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Friday, June 13, 2014

Race for the cure

More Insurers Lower Premiums: Evidence from Initial Pricing in the Health Insurance Marketplaces

Leemore Dafny, Jonathan Gruber & Christopher Ody
NBER Working Paper, May 2014

Abstract:
First-year insurer participation in the Health Insurance Marketplaces (HIMs) established by the Affordable Care Act is limited in many areas of the country. There are 3.9 participants, on (population-weighted) average, in the 395 ratings areas spanning the 34 states with federally facilitated marketplaces (FFMs). Using data on the plans offered in the FFMs, together with predicted market shares for exchange participants (estimated using 2011 insurer-state market shares in the individual insurance market), we study the impact of competition on premiums. We exploit variation in ratings-area-level competition induced by United Healthcare’s decision not to participate in any of the FFMs. We estimate that United’s nonparticipation decision raised the second-lowest-price silver premium (which is directly linked to federal subsidies) by 5.4 percent, on average. If all insurers active in each state’s individual insurance market in 2011 had participated in all ratings areas in that state’s HIM, we estimate this key premium would be 11.1% lower and 2014 federal subsidies would be reduced by $1.7 billion.

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The Political Polarization of Physicians in the United States: An Analysis of Campaign Contributions to Federal Elections, 1991 Through 2012

Adam Bonica, Howard Rosenthal & David Rothman
JAMA Internal Medicine, forthcoming

Objective: To analyze campaign contributions that physicians made from the 1991 to 1992 through the 2011 to 2012 election cycles to Republican and Democratic candidates in presidential and congressional races and to partisan organizations, including party committees and super political action committees (Super PACs).

Design, Setting, and Participants: We explored partisan differences in physician contributions by sex, for-profit vs nonprofit practice setting, and specialty using multiple regression analysis. We studied the relation between the variation in the mean annual income across specialties and the mean percentage of physicians within each specialty contributing to Republicans.

Results: Between the 1991 to 1992 and the 2011 to 2012 election cycles, physician campaign contributions increased from $20 million to $189 million, and the percentage of active physicians contributing increased from 2.6% to 9.4%. Of physicians who contributed during the study period, the mean percentage contributing to Republicans was 57% for men and 31% for women. Since 1996, the percentage of physicians contributing to Republicans has decreased, to less than 50% in the 2007 to 2008 election cycle and again in the 2011 to 2012 election cycle. Contributions to Republicans in 2011 to 2012 were more prevalent among men vs women (52.3% vs 23.6%), physicians practicing in for-profit vs nonprofit organizations (53.2% vs 25.6%), and surgeons vs pediatricians (70.2% vs 22.1%). In 1991 to 1992, these contribution gaps were smaller: for sex, 54.5% vs 30.9%; for organizations, 54.2% vs 40.0%; and for specialty, 65.5% vs 32.7%. The percentage of physicians contributing to Republicans across specialties correlated 0.84 with the mean log earnings of each specialty; specialties with higher mean earnings had higher percentages of physicians contributing to Republicans.

Conclusions and Relevance: Between 1991 and 2012, the political alignment of US physicians shifted from predominantly Republican toward the Democrats. The variables driving this change, including the increasing percentage of female physicians and the decreasing percentage of physicians in solo and small practices, are likely to drive further changes.

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The Effect of Child Health Insurance Access on Schooling: Evidence from Public Insurance Expansions

Sarah Cohodes et al.
NBER Working Paper, May 2014

Abstract:
Public health insurance programs comprise a large share of federal and state government expenditure, and these programs are due to be expanded as part of the 2010 Affordable Care Act. Despite a large literature on the effects of these programs on health care utilization and health outcomes, little prior work has examined the long-term effects of these programs and resultant health improvements on important outcomes, such as educational attainment. We contribute to filling this gap in the literature by examining the effects of the public insurance expansions among children in the 1980s and 1990s on their future educational attainment. Our findings indicate that expanding health insurance coverage for low-income children has large effects on high school completion, college attendance and college completion. These estimates are robust to only using federal Medicaid expansions, and they are mostly due to expansions that occur when the children are older (i.e., not newborns). We present suggestive evidence that better health is one of the mechanisms driving our results by showing that Medicaid eligibility when young translated into better teen health. Overall, our results indicate that the long-run benefits of public health insurance are substantial.

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Health-Insurer Bargaining Power and Firms' Incentives to Manage Earnings

Francesco Bova, Yiwei Dou & Ole-Kristian Hope
University of Toronto Working Paper, May 2014

Abstract:
Health-insurance premiums account for a significant portion of the cost base of U.S. corporations. A recent study in The American Economic Review (Dafny 2010) finds that health-insurance premiums increase for firms that experience positive profit shocks, suggesting that the health-insurance market is not perfectly competitive. Motivated by this finding and the economic importance of health-insurance premiums, this is the first study to examine firms’ earnings-management incentives in the face of insurance carriers with strong bargaining power. Using an innovative dataset for a large sample of U.S. firms with detailed information on insurance premiums and insurance-plan characteristics, we find that firms manage their reported earnings downward when insurance providers have strong bargaining power. This finding holds using both association tests and a natural experiment. We further show that this effect is more pronounced in settings in which there are ex-ante reasons to expect stronger incentives to manage earnings. We also provide preliminary evidence suggesting that downward earnings management has the intended effect of reducing future health-insurance premiums. Our analyses highlight an inefficient health-insurance market as an important determinant of firms’ accounting choices.

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Impacts of the Affordable Care Act Dependent Coverage Provision on Health-Related Outcomes of Young Adults

Silvia Barbaresco, Charles Courtemanche & Yanling Qi
NBER Working Paper, May 2014

Abstract:
The first major insurance expansion of the Affordable Care Act – a provision requiring insurers to allow dependents to remain on parents’ health insurance until turning 26 – took effect in September 2010. We estimate this mandate’s impacts on numerous health-related outcomes using a difference-in-differences approach with 23-25 year olds as the treatment group and 27-29 year olds as the control group. For the full sample, the dependent coverage provision increased the probabilities of having insurance, a primary care doctor, and excellent self-assessed health, while decreasing unmet medical needs because of cost. However, we find no evidence of improvements in preventive care utilization or health behaviors. Subsample analyses reveal particularly striking gains for college graduates, including reduced obesity. Finally, we show that the mandate’s impacts on 19-22 year olds were generally weaker than those on 23-25 year olds, although we observe a reduction in pregnancies for unmarried 19-22 year old women.

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Do Physicians Possess Market Power?

Abe Dunn & Adam Hale Shapiro
Journal of Law and Economics, February 2014, Pages 159-193

Abstract:
We study the degree to which greater physician concentration leads to higher service prices charged by physicians in the commercially insured medical care market. Using a database of physicians throughout the United States, we construct physician-firm concentration measures based on market boundaries defined by fixed driving times, which we label the fixed-travel-time Herfindahl-Hirschman index. We link these concentration measures to health insurance claims. We find that physicians in more concentrated markets charge higher service prices; a physician in the 90th percentile of market concentration will charge 14–30 percent higher fees than a physician in the 10th percentile. Our estimates imply that physician consolidation has caused about an 8 percent increase in fees on average over the last 20 years and substantially higher increases in concentrated markets.

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The Effect of Public Insurance Coverage for Childless Adults on Labor Supply

Laura Dague, Thomas DeLeire & Lindsey Leininger
NBER Working Paper, May 2014

Abstract:
This study provides plausibly causal estimates of the effect of public insurance coverage on the employment of non-elderly, non-disabled adults without dependent children (“childless adults”). We use regression discontinuity and propensity score matching difference-in-differences methods to take advantage of the sudden imposition of an enrollment cap, comparing the labor supply of enrollees to eligible applicants on a waitlist. We find enrollment into public insurance leads to sizable and statistically meaningful reductions in employment up to at least 9 quarters later, with an estimated size of from 2 to 10 percentage points depending upon the model used.

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Payment Systems in the Healthcare Industry: An Experimental Study of Physician Incentives

Ellen Green
Journal of Economic Behavior & Organization, forthcoming

Abstract:
Policy makers and the healthcare industry have proposed changes to physician payment structures as a way to improve the quality of health care and reduce costs. Several of these proposals require healthcare providers to employ a value-based purchasing program (also known as pay-for-performance [P4P]). However, the way in which existing payment structures impact physician behavior is unclear and therefore, predicting how well P4P will perform is difficult. To understand the impact physician payment structures have on physician behavior, I approximate the physician-patient relationship in a real-effort laboratory experiment. I study several prominent physician payment structures including fee-for-service, capitation, salary, and P4P. I find that physicians are intrinsically motivated to provide high quality care and relying exclusively on extrinsic incentives to motivate physicians is detrimental to the quality of care and costly for the healthcare industry.

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Malpractice Law, Physicians’ Financial Incentives, and Medical Treatment: How Do They Interact?

Ity Shurtz
Journal of Law and Economics, February 2014, Pages 1-29

Abstract:
The effects of malpractice law and financial incentives on physicians are typically studied independently. This paper shows that to make both positive and normative statements about medical malpractice liability, one must consider physicians’ legal and financial incentives jointly. I develop a simple model to show that when treatment is unprofitable at the margin, mitigation of liability lowers treatment levels; conversely, when treatment is profitable, mitigation of liability raises them. Motivated by this simple theoretical framework, I analyze the impact of a tort reform in Texas that mitigated malpractice liability. Consistent with the theory, the rate of cesarean sections among commercially insured mothers, for whom the procedure is considered profitable, increased by 2 percentage points relative to the rate of cesarean sections among mothers covered by Medicaid, for whom the procedure is thought to be unprofitable.

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Do the Poor Benefit from More Generous Medicaid Physician Payments?

Alice Chen
University of Chicago Working Paper, February 2014

Abstract:
This paper examines how changes in Medicaid physician payments affect provision of care to both Medicaid patients and the uninsured. I find that payment increases generate an increase in supply of care to Medicaid patients but a more than offsetting decrease in supply to the uninsured. Using survey data, I additionally show that physicians encourage their uninsured patients to enroll in Medicaid. Finally, I demonstrate that when Medicaid eligibility is high, physicians are less likely to substitute between caring for Medicaid patients and treating the uninsured. Because higher eligibility magnifies the Medicaid supply response to a payment change, my results suggest that payment increases should be coupled with eligibility expansions in order to improve access to care among the poor.

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Effects of Cuts in Medicaid on Dental-Related Visits and Costs at a Safety-Net Hospital

Martha Neely et al.
American Journal of Public Health, June 2014, Pages e13-e16

Abstract:
We used data from Boston Medical Center, Massachusetts, to determine whether dental-related emergency department (ED) visits and costs increased when Medicaid coverage for adult dental care was reduced in July 2010. In this retrospective study of existing data, we examined the safety-net hospital’s dental-related ED visits and costs for 3 years before and 2 years after Massachusetts Health Care Reform. Dental-related ED visits increased 2% the first and 14% the second year after Medicaid cuts. Percentage increases were highest among older adults, minorities, and persons receiving charity care, Medicaid, and Medicare.

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The Association Between Community-level Insurance Coverage and Emergency Department Use

Laurence Baker & Renee Hsia
Medical Care, June 2014, Pages 535-540

Background: Emergency departments (EDs) nationwide are key entry points into the health care system, and their use may reflect changes in access and need in their communities. However, no studies to date have empirically and longitudinally studied how changes in a community’s level of insurance coverage, a key determinant of access, affect ED utilization.

Objective: To determine the effects of changes in a community’s rate of insurance coverage on its population’s ED use.

Methods: We conducted a longitudinal analysis of all California counties between 2005 and 2010 using comprehensive ED visit data from the California Office of Statewide Health Planning and Development. Using Poisson regression with county and year fixed effects, we determined how changes in the rate of insurance coverage within a given county affect ED visits per 1000 residents.

Results: We found that changes in the rate of insurance coverage within a county had a slight but significant inverse relationship with ED visits per 1000 residents for both adults and children. For example, if a county’s rate of insurance coverage among adults jumped from the 10th (73.22%) to the 90th percentile (84.93%), an estimated 2 fewer ED visits would occur per 1000 adult residents.

Conclusions: As the rate of insurance coverage increased within California counties, overall ED utilization declined only slightly. Thus, expanding insurance coverage may not lead to significant decreases in overall ED use.

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Long-Term Impact of Medicare Payment Reductions on Patient Outcomes

Vivian Wu & Yu-Chu Shen
Health Services Research, forthcoming

Objective: To examine the long-term impact of Medicare payment reductions on patient outcomes for Medicare acute myocardial infarction (AMI) patients.

Data Sources: Analysis of secondary data compiled from 100 percent Medicare Provider Analysis and Review between 1995 and 2005, Medicare hospital cost reports, Inpatient Prospective Payment System Payment Impact Files, American Hospital Association annual surveys, InterStudy, Area Resource Files, and County Business Patterns.

Study Design: We used a natural experiment — the Balanced Budget Act (BBA) of 1997 — as an instrument to predict cumulative Medicare revenue loss due solely to the BBA, and basing on the predicted loss categorized hospitals into small, moderate, or large payment-cut groups and followed Medicare AMI patient outcomes in these hospitals over an 11-year panel between 1995 and 2005.

Principal Findings: We found that while Medicare AMI mortality trends remained similar across hospitals between pre-BBA and initial-BBA periods, hospitals facing large payment cuts saw smaller improvement in mortality rates relative to that of hospitals facing small cuts in the post-BBA period. Part of the relatively higher AMI mortalities among large-cut hospitals might be related to reductions in staffing levels and operating costs, and a small part might be due to patient selection.

Conclusions: We found evidence that hospitals facing large Medicare payment cuts as a result of BBA of 1997 were associated with deteriorating patient outcomes in the long run. Medicare payment reductions may have an unintended consequence of widening the gap in quality across hospitals.

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Switching To Less Expensive Blindness Drug Could Save Medicare Part B $18 Billion Over A Ten-Year Period

David Hutton et al.
Health Affairs, June 2014, Pages 931-939

Abstract:
The biologic drugs bevacizumab and ranibizumab have revolutionized treatment of diabetic macular edema and neovascular age-related macular degeneration, leading causes of blindness. Ophthalmologic use of these drugs has increased and now accounts for roughly one-sixth of the Medicare Part B drug budget. The two drugs have similar efficacy and potentially minor differences in adverse-event rates; however, at $2,023 per dose, ranibizumab costs forty times more than bevacizumab. Using modeling methods, we predict ten-year (2010–20) population-level costs and health benefits of using bevacizumab and ranibizumab. Our results show that if all patients were treated with the less expensive bevacizumab instead of current usage patterns, savings would amount to $18 billion for Medicare Part B and nearly $5 billion for patients. With an additional $6 billion savings in other health care expenses, the total savings would be almost $29 billion. Altering patterns of use with these therapies by encouraging bevacizumab use and hastening approval of biosimilar therapies would dramatically reduce spending without substantially affecting patient outcomes.

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Dominated Choices and Medicare Advantage Enrollment

Christopher Afendulis, Anna Sinaiko & Richard Frank
NBER Working Paper, May 2014

Abstract:
Research in behavioral economics suggests that certain circumstances, such as large numbers of complex options or revisiting prior choices, can lead to decision errors. This paper explores the enrollment decisions of Medicare beneficiaries in the Medicare Advantage (MA) program. During the time period we study (2007-2010), private fee-for-service (PFFS) plans offered enhanced benefits beyond those of traditional Medicare (TM) without any restrictions on physician networks or additional cost, making TM a dominated choice relative to PFFS. Yet more than three quarters of Medicare beneficiaries remained in TM during our study period. We explore two possible explanations for this behavior: status quo bias and choice overload. Our results suggest that status quo bias plays an important role; the rate of MA enrollment was significantly higher among new Medicare beneficiaries than among incumbents. Our results also provide some evidence of choice overload; while the MA enrollment rate did not decline with an increase in the number of plans, among incumbent beneficiaries it failed to increase. Our results illustrate the importance of the choice environment that is in place when enrollees first enter the Medicare program.

