the Fourteenth Amendment was ratified, and we conclude that three-quarters of the States in 1868 recognized access to a public school education as being a fundamental right at that time. Since the Fourteenth Amendment forbids racial discrimination with respect to fundamental rights, i.e. privileges or immunities of national and state citizenship, Brown v. Board of Education was correctly decided using the original public meaning approach of Justices Antonin Scalia and Clarence Thomas. We show that by 1954 fifteen of the Forty-Eight States had added clauses to their State constitutions specifically providing for racial segregation in public schools. A three quarters consensus about access to a desegregated education which existed in 1868 thus had vanished by 1954. We therefore suggest that Brown v. Board of Education finds more support in State constitutional law from 1868 than it does from State constitutional law in 1954. Contrary to the received understanding, Brown v. Board of Education is better justified using an originalist approach to constitutional interpretation than it is using a living constitution, evolutionary approach. The conventional wisdom about Brown v. Board of Education is thus shown to be completely and totally wrong.

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Antisemitism Affects Households' Investments

Francesco D'Acunto, Marcel Prokopczuk & Michael Weber
University of California Working Paper, December 2013

Abstract:
We propose historical anti-Jewish sentiment as a proxy for distrust in financial markets. Households in German counties where Jews were persecuted the most as far back as in the Middle Ages are less likely to invest in stocks today. A one-standard-deviation increase in historical anti-Jewish violence leads to a 7.5% to 12% drop in the average stock market participation. For identification, we exploit the forced migrations of Ashkenazi Jews out of the Rhine Valley after the 11th century. The distance of a county from the Rhine Valley instruments for the existence of a Jewish community during the Black Death (1349) and hence the early emergence of anti-Jewish sentiment. Results are similar when we use the votes for the Nazi party as a proxy for anti-Jewish sentiment. The magnitude of the effect does not change from 1984 until 2011 nor across cohorts. Anti-Jewish sentiment does not capture generalized trust: its effect on stockholdings is similar across counties and households with different levels of education.

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Segregation and African-American imprisonment rates for drug offenses

Thomas Arvanites
Social Science Journal, forthcoming

Abstract:
Scholars argue that the dramatic increase in the African-American incarceration rate that occurred after the civil rights era was in part a reflection of the declining utility of residential segregation as a modern form of social control. Existing research has not thoroughly investigated the association between racial segregation and prison admission rates. Using 2002 data for 198 metropolitan counties, this research examines the relationship between two dimensions of racial residential segregation and African-American prison admission rates for drug offenses. The results from a multivariate regression analysis reveal that the prison admission rates of African-Americans for drug offenses are lower in counties where White residents are more residentially isolated from African-Americans. The admission rates are unaffected by the dissimilarity index. Consistent with recent research on the level of coercive control, the findings suggest that the effect of the percentage of African-Americans residing in an area is nonlinear.

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Race, economy and punishment: Inequity and racial disparity in imprisonment, 1972–2002

Henry Jackson
Criminal Justice Studies, forthcoming

Abstract:
Guided by the Rusche and Kirchheimer thesis, this study examines variation in incarceration rates across states. Time-series regression analysis is applied to 30 years of state-level data to examine how economic factors interact with aggregate measures of race/ethnicity in predicting rates of incarceration. The analysis indicates that income inequality, not unemployment, is the most salient predictor of incarceration rates. That is, state-level measures of income inequality exert a strong, positive effect on state-level incarceration rates, and this effect is particularly salient in the presence of higher percentages of African-Americans.

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The Promise of Freedom: Fertility Decisions and the Escape from Slavery

Treb Allen
Northwestern University Working Paper, December 2013

Abstract:
This paper examines the extent to which the fertility of enslaved women was affected by the promise of freedom. Because women derived greater pleasure from children when they were free, increases in the distance to freedom (which lowered the probability of escape) should reduce fertility. Exploiting the Fugitive Slave Law of 1850 and the particularity of U.S. geography, I demonstrate a strong negative correlation between fertility and the distance to freedom. This negative correlation is stronger on larger plantations, but disappears when the father of the child is white. The correlation varies with the difficulty of the route, and a similar correlation is not present for white children or for slave children born prior to the Fugitive Slave Law. The negative correlation suggests that despite the small number of successful escapes, the promise of freedom played an important role in the everyday lives of slaves.

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Jewish Persecutions and Weather Shocks: 1100-1800

Robert Warren Anderson, Noel Johnson & Mark Koyama
George Mason University Working Paper, December 2013

Abstract:
What factors caused the persecution of minorities in medieval and early modern Europe? We build a model that predicts that minority communities were more likely to be expropriated in the wake of negative income shocks. Using panel data consisting of 1,366 city-level persecutions of Jews from 936 European cities between 1100 and 1800, we test whether persecutions were more likely in colder growing seasons. A one standard deviation decrease in average growing season temperature increased the probability of a persecution between one-half and one percentage points (relative to a baseline probability of two percent). This effect was strongest in regions with poor soil quality or located within weak states. We argue that long-run decline in violence against Jews between 1500 and 1800 is partly attributable to increases in fiscal and legal capacity across many European states.

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Linguistic correlates of Irish-American and Italian-American ethnicity in high school and beyond

Suzanne Evans Wagner
Language & Communication, forthcoming

Abstract:
Young Irish-American and Italian-American women from South Philadelphia were recorded in their senior year of high school and then in their freshman year of college. Despite the relative longevity and increasing cultural integration of the Irish and Italian communities in South Philadelphia, some linguistic differences obtain in the Philadelphia English of women from these two groups. In the 1970s (Labov, 2001), the only Irish or Italian ethnic effect on Philadelphia vowels was found in Italians’ relatively retracted bow/boat and boo/boot. This was supported in the present study for boat, for which Italian-Americans are less fronted than Irish-Americans. Yet other ethnolinguistic differences were unexpectedly also found in the speech of these young women. For instance, Irish-American women and ‘tough’ Italian-American women exhibited more retracted bite-nuclei than their peers. Ethnicity also conditions the alternation between alveolar and velar variants of suffixal (ing), with Irish-Americans more likely than Italian-Americans to use the non-standard alveolar variant. However, the strength of this effect on (ing) attenuates after high school, when ethnicity becomes a less salient component of the speakers’ self-presentation. The article discusses the importance of bringing ethnographic observations to the study of within-White ethnicity, and emphasizes the dynamic nature of ‘ethnicity’ as it is constructed and re-constructed across the individual lifespan.

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Where Does Racial Discrimination Occur? An Experimental Analysis across Neighborhood and Housing Unit Characteristics

Andrew Hanson & Zackary Hawley
Regional Science and Urban Economics, January 2014, Pages 94–106

Abstract:
This paper examines racial discrimination across several neighborhood and housing unit characteristics including racial composition, rent, and distance from the urban core. We find that African Americans face higher rates of discrimination than whites in a wide range of racially mixed neighborhoods, in higher rent areas, closer to central cities, and in low vacancy areas. These results are robust to various parameterizations of the local smoothing empirical specification. The location of discrimination supports the current/future customer prejudice and perceived preference hypotheses as a cause of discrimination in housing markets but not the landlord taste-based hypothesis.

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Convergence Between Black Immigrants and Black Natives Across and Within Generations

Alison Rauh
University of Chicago Working Paper, October 2013

Abstract:
The number of black immigrants living in the US has increased 13-fold from 1970 to 2010, increasing their share of the black population from 1% to 10%. Black immigrants' labor market outcomes surpass those of native blacks. This paper determines in how far the relative success of black immigrants is passed on to the second generation. While blacks of the second generation have equal or higher education and earnings levels than the first generation, the return on their unobservable characteristics is converging to that of native blacks. Race premia are put into a broader context by comparing them to Hispanics, Asians, and whites. Blacks are the only group that experiences a decrease in residual earnings when moving from the first to the second generation. Black immigrants do not only converge to native blacks across generations but also within a generation. For Asians and Hispanics, residual earnings decrease monotonically with age of immigration. For blacks, the residual earnings-age of immigration profile is upward sloping for those immigrating before the age of 15. Convergence across generations is mostly driven by low-educated second generation blacks that drop out the labor force in greater numbers than low-educated first generation immigrants do. Similarly, convergence within a generation is mostly driven by low-educated blacks who immigrate when they are young dropping out of the labor force in greater numbers than those who immigrate when they are older. A social interactions model with an assimilation parameter that varies by age of immigration helps explain this phenomenon. When making their labor force participation decision, immigrant men of all races, but not women, generally place more weight on the characteristics of natives the earlier they immigrate.

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Social networks and labor market inequality between ethnicities and races

Ott Toomet, Marco Van Der Leij & Meredith Rolfe
Network Science, December 2013, Pages 321-352

Abstract:
This paper analyzes the relationship between unexplained racial/ethnic wage differentials on the one hand and social network segregation, as measured by inbreeding homophily, on the other. Our analysis is based on both the US and Estonian surveys, supplemented with the Estonian telephone communication data. In the case of Estonia we consider the regional variation in economic performance of the Russian minority, and in the US case we consider the regional variation in black-white differentials. Our analysis finds a strong relationship between the size of the wage differential and network segregation: Regions with more segregated social networks exhibit larger unexplained wage gaps.

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What Does a High School Diploma Get You? Employment, Race, and the Transition to Adulthood

Marla McDaniel & Daniel Kuehn
Review of Black Political Economy, December 2013, Pages 371-399

Abstract:
We compare the employment of African American and white youth as they transition to adulthood from age 18 to 22, focusing on high school graduates and high school dropouts who did not attend college. Using OLS and hazard models, we analyze the relative employment rates, and employment consistency, stability, and timing, controlling for a number of factors including family income, academic aptitude, prior work experience, and neighborhood poverty. We find white high school graduates work significantly more than all other youth on most measures; African American high school graduates work as much and sometimes less than white high school dropouts; African American dropouts work significantly less than all other youth. Findings further suggest that the improved labor market participation associated with a high school diploma is higher over time for African Americans than for white youth.

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Minority Representation and Order Maintenance Policing: Toward a Contingent View

Elaine Sharp
Social Science Quarterly, forthcoming

Objective: This article's aim is to test the impact of black political and bureaucratic representation on the rate at which blacks are arrested for order maintenance violations in U.S. cities.

Methods: Using data from the Law Enforcement Management and Administration Survey, the Census Bureau, and the Joint Center for Political and Economic Studies, for all U.S. cities over 100,000 population, the article first documents the continuing influence of black elected officials in promoting black representation on police forces. After establishing the appropriateness of order maintenance policing as a follow-up focus, the article then tests hypotheses that link variation in the rate of black order maintenance arrests to black political and bureaucratic representation, contingent upon form of government.

Results: Black political representation does constrain black order maintenance arrests, while black representation on the police force does not.

Conclusion: Even with a more racially representative police force in place, black political representation is what matters in constraining controversial patterns of police practice.

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Residential Hierarchy in Los Angeles: An Examination of Ethnic and Documentation Status Differences

David Cort, Ken-Hou Lin & Gabriela Stevenson
Social Science Research, May 2014, Pages 170–183

Abstract:
Longitudinal event history data from two waves of the Los Angeles Family and Neighborhood Survey are used to explore racial, ethnic, and documentation status differences in access to desirable neighborhoods. We first find that contrary to recent findings, undocumented Latinos do not replace blacks at the bottom of the locational attainment hierarchy. Whites continue to end up in neighborhoods that are less poor and whiter than minority groups, while all minorities, including undocumented Latinos, end up in neighborhoods that are of similar quality. Second, the effects of socioeconomic status for undocumented Latinos are either similar to or weaker than disadvantaged blacks. These findings suggest that living in less desirable neighborhoods is a fate disproportionately borne by non-white Los Angeles residents and that in some limited ways, the penalty attached to being undocumented Latino might actually be greater than the penalty attached to being black.

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Are Urbanites More Permissive? Germany’s Urban Geography of Prejudice

Peter Dirksmeier
Urban Affairs Review, forthcoming

Abstract:
Traditionally, bowing to the migration history of Germany, larger proportions of foreigners live in major German cities than in other parts of the country. According to contact theory, famously developed by social psychologist Gordon Allport in the 1950s, intergroup contacts between different ethnic groups reduce prejudice. The main aim of the article is to examine whether the level of prejudice toward foreigners is lower among the German urban population due to greater contact opportunities and habituation among different ethnic groups in Germany’s major cities, which reduces prejudice as well. The presented findings show, first, that prejudice is only slightly lower in the major cities. Second, this finding crucially depends on the quality of contacts. Only friendships between Germans and foreigners show a significant impact on reducing prejudice. Clearly, beyond the level of acquaintance with individual members of an out-group, only voluntary contacts are able to diminish prejudice. Third, in terms of spatial context effects, the switch between majority and minority group positions in residential areas appears to be a tipping point for prejudice, which means that even people with low levels of prejudice wish to live as the ethnic majority in their respective residential area.

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Social Influence in the Housing Market

Carrie Pan & Christo Pirinsky
Journal of Financial and Quantitative Analysis, forthcoming

Abstract:
We utilize the decennial U.S. Census to study social effects in housing consumption across 4 million households from 126 ethnic groups and 2,071 geographic locations in the U.S. We find that the homeownership decisions within ethnic groups are locally correlated, after controlling for the homeownership rates within the group and the region. Social influence is stronger for younger, less educated, and lower-income individuals; immigrants; and Americans with ancestors from more unequal, uncertainty-avoiding, and collectivistic cultures. Our results suggest that both status and information considerations play an important role in the social comparison process in capital markets.

By KEVIN LEWIS | 09:00:00 AM

Monday, February 17, 2014

Dumped

Every Breath You Take – Every Dollar You'll Make: The Long-Term Consequences of the Clean Air Act of 1970

Adam Isen, Maya Rossin-Slater & Reed Walker
NBER Working Paper, January 2014

Abstract:
This paper examines the long-term impacts of in-utero and early childhood exposure to ambient air pollution on adult labor market outcomes. We take advantage of a new administrative data set that is uniquely suited for addressing this question because it combines information on individuals' quarterly earnings together with their counties and dates of birth. We use the sharp changes in ambient air pollution concentrations driven by the implementation of the 1970 Clean Air Act Amendments as a source of identifying variation, and we compare cohorts born in counties that experienced large changes in total suspended particulate (TSP) exposure to cohorts born in counties that had minimal or no changes. We find a significant relationship between TSP exposure in the year of birth and adult labor market outcomes. A 10 unit decrease in TSP in the year of birth is associated with a 1 percent increase in annual earnings for workers aged 29-31. Most, but not all, of this effect is driven by an increase in labor force participation. In present value, the gains from being born into a county affected by the 1970 Clean Air Act amount to about $4,300 in lifetime income for the 1.5 million individuals born into these counties each year.

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Free to choose: Promoting conservation by relaxing outdoor watering restrictions

A. Castledine et al.
Journal of Economic Behavior & Organization, forthcoming

Abstract:
Many water utilities use outdoor watering restrictions based on assigned weekly watering days to promote conservation and delay costly capacity expansions. We find that such policies can lead to unintended consequences - customers who adhere to the prescribed schedule use more water than those following a more flexible irrigation pattern. For our application to residential watering in a high-desert environment, this “rigidity penalty” is robust to an exogenous policy change that allowed an additional watering day per week. Our findings contribute to the growing literature on leakage effects of regulatory policies. In our case inefficiencies arise as policies limit the extent to which agents can temporally re-allocate actions.

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Cars on crutches: How much abatement do smog check repairs actually provide?

Pierre Mérel et al.
Journal of Environmental Economics and Management, forthcoming

Abstract:
Not as much abatement as has been presumed. Smog check programs aim to curb tailpipe emissions from in-use vehicles by requiring repairs whenever emissions, measured at regular time intervals, exceed a certain threshold. Using data from California, we estimate that on average 41 percent of the initial emissions abatement from repairs is lost by the time of the subsequent inspection, normally two years later. Our estimates imply that the cost per pound of pollution avoided is an order of magnitude greater for smog check repairs than alternative policies such as new-vehicle standards or emissions trading among industrial point sources.

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Coal Mining and the Resource Curse in the Eastern United States

Stratford Douglas & Anne Walker
West Virginia University Working Paper, December 2013

Abstract:
We measure the effect of resource sector dependence on long run income growth using the natural experiment of variation in coal endowments in a set of 409 relatively U.S. counties selected for homogeneity. Using a panel data set that extends over two separate boom and bust cycles (1970-2010), we find that coal dependence significantly reduces growth of per capita county income over the long run. These estimates indicate that a one standard deviation increase in the measure of resource intensity results in an estimated 0.7 percentage point drop in average annual growth rates. We also measure the extent to which the Appalachian coal resource curse operates by providing disincentives to education, and find that the education channel explains only about 15% to 30% of the curse.

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China’s international trade and air pollution in the United States

Jintai Lin et al.
Proceedings of the National Academy of Sciences, 4 February 2014, Pages 1736–1741

Abstract:
China is the world’s largest emitter of anthropogenic air pollutants, and measurable amounts of Chinese pollution are transported via the atmosphere to other countries, including the United States. However, a large fraction of Chinese emissions is due to manufacture of goods for foreign consumption. Here, we analyze the impacts of trade-related Chinese air pollutant emissions on the global atmospheric environment, linking an economic-emission analysis and atmospheric chemical transport modeling. We find that in 2006, 36% of anthropogenic sulfur dioxide, 27% of nitrogen oxides, 22% of carbon monoxide, and 17% of black carbon emitted in China were associated with production of goods for export. For each of these pollutants, about 21% of export-related Chinese emissions were attributed to China-to-US export. Atmospheric modeling shows that transport of the export-related Chinese pollution contributed 3–10% of annual mean surface sulfate concentrations and 0.5–1.5% of ozone over the western United States in 2006. This Chinese pollution also resulted in one extra day or more of noncompliance with the US ozone standard in 2006 over the Los Angeles area and many regions in the eastern United States. On a daily basis, the export-related Chinese pollution contributed, at a maximum, 12–24% of sulfate concentrations over the western United States. As the United States outsourced manufacturing to China, sulfate pollution in 2006 increased in the western United States but decreased in the eastern United States, reflecting the competing effect between enhanced transport of Chinese pollution and reduced US emissions. Our findings are relevant to international efforts to reduce transboundary air pollution.

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Asian pollution climatically modulates mid-latitude cyclones following hierarchical modelling and observational analysis

Yuan Wang, Renyi Zhang & R. Saravanan
Nature Communications, January 2014

Abstract:
Increasing levels of anthropogenic aerosols in Asia have raised considerable concern regarding its potential impact on the global atmosphere, but the magnitude of the associated climate forcing remains to be quantified. Here, using a novel hierarchical modelling approach and observational analysis, we demonstrate modulated mid-latitude cyclones by Asian pollution over the past three decades. Regional and seasonal simulations using a cloud-resolving model show that Asian pollution invigorates winter cyclones over the northwest Pacific, increasing precipitation by 7% and net cloud radiative forcing by 1.0 W m−2 at the top of the atmosphere and by 1.7 W m−2 at the Earth’s surface. A global climate model incorporating the diabatic heating anomalies from Asian pollution produces a 9% enhanced transient eddy meridional heat flux and reconciles a decadal variation of mid-latitude cyclones derived from the Reanalysis data. Our results unambiguously reveal a large impact of the Asian pollutant outflows on the global general circulation and climate.

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Advertising, Reputation, and Environmental Stewardship: Evidence from the BP Oil Spill

Lint Barrage, Eric Chyn & Justine Hastings
NBER Working Paper, January 2014

Abstract:
This paper explores whether and how environmental stewardship can be provided by private markets through green advertising. We examine the period surrounding the BP oil spill and estimate how BP’s pre-spill investment in “green advertising” affected the spill’s impact on retail prices and demand at BP gasoline stations. We use station-level prices and sales from a large sample of U.S. retail gasoline stations, and market-level advertising expenditures during BP’s 2000-2008 “Beyond Petroleum” advertising campaign. We find evidence consistent with consumer punishment of BP in the months following the spill; overall BP margins declined significantly by 4.2 cents per gallon, and volumes declined by 3.6 percent during the spill. We examine how pre-spill environmental advertising affected the spill’s impact on margins and sales, testing whether expenditures on green reputation act as a commitment to green production or as insurance against environmental damage. We find evidence in support of the latter: pre-spill exposure to BP advertising significantly softened the impact of the spill on BP retail margins, and abated losses to station share from stations switching to alternative gasoline brands.