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The Effect of Medicaid Premiums on Enrollment: A Regression Discontinuity Approach

Laura Dague
Journal of Health Economics, September 2014, Pages 1–12

Abstract:
This paper estimates the effect that premiums in Medicaid have on the length of enrollment of program beneficiaries. Whether and how low income-families will participate in the exchanges and in states’ Medicaid programs depends crucially on the structure and amounts of the premiums they will face. I take advantage of discontinuities in the structure of Wisconsin's Medicaid program to identify the effects of premiums on enrollment for low-income families. I use a three year administrative panel of enrollment data to estimate these effects. I find an increase in the premium from zero to ten dollars per month results in 1.4 fewer months enrolled and reduces the probability of remaining enrolled for a full year by 12 percentage points, but other discrete changes in premium amounts do not affect enrollment or have a much smaller effect. I find no evidence of program enrollees intentionally decreasing labor supply in order to avoid the premiums.

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Electronic Discovery and the Adoption of Information Technology

Amalia Miller & Catherine Tucker
Journal of Law, Economics, and Organization, May 2014, Pages 217-243

Abstract:
After firms adopt electronic information and communication technologies, their decision-making leaves a trail of electronic information that may be more extensive and accessible than a paper trail. We ask how the expected costs of litigation affect decisions to adopt technologies, such as electronic medical records (EMRs), which leave more of an electronic trail. EMRs allow hospitals to document electronically both patient symptoms and health providers’ reactions to those symptoms and may improve the quality of care that makes the net impact of their adoption on expected litigation costs ambiguous. This article studies the impact of state rules that facilitate the use of electronic records in court. We find evidence that hospitals are one-third less likely to adopt EMRs after these rules are enacted.

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A Simple Change To The Medicare Part D Low-Income Subsidy Program Could Save $5 Billion

Yuting Zhang, Chao Zhou & Seo Hyon Baik
Health Affairs, June 2014, Pages 940-945

Abstract:
Medicare Part D provides a subsidy to beneficiaries with incomes below 150 percent of the federal poverty level. Enrollees with the low-income subsidy accounted for 75 percent of the $60 billion in total federal Part D spending in 2013. The government randomly assigns any new beneficiary who automatically qualifies for the subsidy, or who successfully applies for it without indicating a preferred plan, to a stand-alone Part D plan whose premium is equal to or below the average premium for the basic Part D benefit in the region. We used an intelligent reassignment algorithm and 2008–09 Part D drug use and spending data to match enrollees to available plans according to their medication needs. We found that such a reassignment approach could have saved the federal government over $5 billion in 2009, for mean government savings of $710 (median: $368) per enrollee with a low-income subsidy. Implementing that simple change to reassign beneficiaries would have also lowered the proportion of prescriptions that required utilization review from 29 percent to 20 percent, and the proportion of prescriptions with quantity limits from 27 percent to 19 percent.

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Cutting Medicare Hospital Prices Leads to a Spillover Reduction in Hospital Discharges for the Nonelderly

Chapin White
Health Services Research, forthcoming

Objective: To measure spillover effects of Medicare inpatient hospital prices on the nonelderly (under age 65).

Primary Data Sources: Healthcare Cost and Utilization Project State Inpatient Databases (10 states, 1995–2009) and Medicare Hospital Cost Reports.

Study Design: Outcomes include nonelderly discharges, length of stay and case mix, staffed hospital bed-days, and the share of discharges and days provided to the elderly. We use metropolitan statistical areas as our markets. We use descriptive analyses comparing 1995 and 2009 and panel data fixed-effects regressions. We instrument for Medicare prices using accumulated changes in the Medicare payment formula.

Principal Findings: Medicare price reductions are strongly associated with reductions in nonelderly discharges and hospital capacity. A 10-percent reduction in the Medicare price is estimated to reduce discharges among the nonelderly by about 5 percent. Changes in the Medicare price are not associated with changes in the share of inpatient hospital care provided to the elderly versus nonelderly.

Conclusions: Medicare price reductions appear to broadly constrain hospital operations, with significant reductions in utilization among the nonelderly. The slow Medicare price growth under the Affordable Care Act may result in a spillover slowdown in hospital utilization and spending among the nonelderly.

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Measuring the Hospital Length of Stay/Readmission Cost Trade-Off under a Bundled Payment Mechanism

Kathleen Carey
Health Economics, forthcoming

Abstract:
If patients are discharged from the hospital prematurely, many may need to return within a short period of time. This paper investigates the relationship between length of stay and readmission within 30 days of discharge from an acute care hospitalization. It applies a two-part model to data on Medicare patients treated for heart attack in New York state hospitals during 2008 to obtain the expected cost of readmission associated with length of stay. The expected cost of a readmission is compared with the marginal cost of an additional day in the initial stay to examine the cost trade-off between an extra day of care and the expected cost of readmission. The cost of an additional day of stay was offset by expected cost savings from an avoided readmission in the range of 15% to 65%. Results have implications for payment reform based on bundled payment reimbursement mechanisms.

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Physician Payment Reform and Hospital Referrals

Kate Ho & Ariel Pakes
American Economic Review, May 2014, Pages 200-205

Abstract:
Commercial health insurers in California use provider capitation payments to different extents. These are similar to arrangements introduced by the recent health reforms to give physicians incentives to control costs. In a previous paper we showed that patients whose insurers used capitation incentives traveled further to access lower-priced, similar-quality hospitals than other same-severity patients. This paper predicts the implied effects of a move to widespread capitation. We show that, if the introduction of capitation prompted low-capitation insurers to act like high-capitation insurers, this would generate a 4–5 percent cost saving with some reduction in patient convenience but no reduction in quality.

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Measuring Low-Value Care in Medicare

Aaron Schwartz et al.
JAMA Internal Medicine, forthcoming

Objectives: To develop claims-based measures of low-value services, examine service use (and associated spending) detected by these measures in Medicare, and determine whether patterns of use are related across different types of low-value services.

Design, Setting, and Participants: Drawing from evidence-based lists of services that provide minimal clinical benefit, we developed 26 claims-based measures of low-value services. Using 2009 claims for 1 360 908 Medicare beneficiaries, we assessed the proportion of beneficiaries receiving these services, mean per-beneficiary service use, and the proportion of total spending devoted to these services. We compared the amount of use and spending detected by versions of these measures with different sensitivity and specificity. We also estimated correlations between use of different services within geographic areas, adjusting for beneficiaries’ sociodemographic and clinical characteristics.

Results: Services detected by more sensitive versions of measures affected 42% of beneficiaries and constituted 2.7% of overall annual spending. Services detected by more specific versions of measures affected 25% of beneficiaries and constituted 0.6% of overall spending. In adjusted analyses, low-value spending detected in geographic regions at the 5th percentile of the regional distribution of low-value spending ($227 per beneficiary) exceeded the difference in detected low-value spending between regions at the 5th and 95th percentiles ($189 per beneficiary). Adjusted regional use was positively correlated among 5 of 6 categories of low-value services (mean r for pairwise, between-category correlations, 0.33; range, 0.14-0.54; P ≤ .01).

Conclusions and Relevance: Services detected by a limited number of measures of low-value care constituted modest proportions of overall spending but affected substantial proportions of beneficiaries and may be reflective of overuse more broadly. Performance of claims-based measures in supporting targeted payment or coverage policies to reduce overuse may depend heavily on how the measures are defined.

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Doctors with borders: Occupational licensing as an implicit barrier to high skill migration

Brenton Peterson, Sonal Pandya & David Leblang
Public Choice, July 2014, Pages 45-63

Abstract:
Research on the political economy of immigration overlooks the specificity of human capital in skilled occupations and its implications for immigration preferences and policymaking. Conclusions that skilled Americans are unconcerned about labor market competition from skilled migrants build on a simple dichotomy between high and low skill migrants. In this article we show that natives turn to occupational licensing regulations as occupation-specific protectionist barriers to skilled migrant labor competition. In practice, high skill natives face labor market competition only from those high-skill migrants who share their occupation-specific skills. Licensure regulations ostensibly serve the public interest by certifying competence, but they can simultaneously be formidable barriers to entry by skilled migrants. From a collective action perspective, skilled natives can more easily secure sub-national, occupation-specific policies than influence national immigration policy. We exploit the unique structure of the American medical profession that allows us to distinguish between public interest and protectionist motives for migrant physician licensure regulations. We show that over the 1973–2010 period states with greater physician control over licensure requirements imposed more stringent requirements for migrant physician licensure and, as a consequence, received fewer new migrant physicians. By our estimates over a third of all US states could reduce their physician shortages by at least 10 percent within 5 years just by equalizing migrant and native licensure requirements. This article advances research on the political economy of immigration and highlights an overlooked dimension of international economic integration: regulatory rent-seeking as a barrier to the cross-national mobility of human capital, and the public policy implications of such barriers.

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One Pool to Insure them All?: Age, Risk and the Price(s) of Medical Insurance

Thomas Koch
International Journal of Industrial Organization, July 2014, Pages 1–11

Abstract:
Asymmetric information can lead to adverse selection and market failure. In a dynamic setting, asymmetric information also limits reclassification risk. This certainty offsets the costs of adverse selection. Using a dynamic model of endogenous insurance choice and price calibrated to the U.S. medical insurance market, I find that asymmetric information is Pareto improving when information is fully asymmetric. However, when insurers can discriminate by age group, but not within age groups, the young benefit by paying less for insurance. The insurance market for the near elderly collapses because it is no longer implicitly subsidized by the participation of the young.

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Will Health Care Reform Reduce Disparities in Insurance Coverage?: Evidence From the Dependent Coverage Mandate

Dan Shane & Padmaja Ayyagari
Medical Care, June 2014, Pages 528-534

Objectives: We used data from the Medical Expenditure Panel Survey to assess the impact of the Affordable Care Act’s dependent coverage mandate on disparities in health insurance coverage rates and evaluated whether non-Hispanic blacks and Hispanics gained coverage at the same rates as non-Hispanic whites.

Methods: To estimate changes in insurance rates, we employed a difference-in-difference regression approach comparing 7962 young adults aged 19–25 to 9321 adults aged 27–34. Separate regressions were estimated for non-Hispanic blacks, Hispanics, and non-Hispanic whites to understand whether the mandate had differential effects by race/ethnicity. Separate regressions by income level and race/ethnicity were also estimated.

Results: Insurance rates increased by 9.3 percentage points among non-Hispanic whites, 7.2 percentage points among Hispanics, and 9.4 percentage points among non-Hispanic blacks. These changes were not significantly different from each other. Among individuals with income of <133% of the Federal Poverty Level, non-Hispanic whites experienced significantly larger gains, whereas at higher-income levels, non-Hispanic blacks experienced significantly larger gains than other racial/ethnic groups.

Conclusions: The dependent coverage mandate of the Affordable Care Act increased insurance rates among all racial and ethnic groups but did not change overall disparities. Disparities may have widened among low-income populations which highlights the importance of Medicaid expansions in reducing disparities. Among higher-income populations, disparities between non-Hispanic blacks and non-Hispanic whites were reduced.

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Intended and Unintended Consequences of Minimum Staffing Standards for Nursing Homes

Min Chen & David Grabowski
Health Economics, forthcoming

Abstract:
Staffing is the dominant input in the production of nursing home services. Because of concerns about understaffing in many US nursing homes, a number of states have adopted minimum staffing standards. Focusing on policy changes in California and Ohio, this paper examined the effects of minimum nursing hours per resident day regulations on nursing home staffing levels and care quality. Panel data analyses of facility-level nursing inputs and quality revealed that minimum staffing standards increased total nursing hours per resident day by 5% on average. However, because the minimum staffing standards treated all direct care staff uniformly and ignored indirect care staff, the regulation had the unintended consequences of both lowering the direct care nursing skill mix (i.e., fewer professional nurses relative to nurse aides) and reducing the absolute level of indirect care staff. Overall, the staffing regulations led to a reduction in severe deficiency citations and improvement in certain health conditions that required intensive nursing care.

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Does regulating private long-term care facilities lead to better care? A study from Quebec, Canada

Gina Bravo et al.
International Journal for Quality in Health Care, June 2014, Pages 330-336

Participants: Random samples of disabled residents aged 65 years and over. In total, 451 residents from 145 care settings assessed in 1995–2000 were compared with 329 residents from 102 care settings assessed in 2010–12.

Intervention: Regulation introduced by the province in 2005, effective February 2007.

Results: After regulation, fewer small-size facilities were in operation in the private market. Between the two study periods, the proportion of residents with severe disabilities decreased in private facilities whereas it remained >80% in their public counterparts. Meanwhile, quality of care improved significantly in private facilities, while worsening in their public counterparts, even after controlling for confounding.

Conclusions: The private industry now provides better care to its residents. Improvement in care quality likely results in part from the closure of small homes and change in resident case-mix.

By KEVIN LEWIS | 09:00:00 AM

Thursday, June 12, 2014

Love actually

Continued Pursuit of Happily Ever After: Low Barriers to Divorce and Happiness

Elizabeth Mokyr Horner
Journal of Family and Economic Issues, June 2014, Pages 228-240

Abstract:
Throughout the 1970s, a “no-fault revolution” swept through the United States, reducing the legal and economic barriers to divorce. Previous studies have found that these legal changes did at least temporarily increase divorces, and may have been, on average, detrimental to women’s economic well-being. It has also been suggested that reducing the barriers to divorce redistributed power to spouses with better predicted outcomes on the remarriage market. In keeping with this theory, the current study examined men and women ages 25–50 as they transitioned to low-barriers to divorce regimes. My data show that reductions in the barriers to divorce were associated with reductions in women’s happiness, particularly among older women and women with children. Conversely, older men and men with children (these women’s potential partners) reported on average higher happiness after low barriers to divorce. These relationships were found even for individuals who remained married, suggesting that this redistribution of happiness was in part the result of a change in bargaining power within marriages.

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Partner Choice, Relationship Satisfaction, and Oral Contraception: The Congruency Hypothesis

Craig Roberts et al.
Psychological Science, forthcoming

Abstract:
Hormonal fluctuation across the menstrual cycle explains temporal variation in women’s judgment of the attractiveness of members of the opposite sex. Use of hormonal contraceptives could therefore influence both initial partner choice and, if contraceptive use subsequently changes, intrapair dynamics. Associations between hormonal contraceptive use and relationship satisfaction may thus be best understood by considering whether current use is congruent with use when relationships formed, rather than by considering current use alone. In the study reported here, we tested this congruency hypothesis in a survey of 365 couples. Controlling for potential confounds (including relationship duration, age, parenthood, and income), we found that congruency in current and previous hormonal contraceptive use, but not current use alone, predicted women’s sexual satisfaction with their partners. Congruency was not associated with women’s nonsexual satisfaction or with the satisfaction of their male partners. Our results provide empirical support for the congruency hypothesis and suggest that women’s sexual satisfaction is influenced by changes in partner preference associated with change in hormonal contraceptive use.