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Environmental legislative standstill and bureaucratic politics in the USA

Jongkon Lee
Policy Studies, January/February 2014, Pages 40-58

Abstract:
In spite of growing environmental problems in the USA, an environmental legislative standstill has been prevalent in US politics for about 20 years. Several studies on lawmaking have argued that this legislative standstill has been caused by conflicts among elected officials, such as legislators and the president (institutional gridlock). This paper suggests a different view on the environmental legislative standstill in terms of bureaucratic politics. Using a case study on the US Environmental Protection Agency (EPA) regarding hazardous waste disposal and the Superfund, the current study contends that the EPA's collaborative efforts to resolve interest conflict expansion have led to legislative standstill.

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Life-cycle energy implications of different residential settings: Recognizing buildings, travel, and public infrastructure

Brice Nichols & Kara Kockelman
Energy Policy, forthcoming

Abstract:
The built environment can be used to influence travel demand, but very few studies consider the relative energy savings of such policies in context of a complex urban system. This analysis quantifies the day-to-day and embodied energy consumption of four different neighborhoods in Austin, Texas, to examine how built environment variations influence various sources of urban energy consumption. A microsimulation combines models for petroleum use (from driving) and residential and commercial power and natural gas use with rigorously measured building stock and infrastructure materials quantities (to arrive at embodied energy). Results indicate that the more suburban neighborhoods, with mostly detached single-family homes, consume up to 320% more embodied energy, 150% more operational energy, and about 160% more total life-cycle energy (per capita) than a densely developed neighborhood with mostly low-rise-apartments and duplexes. Across all neighborhoods, operational energy use comprised 83 to 92% of total energy use, and transportation sources (including personal vehicles and transit, plus street, parking structure, and sidewalk infrastructure) made up 44 to 47% of the life-cycle energy demands tallied. Energy elasticity calculations across the neighborhoods suggest that increased population density and reduced residential unit size offer greatest life-cycle energy savings per capita, by reducing both operational demands from driving and home energy use, and from less embodied energy from construction. These results provide measurable metrics for comparing different neighborhood styles and develop a framework to anticipate energy-savings from changes in the built environment versus household energy efficiency.

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The Effect of Inspector Group Size and Familiarity on Enforcement and Deterrence: Evidence from Oil Platforms

Lucija Muehlenbachs, Stefan Staubli & Mark Cohen
Vanderbilt University Working Paper, November 2013

Abstract:
This paper provides new insights into the productivity of teams and the relationship between the inspector and the inspected party by examining data on inspections of offshore oil and gas platforms in the Gulf of Mexico. We exploit weather patterns that only influence the number of inspectors that are sent to inspect a platform and show that inspector group size matters; an additional inspector results in more severe sanctions being issued. We also exploit the agglomeration of two inspection offices to examine the effect of reducing the familiarity between an inspector and an inspected party; we find that reducing the inspector-offender relationship also results in more severe sanctions being issued. Combined, these findings are consistent with regulatory capture and related concerns about insulating inspectors from undue influence by those they are supposed to monitor. Using these shifts in sanction severity we also estimate the effectiveness of increasing enforcement on the deterrence of incidents, such as oil spills, fires, injuries, or fatalities. We only find weak evidence that increasing sanction severity increases deterrence.

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Coal, Smoke, and Death: Bituminous Coal and American Home Heating

Alan Barreca, Karen Clay & Joel Tarr
NBER Working Paper, February 2014

Abstract:
Air pollution was severe in many urban areas of the United States in the first half of the twentieth century, in part due to the burning of bituminous coal for heat. We estimate the effects of this bituminous coal consumption on mortality rates in the U.S. during the mid 20th century. Coal consumption varied considerably during the 20th century due to coal-labor strikes, wartime oil and gas restrictions, and the expansion of gas pipelines, among other reasons. To mitigate the influence of confounding factors, we use a triple-differences identification strategy that relies on variation in coal consumption at the state-year-season level. It exploits the fact that coal consumption for heating was highest in the winter and uses within-state changes in mortality in non-winter months as an additional control group. Our estimates suggest that reductions in the use of bituminous coal for heating between 1945 and 1960 decreased winter all-age mortality by 1.25 percent and winter infant mortality by 3.27 percent, saving 1,923 all age lives per winter month and 310 infant lives per winter month. Our estimates are likely to be a lower bound, since they primarily capture short-run relationships between coal and mortality.

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Long-term dynamics of household size and their environmental implications

Mason Bradbury, Nils Peterson & Jianguo Liu
Population and Environment, forthcoming

Abstract:
Little is known about the environmental implications of long-term historical trends in household size. This paper presents the first historical assessment of global shifts in average household size based on a variety of datasets covering the period 1600–2000. Findings reveal that developed nations reached a threshold in 1893 when average household size began to drop rapidly from approximately 5.0 to 2.5. A similar threshold was reached in developing nations in 1987. With the notable exceptions of Ireland, and England and Wales in the early 1800s, and India and the Seychelles in the late 1900s, the number of households grew faster than population size in every country and every time period. These findings suggest accommodating housing may continue to pose one of the greatest environmental challenges of the twenty-first century because the impacts of increased housing present a threat to sustainability even when population growth slows. Future research addressing environmental impacts of declining household size could use an adapted IPAT model, I = PHoG: where environmental impact (I) = population × personal goods (P) + households × household goods (HoG).

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Saving Power to Conserve Your Reputation? The Effectiveness of Private versus Public Information

Magali Delmas & Neil Lessem
Journal of Environmental Economics and Management, forthcoming

Abstract:
Environmental damage is often an unseen byproduct of other activities. Disclosing environmental impact privately to consumers can reduce the costs and/or increase the moral benefits of conservation behaviors, while publicly disclosing such information can provide an additional motivation for conservation -- cultivating a green reputation. In a unique field experiment in the residence halls at the University of California -- Los Angeles, we test the efficacy of detailed private and public information on electricity conservation. Private information was given through real-time appliance level feedback and social norms over usage, and public information was given through a publicly visible conservation rating. Our analysis is based on 7,120 daily observations about energy use from heating and cooling, lights and plug load for 66 rooms collected over an academic year. Our results suggest that while private information alone was ineffective, public information combined with private information motivated a 20 percent reduction in electricity consumption achieved through lower use of heating and cooling. Public information was particularly effective for above median energy users.

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The Housing Market Impacts of Shale Gas Development

Lucija Muehlenbachs, Elisheba Spiller & Christopher Timmins
NBER Working Paper, January 2014

Abstract:
Using data from Pennsylvania and New York and an array of empirical techniques to control for confounding factors, we recover hedonic estimates of property value impacts from shale gas development that vary with geographic scale, water source, well productivity, and visibility. Results indicate large negative impacts on nearby groundwater-dependent homes, while piped-water-dependent homes exhibit smaller positive impacts, suggesting benefits from lease payments. At a broader geographic scale, we find that new wellbores increase property values, but these effects diminish over time. Undrilled permits cause property values to decrease. Results have implications for the debate over regulation of shale gas development.

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Foreclosures and Invasive Insect Spread: The Case of Asian Citrus Psyllid

Timothy Richards, David Shanafelt & Eli Fenichel
American Journal of Agricultural Economics, forthcoming

Abstract:
Human economic activity is considered to be an important factor in exacerbating the speed of invasive species spread, but may also play an important role in preventing it. In this study, we investigate the role of home foreclosure in the spread of Asian Citrus Psyllid (ACP, Diaphorina citri Kuwayama) throughout residential areas of Southern California. We find that foreclosures are indeed a significant factor in explaining ACP spread, even after controlling for other human and environmental effects. Our results suggest that human economic activity may be more important in controlling the spread of invasive species than previously realized, and that the external costs of the foreclosure problem may also be underestimated.

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The Private Rationality of Bottled Water Drinking

Kip Viscusi, Joel Huber & Jason Bell
Vanderbilt University Working Paper, December 2013

Abstract:
This article examines evidence for the private rationality of decisions to choose bottled water using a large, nationally representative sample. Consumers are more likely to believe that bottled water is safer or tastes better if they have had adverse experiences with tap water or live in states with more prevalent violations of EPA water quality standards. Perceptions of superior safety, taste, and convenience of bottled water boost consumption of bottled water. Blacks and Hispanics are more likely to drink bottled water due to their relatively greater exposure to unsafe water and greater risk beliefs. The coherent network of experiences, beliefs, and actions is consistent with rational consumer choice.

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Do Consumers Respond to Marginal or Average Price? Evidence from Nonlinear Electricity Pricing

Koichiro Ito
American Economic Review, February 2014, Pages 537-563

Abstract:
Nonlinear pricing and taxation complicate economic decisions by creating multiple marginal prices for the same good. This paper provides a framework to uncover consumers' perceived price of nonlinear price schedules. I exploit price variation at spatial discontinuities in electricity service areas, where households in the same city experience substantially different nonlinear pricing. Using household-level panel data from administrative records, I find strong evidence that consumers respond to average price rather than marginal or expected marginal price. This suboptimizing behavior makes nonlinear pricing unsuccessful in achieving its policy goal of energy conservation and critically changes the welfare implications of nonlinear pricing.

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Metric and Scale Design as Choice Architecture Tools

Adrian Camilleri & Richard Larrick
Journal of Public Policy & Marketing, forthcoming

Abstract:
Interest is increasing in using behavioral decision insights to design better product labels. A specific policy target is the fuel economy label, which policy makers can use to encourage reduction in carbon dioxide emissions from transport-related fossil-fuel combustion. In two online experiments, the authors examine whether vehicle preferences can be shifted toward more fuel-efficient vehicles by manipulating the metric (consumption of gas vs. cost of gas) and scale (100 miles vs. 15,000 miles vs. 100,000 miles) on which fuel economy information is expressed. They find that preference for fuel-efficient vehicles is highest when fuel economy is expressed in terms of the cost of gas over 100,000 miles, regardless of whether the vehicle pays for its higher price in gas savings. The authors discuss the underlying psychological mechanisms for this finding, including compatibility, anchoring, and familiarity effects, and conclude that policy makers should initiate programs that communicate fuel-efficiency information in terms of costs over an expanded, lifetime scale.

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Global Inequality in Energy Consumption from 1980 to 2010

Scott Lawrence, Qin Liu & Victor Yakovenko
Entropy, December 2013, Pages 5565-5579

Abstract:
We study the global probability distribution of energy consumption per capita around the world using data from the U.S. Energy Information Administration (EIA) for 1980–2010. We find that the Lorenz curves have moved up during this time period, and the Gini coefficient, G, has decreased from 0.66 in 1980 to 0.55 in 2010, indicating a decrease in inequality. The global probability distribution of energy consumption per capita in 2010 is close to the exponential distribution with G = 0:5. We attribute this result to the globalization of the world economy, which mixes the world and brings it closer to the state of maximal entropy. We argue that global energy production is a limited resource that is partitioned among the world population. The most probable partition is the one that maximizes entropy, thus resulting in the exponential distribution function. A consequence of the latter is the law of 1/3: the top 1/3 of the world population consumes 2/3 of produced energy. We also find similar results for the global probability distribution of CO2 emissions per capita.

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Transport Mode Selection for Toxic Gases: Rail or Road?

Morteza Bagheri, Manish Verma & Vedat Verter
Risk Analysis, January 2014, Pages 168–186

Abstract:
A significant majority of hazardous materials (hazmat) shipments are moved via the highway and railroad networks, wherein the latter mode is generally preferred for long distances. Although the characteristics of highway transportation make trucks the most dominant surface transportation mode, should it be preferred for hazmat whose accidental release can cause catastrophic consequences? We answer this question by first developing a novel and comprehensive assessment methodology — which incorporates the sequence of events leading to hazmat release from the derailed railcars and the resulting consequence — to measure rail transport risk, and second making use of the proposed assessment methodology to analyze hazmat transport risk resulting from meeting the demand for chlorine and ammonia in six distinct corridors in North America. We demonstrate that rail transport will reduce risk, irrespective of the risk measure and the transport corridor, and that every attempt must be made to use railroads to transport these shipments.

By KEVIN LEWIS | 09:00:00 AM

Sunday, February 16, 2014

Bummed out

Are Suicidal Behaviors Contagious in Adolescence? Using Longitudinal Data to Examine Suicide Suggestion

Seth Abrutyn & Anna Mueller
American Sociological Review, forthcoming

Abstract:
Durkheim argued that strong social relationships protect individuals from suicide. We posit, however, that strong social relationships also have the potential to increase individuals’ vulnerability when they expose people to suicidality. Using three waves of data from the National Longitudinal Study of Adolescent Health, we evaluate whether new suicidal thoughts and attempts are in part responses to exposure to role models’ suicide attempts, specifically friends and family. We find that role models’ suicide attempts do in fact trigger new suicidal thoughts, and in some cases attempts, even after significant controls are introduced. Moreover, we find these effects fade with time, girls are more vulnerable to them than boys, and the relationship to the role model — for teenagers at least — matters. Friends appear to be more salient role models for both boys and girls. Our findings suggest that exposure to suicidal behaviors in significant others may teach individuals new ways to deal with emotional distress, namely by becoming suicidal. This reinforces the idea that the structure — and content — of social networks conditions their role in preventing suicidality. Social ties can be conduits of not just social support, but also antisocial behaviors, like suicidality.

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Perceived Control Reduces Mortality Risk at Low, Not High, Education Levels

Nicholas Turiano et al.
Health Psychology, forthcoming

Objective: Both higher levels of educational attainment and a strong sense of control over one’s life independently predict better health and longevity. Evidence also suggests that these 2 factors may combine in multiplicative ways to influence subjective reports of health.

Method: In the Midlife in the United States (MIDUS) national sample (N = 6,135; age = 25 to 75 years), we tested whether stronger beliefs of control over one’s life would moderate the effect of education on 14-year mortality risk.

Results: Proportional hazards modeling indicated that both current levels of education and control beliefs were associated with lower risk of dying, over and above childhood socioeconomic level. In addition, there was a significant interaction between education and control beliefs. Among those low in education, higher control beliefs were associated with a decreased mortality risk. However, at greater levels of education, control beliefs were not associated with mortality risk. This effect remained after adjusting for potential confounding variables, including health behaviors, depressed affect, and general health (chronic illnesses, functional limitations, and self-rated health).

Conclusions: These findings demonstrate the importance of individual perceptions of control in buffering the mortality risk associated with educational disadvantage.

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Changes in materialism, changes in psychological well-being: Evidence from three longitudinal studies and an intervention experiment

Tim Kasser et al.
Motivation and Emotion, February 2014, Pages 1-22

Abstract:
Few studies have examined how changes in materialism relate to changes in well-being; fewer have experimentally manipulated materialism to change well-being. Studies 1, 2, and 3 examined how changes in materialistic aspirations related to changes in well-being, using varying time frames (12 years, 2 years, and 6 months), samples (US young adults and Icelandic adults), and measures of materialism and well-being. Across all three studies, results supported the hypothesis that people’s well-being improves as they place relatively less importance on materialistic goals and values, whereas orienting toward materialistic goals relatively more is associated with decreases in well-being over time. Study 2 additionally demonstrated that this association was mediated by changes in psychological need satisfaction. A fourth, experimental study showed that highly materialistic US adolescents who received an intervention that decreased materialism also experienced increases in self-esteem over the next several months, relative to a control group. Thus, well-being changes as people change their relative focus on materialistic goals.

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The Onset of Depression During the Great Recession: Foreclosure and Older Adult Mental Health

Kathleen Cagney et al.
American Journal of Public Health, March 2014, Pages 498-505

Objectives: We examined neighborhood-level foreclosure rates and their association with onset of depressive symptoms in older adults.

Methods: We linked data from the National Social Life, Health, and Aging Project (2005–2006 and 2010–2011 waves), a longitudinal, nationally representative survey, to data on zip code–level foreclosure rates, and predicted the onset of depressive symptoms using logit-linked regression.

Results: Multiple stages of the foreclosure process predicted the onset of depressive symptoms, with adjustment for demographic characteristics and changes in household assets, neighborhood poverty, and visible neighborhood disorder. A large increase in the number of notices of default (odds ratio [OR] = 1.75; 95% confidence interval [CI] = 1.14, 2.67) and properties returning to ownership by the bank (OR = 1.62; 95% CI = 1.06, 2.47) were associated with depressive symptoms. A large increase in properties going to auction was suggestive of such an association (OR = 1.45; 95% CI = 0.96, 2.19). Age, fewer years of education, and functional limitations also were predictive.

Conclusions: Increases in neighborhood-level foreclosure represent an important risk factor for depression in older adults. These results accord with previous studies suggesting that the effects of economic crises are typically first experienced through deficits in emotional well-being.

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From Stress to Inflammation and Major Depressive Disorder: A Social Signal Transduction Theory of Depression

George Slavich & Michael Irwin
Psychological Bulletin, forthcoming

Abstract:
Major life stressors, especially those involving interpersonal stress and social rejection, are among the strongest proximal risk factors for depression. In this review, we propose a biologically plausible, multilevel theory that describes neural, physiologic, molecular, and genomic mechanisms that link experiences of social-environmental stress with internal biological processes that drive depression pathogenesis. Central to this social signal transduction theory of depression is the hypothesis that experiences of social threat and adversity up-regulate components of the immune system involved in inflammation. The key mediators of this response, called proinflammatory cytokines, can in turn elicit profound changes in behavior, which include the initiation of depressive symptoms such as sad mood, anhedonia, fatigue, psychomotor retardation, and social-behavioral withdrawal. This highly conserved biological response to adversity is critical for survival during times of actual physical threat or injury. However, this response can also be activated by modern-day social, symbolic, or imagined threats, leading to an increasingly proinflammatory phenotype that may be a key phenomenon driving depression pathogenesis and recurrence, as well as the overlap of depression with several somatic conditions including asthma, rheumatoid arthritis, chronic pain, metabolic syndrome, cardiovascular disease, obesity, and neurodegeneration. Insights from this theory may thus shed light on several important questions including how depression develops, why it frequently recurs, why it is strongly predicted by early life stress, and why it often co-occurs with symptoms of anxiety and with certain physical disease conditions. This work may also suggest new opportunities for preventing and treating depression by targeting inflammation.

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Mismatch or Cumulative Stress: The Pathway to Depression Is Conditional on Attention Style

Esther Nederhof, Johan Ormel & Albertine Oldehinkel
Psychological Science, forthcoming

Abstract:
In the study reported here, the main question we investigated was whether attention style could be a conditional adaptation. We organized participants of the TRacking Adolescents’ Individual Lives Survey (TRAILS; N = 2,230) into shifters, sustainers, and two comparison groups, depending on their performance on a shifting- and a sustained-attention task at age 11 years. Compared with sustainers, shifters reported more pre- and perinatal risk factors and more childhood stress, and they adopted a faster life-history strategy. These differences were not found between the comparison groups, who performed well or poorly on both tasks, which suggests that specialization for either sustained or shifting attention is the key to conditional adaptation. In a subsample (n = 860), we found that stress did not increase depression risk in shifters, whereas a mismatch between early and recent stress predicted depression in sustainers. Cumulative stress predicted depression in the comparison group. These results suggest that shifters retain high levels of plasticity throughout life, whereas sustainers’ adapted their phenotype early in life to the expected mature environment.

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The 5-HTTLPR polymorphism, early and recent life stress, and cognitive endophenotypes of depression

Anne-Wil Kruijt, Peter Putman & Willem Van der Does
Cognition & Emotion, forthcoming

Abstract:
Studies associating interactions of 5-HTTLPR and life adversities with depression have yielded equivocal results. Studying endophenotypes may constitute a more powerful approach. In the current study, it was assessed whether interactions of 5-HTTLPR with childhood emotional abuse (CEA) and recent negative life events (RNLE) affect possible cognitive endophenotypes of depression, namely, attention-allocation bias and the ability to recognise others' mind states in 215 young adults of North-West European descent. The ability to classify others' negative mind states was found to be increased with increasing RNLE in carriers of low-expressing Serotonin Transporter Linked Polymorphic Region (5-HTTLPR) alleles. Carriers of two low-expressing alleles also preferentially oriented attention towards negative information. Gene-environment interactions were not observed for attention allocation bias. No effects involving CEA were observed. These results suggest that low-expressing 5-HTTLPR alleles may confer increased risk for depression through enhanced recognition of negative facial expressions following RNLE.