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For better and for worse: Genes and parenting interact to predict future behavior in romantic relationships

April Masarik et al.
Journal of Family Psychology, June 2014, Pages 357-367

Abstract:
We tested the differential susceptibility hypothesis with respect to connections between interactions in the family of origin and subsequent behaviors with romantic partners. Focal or target participants (G2) in an ongoing longitudinal study (N = 352) were observed interacting with their parents (G1) during adolescence and again with their romantic partners in adulthood. Independent observers rated positive engagement and hostility by G1 and G2 during structured interaction tasks. We created an index for hypothesized genetic plasticity by summing G2′s allelic variation for polymorphisms in 5 genes (serotonin transporter gene [linked polymorphism], 5-HTT; ankyrin repeat and kinase domain containing 1 gene/dopamine receptor D2 gene, ANKK1/DRD2; dopamine receptor D4 gene, DRD4; dopamine active transporter gene, DAT; and catechol-O-methyltransferase gene, COMT). Consistent with the differential susceptibility hypothesis, G2s exposed to more hostile and positively engaged parenting behaviors during adolescence were more hostile or positively engaged toward a romantic partner if they had higher scores on the genetic plasticity index. In short, genetic factors moderated the connection between earlier experiences in the family of origin and future romantic relationship behaviors, for better and for worse.

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Man enough? Masculine discrepancy stress and intimate partner violence

Dennis Reidy et al.
Personality and Individual Differences, October 2014, Pages 160–164

Abstract:
Research on gender roles suggests that men who strongly adhere to traditional masculine gender norms are at increased risk for the perpetration of violent and abusive acts toward their female intimate partners. Yet, gender norms alone fail to provide a comprehensive explanation of the multifaceted construct of intimate partner violence (IPV) and there is theoretical reason to suspect that men who fail to conform to masculine roles may equally be at risk for IPV. In the present study, we assessed effect of masculine discrepancy stress, a form of distress arising from perceived failure to conform to socially-prescribed masculine gender role norms, on IPV. Six-hundred men completed online surveys assessing their experience of discrepancy stress, masculine gender role norms, and history of IPV. Results indicated that masculine discrepancy stress significantly predicted men’s historical perpetration of IPV independent of other masculinity related variables. Findings are discussed in terms of potential distress engendered by masculine socialization as well as putative implications of gender role discrepancy stress for understanding and intervening in partner violence perpetrated by men.

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Romantic relationship status biases the processing of an attractive alternative's behavior

Mariko Visserman & Johan Karremans
Personal Relationships, June 2014, Pages 324–334

Abstract:
The present research examines whether romantically involved individuals process behavioral information of attractive alternatives in a biased manner. When presented with behavioral information of an attractive mate, in Study 1 involved (vs. uninvolved) participants tended to recall fewer positive behaviors of an attractive alternative. Study 2 demonstrated that involved participants recalled more negative behaviors, and also evaluated these behaviors more negatively, compared to uninvolved participants. Study 3 demonstrated that romantically involved participants recalled more negative (but also neutral) behaviors when it concerned behaviors displayed by an attractive alternative as compared to a same-sex other. These findings provide initial evidence for biased processing of behavioral information of an alternative mate, which may serve an important relationship protection function.

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Sex differences in distress from infidelity in early adulthood and in later life: A replication and meta-analysis of Shackelford et al. (2004)

Hans IJzerman et al.
Social Psychology, Summer 2014, Pages 202-208

Abstract:
Shackelford and colleagues (2004) found that men, compared to women, are more distressed by sexual than emotional infidelity, and this sex difference continued into older age. We conducted four high-powered replications (total N = 1,952) of this effect and found different results. A meta-analysis of original and replication studies finds the sex difference in younger samples (though with a smaller effect size), and no effect among older samples. Furthermore, we found attitude toward uncommitted sex to be a mediator (although not consistently in the same direction) between participant sex and relative distress between sexual and emotional infidelity. We hypothesize that the discrepancies between the original and replication studies may be due to changing cultural attitudes about sex across time. Confirming this speculative interpretation requires further investigation.

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Testing the Economic Independence Hypothesis: The Effect of an Exogenous Increase in Child Support on Subsequent Marriage and Cohabitation

Maria Cancian & Daniel Meyer
Demography, June 2014, Pages 857-880

Abstract:
We examine the effects of an increase in income on the cohabitation and marriage of single mothers. Using data from an experiment that resulted in randomly assigned differences in child support receipt for welfare-receiving single mothers, we find that exogenous income increases (as a result of receiving all child support that was paid) are associated with significantly lower cohabitation rates between mothers and men who are not the fathers of their child(ren). Overall, these results support the hypothesis that additional income increases disadvantaged women’s economic independence by reducing the need to be in the least stable type of partnerships. Our results also show the potential importance of distinguishing between biological and social fathers.

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Women's Income and Marriage Markets in the United States: Evidence from the Civil War Pension

Laura Salisbury
NBER Working Paper, June 2014

Abstract:
Under the Civil War pension act of 1862, the widow of a Union Army soldier was entitled to a pension if her husband died as a direct result of his military service; however, she lost her right to the pension if she remarried. I analyze the effect this had on the rate of remarriage among these widows. This study fits into a modern literature on the behavioral effects of marriage penalties. In addition, it offers a unique perspective on 19th century marriage markets, which are little understood. Using a new database compiled from widows' pension files, I estimate the effect of the pension on the hazard rate of remarriage using variation in pension processing times. Taking steps to account for the potential endogeneity of processing times to marital outcomes, I find that receiving a pension lowered the hazard rate of remarriage by 25 percent, which implies an increase in the median time to remarriage of 3.5 years. Among older women and women with children, this effect is substantially greater. This indicates that women were willing to substitute away from marriage if the alternatives were favorable enough, suggesting that changes in the desirability of marriage to women may account for some of the aggregate patterns of first marriage documented for this period.

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Stated Reasons for Relationship Dissolution in Britain: Marriage and Cohabitation Compared

Richard Lampard
European Sociological Review, June 2014, Pages 315-328

Abstract:
Data from the second National Survey of Sexual Attitudes and Lifestyles are used to examine stated reasons for the dissolution of co-residential relationships in Britain at the end of the 20th century. The findings exhibit a degree of continuity with earlier British studies, and resonate with themes identified within a broader international literature. While the ‘serious’ issues of violence and infidelity still feature prominently, a substantial minority of stated reasons appear indicative of relationships based on relatively ‘weak bonds’. Differences between marital and cohabiting relationships persist within multivariate analyses, suggesting that neither attitudes to relationships nor socio-economic or demographic factors provide satisfactory explanations for their existence. It is speculated that an adequate explanation of these differences would need to take account of an individual’s personal commitment to a specific partner and their level of investment in that specific relationship.

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What difference does a day make? Examining temporal variations in partner maltreatment

Randy McCarthy et al.
Journal of Family Psychology, June 2014, Pages 421-428

Abstract:
Routine activities (RA) theory posits that changes in people’s typical daily activities covary with increases or decreases in criminal behaviors, including, but not limited to, partner maltreatment. Using a large clinical database, we examined temporal variations among 24,460 incidents of confirmed partner maltreatment across an 11-year period within the U.S. Air Force (USAF). Specifically, we created regression models that predicted the number of partner maltreatment incidents per day. In addition to several control variables, we coded temporal variables for days of the week, month, year, and several significant days (e.g., holidays, Super Bowl Sunday), which allowed us to examine the independent influence of these variables on partner maltreatment prevalence. While accounting for the influence of all other study variables, we observed significant increases in partner maltreatment for weekend days, New Year’s Day, Independence Day, and Super Bowl Sunday. Similar results were found for partner maltreatment incidents involving offender alcohol/drug use. Furthermore, the proportion of incidents involving offender alcohol/drug use increased on New Year’s Day and Independence Day. Consistent with RA theory and data from civilian samples, the current results indicate that certain days are associated with increased incidents of partner maltreatment within the USAF. These findings should be used to inform future preventive efforts.

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Revisiting the Romeo and Juliet effect (Driscoll, Davis, & Lipetz, 1972): Reexamining the links between social network opinions and romantic relationship outcomes

Colleen Sinclair, Kristina Hood & Brittany Wright
Social Psychology, Summer 2014, Pages 170-178

Abstract:
We conducted a replication and extension of Driscoll, Davis, and Lipetz’s (1972) classic longitudinal survey of the Romeo and Juliet effect, wherein they found that increases in parental interference were linked to increases in love and commitment. Using the original measures, 396 participants were followed over a 3–4 month period wherein they reported love, commitment, trust, and criticism for their partners as well as levels of perceived interference from friends and family. Participants also completed contemporary, validated measures of the same constructs similar to those often implemented in studies of social network opinion. Repeating the analyses employed by Driscoll and colleagues, we could not find evidence for the Romeo and Juliet effect. Rather, consistent with the social network effect (Felmlee, 2001), participants reporting higher levels of interference or lower levels of approval reported poorer relationship quality regardless of outcome measured. This effect was likewise evident in a meta-analysis.

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Endorsing benevolent sexism magnifies willingness to dissolve relationships when facing partner-ideal discrepancies

Matthew Hammond & Nickola Overall
Personal Relationships, June 2014, Pages 272–287

Abstract:
Benevolent sexism (BS) contains prescriptive partner expectations that should foster an intolerance of discrepancies between partners and warmth/trustworthiness ideal standards. This longitudinal study tested whether endorsing BS magnifies the degree to which warmth/trustworthiness partner-ideal discrepancies are associated with willingness to dissolve relationships. Heterosexual couples (N = 88) reported their partner-ideal discrepancies, willingness to dissolve the relationship, and their partner's willingness to dissolve the relationship every 3 months for 1 year. Greater partner-ideal discrepancies were associated with subsequent increases in willingness to dissolve the relationship, but this was stronger for people who endorsed BS. Partners of women who endorsed BS also perceived this greater willingness to dissolve the relationship. These results demonstrate that the prescriptions within BS undermine the stability of ongoing relationships.

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Partner support for individual self-expansion opportunities: Effects on relationship satisfaction in long-term couples

Hayley Fivecoat et al.
Journal of Social and Personal Relationships, forthcoming

Abstract:
Previous research indicates that partner responsiveness and self-expansion play key roles in the creation, maintenance, and improvement of close relationships. This experiment examined the hypothesis that active (vs. passive) partner support for an individual’s opportunity for self-expansion would increase relationship satisfaction. In an experimental task manipulated to be either self-expanding or stressful, dating couple members (N = 116; 58 couples) received active or passive support messages, ostensibly from their partners. Among those in longer term (14–60 months), but not in shorter term relationships, relationship satisfaction increased significantly more for those who received active (vs. passive) support for self-expansion. This same pattern was not found when partners’ messages responded to a stressful task or for couples in short-term relationships. This study provides the first experimental evidence for effects on relationship satisfaction of partner support for individual self-expansion. In addition, the findings suggest the potential substantial importance of relationship length for moderating self-expansion processes.

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Relationship Quality Among Young Couples from an Economic and Gender Perspective

Sonya Britt & Roudi Nazarinia Roy
Journal of Family and Economic Issues, June 2014, Pages 241-250

Abstract:
Less than a third of married couple households in the United States are composed of families with one breadwinner. This is a stark contrast to a mere 40 years ago when men were the primary breadwinner for the majority of households. The goal of this study was to determine how the perception of household chores is related to relationship quality. Specifically we wanted to determine how perception of household chores is related to relationship quality reported by partners from a traditional economic and a gender role theory perspective. Using data from the National Longitudinal Survey of Youth, 1986 cohort, results indicate that perceived unfairness in household division of chores was predictive of women’s relationship quality, but not men’s. Arguments about affection and money were predictive of relationship quality for both genders.

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Equality Is Bliss? Relationship Quality and the Gender Division of Household Labor

Anders Barstad
Journal of Family Issues, June 2014, Pages 972-992

Abstract:
How does gender equality in the division of household labor correlate with relationship quality? Earlier research has pointed to the division of routine housework as a “zero-sum game”: Women gain in terms of relationship quality when housework is shared equally, while men lose. I find weak support for a “zero-sum game” logic in the case of Norway, possibly related to the strong influence of gender egalitarian norms in Norwegian society. For men, equality in the sharing of routine housework is associated with less dissatisfaction with the division of household labor than all other sharing arrangements. Compared with taking no or little part in such housework, men who do as much routine housework as their partner score equally well on an index for relationship quality. While women’s relationship quality deteriorates the larger their share of intermittent work (doing small repairs) is, there is no clear pattern among men.

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Relationship quality and oxytocin: Influence of stable and modifiable aspects of relationships

Julianne Holt-Lunstad, Wendy Birmingham & Kathleen Light
Journal of Social and Personal Relationships, forthcoming

Abstract:
Prior studies report that couples with higher relationship quality show higher oxytocin (OT) levels, yet other studies report those with higher distress have increased OT. This study investigated these competing predictions in the context of a support enhancement intervention among 34 young married couples (N = 68). Preintervention marital quality (Dyadic Adjustment Scale) was examined for associations with plasma and salivary OT levels 4 weeks apart and for changes between these time points within the intervention group. High relationship quality, not distress, was associated with higher OT in both saliva and plasma at both time points. No significant interaction was found between marital quality and intervention condition; relationship quality and support intervention were both independently associated with higher postintervention OT levels.

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The Role of Marriage in the Causal Pathway From Economic Conditions Early in Life to Mortality

Gerard Van Den Berg & Sumedha Gupta
Journal of Health Economics, forthcoming

Abstract:
This paper analyzes the interplay between early-life conditions and marital status, as determinants of adult mortality. We use individual data from Dutch registers (years 1815-2000), combined with business cycle conditions in childhood as indicators of early-life conditions. The empirical analysis estimates bivariate duration models of marriage and mortality, allowing for unobserved heterogeneity. Results show that conditions around birth and schoolgoing ages are important for marriage and mortality. Men typically enjoy a protective effect of marriage, whereas women suffer during childbearing ages. However, having been born under favorable economic conditions reduces female mortality during childbearing ages.

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Committed to us: Predicting relationship closeness following nonmarital romantic relationship breakup

Kenneth Tan et al.
Journal of Social and Personal Relationships, forthcoming

Abstract:
There is little research on the nature of relationships between individuals following the termination of a nonmarital romantic relationship. It is largely unknown to what extent former romantic partners remain close following breakup. The present research used the Investment Model of Commitment Processes, assessed prior to romantic breakup, to examine the closeness of post-breakup relationships. Results obtained from two waves of data collected from 143 young adults involved in romantic relationships at Time 1 and experiencing a romantic breakup by Time 2 indicated that pre-breakup romantic commitment mediated the effects of pre-breakup romantic satisfaction, investments, and alternatives on post-breakup closeness, with higher pre-breakup commitment predicting greater post-breakup closeness. Implications of these findings for understanding the underlying dynamics of ongoing interpersonal relationships and directions for future research are discussed.

By KEVIN LEWIS | 09:00:00 AM

Wednesday, June 11, 2014

Make work

Comparing Federal and Private-Sector Wages without Logs

Justin Falk
Contemporary Economic Policy, forthcoming

Abstract:
I use Current Population Survey data from 2005 through 2010 to compare the wages of federal employees and workers in the private sector who have similar observable characteristics. The distribution of wages differed drastically between the federal and private sectors. In particular, I find that federal employees with no more than a high school diploma earned 21% more, on average, than their private-sector counterparts, whereas those with a professional degree or doctorate earned 23% less. Overall, the average of federal wages was about 2% higher than the average wage of similar private-sector workers. Other researchers have found larger differences because they used log-linearized models, which result in comparisons of geometric means. I show that arithmetic means are more relevant in the context of the relationship between a government's compensation policy and its budget. The discrepancy between differences in arithmetic and geometric means occurs because the wages of federal employees were much less dispersed than those of employees with similar characteristics in the private sector.

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Botsourcing and outsourcing: Robot, British, Chinese, and German workers are for thinking — not feeling — jobs

Adam Waytz & Michael Norton
Emotion, April 2014, Pages 434-444

Abstract:
Technological innovations have produced robots capable of jobs that, until recently, only humans could perform. The present research explores the psychology of “botsourcing” — the replacement of human jobs by robots — while examining how understanding botsourcing can inform the psychology of outsourcing — the replacement of jobs in one country by humans from other countries. We test four related hypotheses across six experiments: (1) Given people’s lay theories about the capacities for cognition and emotion for robots and humans, workers will express more discomfort with botsourcing when they consider losing jobs that require emotion versus cognition; (2) people will express more comfort with botsourcing when jobs are framed as requiring cognition versus emotion; (3) people will express more comfort with botsourcing for jobs that do require emotion if robots appear to convey more emotion; and (4) people prefer to outsource cognition- versus emotion-oriented jobs to other humans who are perceived as more versus less robotic. These results have theoretical implications for understanding social cognition about both humans and nonhumans and practical implications for the increasingly botsourced and outsourced economy.

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The Declining Fortunes of the Young since 2000

Paul Beaudry, David Green & Benjamin Sand
American Economic Review, May 2014, Pages 381-386

Abstract:
We document that successive cohorts of college and post-college degree graduates experienced an increase in the probability of obtaining cognitive jobs both at the start of their careers and with time in the labor market in the 1990s. However, this pattern reversed for cohorts entering after 2000; profiles of the proportion of a cohort in cognitive occupations since school completion fall and become flatter with successive cohorts. Since cohort-wage profiles display a similar pattern, these findings appear to fit with a strong increase in demand for cognitive tasks in the 1990s followed by a decline in the 2000s.

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New Measures of the Costs of Unemployment: Evidence from the Subjective Well-Being of 3.3 Million Americans

John Helliwell & Haifang Huang
Economic Inquiry, forthcoming

Abstract:
Using two large U.S. surveys, we estimate the effects of unemployment on the subjective well-being (SWB) of the unemployed and the rest of the population. For the unemployed, the nonpecuniary costs of unemployment are several times as large as those resulting from lower incomes, while the indirect effect at the population level is 15 times as large. For those who are still employed, a one percentage point increase in local unemployment has an impact on well-being roughly equivalent to a 4% decline in household income. We also find evidence indicating that job security is an important channel for the indirect effects of unemployment.

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Amerisclerosis?: The Puzzle of Rising U.S. Unemployment Persistence

Olivier Coibion, Yuriy Gorodnichenko & Dmitri Koustas
Brookings Papers on Economic Activity, Fall 2013, Pages 193-260

Abstract:
The persistence of U.S. unemployment has risen with each of the last three recessions, raising the specter that future U.S. recessions might look more like the “Eurosclerosis” experience of the 1980s than like the traditional V-shaped recoveries of the past. We revisit several explanations for this rising persistence, decomposing them into three possible sources: business cycle fluctuations, changing policy responses, and propagation mechanisms. First, we find that financial shocks do not systematically lead to more persistent unemployment than monetary policy shocks, casting doubt on the hypothesis that different drivers of business cycles are the primary explanation. Second, we find that changing monetary and fiscal policy responses account for approximately one-third of the rise in unemployment persistence. Third, after examining three propagation mechanisms we find that jointly they cannot account for any rising persistence of unemployment. The three propagation mechanisms we focus on — declining labor mobility, changing age structures, and the decline in trust among Americans — are consistent with four other cyclical patterns that have evolved since the early 1980s: a rising cyclicality in long-term unemployment, lower regional convergence after downturns, rising cyclicality in disability claims, and missing disinflation. We exploit regional variation in labor market outcomes across Western Europe and North America during 1970–91 to assess the predictive capacity of each propagation mechanism for unemployment persistence. In summary, two-thirds of the rise in unemployment persistence is unexplained.

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Unemployment Benefit Extensions Caused Jobless Recoveries!?

Kurt Mitman & Stanislav Rabinovich
University of Pennsylvania Working Paper, April 2014

Abstract:
The last three recessions in the United States were followed by jobless recoveries: while labor productivity recovered, unemployment remained high. In this paper, we show that countercyclical unemployment benefit extensions lead to jobless recoveries. We augment the standard Mortensen-Pissarides model to incorporate unemployment benefits expiration and state-dependent extensions of unemployment benefits. In the model, an extension of unemployment benefits slows down the recovery of vacancy creation in the aftermath of a recession. We calibrate the model to US data and show that it is quantitatively consistent with observed labor market dynamics, in particular the emergence of jobless recoveries after 1990. Furthermore, counterfactual experiments indicate that unemployment benefits are quantitatively important in explaining jobless recoveries.

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Unhappiness and Job Finding

Anne Gielen & Jan van Ours
Economica, forthcoming

Abstract:
It is puzzling that people feel unhappy when they become unemployed, while simultaneously active labour market policies are needed to bring them back to work. We investigate this using GSOEP data. We find that nearly half of the unemployed do not experience a drop in happiness, which might explain why activation is sometimes needed. Furthermore, even though unhappy unemployed search more actively for a job, it does not speed up their job finding. Apparently, there is no link between unhappiness and job finding rate. Hence there is no contradiction between the unemployed being unhappy and the need for activation policies.

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Job Displacement and the Duration of Joblessness: The Role of Spatial Mismatch

Fredrik Andersson et al.
NBER Working Paper, April 2014

Abstract:
This paper presents a new approach to the measurement of the effects of spatial mismatch that takes advantage of matched employer-employee administrative data integrated with a person-specific job accessibility measure, as well as demographic and neighborhood characteristics. The basic hypothesis is that if spatial mismatch is present, then improved accessibility to appropriate jobs should shorten the duration of unemployment. We focus on lower-income workers with strong labor force attachment searching for employment after being subject to a mass layoff – thereby focusing on a group of job searchers that are plausibly searching for exogenous reasons. We construct person-specific measures of job accessibility based upon an empirical model of transport modal choice and network travel-time data, giving variation both across neighborhoods in nine metropolitan areas, as well as across neighbors. Our results support the spatial mismatch hypothesis. We find that better job accessibility significantly decreases the duration of joblessness among lower-paid displaced workers. Blacks, females, and older workers are more sensitive to job accessibility than other subpopulations.

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Free to Move? A Network Analytic Approach for Learning the Limits to Job Mobility

Ian Schmutte
Labour Economics, forthcoming

Abstract:
Job mobility has many overlapping determinants that are hard to characterize solely on the basis of industry or occupation transitions. Workers may match with, and move to, particular jobs on the basis of match quality, preferences, human capital, and mobility costs. This paper implements a novel method based on complex network analysis to describe how workers move from job to job. Using data from the Panel Study of Income Dynamics (PSID), I find first that the labor market is composed of four distinct segments between which job mobility is relatively unlikely. Second, these segments are not well-described on the basis of industry, occupation, demographic characteristics, or education. Third, mobility segments are associated with earnings heterogeneity, and there is evidence of positive assortative matching across segments. Fourth, the boundaries to job mobility are counter-cyclical: workers move more freely when unemployment is low.

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Episodes of Unemployment Reduction in Rich, Middle-Income and Transition Economies

Caroline Freund & Bob Rijkers
Journal of Comparative Economics, forthcoming

Abstract:
This paper studies the incidence and determinants of episodes of drastic unemployment reduction, defined as swift, substantial, and sustained declines in unemployment. We identify 43 episodes over a period of nearly 3 decades in 94 rich, middle-income and transition countries. Unemployment reductions often coincide with an acceleration of growth and an improvement in macroeconomic conditions. Episodes are much more prevalent in countries with higher levels of unemployment and, given unemployment, are more likely in countries with better regulation. An efficient legal system that enforces contracts expeditiously is particularly important for reducing unemployment. The results imply that while employment is largely related to the business cycle, better regulation reduces likelihood of high unemployment and facilitates a more rapid recovery in the event unemployment builds up.

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The Career Prospects of Overeducated Americans

Brian Clark, Clément Joubert & Arnaud Maurel
NBER Working Paper, May 2014

Abstract:
In this paper we analyze career dynamics for the large share of U.S. workers who have more schooling than their peers in the same occupation. We use data from the NLSY79 combined with the CPS to analyze transitions into and out of overeducated employment, together with the corresponding effects on wages. Overeducation is a fairly persistent phenomenon at the aggregate and individual levels, with 66% of workers remaining overeducated after one year. Overeducation is not only more common, but also more persistent among blacks and low-AFQT individuals. Further, the hazard rate out of overeducation drops by about 60% during the first 5 years spent overeducated. However, the estimation of a mixed proportional hazard model suggests that this is attributable to selection on unobservables rather than true duration dependence. Finally, overeducation is associated with lower current as well as future wages, which points to the existence of scarring effects.

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Macroeconomic policy in recessions and unemployment hysteresis

Simon Sturn
Applied Economics Letters, Summer 2014, Pages 914-917

Abstract:
I adopt Ball’s (1999) cross-sectional approach to test for unemployment hysteresis to panel data. Long-run unemployment is explained with standard institutional controls, and proxies for monetary and fiscal policy reactions in recessions. The sample consists of 20 OECD countries for the period 1985 to 2008. The results indicate that fiscal consolidation in recessions has long-lasting effects on unemployment. No significant impact of monetary policy is found. However, tentative evidence suggests that the effects of fiscal spending are stronger when accommodated by expansionary monetary policy.

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The skill bias of technological change and the evolution of the skill premium in the US since 1970

Barbara Richter
B.E. Journal of Macroeconomics, forthcoming

Abstract:
Using a two-sector model with potentially different capital shares in each sector, I show that the evolution of the skill premium from 1970 to 2005 is consistent with skill-neutrality and even a mild unskill-bias of technological change. The main channel of adjustment to changes in labor supply is instead via the reallocation of capital. New investment occurs predominantly in the skilled sector, to the detriment of the unskilled sector of the economy. This result is shown both theoretically in a simple model and in a quantitative exercise using data on the US economy.

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Competition over High-income Workers: Job Growth and Access to Labour in Atlanta

Miwa Matsuo
Urban Studies, June 2014, Pages 1634-1652

Abstract:
Access to a large labour pool (labour pooling) leads to local economic concentrations through agglomeration economies. However, these concentrations may be self-limiting by reducing labour availability through competition over high-skill workers. This paper examines whether labour pooling and labour availability of workers with different incomes account for local job growth in the Atlanta metropolitan area between 2000 and 2006. Workers’ income is employed to account for the human capital of workers, including education and skills. It is found that the availability of high-income workers is the only positive significant factor for job growth and the spatial size of the effect is larger than the traffic analysis zone (neighbourhood scale). In contrast, no labour pooling indicators show a positive association with job growth. The finding casts doubt on labour pooling effects at the intraregional level and suggests avenues for further research on local-area agglomeration economies.

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Habit persistence and the long-run labor supply

Clemens Struck
Economics Letters, forthcoming

Abstract:
Standard macroeconomic models possess the undesirable feature that people stop working in the long run. Assuming standard parameters, the neoclassical model predicts that 2% of annual productivity growth leads to a 99% decline in the labor supply after 624 years. Yet, this contradicts the fact that labor hours per capita are relatively stable, even over a long period of time. This paper shows how internal and external habit persistence each work to stabilize the long run labor supply, independent of key parameter choices.

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Papers, please! The effect of birth registration on child labor and education in early 20th century USA

Sonja Fagernäs
Explorations in Economic History, April 2014, Pages 63–92

Abstract:
A birth certificate establishes a child's legal identity and age, but few quantitative estimates of the significance of birth registration exist. Birth registration laws were enacted by U.S. states in the 19th and early 20th centuries. Using 1910–1930 census data, this study finds that minimum working age legislation was twice as effective in reducing under-aged employment if children had been born with a birth registration law, with positive implications for school attendance. There is some evidence that registration laws also improved the enforcement of schooling laws for younger children. A retrospective analysis with the 1960 census shows that the long-term effect of registration laws was to increase educational attainment by approximately 0.1 years.

By KEVIN LEWIS | 09:00:00 AM

Tuesday, June 10, 2014

Managing diversity

Are Good-Looking People More Employable?

Bradley Ruffle & Ze'ev Shtudiner
Management Science, forthcoming

Abstract:
We investigate the role of physical attractiveness in the hiring process. We sent 5,312 curricula vitae (CVs) in pairs to 2,656 advertised job openings. In each pair, one CV was without a picture, whereas the second, otherwise almost identical CV contained a picture of either an attractive male or female or a plain-looking male or female. Employer callbacks to attractive men are significantly higher than to men with no picture and to plain-looking men, nearly doubling the latter group. Strikingly, attractive women do not enjoy the same beauty premium. In fact, women with no picture have a significantly higher rate of callback than attractive or plain-looking women. We explore a number of explanations for this discrimination against attractive women and provide evidence that female jealousy and envy are likely reasons.

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Gender and Business Outcomes of Black and Hispanic New Entrepreneurs in the United States

Marie Mora & Alberto Dávila
American Economic Review, May 2014, Pages 245-249

Abstract:
In light of the growing numbers of women of color in the entrepreneurial sector in the United States, employing public-use microdata from the 2007 Survey of Business Owners, this study finds that new firms owned by black and Hispanic women were more likely to cease operations than those owned by their male counterparts or by non-Hispanic whites, even when controlling for other owner- and firm-level characteristics and labor market conditions. These differences occurred despite the existence of public programs designed to help female and minority entrepreneurs, raising the question of efficiency of the current policy infrastructure in the United States.

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When “mom’s the boss”: Control over domestic decision making reduces women’s interest in workplace power

Melissa Williams & Serena Chen
Group Processes & Intergroup Relations, July 2014, Pages 436-452

Abstract:
Although men are typically considered to have more power than women, women are more likely than men to be primary decision makers in the household domain. We argue that the portrayal of women’s traditional role as representing a form of power, albeit limited in scope, is widespread in popular culture, and that this power is perceived as desirable and providing a subjective sense of control (Study 1). Yet power over household decision making may also function to reduce women’s objections to a status quo in which they have less power overall, outside their traditional role. Two experiments (Studies 2 and 3) showed that power over household decisions (but not mere domestic tasks) reduced women’s interest in achieving power in the workplace. Men’s interest in workplace power, on the other hand, was unaffected by the degree to which they wielded power at home.

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What Happens Before? A Field Experiment Exploring How Pay and Representation Differentially Shape Bias on the Pathway into Organizations

Katherine Milkman, Modupe Akinola & Dolly Chugh
University of Pennsylvania Working Paper, April 2014

Abstract:
Little is known about how discrimination against women and minorities manifests before individuals formally apply to organizations or how it varies within and between organizations. We address this knowledge gap through an audit study in academia of over 6,500 professors at top U.S. universities drawn from 89 disciplines and 259 institutions. We hypothesized that discrimination would appear at the informal “pathway” preceding entry to academia and would vary by discipline and university as a function of faculty representation and pay. In our experiment, professors were contacted by fictional prospective students seeking to discuss research opportunities prior to applying to a doctoral program. Names of students were randomly assigned to signal gender and race (Caucasian, Black, Hispanic, Indian, Chinese), but messages were otherwise identical. We found that faculty ignored requests from women and minorities at a higher rate than requests from Caucasian males, particularly in higher-paying disciplines and private institutions. Counterintuitively, the representation of women and minorities and discrimination were uncorrelated, suggesting that greater representation cannot be assumed to reduce discrimination. This research highlights the importance of studying what happens before formal entry points into organizations and reveals that discrimination is not evenly distributed within and between organizations.