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Cholesterol and the “Cycle of Violence” in Attempted Suicide

Peter Asellus et al.
Psychiatry Research, forthcoming

Abstract:
An association between low levels of serum cholesterol and violent or suicidal behaviour has frequently been reported. However the role of serum cholesterol in the cycle of violence (Widom, 1989) has not been studied. The aim of this study was to investigate association between exposure to violence during childhood and used adult violence in suicide attempters with low and high serum cholesterol levels. 81 suicide attempters were assessed with the Karolinska Interpersonal Violence Scale (KIVS) measuring exposure to violence and expressed violent behaviour in childhood (between 6–14 years of age) and during adult life (15 years or older). We used median split to dichotomise groups below and above median serum cholesterol. In patients with serum cholesterol below median, the correlation between exposure to violence as a child and used adult violence was significant (rho=0.52, p=0.002), while in patients with serum cholesterol above median, the correlation between exposure to violence as a child and expressed violent behaviour as an adult was not significant (rho=0.25, p=0.2). Comorbid substance abuse predicted violent behaviour as an adult only in patients with serum cholesterol above median. Serum cholesterol may modify the effect of the “cycle of violence”.

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The Effects of Media Violence on Anxiety in Late Adolescence

Anjana Madan, Sylvie Mrug & Rex Wright
Journal of Youth and Adolescence, January 2014, Pages 116-126

Abstract:
Exposure to media violence is related to anxiety in youth, but the causality of the effect has not been established. This experimental study examined the effects of media violence on anxiety, blood pressure, and heart rate in late adolescents. We also examined whether these responses varied by previous exposure to media and real-life violence. College students (N = 209; M age = 18.74; 75 % female; 50 % Caucasian, 34 % African American, 9 % Asian, 3 % Hispanic, and 3 % other racial minorities) were randomized to view either violent or nonviolent high-action movie clips. Participants reported on their anxiety before and after watching the clips, as well as their previous exposure to violence. Measures of blood pressure and heart rate were taken at baseline and during movie viewing. Participants watching violent movie clips showed a greater anxiety increase than those watching nonviolent clips. Both groups experienced increased blood pressure and reduced heart rate during movie watching compared to baseline. Prior exposure to media violence was associated with diminished heart rate response. Additionally, students previously exposed to high levels of real-life violence showed lower blood pressure increases when watching violent clips compared to nonviolent clips. Thus, relatively brief exposure to violent movie clips increased anxiety among late adolescents. Prior exposure to media and real-life violence were associated with lower physiological reactivity to high-action and violent movies, respectively, possibly indicating desensitization. Future studies should investigate long-term anxiety and physiological consequences of regular exposure to media violence in adolescence.

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Media Violence and Children's ADHD-Related Behaviors: A Genetic Susceptibility Perspective

Sanne Nikkelen et al.
Journal of Communication, February 2014, Pages 42–60

Abstract:
This study examined the relationship between media violence exposure and Attention-deficit/hyperactivity disorder (ADHD)-related behaviors. Using survey (parent-reported) and genetic data of 1,612 Dutch children (aged 5 to 9 years), we examined genetic disposition as a possible cause of individual differences in children's use of and susceptibility to media violence. The gene variant of interest was the 5-HTTLPR polymorphism, which has been associated with ADHD-related behaviors in previous research. Results showed that the “long” variant of the gene polymorphism was related to greater violent media use, which in turn was related to more ADHD-related behaviors. The 5-HTTLPR genotype did not moderate the effect of media violence on ADHD-related behaviors. This study provides insight into the role of genetic factors in media effects.

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Extending Role Congruity Theory of Prejudice to Men and Women With Sex-Typed Mental Illnesses

Anne Koenig & Alice Eagly
Basic and Applied Social Psychology, January/February 2014, Pages 70-82

Abstract:
We tested role congruity theory, which states that prejudice arises from an incongruity between group stereotypes and role characteristics, by assessing prejudice toward men and women with a masculine or feminine mental illness. Across two studies, participants acting as a vocational counselor rated the suitability of each target individual in each role. Men and individuals with a masculine sex-typed illness were more suitable for agentic roles, whereas women and individuals with a feminine sex-typed illness were more suitable for communal roles. In addition, sex and mental illness sex-type were better predictors of prejudice than evaluations of the group.

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Reduced Corpus-Callosum Volume in Posttraumatic Stress Disorder Highlights the Importance of Interhemispheric Connectivity for Associative Memory

Rotem Saar-Ashkenazy et al.
Journal of Traumatic Stress, February 2014, Pages 18–26

Abstract:
Memory deficits are a common complaint of patients with posttraumatic stress disorder (PTSD). Despite vivid trauma-related memory, previous studies report memory impairment for nontrauma-related stimuli when compared to controls, specifically in associative memory (Guez et al., 2011). Healthy individuals show hemispheric memory asymmetry with left-prefrontal lateralization of encoding and right-prefrontal lateralization of episodic retrieval, suggesting a role for interhemispheric communication in memory-related tasks (Gazzaniga; Ringo, Doty, Demeter, & Simard). Because brain magnetic resonance imaging (bMRI) studies in PTSD patients report volume changes in various regions, including white matter and corpus callosum (CC), we aimed to test the relationship between memory deficits and CC volume in PTSD patients. We probed for specific alterations in associative memory in PTSD and measured the volume of subportions within the CC employing bMRI. Our main finding was a reduction in CC white-matter volume in PTSD patients, as compared to controls, t(35) = −2.7, p = .010, that was correlated with lower associative performance (r = .76, p = .003). We propose that CC volume reduction is a substrate for the associative memory deficits found in PTSD.

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Oxytocin Receptor Gene Polymorphism (rs53576) Moderates the Intergenerational Transmission of Depression

Sarah Thompson et al.
Psychoneuroendocrinology, forthcoming

Abstract:
Maternal depression serves as a potent source of stress among offspring, greatly enhancing the risk of numerous adverse outcomes including youth depression. Several factors moderate the transmission of depression from mothers to offspring. However, the role of genetic characteristics in this process merits further exploration. Consistent with an interpersonal perspective on depression, the present study focused on a genetic polymorphism that has been shown to be relevant to social functioning, the rs53576 polymorphism of the oxytocin receptor gene (OXTR). In a community sample of 441 youth, OXTR genotype moderated the association between maternal depression in early childhood and youth depressive symptoms in adolescence, such that youth possessing at least one A allele of OXTR who also had a history of maternal depression exhibited the highest levels of depressive symptoms at age 15. In order to explore possible interpersonal mediators of this effect, conditional process analyses examined the role of youth social functioning in adolescence. Results suggest that OXTR genotype may partially account for the transmission of maternal depression to youth and support the role of dysfunctional social processes as a mechanism through which OXTR influences the development of depressive symptoms.

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Early life stress modulates oxytocin effects on limbic system during acute psychosocial stress

Simone Grimm et al.
Social Cognitive and Affective Neuroscience, forthcoming

Abstract:
Early life stress (ELS) is associated with altered stress responsivity, structural and functional brain changes and an increased risk for the development of psychopathological conditions in later life. Due to its behavioral and physiological effects, the neuropeptide oxytocin (OXT) is a useful tool to investigate stress responsivity, even though the neurobiological underpinnings of its effects are still unknown. Here we investigate the effects of OXT on cortisol stress response and neural activity during psychosocial stress. Using functional magnetic resonance imaging in healthy subjects with and without a history of ELS, we found attenuated hormonal reactivity and significantly reduced limbic deactivation after OXT administration in subjects without a history of ELS. Subjects who experienced ELS showed both blunted stress reactivity and limbic deactivation during stress. Furthermore, in these subjects OXT had opposite effects with increased hormonal reactivity and increased limbic deactivation. Our results might implicate that reduced limbic deactivation and HPA-axis responsivity during psychosocial stress are markers for biological resilience after ELS. Effects of OXT in subjects with a history of maltreatment could therefore be considered detrimental and suggest careful consideration of OXT administration in such individuals.

By KEVIN LEWIS | 09:00:00 AM

Saturday, February 15, 2014

Thanks for a good time

A Preliminary Examination of Cell Phone Use and Helping Behavior

Curtis Puryear & Stephen Reysen
Psychological Reports, December 2013, Pages 1001-1003

Abstract:
Use of a cell phone reduces attention and increases response times. 62 people (30 men, 32 women) were confronted with a confederate wearing a large leg brace, who dropped a stack of magazines and feigned difficulty retrieving them. Among the 33 people who talked on their cell phones only 9% offered their help, whereas among the 29 people who did not talk on their cell phones, 72% offered help. The use of cell phones affects helping behavior.

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Geographical Differences in Subjective Well-Being Predict Extraordinary Altruism

Kristin Brethel-Haurwitz & Abigail Marsh
Psychological Science, forthcoming

Abstract:
Altruistic kidney donation is a form of extraordinary altruism, the antecedents of which are poorly understood. Although well-being is known to increase the incidence of prosocial behaviors and there is significant geographical variation in both well-being and altruistic kidney donation in the United States, it is unknown whether geographical variation in well-being predicts the prevalence of this form of extraordinary altruism. We calculated per capita rates of altruistic kidney donation across the United States and found that an index of subjective well-being predicted altruistic donation, even after we controlled for relevant sociodemographic variables. This relationship persisted at the state level and at the larger geographic regional level. Consistent with hypotheses about the relationship between objective and subjective well-being, results showed that subjective well-being mediated the relationship between increases in objective well-being metrics, such as income, and altruism. These results suggest that extraordinary altruism may be promoted by societal factors that increase subjective well-being.