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Does Social Proximity Enhance Business Partnerships? Theory and Evidence from Ethnicity's Role in U.S. Venture Capital

Deepak Hegde & Justin Tumlinson
Management Science, forthcoming

Abstract:
We develop a formal model to understand the selection and influence effects of social proximity (homophily) between business partners. Consistent with the model's predictions, we find that U.S. venture capitalists (VCs) are more likely to select start-ups with coethnic executives for investment, particularly when the probability of the start-up's success appears low. Ethnic proximity between VCs and the start-ups they invest in is positively related to performance, measured by the probability of the companies' successful exit through acquisitions and initial public offerings (IPOs) and net income after IPO. Two-stage regression estimates suggest that these positive performance outcomes are largely due to influence, that is, superior communication and coordination between coethnic VCs and start-up executives after the investment. To the extent that VCs expect to work better with coethnic start-ups, they invest in coethnic ventures that are of lower observable quality than noncoethnic ventures.

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Gender, Competitiveness and Career Choices

Thomas Buser, Muriel Niederle & Hessel Oosterbeek
Quarterly Journal of Economics, forthcoming

Abstract:
Gender differences in competitiveness have been hypothesized as a potential explanation for gender differences in education and labor market outcomes. We examine the predictive power of a standard laboratory experimental measure of competitiveness for the later important choice of academic track of secondary school students in the Netherlands. Although boys and girls display similar levels of academic ability, boys choose substantially more prestigious academic tracks, where more prestigious tracks are more math and science intensive. Our experimental measure shows that boys are also substantially more competitive than girls. We find that competitiveness is strongly positively correlated with choosing more prestigious academic tracks even conditional on academic ability. Most importantly, we find that the gender difference in competitiveness accounts for a substantial portion (about 20 percent) of the gender difference in track choice.

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Explaining Asian Americans’ academic advantage over whites

Amy Hsin & Yu Xie
Proceedings of the National Academy of Sciences, forthcoming

Abstract:
The superior academic achievement of Asian Americans is a well-documented phenomenon that lacks a widely accepted explanation. Asian Americans’ advantage in this respect has been attributed to three groups of factors: (i) socio-demographic characteristics, (ii) cognitive ability, and (iii) academic effort as measured by characteristics such as attentiveness and work ethic. We combine data from two nationally representative cohort longitudinal surveys to compare Asian-American and white students in their educational trajectories from kindergarten through high school. We find that the Asian-American educational advantage is attributable mainly to Asian students exerting greater academic effort and not to advantages in tested cognitive abilities or socio-demographics. We test explanations for the Asian–white gap in academic effort and find that the gap can be further attributed to (i) cultural differences in beliefs regarding the connection between effort and achievement and (ii) immigration status. Finally, we highlight the potential psychological and social costs associated with Asian-American achievement success.

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Culture Shock Revisited: The Social and Cultural Contingencies to Class Marginality

Anthony Abraham Jack
Sociological Forum, June 2014, Pages 453–475

Abstract:
Existing explanations of class marginality predict similar social experiences for all lower-income undergraduates. This article extends this literature by presenting data highlighting the cultural and social contingencies that account for differences in experiences of class marginality. The degree of cultural and social dissimilarity between one's life before and during college helps explain variation in experiences. I contrast the experiences of two groups of lower-income, black undergraduates — the Doubly Disadvantaged and Privileged Poor. Although from comparable disadvantaged households and neighborhoods, they travel along divergent paths to college. Unlike the Doubly Disadvantaged, whose precollege experiences are localized, the Privileged Poor cross social boundaries for school. In college, the Doubly Disadvantaged report negative interactions with peers and professors and adopt isolationist strategies, while the Privileged Poor generally report positive interactions and adopt integrationist strategies. In addition to extending present conceptualizations of class marginality, this study advances our understanding of how and when class and culture matter in stratification processes in college.

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You, Me, or Her: Leaders’ Perceptions of Responsibility for Increasing Gender Diversity in STEM Departments

Sara McClelland & Kathryn Holland
Psychology of Women Quarterly, forthcoming

Abstract:
We examined how university leaders described what and who needed to change in order to increase the representation of female faculty in science, technology, engineering, and math (STEM) departments. Thirty-one (28 men and 3 women) STEM departmental chairs and deans at a large, public university participated in semi-structured interviews. Data were examined using both qualitative and quantitative procedures. Analysis focused on participants’ descriptions of responsibility for changes related to gender equity. Using the distinction of high versus low responsibility, themes were examined for their qualitative characteristics as well as their frequency. Leaders who exhibited high personal responsibility most frequently saw themselves as needing to change and also named their male colleagues as concurrently responsible for diversity. Conversely, leaders who exhibited low personal responsibility most frequently described female faculty as responsible and described women’s attitudes and their “choice” to have a family as obstacles to gender diversity in STEM. We argue that the dimensions of high and low responsibility are useful additions to discussions of leadership, workplace diversity initiatives, and gender equity more broadly. To this end, we provide several methodological tools to examine these subtle, yet essential, aspects of how diversity and change efforts are imagined and discussed.

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Do Black Mayors Improve Black Relative to White Employment Outcomes? Evidence from Large US Cities

John Nye, Ilia Rainer & Thomas Stratmann
Journal of Law, Economics, and Organization, forthcoming

Abstract:
To what extent do politicians reward voters who are members of their own ethnic or racial group? Using data from large cities in the United States, we study how black employment outcomes are affected by changes in the race of the cities’ mayors between 1973 and 2004. We find that relative to whites, black employment and labor force participation rise, and the black unemployment rate falls, during the tenure of black mayors. Black employment gains in municipal government jobs are particularly large, which suggests that our results capture causal effects of black mayors. Black mayors also lead to higher black incomes relative to white incomes. We show that our results continue to hold when we compare the treated cities to alternative control groups of cities, explicitly control for changing attitudes towards blacks or use regression discontinuity analysis to compare cities that elected black and white mayors in close elections.

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The Scarring Effect of “Women's Work”: The Determinants of Women's Attrition from Male-Dominated Occupations

Margarita Torre
Social Forces, forthcoming

Abstract:
Women's entry into formerly male-dominated occupations has increased in recent decades, yet a significant outflow remains. This study examines the determinants of women's exits from male-dominated occupations, focusing on the effect of previous occupational trajectories. In particular, it hypothesizes that occupational trajectories in female-dominated occupations are often imbued with meanings and beliefs about the (in)appropriateness of the worker, which adversely affect women's integration and chances when they enter the male sector. Using the NLSY79 data set, the study analyzes the job histories of women employed in the United States between 1979 and 2006. The results reveal a disproportionate risk of exit among newcomers from female-dominated occupations. Also, women who reenter the male field are more likely to leave it again. Altogether, the findings challenge explanations based on deficiencies in the information available to women at the moment of hiring. The evidence points to the existence of a “scar effect” of previous work in the female field, which hinders women's opportunities in the male sector and ends up increasing the likelihood of exit.

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When Accomplishments Come Back to Haunt You: The Negative Effect of Competence Signals on Women’s Performance Evaluations

Ena Inesi & Daniel Cable
Personnel Psychology, forthcoming

Abstract:
This research explores the possibility that the very accomplishments that are critical to success during the hiring process (e.g., educational attainment, promotion history) can lead to a drop in future performance evaluations for women. We theorized that evaluators may see such competence signals as a threat to the traditional gender hierarchy, which leads to a negative bias when evaluating women's on-the-job performance. In Study 1, we examined this hypothesis among commanding officers in the United States military, who gave lower performance ratings to female subordinates whose pay-grade approached their own. The same was not true for male subordinates. Studies 2, 3a and 3b experimentally tested the boundary conditions of this effect using two additional competence signals (educational attainment and past career successes) and two different populations. Across these studies, we replicated the negative relationship between competence signal strength and performance evaluations for female subordinates, but only under conditions in which the evaluator would be particularly likely to experience gender hierarchy threat. Specifically, it emerged when the evaluator was male and high social-dominance-oriented, and when the female subordinate's objective on-the-job performance was high. Finally, Study 3a demonstrated how organizations can mitigate this negative bias by using objective (rather than subjective) performance evaluations.

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Are Female Supervisors More Female-Friendly?

Steven Bednar & Dora Gicheva
American Economic Review, May 2014, Pages 370-375

Abstract:
We introduce the idea that easily inferable demographic characteristics such as gender may not be sufficient to define type in the supervisor-employee mentoring relationship. We use longitudinal data on athletic directors at NCAA Division I programs to identify through observed mobility the propensity of top-level administrators to hire and retain female head coaches, above and beyond an organization's culture. We show that supervisor gender appears to be unrelated to female friendliness in this setting. Overall, our findings indicate that more focus should be placed on the more complex manager type defined by attitudes in addition to attributes.

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Gendered Parenthood Penalties and Premiums across the Earnings Distribution in Australia, the United Kingdom, and the United States

Lynn Prince Cooke
European Sociological Review, June 2014, Pages 360-372

Abstract:
Parenthood explains some of the gender earnings gap, but its effects differ among women and men and across countries. Wave 6 LIS data and regressions of the recentered influence function are used to compare effects of parenthood across the unconditional earnings distribution in Australia, the United Kingdom, and the United States. The three countries are considered more liberal welfare regimes, but still differ in within- and between-gender economic inequality. Australia has slightly greater income equality than the other two countries. Results reveal that fatherhood premiums and motherhood penalties are smaller in Australia, as are differences between the highest- and lowest-earning parents. Australian and British mothers are more likely to work part-time, but controlling for work hours, motherhood penalties in those countries are smaller across the bottom half of the distribution than in the United States. Motherhood penalties across the upper half of the earnings distribution are more similar in the three countries and decrease as earnings increase. The lowest-earning men in all three countries face small but significant fatherhood penalties, whereas high-earning British and US fathers garner significant premiums as compared with childless men. Parenthood penalties and premiums therefore reflect relative socio-economic (dis)advantage among both women and men, as well as between them.

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Gender Gap in School Science: Are Single-Sex Schools Important?

Joanna Sikora
Sex Roles, May 2014, Pages 400-415

Abstract:
This paper compares science subject choices and science-related career plans of Australian adolescents in single-sex and coeducational schools. Data from the nationally representative Longitudinal Survey of Australian Youth collected from students who were 15 years of age in 2009 show that, in all schools, boys are overrepresented in physical science courses and careers, while girls are overrepresented in life science. It appears that students in all-girls schools are more likely to take physical science subjects and are keener on careers in physics, computing or engineering than their counterparts in coeducational schools. However, multi-level logit regressions reveal that most apparent differences between students in single-sex and coeducational schools are brought about by differentials in academic achievement, parental characteristics, student’s science self-concept, study time and availability of qualified teachers. The only differences remaining after introducing control variables are the higher propensity of boys in single-sex schools to plan a life science career and the marginally lower propensity of girls in girls-only schools to study life science subjects. Thus, single-sex schooling fosters few non-traditional choices of science specialization. The paper discusses the likely consequences of gender segregation in science and a limited potential of single-sex schools to reduce them. The results of the current analysis are contrasted with a comparable study conducted in Australia a decade ago to illustrate the persistence of the gender gap in science field choices.

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The Impact of Advice on Women's and Men's Selection into Competition

Jordi Brandts, Valeska Groenert & Christina Rott
Management Science, forthcoming

Abstract:
We conduct a laboratory experiment to study how advice by a more experienced and better-informed person affects an individual's entry into a real-effort tournament and the gender gap. Our experiment is motivated by the concerns raised by approaching the gender gap through affirmative action policies. Overall, advice improves the entry decision of subjects, in that forgone earnings due to wrong entry decisions go significantly down. The improvements are mainly driven by increased entry of strong-performing women, who also become more confident, and reduced entry of weak-performing men. We find that the overall gender gap persists even though it disappears among low and strong performers. The persistence is due to an emerging gender gap among intermediate performers driven by women (men) following more the advice to stay out of (enter) the tournament in this performance group.

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Affirmative Action and Other Group Tradeoff Policies: Identifiability of Those Adversely Affected

Ilana Ritov & Eyal Zamir
Organizational Behavior and Human Decision Processes, forthcoming

Abstract:
When social resources are limited, improving the lot of the underprivileged comes at the expense of others. Thus, policies such as Affirmative Action (AA) — designed to increase the representation of minority people in higher education or employment — implicitly entail tradeoffs between groups. We propose that, while aversion to person- or group-tradeoffs of this sort is widespread, the identifiability of those who stand to lose is a moderating factor. In five experiments, we compared support for several hypothetical AA procedures that are equivalent in terms of the overall harm and benefit, but differ with respect to the identifiability of those who stand to lose from its implementation. Results support the claim that the identifiability of those adversely affected reduces support for AA policies and for similar procedures that are unrelated to civil rights issues. Possible determinants and legal implications of this effect are discussed.

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Leaderboards in a Virtual Classroom: A Test of Stereotype Threat and Social Comparison Explanations for Women’s Math Performance

Katheryn Christy & Jesse Fox
Computers & Education, forthcoming

Abstract:
Gamification includes the use of gaming features, such as points or leaderboards, in non-gaming contexts, and is a frequently-discussed trend in education. One way of gamifying the classroom is to introduce leaderboards. Leaderboards allow students to see how they are performing relative to others in the same class. Little empirical research has investigated the impact of leaderboards on academic performance. In this study, 80 female undergraduates took a math test in a virtual representation of a classroom after being exposed to one of three leaderboard conditions: a leaderboard where men held the majority of the top positions, a leaderboard where women held the majority of top positions, and a no leaderboard condition. Participants in the female majority leaderboard condition performed more poorly on the math test than those in the male leaderboard condition, yet demonstrated a higher level of academic identification than those in the male and control conditions. The authors conclude with a discussion of the implications that this study’s findings may have for the use of leaderboards within educational environments.

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Where do Women Stand? New Evidence on the Presence and Absence of Gender Equality in the World's Constitutions

Adèle Cassola et al.
Politics & Gender, June 2014, Pages 200-235

Abstract:
In countries around the world, constitutional protections of women's rights have provided a legal foundation to combat discriminatory laws, customs, and actions and a catalyst for advances in gender equality. This article draws on newly available data from 191 countries to analyze women's constitutional rights across the spheres of general equality and nondiscrimination, political participation, social and economic rights, family life, and customary and religious law. We examined how gender-specific and universal protections differed according to a constitution's year of adoption and last amendment, and identified regional patterns that persisted across all decades. Women were explicitly guaranteed general equality or nondiscrimination in 81% of constitutions, some aspect of political equality in 32%, marital equality in 27%, some aspect of work equality in 26%, and equal educational rights in 9% of constitutions. Protection of women's rights increased substantially between 1980 and 2011. As of June 2011, however, no constitution in the Middle East and North Africa guaranteed gender-specific protection in education, work, or marriage, and there were no guarantees of marital equality in South Asian constitutions. Of the constitutions that protected some aspect of gender equality, 5% stated that customary or religious laws could prevail over constitutional provisions.

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The Gender Gap in Academic Medicine: Comparing Results From a Multifaceted Intervention for Stanford Faculty to Peer and National Cohorts

Hannah Valantine et al.
Academic Medicine, June 2014, Pages 904–911

Purpose: To assess whether the proportion of women faculty, especially at the full professor rank, increased from 2004 to 2010 at Stanford University School of Medicine after a multifaceted intervention.

Method: The authors surveyed gender composition and faculty satisfaction five to seven years after initiating a multifaceted intervention to expand recruitment and development of women faculty. The authors assessed pre/post relative change and rates of increase in women faculty at each rank, and faculty satisfaction; and differences in pre/post change and estimated rate of increase between Stanford and comparator cohorts (nationally and at peer institutions).

Results: Post intervention, women faculty increased by 74% (234 to 408), with assistant, associate, and full professors increasing by 66% (108 to 179), 87% (74 to 138), and 75% (52 to 91), respectively. Nationally and at peer institutions, women faculty increased by about 30% (from 30,230 to 39,200 and 4,370 to 5,754 respectively), respectively, with lower percentages at each rank compared with Stanford. Estimated difference (95% CI) in annual rate of increase was larger for Stanford versus the national cohort: combined ranks 0.36 (0.17 to 0.56), P = .001; full professor 0.40 (0.18 to 0.62), P = .001; and versus the peer cohort: combined ranks 0.29 (0.07 to 0.51), P = .02; full professor 0.37 (0.14 to 0.60), P = .003. Stanford women faculty satisfaction increased from 48% (2003) to 71% (2008).

Conclusions: Increased satisfaction and proportion of women faculty, especially full professors, suggest that the intervention may ameliorate the gender gap in academic medicine.

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Nurse or Mechanic? The Role of Parental Socialization and Children's Personality in the Formation of Sex-Typed Occupational Aspirations

Javier Polavieja & Lucinda Platt
Social Forces, forthcoming

Abstract:
Boys and girls with sex-typical aspirations are significantly more likely to end up in sex-typical jobs as adults. Preference formation among children is therefore relevant for subsequent occupational outcomes. This study investigates the role of parental socialization and children's agency in the formation of sex-typed occupational preferences using data for British children aged 11 to 15. We anchor agency in observable psychological attributes associated with children's capacity to act in the face of constraints. We focus on two such attributes, motivation and self-esteem. Our findings identify two main sources of parental influence: (1) parental sex-typical behaviors, from which children learn which occupations are appropriate for each sex; and (2) parental socio-economic resources, which affect children's occupational ambition. We find, additionally, that girls with high motivation and both girls and boys with high self-esteem are less likely to aspire to sex-typical occupations, net of parental characteristics. Motivation and self-esteem help girls aim higher in the occupational ladder, which automatically reduces their levels of sex-typicality. For boys, however, self-esteem reduces sex-typicality at all levels of the aspired occupational distribution. This suggests that boys with high self-esteem are better equipped to contradict the existing social norms regarding sex-typical behavior. Implications are discussed.

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Influence of Communication Partner’s Gender on Language

Adrienne Hancock & Benjamin Rubin
Journal of Language and Social Psychology, forthcoming

Abstract:
Forty participants (20 male) had 3-minute conversations with trained male and female communication partners in a repeated-measures, within-subject design. Eighty 3-minute conversations were transcribed and coded for dependent clauses, fillers, tag questions, intensive adverbs, negations, hedges, personal pronouns, self-references, justifiers, and interruptions. Results suggest no significant changes in language based on speaker gender. However, when speaking with a female, participants interrupted more and used more dependent clauses than when speaking with a male. There was no significant interaction to suggest that the language differences based on communication partner was specific to one gender group. These results are discussed in context of previous research, communication accommodation theory, and general process model for gendered language.

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Vocal Fry May Undermine the Success of Young Women in the Labor Market

Rindy Anderson et al.
PLoS ONE, May 2014

Abstract:
Vocal fry is speech that is low pitched and creaky sounding, and is increasingly common among young American females. Some argue that vocal fry enhances speaker labor market perceptions while others argue that vocal fry is perceived negatively and can damage job prospects. In a large national sample of American adults we find that vocal fry is interpreted negatively. Relative to a normal speaking voice, young adult female voices exhibiting vocal fry are perceived as less competent, less educated, less trustworthy, less attractive, and less hirable. The negative perceptions of vocal fry are stronger for female voices relative to male voices. These results suggest that young American females should avoid using vocal fry speech in order to maximize labor market opportunities.

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Performance pay and ethnic earnings differences in Britain

Colin Green, John Heywood & Nikolaos Theodoropoulos
Oxford Economic Papers, July 2014, Pages 798-823

Abstract:
In the first British study, we show that the ethnic earnings gap amongst performance pay jobs is smaller than that amongst time rate jobs. This partially reflects sorting but persists with diminished magnitude in fixed effect estimates. Although varying somewhat with specification, quantile decompositions show that the smaller ethnic earnings gap is driven by bonus payments in the upper middle portion of the earnings distribution. These findings differ dramatically from those for the USA in which performance pay has been associated with larger negative racial differentials especially at the top of the earnings distribution.

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The Multiple Burdens of Foreign-Named Men — Evidence from a Field Experiment on Gendered Ethnic Hiring Discrimination in Sweden

Moa Bursell
European Sociological Review, June 2014, Pages 399-409

Abstract:
Scholars have documented ethnic and gender discrimination across labour markets since the 1970s by using field experiments (correspondence tests) in which pairs of equally qualified applications are sent to employers with job openings. In these experiments, discrimination is measured by documenting group differences in callbacks. However, the gendered nature of ethnic discrimination has been neglected thus far in this literature. Drawing on the results of a correspondence test, this study presents evidence of extensive ethnic discrimination in the Swedish labour market against applicants with Arabic and North African names but no evidence of discrimination against women. However, the findings also reveal gendered ethnic employer preferences: employers in male-dominated occupations practice gender overcompensation favouring female-named applicants, whereas employers in female-dominated occupations practice both ethnic and gender overcompensation, favouring foreign-named men in particular.

By KEVIN LEWIS | 09:00:00 AM

Monday, June 9, 2014

Harm's way

Exploring the potential of stricter gun restrictions for people with serious mental illness to reduce homicide in the United States

Jason Matejkowski et al.
Journal of Forensic Psychiatry & Psychology, May/June 2014, Pages 362-369

Abstract:
This study explores the potential that current efforts to limit access to firearms for individuals with serious mental illness (SMI) have for reducing overall rates of murder by firearm in the United States. Official arrest, court and health records provided data on personal and offense characteristics of 95 individuals with SMI and 423 without, all of whom had been convicted of murder in the State of Indiana between 1990 and 2002. Bivariate analyses examined differences between the two groups and logistic regression models examined the relationship between SMI and offense characteristics. Compared to those without, a relatively small proportion of convicted murderers had a diagnosis indicating SMI. The presence of SMI was associated with reduced likelihood of targeting a stranger and was not associated with having multiple-victims or firearm use. Focusing on access to firearms exclusively by individuals with SMI will have little impact on multiple-victim or firearm-related homicides.

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The effect of firearm restrictions on gun-related homicides across US states

Steven Lanza
Applied Economics Letters, Summer 2014, Pages 902-905

Abstract:
The Newtown massacre has raised the issue of gun violence to a fever pitch. While several states have responded with tough new controls on firearms, most states have loosened restrictions. This study explores what effect such changes might have on gun-related homicides in the United States. The results, based on panel data for the 50 states over the 2007–2010 period and estimated under several alternative model specifications, suggest that looser restrictions will likely do little to lessen the incidence of gun deaths but that tighter restrictions may produce a modest reduction in firearm fatalities.

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Trends in Children’s Exposure to Violence, 2003 to 2011

David Finkelhor et al.
JAMA Pediatrics, June 2014, Pages 540-546

Objective: To identify trends in children’s exposure to violence, crime, and abuse from 2003 through 2011.

Design, Setting, and Participants: Three national telephone surveys of representative samples of children and caregivers from 2003, 2008, and 2011 were compared, all obtained using the Juvenile Victimization Questionnaire; samples included parents of children 2 to 9 years old and youth 10 to 17 years old.

Results: Of 50 trends in exposure examined, there were 27 significant declines and no significant increases between 2003 and 2011. Declines were particularly large for assault victimization, bullying, and sexual victimization. There were also significant declines in the perpetration of violence and property crime. For the recession period between 2008 and 2011, there were 11 significant declines and no increases for 50 specific trends examined. Dating violence declined, as did one form of sexual victimization and some forms of indirect exposure.

Conclusions and Relevance: Victimization surveys with general population samples confirm patterns seen in police data and adult surveys. Crime and violence have been declining in the child and youth population as well.

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Dispersing the Crowd: A Natural Experiment of the Effects of the Deconcentration of the Urban Underclass

David Kirk
University of Texas Working Paper, April 2014

Abstract:
Even during the 1990s as concentrated poverty briefly dissipated in the United States, one segment of the urban underclass continued to expand rapidly — the prison population. Indeed mass incarceration has artificially hidden the true extent of inequality and poverty in the country. Roughly 700,000 prisoners are released from incarceration each year in the United States, and most end up residing in urban areas, clustered within a select few neighborhoods. The massive rise in the number of returning prisoners combined with the geographic concentration of these ex-prisoners means that select urban neighborhoods have become inundated with individuals who have served time in prison. Through a contagious process, neighborhoods characterized by a concentration of former prisoners likely incubate an environment conducive to crime and subsequent incarceration. Yet what would happen to rates of aberrant behavior if former prisoners were dispersed across geographic space instead of concentrated? Through investigations of national patterns of prisoner reentry as well as a natural experiment focused on post-Hurricane Katrina Louisiana, I find that a decrease in the concentration of parolees in a neighborhood leads to a significant decline in the rate of admission to prison for neighborhood residents generally and in the re-incarceration rate for former prisoners specifically. To reduce the emergent consequences of concentrated prisoner reentry, it would be worthwhile to consider policies that disperse the parolee population instead of concentrating it into select neighborhoods.

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The Impact of Living-Wage Ordinances on Urban Crime

Jose Fernandez, Thomas Holman & John Pepper
Industrial Relations, July 2014, Pages 478–500

Abstract:
We examine the impact of living wages on crime. Past research has found that living wages appear to increase unemployment while providing greater returns to market work. The impact on crime, therefore, is unclear. Using data on annual crime rates for large cities in the United States, we find that living-wage ordinances are associated with notable reductions in property-related crime and no discernable impact on nonproperty crimes.

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Social welfare support and homicide: Longitudinal analyses of European countries from 1994 to 2010

Patricia McCall & Jonathan Brauer
Social Science Research, forthcoming

Abstract:
The purpose of this research is to explore the extent to which retrenchment in welfare support is related to homicide trends across European countries between 1994 and 2010. Using a longitudinal decomposition design that allows for stronger causal inferences compared to typical cross-sectional designs, we examine these potential linkages between social support spending and homicide with data collected from a heterogeneous sample of European nations, including twenty Western nations and nine less frequently analyzed East-Central nations, during recent years in which European nations generally witnessed substantial changes in homicide rates as well as both economic prosperity and fiscal crisis. Results suggest that even incremental, short-term changes in welfare support spending are associated with short-term reductions in homicide — specifically, impacting homicide rates within two to three years for this sample of European nations.

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Can Safe Ride Programs Reduce Urban Crime?

Bryan Weber
Regional Science and Urban Economics, September 2014, Pages 1–11

Abstract:
This study evaluates the influence of a safe ride program on neighborhood crime in a major urban area. Using an hours of the week panel, the program’s operation is associated with an approximate 14 percent reduction in crime. The program being open appears to have roughly similar influences on different categories of crime. Moreover, increases in rides (the intensity of the program) are also associated with reductions in crime. Such increases in program intensity are also associated with notably greater reductions in crime occurring on weekends. The cost of the safe ride program suggests it is a relatively efficient means of reducing crime.

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Catching the Really Bad Guys: An Assessment of the Efficacy of the U.S. Criminal Justice System

J.C. Barnes
Journal of Criminal Justice, July–August 2014, Pages 338–346

Purpose: History shows that one of the most important institutions to a society is its criminal justice system. The current study offers an analysis of the criminal justice system’s effectiveness in identifying, apprehending, convicting, and punishing high-level/persistent offenders.

Methods: Data were drawn from all four waves of the Add Health study. Survey-corrected univariate statistics and logistic regression models were estimated to provide population parameter estimates of the frequency of arrest and punishment for a group of persistent offenders compared to non-persistent offenders.

Results: Findings indicated persistent offenders (as identified by self-reported crime) were much more likely to be arrested (63% vs. 26%), accounted for more arrests (View the MathML source = 1.71 vs. View the MathML source = .53), were more likely to be convicted (39% vs. 11%), were more likely to be placed on probation (38% vs. 12%), and were more likely to be sent to jail (43% vs. 13%) compared to non-persistent offenders. These differences remained when levels of psychopathy, age, race, and sex were controlled in the logistic regression models.

Conclusions: These findings suggest the criminal justice system does a good job of identifying and punishing offenders who break the law more frequently.

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The Influence of Gentrification on Gang Homicides in Chicago Neighborhoods, 1994 to 2005

Chris Smith
Crime & Delinquency, June 2014, Pages 569-591

Abstract:
In this study, the author examines the effects of three forms of gentrification — demographic shifts, private investment, and state intervention — on gang-motivated homicides in Chicago from 1994 to 2005 using data from the U.S. Census, the Chicago Police Department, business directories, and the Chicago Housing Authority. The findings suggest that demographic shifts have a strong negative effect on gang homicide. Private investment gentrification, measured here as the proliferation of coffee shops, has a marginally significant and negative effect on gang homicide. In contrast, state-based gentrification, operationalized as the demolition of public housing, has a positive effect on gang homicide.

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Education and Crime over the Life Cycle

Giulio Fella & Giovanni Gallipoli
Review of Economic Studies, forthcoming

Abstract:
We compare two large-scale policy interventions aimed at reducing crime: subsidizing high school completion and increasing the length of prison sentences. To this purpose we use a life-cycle model with endogenous education and crime choices. We apply the model to property crime and calibrate it to U.S. data. We find that targeting crime reductions through increases in high school graduation rates entails large efficiency and welfare gains. These gains are absent if the same crime reduction is achieved by increasing the length of sentences. We also find that general equilibrium effects explain roughly one half of the reduction in crime from subsidizing high school.

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Crime Deterrence: Evidence From the London 2011 Riots

Brian Bell, Laura Jaitman & Stephen Machin
Economic Journal, May 2014, Pages 480–506

Abstract:
Significant riots occurred in London in August 2011. The riots took place in highly localised geographical areas, with crime going up hugely in the affected sub-wards. The criminal justice response was to make sentencing for rioters much more severe. We show a significant drop in riot crimes across London in the six months after the riots, consistent with a deterrence effect from the tougher sentencing. More evidence of general deterrence comes from the observation that crime also fell in the post-riot aftermath in areas where rioting did not take place.

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Monoamine oxidase A genotype, childhood adversity, and criminal behavior in an incarcerated sample

Todd Armstrong et al.
Psychiatric Genetics, forthcoming

Background: A number of studies have found a functional variable number tandem repeat polymorphism in the upstream regulatory region of the monamine oxidase A gene (MAOA-uVNTR) interacts with childhood adversity to increase risk for antisocial behavior. Several studies have also reported null findings.