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Convincing Yourself to Care About Others: An Intervention for Enhancing Benevolence Values

Sharon Arieli, Adam Grant & Lilach Sagiv
Journal of Personality, February 2014, Pages 15–24

Abstract:
To study value change, this research presents an intervention with multiple exercises designed to instigate change through both effortful and automatic routes. Aiming to increase the importance attributed to benevolence values, which reflect the motivation to help and care for others, the intervention combines three mechanisms for value change (self-persuasion, consistency-maintenance, and priming). In three experiments, 142 undergraduates (67% male, ages 19–26) participated in an intervention emphasizing the importance of either helping others (benevolence condition) or recognizing flexibility in personality (control condition). We measured the importance of benevolence values before and after the task. In Experiment 1, the intervention increased U.S. participants' benevolence values. In Experiment 2, we replicated these effects in a different culture (Israel) and also showed that by enhancing benevolence values, the intervention increased participants' willingness to volunteer to help others. Experiment 3 showed that the increases in the importance of benevolence values lasted at least 4 weeks. Our results provide evidence that value change does not require fictitious feedback or information about social norms, but can occur through a 30-min intervention that evokes both effortful and automatic processes.

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Desire for a positive moral self-regard exacerbates escalation of commitment to initiatives with prosocial aims

Rebecca Schaumberg & Scott Wiltermuth
Organizational Behavior and Human Decision Processes, March 2014, Pages 110–123

Abstract:
Across three experiments, people escalated commitment more frequently to a failing prosocial initiative (i.e., an initiative that had the primary aim of improving the outcomes of others in need) than they did to a failing egoistic initiative (i.e., an initiative that had the primary aim of improving the outcomes of the decision-maker). A test of mediation (Study 1b) and a test of moderation (Study 2) each provided evidence that a desire for a positive moral self-regard underlies people’s tendency to escalate commitment more frequently to failing prosocial initiatives than to failing egoistic initiatives. We discuss the implications of these findings for the resource-allocation decisions that people and organizations face when undertaking initiatives with prosocial aims.

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Fundraising through online social networks: A field experiment on peer-to-peer solicitation

Marco Castillo, Ragan Petrie & Clarence Wardell
Journal of Public Economics, forthcoming

Abstract:
Two main reasons why people donate to charity are that they have been asked and asked by someone they care about. One would therefore expect that charitable organizations could benefit from peer-to-peer fundraising if they were able to persuade donors to do so for them. However, little is known on the costs and benefits of asking donors to fundraise. We investigate this by implementing a field experiment embedded in an online giving organization’s web page. In our experiment, donors who have completed an online transaction were randomly asked to share having donated by posting on their Facebook (FB) wall or by sending a private message to a friend on FB. To further explore the impact of incentives on the willingness to fundraise, donors were also assigned to one of three treatments in which the organization added either $0, $1 or $5 in the donor's name in exchange for sharing the information. We have several findings: (1) Donors respond to incentives: larger add-on donations increase the willingness to post having made a donation. (2) Nuisance costs may be important: willingness to post is over two times higher among those already logged into FB. (3) The type of ask matters: willingness to post via one’s wall or via a private message is different. (4) There are benefits to incentivizing peer-to-peer fundraising in increased new donations.

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Hitchhiking and the ‘Sunshine Driver’: Further Effects of Weather Conditions on Helping Behavior

Nicolas Guéguen & Jordy Stefan
Psychological Reports, December 2013, Pages 994-1000

Abstract:
Previous studies have shown that pleasant weather conditions can improve people's mood and facilitate positive social relationships. The current study tested the effect of sunshine on drivers' willingness to give hitchhikers a ride. Four confederates (2 men, 2 women; M age = 20 yr.) acted as hitchhikers on the roadside in France, on sunny and cloudy days. To minimize the influence of other important variables, hitchhiking was conducted only when it was not raining and only when the external temperatures were between 20° and 24 °C. Motorists' behavior in 2,864 hitchhiking events was analyzed. The results showed that both male and female drivers stopped more on sunny days than on cloudy days for both male and female hitchhikers. Perhaps the positive mood induced by the sunshine promotes helping behaviors.

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Help-Seeking Helps: Help-Seeking and Group Image

Juliet Wakefield, Nick Hopkins & Ronni Michelle Greenwood
Small Group Research, February 2014, Pages 89-113

Abstract:
Seeking help from an outgroup can be difficult, especially when the outgroup is known to stereotype the ingroup negatively and the potential recipient cares strongly about its social image. However, we ask whether even highly identified ingroup members may seek help from a judgmental outgroup if doing so allows them to disconfirm the outgroup’s negative stereotype of the ingroup. We presented participants with one of two negative outgroup stereotypes of their ingroup. One could be disconfirmed through seeking help, the other could not. Study 1 (n = 43) showed group members were aware of the strategic implications of seeking help for disconfirming these stereotypes. Study 2 (n = 43) showed high identifiers acted on such strategic knowledge by seeking more help from the outgroup when help-seeking could disconfirm a negative stereotype of their group (than when it could not). Implications for the seeking and acceptance of help are discussed.

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Web disclosure and the market for charitable contributions

Gregory Saxton, Daniel Neely & Chao Guo
Journal of Accounting and Public Policy, forthcoming

Abstract:
Nonprofit organizations face intense competition in the market for charitable contributions. Increasingly, donation decisions are made online, and organizations have responded by implementing substantive Internet disclosure and reporting regimes. We posit here that the voluntary disclosure of financial and performance information inherent in these regimes provides additional relevant information to a broad array of market participants, and thus has a positive impact on the receipt of charitable contributions. We test our hypotheses on a random sample of 400 US nonprofit organizations by building on the well established economic model of giving (Weisbrod and Dominguez, 1986), in which donations serve as the proxy for demand. Our central research question is thus: Are donors willing to “pay” for Web disclosure? Results indicate a positive relationship between the level of charitable contributions and the amount of disclosure provided by an organization on its website; however, performance and annual report disclosure are more important than financial disclosure, and performance disclosure has the biggest impact in organizations that are less reliant on donations.

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Intrinsic Motivation, Effort and the Call to Public Service

Sheheryar Banuri & Philip Keefer
World Bank Working Paper, December 2013

Abstract:
Pay schemes in the public sector aim to attract motivated, high-ability applicants. A nascent literature has found positive effects of higher pay on ability and no or slightly positive effects on motivation. This paper revisits this issue with a novel subject pool, students destined for the private and public sectors in Indonesia. The analysis uses dictator games and real effort tasks to examine wage effects on a measure of motivation that exactly matches the mission of the public sector task. The model and experimental design allow for precisely measuring (1) the distribution of ability over the effort task; (2) the distribution of motivational preferences for public sector missions; and (3) outside options when choosing to work for public sector missions. Three novel conclusions emerge. First, more pro-social workers do, in fact, exert higher effort in a pro-social task. Second, in contrast to previous research, motivated individuals are more likely to join the public sector when public sector pay is low than when it is high. Third, real public sector workers exhibit greater pro-sociality than private sector workers, even for entrants into the Indonesian Ministry of Finance.

By KEVIN LEWIS | 09:00:00 AM

Friday, February 14, 2014

Corporate veil

Religion and Stock Price Crash Risk

Jeffrey Callen & Xiaohua Fang
Journal of Financial and Quantitative Analysis, forthcoming

Abstract:
This study examines whether religiosity at the county level is associated with future stock price crash risk. We find robust evidence that firms headquartered in counties with higher levels of religiosity exhibit lower levels of future stock price crash risk. This finding is consistent with the view that religion, as a set of social norms, helps to curb bad news hoarding activities by managers. Our evidence further shows that the negative relation between religiosity and future crash risk is stronger for riskier firms and for firms with weaker governance mechanisms measured by shareholder takeover rights and dedicated institutional ownership.

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Military CEOs

Efraim Benmelech & Carola Frydman
NBER Working Paper, January 2014

Abstract:
There is mounting evidence of the influence of personal characteristics of CEOs on corporate outcomes. In this paper we analyze the relation between military service of CEOs and managerial decisions, financial policies, and corporate outcomes. Exploiting exogenous variation in the propensity to serve in the military, we show that military service is associated with conservative corporate policies and ethical behavior. Military CEOs pursue lower corporate investment, are less likely to be involved in corporate fraudulent activity, and perform better during industry downturns. Taken together, our results show that military service has significant explanatory power for managerial decisions and firm outcomes.

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The influence of economic context on the relationship between chief executive officer facial appearance and company profits

Nicholas Rule & Konstantin Tskhay
Leadership Quarterly, forthcoming

Abstract:
Inferences of leadership ability and personality from faces have been associated with leaders' efficacy across multiple domains. One influential factor that has only been scarcely explored, however, is the context in which leadership occurs. The present studies examined the effect of two such contextual variables: economic conditions across time and economic conditions across nations. In Study 1, inferences of leadership ability from the faces of American Chief Executive Officers (CEOs) predicted their companies' financial performance prior to the Financial Crisis of 2008 but not after. In Study 2, traits previously found to predict the success of American CEOs before the Financial Crisis (i.e., Power) predicted the success of CEOs in Germany in the year following the crisis but not in the US, consistent with the differential impact of the international recession in the two nations. These results suggest that economic events may affect the relationship between facial appearance and business leaders' success.

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Financial Crisis And Bank Executive Incentive Compensation

Sanjai Bhagat & Brian Bolton
Journal of Corporate Finance, April 2014, Pages 313–341

Abstract:
We study the executive compensation structure in 14 of the largest U.S. financial institutions during 2000–2008. We focus on the CEO’s purchases and sales of their bank’s stock, their salary and bonus, and the capital losses these CEOs incur due to the dramatic share price declines in 2008. We consider three measures of risk-taking by these banks. Our results are mostly consistent with and supportive of the findings of Bebchuk, Cohen and Spamann (2010), that is, managerial incentives matter - incentives generated by executive compensation programs are correlated with excessive risk-taking by banks. Also, our results are generally not supportive of the conclusions of Fahlenbrach and Stulz (2011) that the poor performance of banks during the crisis was the result of unforeseen risk. We recommend bank executive incentive compensation should only consist of restricted stock and restricted stock options – restricted in the sense that the executive cannot sell the shares or exercise the options for two to four years after their last day in office. The above incentive compensation proposal logically leads to a complementary proposal regarding a bank’s capital structure, namely, banks should be financed with considerably more equity than they are being financed currently.

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Right on Schedule: CEO Option Grants and Opportunism

Robert Daines, Grant Richard McQueen & Robert Schonlau
Stanford Working Paper, December 2013

Abstract:
In the wake of the backdating scandal, many firms began awarding options at the same time each year. These scheduled option grants eliminate backdating, but create other agency problems. CEOs that know the dates of upcoming scheduled option grants have an incentive to temporarily depress stock prices before the grant dates to obtain options with lower strike prices. We provide evidence that CEOs respond to this incentive and document negative abnormal returns before scheduled option grants and positive abnormal returns after the grants. These returns are explained by measures of a CEO's incentive and ability to influence stock price. We document several mechanisms CEOs use to lower the strike price, including changing the substance and timing of the firm’s disclosures.

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When Less is More: How Limits on Executive Pay Can Result in Greater Managerial Effort and the Adoption of Better Strategies

Peter Cebon & Benjamin Hermalin
University of California Working Paper, December 2013

Abstract:
We derive conditions under which state-imposed limits on executive compensation can enhance efficiency and benefit shareholders (but not executives). Having their hands tied in the future allows a board of directors to credibly enter into relational contracts with executives that are more efficient than performance-based contracts. This in turn can have implications for firm strategy and the ideal composition of the board. The analysis also offers insights into the political economy of executive-compensation reform.

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Political Connections and the Cost of Bank Loans

Joel Houston et al.
Journal of Accounting Research, March 2014, Pages 193–243

Abstract:
This paper analyzes whether the political connections of listed firms in the United States affect the cost and terms of loan contracts. Using a hand-collected data set of the political connections of S&P 500 companies over the 2003–2008 time period, we find that the cost of bank loans is significantly lower for companies that have board members with political ties. We consider two possible explanations for these findings: a Borrower Channel in which lenders charge lower rates because they recognize that connections enhance the borrower's credit worthiness and a Bank Channel in which banks assign greater value to connected loans to enhance their own relationships with key politicians. After employing a series of tests to distinguish between these two channels, we find strong support for the Borrower Channel but no direct evidence supporting the Bank Channel. Finally, we demonstrate that political connections reduce the likelihood of a capital expenditure restriction or liquidity requirement commanded by banks at the origination of the loan. Taken together, our results suggest that political connections increase the value of U.S. companies and reduce monitoring costs and credit risk faced by banks, which in turn, reduces the borrower's cost of debt.

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Executive Compensation and Board Governance in US Firms

Martin Conyon
Economic Journal, forthcoming

Abstract:
US executive compensation has increased significantly since the early 1990s. This growth has been associated with the use of more equity pay (such as stock options and restricted stock) and less reliance on fixed salaries. Critics assert that the growth in CEO pay reflects a fundamental governance failure. Weak or compliant boards have failed to reign in managerial 'excess’. In practice, compensation committees determine executive pay contracts. Using US data from 2007 to 2012 I show that boards and compensation committees have become increasingly independent. I find no evidence that boards or compensation committees containing affiliated (i.e. nonindependent directors) are associated with higher levels of executive pay. The causes of high US compensation seem to lie elsewhere - not with a failure of compensation committees. In addition, the study finds that on average executive pay is positively correlated to firm performance and firm size. Women executives are paid less than their male counterparts after controlling for other economic determinants of executive pay. The governance of executive pay is changing post Dodd Frank. I show that the market for compensation advice is dominated by relatively few compensation consultants who are generally engaged by the board and not management. I also show the outcomes of non-binding mandatory shareholder voting on executive compensation ('Say on Pay’). Typically, shareholders overwhelmingly endorse executive pay plans at S&P 500 firms. Less than 2% of executive pay resolutions fail.

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Board Changes and CEO Turnover: The Unanticipated Effects of the Sarbanes-Oxley Act

Mustafa Dah, Melissa Frye & Matthew Hurst
Journal of Banking & Finance, April 2014, Pages 97–108

Abstract:
The board independence requirements enacted in conjunction with the Sarbanes Oxley Act of 2002 (SOX) provided motivation for firms that were already compliant with the regulations to alter their board structure. We consider actual board changes made by compliant firms and how such changes affect the monitoring efficiency of the boards. We find that the majority of compliant firms (approximately 56%) add independent directors following SOX. However, we find a nontrivial number of firms (approximately 26%) actually decrease the number of independent directors to move closer to the stated 50% requirement. For firms that decrease independence, the CEO turnover performance sensitivity significantly decreases following SOX. We also find that large board independence changes seem to be most detrimental to the monitoring function of the board. Our results highlight that SOX may have had unintended consequences.

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CEO Ownership, Stock Market Performance, and Managerial Discretion

Ulf von Lilienfeld-Toal & Stefan Ruenzi
Journal of Finance, forthcoming

Abstract:
We examine the relationship between CEO ownership and stock market performance. A strategy based on public information about managerial ownership delivers annual abnormal returns of 4% to 10%. The effect is strongest among firms with weak external governance, weak product market competition, and large managerial discretion, suggesting that CEO ownership can reverse the negative impact of weak governance. Furthermore, owner-CEOs are value increasing: they reduce empire building and run their firms more efficiently. Overall, our findings indicate that the market does not correctly price the incentive effects of managerial ownership, suggesting interesting feedback effects between corporate finance and asset pricing.

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Powerful Independent Directors

Kathy Fogel, Liping Ma & Randall Morck
NBER Working Paper, January 2014

Abstract:
Shareholder valuations are economically and statistically positively correlated with more powerful independent directors, their power gauged by social network power centrality measures. Sudden deaths of powerful independent directors significantly reduce shareholder value, consistent with independent director power “causing” higher shareholder value. Further empirical tests associate more powerful independent directors with fewer value-destroying M&A bids, more high-powered CEO compensation and accountability for poor performance, and less earnings management. We posit that more powerful independent directors can better detect and counter managerial missteps because of their better access to information, their greater credibility in challenging errant top managers, or both.

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Public Equity and Audit Pricing in the U.S.

Brad Badertscher et al.
Journal of Accounting Research, forthcoming

Abstract:
To what degree are audit fees for U.S. firms with publicly traded equity higher than fees for otherwise similar firms with private equity? The answer is potentially important for evaluating regulatory regime design efficiency and for understanding audit demand and production economics. For U.S. firms with publicly-traded debt, we hold constant the regulatory regime, including mandated issuer reporting and auditor responsibilities. We vary equity ownership and thus public securities market contextual factors, including any related public firm audit fees from increased audit effort to reduce audit litigation risk and/or pure litigation risk premium (litigation channel effects). In cross-section, we find that audit fees for public equity firms are 20% to 22% higher than fees for otherwise similar private equity firms. Time-series comparisons for firms that change ownership status yield larger percentage fee increases (decreases) for those going public (private). Results are consistent with litigation channel effects giving rise to substantial incremental audit fees for U.S. firms with public equity ownership.

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CEO Age and the Riskiness of Corporate Policies

Matthew Serfling
Journal of Corporate Finance, April 2014, Pages 251–273

Abstract:
Prior theoretical work generates conflicting predictions with respect to how CEO age impacts risk-taking behavior. Consistent with the prediction that risk-taking behavior decreases as CEOs become older, I document a negative relation between CEO age and stock return volatility. Further analyses reveal that older CEOs reduce firm risk through less risky investment policies. Specifically, older CEOs invest less in research and development, make more diversifying acquisitions, manage firms with more diversified operations, and maintain lower operating leverage. Further, firm risk and the riskiness of corporate policies are lowest when both the CEO and the next most influential executive are older and highest when both of these managers are younger. Although older CEOs prefer less risky investment policies, I document results suggesting that CEO and firm risk preferences tend to be aligned. Lastly, I find that a trading strategy that goes long in a portfolio of stocks consisting of firms managed by younger CEOs and short in a portfolio of stocks comprised of firms led by older CEOs would generate positive risk-adjusted returns. Overall, my results imply that CEO age can have a significant impact on risk-taking behavior and firm performance.

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The Impact of Targets’ Social Performance on Acquisition Premiums

Mahfuja Malik
Boston University Working Paper, January 2014

Abstract:
This paper examines whether the corporate social responsibility (CSR) performance of target firms influences the acquisition premiums paid by the acquirers. Using U.S. public merger and acquisition (M&A) deals, I find that acquisition premiums increase in the targets’ perceived CSR quality, an effect incremental to previously-documented drivers of such premiums. These findings are also robust to (1) using different proxies for CSR measures and acquisition premiums, and (2) considering various dimensions of CSR (environment, community, employee, product, and diversity). Additional analysis reveals that the positive association between target firms’ CSR quality and acquisition premiums is stronger for high-CSR acquirers and larger targets. Overall, I combine the CSR and M&A literature by demonstrating that superior quality CSR performance affects acquisition premiums positively and thus expand our understanding of the value-driven role of CSR initiatives in a unique way.

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Do Overvaluation-driven Stock Acquisitions Really Benefit Acquirer Shareholders?

Mehmet Akbulut
Journal of Financial and Quantitative Analysis, August 2013, Pages 1025-1055

Abstract:
I study the effects of overvalued equity on acquisition activity and shareholder wealth, using managers’ insider trades to measure overvaluation. I find that overvalued equity drives managers to make stock acquisitions, and such acquisitions destroy value for acquirer shareholders. Overvalued stock acquirers earn negative and lower returns in the short run and substantially underperform similarly overvalued non-acquirer firms in the long run. My results do not support the idea that managers can benefit shareholders by converting overvalued equity into real assets through stock acquisitions.

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When Much More of a Difference Makes a Difference: Social Comparison and Tournaments in Top Management Teams

Jason Ridge, Federico Aime & Margaret White
Strategic Management Journal, forthcoming

Abstract:
We integrate the seemingly contradictory theoretical predictions of behavioral and economic perspectives about the relationship between pay disparity and firm performance and show that tournament and social comparison theories are more supplementary than contradictory in nature. Our results show that high levels of firm performance will be found around either meaningfully low or meaningfully high levels of pay disparity. Additional findings indicate that this curvilinear relationship is weakened in the presence of both an heir apparent and high CEO power, and strengthened when top management team members are more eligible as CEOs. These findings suggest that factors that increase or inhibit social comparison or tournament perceptions among TMT members play a role in the strength of the curvilinear relationship between pay disparity and firm performance.