Methods: Here, we examine the association between MAOA-uVNTR genotype, childhood adversity, and criminal activity in a sample of 99 male volunteers who were incarcerated in a large city jail in the Southern United States. MAOA-uVNTR genotypes were obtained from DNA extracted from buccal swabs. Criminal activity in the year before incarceration and childhood adversity were measured with self-report surveys. Violent arrest rates and property arrest rates were quantified with official records of arrest and accounted for periods of incarceration in local and state correctional facilities.

Results: The low expressing allele of the MAOA-uVNTR genotype (MAOAL) interacted with abuse to predict self-reports of less serious criminal and delinquent behavior and had a direct association with serious criminal activity. MAOAL genotype interacted with parental criminality to predict self-reports of serious criminal behavior, property arrest rates, and violent arrest rates.

Conclusion: The findings suggest that crime prevention efforts may be improved through attention to the neurodevelopmental consequence of gene-by-environment interactions.

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Juvenile Drug Courts and Recidivism: Results from a Multisite Outcome Study

Christopher Sullivan et al.
Justice Quarterly, forthcoming

Abstract:
This study reports findings from a study of nine juvenile drug courts (JDCs) from across the US. A quasi-experimental design, with one-to-one matching on possible confounders and sociodemographics, was used for the outcome assessment (n = 1372). Baseline and outcome data were drawn from justice system records. Although there is variation across sites and, to some extent, outcomes, these JDCs were generally ineffective in reducing recidivism. Similar findings have emerged in other recent studies of JDCs. Given the results of this study and others, it is essential that juvenile courts work to improve the effectiveness of JDCs by increasing adherence to known principles of effective intervention.

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The location of placement and juvenile delinquency: Do neighborhoods matter in child welfare?

Hui Huang & Joseph Ryan
Children and Youth Services Review, forthcoming

Abstract:
This study aims to advance the knowledge base by investigating where foster youth are placed in terms of neighborhood characteristics and whether specific neighborhood characteristics were associated with delinquency for adolescents in the child welfare system. This study followed the placement experiences of 2,360 foster youth in Chicago from birth to 16 years of age. The study used State administrative data, census data, and the community survey of the Project of Human Development in Chicago Neighborhoods. The results indicated that foster care placements cluster in neighborhoods characterized by high concentrated disadvantage, low ethnic heterogeneity, low collective efficacy, prevalent neighborhood disorder and violent culture. The results indicated that neighborhood ethnic heterogeneity is positively associated with delinquent offending. The implications for policy and practice are discussed.

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Constructing Victims: The Erasure of Women's Resistance to Sexual Assault

Jocelyn Hollander & Katie Rodgers
Sociological Forum, June 2014, Pages 342–364

Abstract:
How do the news media portray women's resistance to sexual assault? We analyze articles from a systematic sample of 16 U.S. newspapers across 1 full calendar year to assess whether and how newspapers describe women's resistance. We find that in most cases, newspaper reports reinforce the belief that women are incapable of effectively defending themselves. Most articles fail to mention women's resistance or do so only to note its failure; the longer the article, the more likely it is to follow these patterns. Headlines exaggerate these patterns, presenting virtually no evidence that the articles that follow, or that assaults themselves, contain any female resistance or agency. In only a very small minority of cases are women described as strong, competent actors with the ability to defend themselves against violence. We conclude with a discussion of the potential individual and societal consequences of these patterns.

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Fugitives in the United States

David Bierie
Journal of Criminal Justice, July–August 2014, Pages 327–337

Purpose: To (A) describe the prevalence of warrants in the U.S., including variation in warrant features across geography as well as demographics of fugitives (age, race, and gender). In addition, the paper (B) models a key feature of warrants (extradition limits) as a function of legal and extra-legal factors.

Methods: This study draws on the Wanted Persons file — the central operational database maintained by the National Criminal Information Center (NCIC) for tracking warrants from all jurisdictions in the United States. Warrant factors are described across demographic groups via bivariate comparisons. Extradition is modeled via a multivariate fixed effects logistic regression framework (i.e., within state comparisons).

Results: The data show approximately 2 million warrants are active on any given day. Warrant features vary significantly across states (per capita), and fugitive demographics. Extradition varies as a function of legal (e.g., crime seriousness) and extra-legal factors (e.g., race of fugitive).

Conclusions: Warrants may provide an important new avenue for scholarship on disparity, criminal careers, and the administration of justice.

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Going to Jail Sucks (And It Really Doesn’t Matter Who You Ask)

David May et al.
American Journal of Criminal Justice, June 2014, Pages 250-266

Abstract:
A growing body of research suggests that, according to both offenders and criminal justice practitioners, jails and correctional boot camps are viewed and experienced as significantly more punitive than prison. Nevertheless, limited research exists examining the perceptions of the public regarding jail conditions and operations. Using responses from 1,183 Kentucky adults, we examine public opinion regarding the punitiveness of jail when compared to prison. We determine that, with the exception of boot camp, respondents feel that jail is the most punitive noncapital sanction. Additionally, respondents who had been convicted of a felony at some point in their lives and respondents with lower household income indicated that they would serve significantly less time in jail to avoid prison than their counterparts if given the option. Implications for policy and future research are discussed.

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Evaluation of the Phoenix TRUCE Project: A Replication of Chicago CeaseFire

Andrew Fox et al.
Justice Quarterly, forthcoming

Abstract:
The Phoenix TRUCE Project was modeled after the Chicago CeaseFire program. There have been relatively few process and impact evaluations on the model compared to the level of funding and attention the program has rendered. This paper presents findings related to the evaluation of the TRUCE project. We found that the program engaged in a strong media campaign, conducted conflict mediations, and identified high-risk individuals for case management. The program did not, however, establish a coordinated and collaborative relationship with the faith-based community or other community groups. Time-series analysis showed that program implementation corresponded to a significant decrease in overall levels of violence by more than 16 incidents on average per month, a decrease of 16 assaults on average per month, and resulted in a significant increase of 3.2 shootings on average per month, controlling for the comparison areas and the trends in the data.

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Returns to Postincarceration Education for Former Prisoners

Christian Brown
Social Science Quarterly, forthcoming

Objectives: I estimate the returns to education for individuals who attain education after an incarceration spell.

Methods: Returns to labor supply and wages are estimated using data from the National Longitudinal Survey of Youth and a variety of regression and matching techniques.

Results: A positive relationship is found between postincarceration education and labor outcomes, especially for college completion. The General Equivalency Diploma (GED) is not associated with direct benefits.

Conclusions: The returns to post-incarceration education are positive but diminished, implying that programs targeted at college completion may best serve prisoners after release.

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Predictive accuracy in the neuroprediction of rearrest

Eyal Aharoni et al.
Social Neuroscience, July/August 2014, Pages 332-336

Abstract:
A recently published study by the present authors reported evidence that functional changes in the anterior cingulate cortex within a sample of 96 criminal offenders who were engaged in a Go/No-Go impulse control task significantly predicted their rearrest following release from prison. In an extended analysis, we use discrimination and calibration techniques to test the accuracy of these predictions relative to more traditional models and their ability to generalize to new observations in both full and reduced models. Modest to strong discrimination and calibration accuracy were found, providing additional support for the utility of neurobiological measures in predicting rearrest.

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Do Phishing Alerts Impact Global Corporations? A Firm Value Analysis

Indranil Bose & Alvin Chung Man Leung
Decision Support Systems, forthcoming

Abstract:
Phishing is a form of online identity theft that is increasingly becoming a global menace. In this research, we analyze the impact of phishing alerts released in public databases on the market value of global firms. Using a sample of 1,942 phishing alerts related to 259 firms in 32 countries, we show that the release of each phishing alert leads to a statistically significant loss of market capitalization that is at least US$ 411 million for a firm. We propose a theoretical framework for analyzing the impact of threats on firm value, and determine that the negative investor reaction is strongly significant for alerts released in 2006-2007 and for those targeted to financial holding companies, and weakly significant for firms listed in the US. We derive and validate these results using a combination of event study, subsampling analysis, and cross-sectional regression analysis. Our research makes a contribution by providing a new model for conducting multi-country event studies. We also contribute to the information systems literature by quantifying the loss in market value caused by phishing, and provide compelling evidence to information security administrators of firms that urge them to adopt adequate countermeasures to prevent phishing attacks.

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Piracy and Music Sales: The Effects of an Anti-Piracy Law

Adrian Adermon & Che-Yuan Liang
Journal of Economic Behavior & Organization, September 2014, Pages 90–106

Abstract:
The implementation of a copyright protection reform in Sweden in April 2009 suddenly increased the risk of being caught and punished for illegal file sharing. This paper investigates the impact of the reform on illegal file sharing and music sales using a difference-in-differences approach with Norway and Finland as control groups. We find that the reform decreased Internet traffic by 16% and increased music sales by 36% during the first six months. Pirated music therefore seems to be a strong substitute to legal music. However, the reform effects disappeared almost completely after six months, likely because of the weak enforcement of the law.

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Race, Neighborhood, and Drug Court Graduation

Daniel Howard
Justice Quarterly, forthcoming

Abstract:
This research examines the possibility that racial disparities in drug court graduation are attributable to individual-level employment or education or to neighborhood-level disadvantage. Individual-level data on 455 drug court clients and neighborhood-level census and police incident data are joined geographically. Drug court graduation is modeled using multilevel logistic regression. In a model with no neighborhood-level indicators, client race, employment, and education all predicted drug court graduation. When neighborhood-level variables are introduced, client-level race drops from significance but employment and education remain significant predictors of graduation. Client race, then, appears to be an indirect indicator of neighborhood disadvantage, while client employment and education remain important individual-level predictors of drug court graduation. These results support further analysis of neighborhood-based barriers to drug court graduation and the development of drug court programming that can address neighborhood-based challenges.

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What You Find Depends on Where You Look: Using Emergency Medical Services Call Data to Target Illicit Drug Use Hot Spots

Julie Hibdon & Elizabeth Groff
Journal of Contemporary Criminal Justice, May 2014, Pages 169-185

Abstract:
Geographically targeting law enforcement at drug hot spots is a common response to drug problems, but because they are generated with police data, they only reflect what the police already know about narcotics crime. In this study, we illustrate the importance of using multiple data sets to characterize the micro-spatial distribution of illicit drug events in Seattle, Washington, by examining and comparing the Seattle Fire Department’s Emergency Medical Services (EMS) calls and Seattle Police Department’s crime incidents in 2004. We find that both EMS calls and police incidents indicate illicit drug use is concentrated at a small number of street segments, yet their spatial patterning is different. Together, the two data sources identify new street segments as “hot places” of drug use suggesting that law enforcement agencies should incorporate EMS data to more accurately locate drug hot spots.

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Organizational Structure, Police Activity and Crime

Itai Ater, Yehonatan Givati & Oren Rigbi
Journal of Public Economics, July 2014, Pages 62–71

Abstract:
We examine the consequences of an organizational reform in Israel that transferred the responsibility for housing arrestees from the Police to the Prison Authority. Using the staggered rollout of the reform in different regions of the country, we document strong evidence that this organizational change led to an increase of 11 percent in the number of arrests and to a decrease of 4 percent in the number of reported crimes, with these effects concentrated in more minor crimes. The reform also led to a decrease in the quality of arrests, measured by the likelihood of being charged following an arrest. These findings are consistent with the idea that the reform externalized the cost of housing arrestees from the Police’s perspective, and therefore led the Police to increase its activity against crime.

By KEVIN LEWIS | 09:00:00 AM

Sunday, June 8, 2014

Impulse power

"Why should I care?" Challenging free will attenuates neural reaction to errors

Davide Rigoni, Gilles Pourtois & Marcel Brass
Social Cognitive and Affective Neuroscience, forthcoming

Abstract:
Whether human beings have free will or not has been a philosophical question for centuries. The debate about free will has recently entered the public arena through mass media and newspaper articles commenting on scientific findings that leave little to no room for free will. Previous research has shown that encouraging such a deterministic perspective influences behavior, namely by promoting cursory and antisocial behavior. Here we propose that such behavioral changes may, at least partly, stem from a more basic neurocognitive process related to response monitoring, namely a reduced error detection mechanism. Our results show that the Error-Related Negativity, a neural marker of error detection, was reduced in individuals led to disbelieve in free will. This finding shows that reducing the belief in free will has a specific impact on error detection mechanisms. More generally, it suggests that abstract beliefs about intentional control can influence basic and automatic processes related to action control.

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The Nature of Impulsivity: Visual Exposure to Natural Environments Decreases Impulsive Decision-Making in a Delay Discounting Task

Meredith Berry et al.
PLoS ONE, May 2014

Abstract:
The benefits of visual exposure to natural environments for human well-being in areas of stress reduction, mood improvement, and attention restoration are well documented, but the effects of natural environments on impulsive decision-making remain unknown. Impulsive decision-making in delay discounting offers generality, predictive validity, and insight into decision-making related to unhealthy behaviors. The present experiment evaluated differences in such decision-making in humans experiencing visual exposure to one of the following conditions: natural (e.g., mountains), built (e.g., buildings), or control (e.g., triangles) using a delay discounting task that required participants to choose between immediate and delayed hypothetical monetary outcomes. Participants viewed the images before and during the delay discounting task. Participants were less impulsive in the condition providing visual exposure to natural scenes compared to built and geometric scenes. Results suggest that exposure to natural environments results in decreased impulsive decision-making relative to built environments.

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"So Cute I Could Eat It Up": Priming Effects of Cute Products on Indulgent Consumption

Gergana Nenkov & Maura Scott
Journal of Consumer Research, forthcoming

Abstract:
This article examines the extent to which consumers engage in more indulgent consumption when they are exposed to whimsically cute products and explores the process by which such products affect indulgence. Prior research on kindchenschema (baby schema) has found that exposure to cute babies or baby animals leads to more careful behavior (see the study by Sherman, Haidt, and Coan), suggesting restraint. The present research uncovers the opposite: consumers become more indulgent in their behavior after exposure to whimsically cute products. Drawing from research on cognitive priming, kindchenschema, anthropomorphization, indulgence, and regulatory focus, this research posits that exposure to whimsically cute products primes mental representations of fun, increasing consumers' focus on approaching self-rewards and making consumers more likely to choose indulgent options. These effects do not emerge for kindchenschema cute stimuli, since they prime mental representations of vulnerability and caretaking. Four empirical studies provide evidence for the proposed effects and their underlying process.

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Win at All Costs or Lose Gracefully in High-Stakes Competition? Gender Differences in Professional Tennis

Nejat Anbarci, Jungmin Lee & Aydogan Ulker
Journal of Sports Economics, forthcoming

Abstract:
This article examines line-call challenges by male and female professional tennis players in major tournaments around the world. In terms of utilization rates, we find that the genders behave similarly. Nevertheless, we do detect some intriguing gender differences in these challenges. First, male players' challenges are more likely to be provoked by those of their opponents. More importantly, at tiebreaks, females are more likely to reverse an umpire's unfavorable call, while males make relatively more unsuccessful challenges. Furthermore, we find that men are a lot more likely to make "embarrassing" line-call challenges at tiebreaks and offenses (i.e., when the shot lands at the opponent's side of the tennis court) than women. These significant gender differences suggest that women particularly diverge from men at crucial junctures of the match such as tiebreaks. Differences in factors such as risk aversion, overconfidence, pride, shame, and strategic signalling behavior might help us to explain these gender-difference findings in line call challenges.