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Thirty Years of Shareholder Rights and Firm Value

Martijn Cremers & Allen Ferrell
Journal of Finance, forthcoming

Abstract:
This paper introduces a new hand-collected data set that tracks restrictions on shareholder rights at approximately 1,000 firms from 1978 to 1989. In conjunction with the 1990 to 2006 IRRC data, we track shareholder rights over 30 years. Most governance changes occurred during the 1980s. We find a robustly negative association between restrictions on shareholder rights (using G-Index as a proxy) and Tobin's Q. The negative association only appears after judicial approval of antitakeover defenses in the 1985 landmark Delaware Supreme Court decision of Moran v. Household. This decision was an unanticipated exogenous shock that increased the importance of shareholder rights.

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Board composition and CEO power

Tim Baldenius, Nahum Melumad & Xiaojing Meng
Journal of Financial Economics, forthcoming

Abstract:
We study the optimal composition of corporate boards. Directors can be either monitoring or advisory types. Monitoring constrains the empire-building tendency of chief executive officers (CEOs). If shareholders control the board nomination process, a non-monotonic relation ensues between agency problems and board composition. To preempt CEO entrenchment, shareholders may assemble an adviser-heavy board. If a powerful CEO influences the nomination process, this may result in a more monitor-heavy board. Regulations strengthening the monitoring role of boards can be harmful in precisely those cases in which agency problems are severe or in which CEO entrenchment is a threat to corporate governance.

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Director Human Capital, Information Processing Demands, and Board Effectiveness

Poonam Khanna, Carla Jones & Steven Boivie
Journal of Management, February 2014, Pages 557-585

Abstract:
Research on human capital as a source of competitive advantage has focused largely on firm employees. In this article, we argue that outside directors’ general human capital can also be a source of competitive advantage. Firm performance is likely to benefit from directors’ human capital — that is, their prior experience and education — because such human capital is likely to make them more effective at monitoring management and providing advice. Drawing on insights from research on individuals’ cognitive limitations, we further argue that the extent to which the firm is able to benefit from this human capital can be severely limited by the demands for information processing that directors face from their other board positions. Consequently, we find that the benefit of directors’ human capital is contingent upon the information processing load placed upon them from their other board appointments. We find support for our hypotheses using data on over 5,700 directors from 650 firms sampled from the Fortune 1000. This study extends the nascent literature on board human capital by showing that in addition to specific expertise in relevant areas, directors’ general human capital can also help firms create competitive advantage. The theory developed in this article also contributes to the literature on strategic human capital by incorporating the concept of information processing demands, suggesting that not only do such demands leave limited cognitive capacity for directors to focus on the focal firm but also that they can severely diminish the beneficial effects of directors’ general human capital.

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A Structural Estimation of the Cost of Suboptimal Matching in the CEO Labor Market

Jordan Nickerson
University of Texas Working Paper, November 2013

Abstract:
Using a structural model, I examine the distortionary effects of frictions in the CEO labor market. Firms experience productivity shocks over time and either outgrow or underutilize their incumbent CEO's talent, but keep their manager to avoid a switching cost. The decision to replace a manager depends on the magnitude of the cost and dispersion of CEO talent. I find CEO talent to be quite heterogeneous. Additionally, I estimate the switching cost to be 20% of the median firm's annual earnings. While reduced-form estimates of the switching cost serve as a lower bound on the reduction in firm value, they underestimate the overall effect which also includes the resulting inefficient firm-CEO matches. Using counterfactual analysis, the switching cost is estimated to decrease the median firm's value by 4.8%, four times larger than the reduced-form estimate. While firms experience an observable decrease in earnings when finally replacing CEOs, I find evidence of a considerable unobservable cost associated with the inability of firms and managers to be optimally matched in the cross-section.

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Staggered Boards and Firm Value, Revisited

Martijn Cremers, Lubomir Litov & Simone Sepe
University of Notre Dame Working Paper, December 2013

Abstract:
This paper revisits the association between firm value (as proxied by Tobin’s Q) and whether the firm has a staggered board. As is well known, in the cross-section firms with a staggered board tend to have a lower value. Using a comprehensive sample for 1978-2011, we show an opposite result in the time series: firms that adopt a staggered board increase in firm value, while de-staggering is associated with a decrease in firm value. We further show that the decision to adopt a staggered board seems endogenous, and related to an ex ante lower firm value, which helps reconciling the existing cross-sectional results to our novel time series results. To explain our new results, we explore potential incentive problems in the shareholder-manager relationship. Short-term oriented shareholders may generate myopic incentives for the firm to underinvest in risky long-term projects. In this case, a staggered board may helpfully insulate the board from opportunistic shareholder pressure. Consistent with this, we find that the adoption of a staggered board has a stronger positive association with firm value for firms where such incentive problems are likely more severe: firms with more R&D, more intangible assets, more innovative and larger and thus likely more complex firms.

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Do Target CEOs Trade Premiums for Personal Benefits?

Buhui Qiu, Svetoslav Trapkov & Fadi Yakoub
Journal of Banking & Finance, forthcoming

Abstract:
Using a sample of 2,198 completed M&A transactions between 1994 and 2010 in which both target and acquirer are public US firms supplemented with hand-collected data for target CEO retention, we uncover a significantly negative relation between target CEO retention and takeover premiums received by target shareholders. Further, when the target CEO was not retained, we document a significantly negative relation between the relative importance of the severance pay received by the target CEO and takeover premium. Taken together, our findings, which hold in various robustness tests, suggest that target CEOs bargain shareholder value for personal benefits during corporate takeovers. Our findings have important policy implications for takeover disclosures.

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Governing Misvalued Firms

Dalida Kadyrzhanova & Matthew Rhodes-Kropf
NBER Working Paper, January 2014

Abstract:
Equity overvaluation is thought to create the potential for managerial misbehavior, while monitoring and corporate governance curb misbehavior. We combine these two insights from the literatures on misvaluation and governance to ask 'when does governance matter?' Examining firms with standard long-run measures of corporate governance as they are shocked by plausible misvaluation, we provide consistent evidence that firm performance is impacted by governance when firms become overvalued – overvaluation causes weaker performance in poorly governed firms. Our findings imply that firm oversight is important during market booms, just when stock prices suggest all is well.

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CEO Turnover and the Reduction of Price Sensitivity

Michael Alderson, Naresh Bansal & Brian Betker
Journal of Corporate Finance, April 2014, Pages 376–386

Abstract:
We examine managerial compensation and wealth sensitivities around CEO changes. The average new CEO is incentivized to increase the risk of the firm primarily because he holds significantly less stock than his predecessor, and in fact riskier policy choices are subsequently implemented. Similar results are obtained in a subsample of CEO changes that are due to retirements and deaths, which alleviates concerns about endogeneity. Our findings indicate that firms seem to be limited in their ability to mitigate the risk-averse behavior caused by large CEO shareholdings.

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Technological Change, Job Tasks, and CEO Pay

Jason Kotter
University of Michigan Working Paper, November 2013

Abstract:
This paper examines how changes in the composition of the human capital of the workforce impact the CEO. Over the last fifty years, technological change has caused the tasks workers perform to shift from routine to nonroutine work. I estimate that these changes in the workforce caused CEO pay to double over the last thirty years, explaining roughly one-third of the aggregate increase in CEO pay. Consistent with this effect being caused by synergies between CEOs and nonroutine workers, I use text analysis of 10-K statements to show that managers of nonroutine workforces focus relatively more on employees and that this focus leads to large increases in firm value and profitability. Together, these results suggest that a substantial portion of the increase in CEO pay over the past three decades represents an optimal response to technological change.

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Can Strong Boards and Trading Their Own Firm’s Stock Help CEOs Make Better Decisions? Evidence from Acquisitions by Overconfident CEOs

Adam Kolasinski & Xu Li
Journal of Financial and Quantitative Analysis, August 2013, Pages 1173-1206

Abstract:
Little evidence exists on whether boards help managers make better decisions. We provide evidence that strong and independent boards help overconfident CEOs avoid honest mistakes when they seek to acquire other companies. In addition, we find that once-overconfident CEOs make better acquisition decisions after they experience personal stock trading losses, providing evidence that a manager’s recent personal experience, and not just educational and early career experience, influences firm investment policy. Finally, we develop and validate a new CEO overconfidence measure that is easily constructed from machine-readable insider trading data, unlike previously-used measures.

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R&D and the High Cash Holdings in the U.S.

Zhaozhao He
University of Kansas Working Paper, October 2013

Abstract:
This paper re-examines the factors that have contributed to the dramatic increase in the average cash-to-assets ratio in U.S. firms since 1980. The analysis first shows that this increase is driven almost entirely by the increase in cash-to-assets ratio of R&D intensive firms. Further, the results suggest that the biggest increase in cash holdings over the last three decades has been in financially constrained R&D intensive firms in competitive industries with volatile cash flows. Since 1980 there has been a fundamental shift in how firms finance R&D, and these findings suggest that R&D intensive firms are increasingly using their cash holdings to overcome the increased volatility of major financing sources: cash flow and stock issues. Finally, the data reveals strong evidence that intensified competition contributes to the increased cash holdings of R&D firms using exogenous variation in competition.

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The impact of SOX on opportunistic management behavior

François Aubert & Gary Grudnitski
International Review of Financial Analysis, forthcoming

Abstract:
An innovative aspect of this study is the use of a relatively new metric to capture opportunistic earnings management behavior. We define opportunistic earnings management as the difference between a firm’s US-GAAP earnings and ex post earnings consensus derived from forecasts of financial analysts who follow that firm. Using over 24,500 quarterly reports of over 2,500 publicly-traded companies spanning two, three-year periods, and controlling for factors previously linked to having an effect on earnings management and analysts forecast effort, we find statistical evidence supporting the proposition that, in the aggregate, the Sarbanes-Oxley Act (SOX) has served as a constraint on curbing opportunistic earnings management behavior, and thus should be considered as an effective means to improve the quality of financial reporting information.

By KEVIN LEWIS | 09:00:00 AM


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