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Attenuating depletion using goal priming

Darlene Walsh
Journal of Consumer Psychology, forthcoming

Abstract:
This research examines how goal priming can attenuate the depletion effect. Using different self-control goals (i.e., savings and healthy eating) and different measures of self-control ability (i.e., willingness to buy and actual consumption), this study reveals that when people were primed with cues related to a self-control goal and then depleted, the effect of depletion on a subsequent self-control task (related to the primed goal) became attenuated. Also, depleted people, relative to nondepleted people, reported a lower level of commitment to a self-control goal; however, when cues related to a self-control goal were primed, their level of goal commitment increased, weakening the depletion effect. This research clarifies questions related to the process underlying depletion, while highlighting the importance of goal commitment (a measure of motivation) in understanding depletion.

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Autistic-like and Schizotypal Traits in a Life History Perspective: Diametrical Associations with Impulsivity, Sensation Seeking, and Sociosexual Behavior

Marco Del Giudice et al.
Evolution and Human Behavior, forthcoming

Abstract:
According to recent theoretical models, autistic-like and schizotypal traits can be regarded as opposite sides of a single continuum of variation in personality and cognition, and may be diametrically associated with individual differences in life history strategies. Schizotypy is hypothesized to constitute a psychological phenotype oriented toward high mating effort and reduced parenting, consistent with a fast life history strategy; autistic-like traits are hypothesized to contribute to a slow strategy characterized by reduced mating effort and high parental investment. In this study, we tested the hypothesis that autistic-like and schizotypal traits would be diametrically associated with unrestricted sociosexuality, impulsivity, and sensation seeking (three key behavioral correlates of fast life history strategies in humans) in a sample of 152 young adults (18-38 years). The results were consistent with a diametrical autism-schizotypy axis of individual variation. In line with with our hypotheses, autism-schizotypy scores were uniquely associated with individual differences in impulsivity, sensation seeking, and sociosexual behavior, even after controlling for variation in Big Five personality traits. However, we found no significant associations with sociosexual attitude in the present sample. Our findings provide additional support for a life history model of autistic-like and schizotypal traits and demonstrate the heuristic value of this approach in the study of personality and psychopathology.

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When More Depletion Offsets the Ego Depletion Effect

Shanshan Xiao et al.
Social Psychology, forthcoming

Abstract:
The ego depletion effect has been consistently replicated using the typical paradigm that consists of two consecutive tasks. However, striking contradiction exists in studies employing multiple tasks. The aim of the current study is to replicate previous studies following a similar procedure and design in a sample of participants from a non-western cultural background (Chinese), while strictly controlling other confounding factors, such as task duration. Results indicated that although ego depletion occurred after performing a single initial self-control task, engaging in multiple tasks did indeed offset the depletion effect. These findings are contrary to the resource-based view of ego depletion (i.e., the strength model) but more consistent with other theoretical frameworks, such as the cognitive control theory.

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Should Birds of a Feather Flock Together? Understanding Self-Control Decisions in Dyads

Hristina Dzhogleva & Cait Poynor Lamberton
Journal of Consumer Research, forthcoming

Abstract:
Can we rely on our high self-control friends to help us make better joint spending and diet decisions? The current research reports seven studies showing that in joint decisions, homogeneous high self-control pairs make less indulgent choices than both homogeneous low self-control and mixed pairs. However, there is no difference in the self-regulatory patterns of the latter two dyad types: having one high self-control partner in a dyad does not lead to more restraint than having none. The authors argue that this pattern exists because higher self-control individuals tend to prioritize prorelationship behaviors over their personal preference for restraint. Therefore, they assent to the lower self-control partner's more indulgent preferences. Consistent with this explanation, results suggest that interventions that change individuals' prorelationship motivation can alter this pattern. Given the range of decisions consumers may make in couples or pairs, this research has implications for consumers, marketers, and public-policy makers.

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The relationship between puberty and risk taking in the real world and in the laboratory

A. Collado et al.
Personality and Individual Differences, October 2014, Pages 143-148

Abstract:
Adolescence is marked by the emergence and escalation of risk taking. Puberty has been long-implicated as constituting vulnerability for risk behavior during this developmental period. Sole reliance on self-reports of risk taking however poses limitations to understanding this complex relationship. There exist potential advantages of complementing self-reports by using the BART-Y laboratory task, a well-validated measure of adolescent risk taking. Toward this end, we examined the association between self-reported puberty and both self-reported and BART-Y risk taking in 231 adolescents. Results showed that pubertal status predicted risk taking using both methodologies above and beyond relevant demographic characteristics. Advantages of a multimodal assessment toward understanding the effects of puberty in adolescent risk taking are discussed and future research directions offered.

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The Quality of Adolescents' Peer Relationships Modulates Neural Sensitivity to Risk Taking

Eva Telzer et al.
Social Cognitive and Affective Neuroscience, forthcoming

Abstract:
Adolescents' peer culture plays a key role in the development and maintenance of risk taking behavior. Despite recent advances in developmental neuroscience suggesting that peers may increase neural sensitivity to rewards, we know relatively little about how the quality of peer relations impact adolescent risk taking. In the current two-year, three-wave longitudinal study, we examined how chronic levels of peer conflict relate to risk taking behaviorally and neurally, and whether this is modified by high quality peer relationships. Forty-six adolescents completed daily diaries assessing peer conflict across two years as well as a measure of peer support. During a functional brain scan, adolescents completed a risk taking task. Behaviorally, peer conflict was associated with greater risk taking behavior, especially for adolescents reporting low peer support. High levels of peer support buffered this association. At the neural level, peer conflict was associated with greater activation in the striatum and insula, especially among adolescents reporting low peer support, whereas this association was buffered for adolescents reporting high peer support. Results are consistent with the stress-buffering model of social relationships and underscore the importance of the quality of adolescents' peer relationships for their risk taking.

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Evolutionary pressures on primate intertemporal choice

Jeffrey Stevens
Proceedings of the Royal Society: Biological Sciences, 7 July 2014

Abstract:
From finding food to choosing mates, animals must make intertemporal choices that involve fitness benefits available at different times. Species vary dramatically in their willingness to wait for delayed rewards. Why does this variation across species exist? An adaptive approach to intertemporal choice suggests that time preferences should reflect the temporal problems faced in a species' environment. Here, I use phylogenetic regression to test whether allometric factors relating to body size, relative brain size and social group size predict how long 13 primate species will wait in laboratory intertemporal choice tasks. Controlling for phylogeny, a composite allometric factor that includes body mass, absolute brain size, lifespan and home range size predicted waiting times, but relative brain size and social group size did not. These findings support the notion that selective pressures have sculpted intertemporal choices to solve adaptive problems faced by animals. Collecting these types of data across a large number of species can provide key insights into the evolution of decision making and cognition.

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Prenatal Origins of Temperament: Fetal Growth, Brain Structure, and Inhibitory Control in Adolescence

Wolff Schlotz, Keith Godfrey & David Phillips
PLoS ONE, May 2014

Objective: Individual differences in the temperamental dimension of effortful control are constitutionally based and have been associated with an adverse prenatal developmental environment, with structural brain alterations presenting a potential mechanism. We investigated this hypothesis for anatomically defined brain regions implicated in cognitive and inhibitory motor control.

Methods: Twenty-seven 15-16 year old participants with low, medium, or high fetal growth were selected from a longitudinal birth cohort to maximize variation and represent the full normal spectrum of fetal growth. Outcome measures were parent ratings of attention and inhibitory control, thickness and surface area of the orbitofrontal cortex (lateral (LOFC) and medial (MOFC)) and right inferior frontal gyrus (rIFG), and volumetric measures of the striatum and amygdala.

Results: Lower birth weight was associated with lower inhibitory control, smaller surface area of LOFC, MOFC and rIFG, lower caudate volume, and thicker MOFC. A mediation model found a significant indirect effect of birth weight on inhibitory control via caudate volume.

Conclusions: Our findings support a neuroanatomical mechanism underlying potential long-term consequences of an adverse fetal developmental environment for behavioral inhibitory control in adolescence and have implications for understanding putative prenatal developmental origins of externalizing behavioral problems and self-control.

By KEVIN LEWIS | 09:00:00 AM

Saturday, June 7, 2014

Getting it done

Purpose in Life as a Predictor of Mortality Across Adulthood

Patrick Hill & Nicholas Turiano
Psychological Science, forthcoming

Abstract:
Having a purpose in life has been cited consistently as an indicator of healthy aging for several reasons, including its potential for reducing mortality risk. In the current study, we sought to extend previous findings by examining whether purpose in life promotes longevity across the adult years, using data from the longitudinal Midlife in the United States (MIDUS) sample. Proportional-hazards models demonstrated that purposeful individuals lived longer than their counterparts did during the 14 years after the baseline assessment, even when controlling for other markers of psychological and affective well-being. Moreover, these longevity benefits did not appear to be conditional on the participants’ age, how long they lived during the follow-up period, or whether they had retired from the workforce. In other words, having a purpose in life appears to widely buffer against mortality risk across the adult years.

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Like Mike: Ability contagion through touched objects increases confidence and improves performance

Thomas Kramer & Lauren Block
Organizational Behavior and Human Decision Processes, July 2014, Pages 215–228

Abstract:
Magical thinking refers to irrational peculiar beliefs, including those that conform to the laws of contagion. We propose that touching an object that was previously touched by a high performer increases confidence via magical thinking (ability contagion) and improves actual performance among individuals high in experiential processing. A series of studies provides support for this main proposition. Our results cast doubt on an alternative explanation based on priming, and are obtained controlling for participants’ level of rational processing, motivation, and affect.

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Small Victories: Creating Intrinsic Motivation in Savings and Debt Reduction

Alexander Brown & Joanna Lahey
NBER Working Paper, May 2014

Abstract:
Saving when faced with the immediate option to spend is an unpleasant but not conceptually difficult task. One popular approach contradicts traditional economic theory by suggesting that people in debt should pay off their debts from smallest size to largest regardless of interest rate, to realize quick motivational gains from eliminating debts. We more broadly define this idea as “small victories” and discuss, model, and empirically examine alternative behavioral theories that might explain it. Using a laboratory computer task, we test the validity of these predictions by breaking down this approach into component parts and examining their efficacy. Consistent with the idea of small victories, we find that when a mildly unpleasant task is broken down into parts of unequal size, subjects complete these parts faster when they are arranged in ascending order (i.e, from smallest to largest) rather than descending order (i.e., from largest to smallest). Yet when subjects are given the choice over three different orderings, subjects choose the ascending ordering least often. Given the magnitude of our results, we briefly discuss the possible efficacy of these alternative methods in actual debt repayment scenarios.

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The Selfish Goal: Autonomously operating motivational structures as the proximate cause of human judgment and behavior

Julie Huang & John Bargh
Behavioral and Brain Sciences, April 2014, Pages 121-135

Abstract:
We propose the Selfish Goal model, which holds that a person's behavior is driven by psychological processes called goals that guide his or her behavior, at times in contradictory directions. Goals can operate both consciously and unconsciously, and when activated they can trigger downstream effects on a person's information processing and behavioral possibilities that promote only the attainment of goal end-states (and not necessarily the overall interests of the individual). Hence, goals influence a person as if the goals themselves were selfish and interested only in their own completion. We argue that there is an evolutionary basis to believe that conscious goals evolved from unconscious and selfish forms of pursuit. This theoretical framework predicts the existence of unconscious goal processes capable of guiding behavior in the absence of conscious awareness and control (the automaticity principle), the ability of the most motivating or active goal to constrain a person's information processing and behavior toward successful completion of that goal (the reconfiguration principle), structural similarities between conscious and unconscious goal pursuit (the similarity principle), and goal influences that produce apparent inconsistencies or counterintuitive behaviors in a person's behavior extended over time (the inconsistency principle). Thus, we argue that a person's behaviors are indirectly selected at the goal level but expressed (and comprehended) at the individual level.

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Feeling Good at the Right Time: Why People Value Predictability in Goal Attainment

Nadav Klein & Ayelet Fishbach
Journal of Experimental Social Psychology, November 2014, Pages 21–30

Abstract:
We investigate whether information on upcoming goal attainment spoils some of the benefits of attaining the goal, because people hold a script suggesting they should feel happy at the “right” time; that is, after the goal is attained. We find that people falsely recall sequences of events in a way that corresponds to a script of feeling happy upon goal attainment rather than upon learning that a goal will be attained (Study 1). The disruption of the goal-attainment script results in mellowed happiness and lower goal evaluation (Studies 2–4). We conclude that because of their expectation to feel happy only upon goal attainment, people experience mellowed positive emotion and goal evaluation when they learn that a goal will be attained. Reawakening positive emotion after having had early knowledge of goal attainment appears to be difficult.

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When Cognitive Control Is Not Adaptive

Bruno Bocanegra & Bernhard Hommel
Psychological Science, June 2014, Pages 1249-1255

Abstract:
In order to engage in goal-directed behavior, cognitive agents have to control the processing of task-relevant features in their environments. Although cognitive control is critical for performance in unpredictable task environments, it is currently unknown how it affects performance in highly structured and predictable environments. In the present study, we showed that, counterintuitively, top-down control can impair and interfere with the otherwise automatic integration of statistical information in a predictable task environment, and it can render behavior less efficient than it would have been without the attempt to control the flow of information. In other words, less can sometimes be more (in terms of cognitive control), especially if the environment provides sufficient information for the cognitive system to behave on autopilot based on automatic processes alone.

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When Motivation is Against Debtors' Best Interest: The Illusion of Goal Progress in Credit Card Debt Repayment

Ali Besharat, François Carrillat & Daniel Ladik
Journal of Public Policy & Marketing, forthcoming

Abstract:
The authors explore the illusion of goal progress by consumers who own multiple credit cards and pay off their debt balances in order to facilitate the achievement of their subgoal rather than the superordinate goal of being debt free. The first experiment shows that debtors use their savings toward the credit card debt they can pay off entirely or substantially, even if it is associated with the smallest balance and the lowest APR, rather than toward the highest APR debt. The second experiment reveals that when the income available to pay down the debt is in the form of effortless money (i.e., windfall or reward money), as opposed to hard-earned savings, allocating money toward the smallest credit card debt is exacerbated. However, people tend to pay their debt more rationally when the number of debt accounts increases. Finally, the third experiment shows that credit card debt repayment decisions depend on the nature of the debt (hedonic vs. utilitarian) and the timing of consumption benefits (past vs. future). Managerial and public policy implications are also discussed.

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Give Up or Get Going? Productive Uncertainty in Uncertain Times

George Smith et al.
Self and Identity, forthcoming

Abstract:
We live in uncertain times; the path toward attaining important goals is best thought of as probabilistic, not certain. Three studies test the prediction that this “world uncertainty,” uncertainty about the path, is motivating if accompanied by certainty that one can have the skills needed to work on one's goals. Self- and world-certainty were separately manipulated in college students, and effect on salience of academic and career possible identities and behaviors was assessed. For students, self-uncertainty reduces salience of academic–career possible identities (Study 1), but self-certainty does not help unless combined with some world-uncertainty (Study 2). This combination also increases planned study hours (Study 2) and actual goal-focused action, working on a resume builder instead of playing games (Study 3).

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Know who you’re up against: Counterpart identifiability enhances competitive behavior

Uriel Haran & Ilana Ritov
Journal of Experimental Social Psychology, September 2014, Pages 115–121

Abstract:
Research on pro-social behavior reports greater generosity and helping behavior toward merely identifiable persons, whose identities have been determined but not revealed, than toward unspecified, “statistical” targets. This work investigates whether identifiability can have a similar effect on behavior in competitive contexts. Data from three experiments show that providing arbitrary, non-identifying information about one’s competition enhances one’s goal-driven behavior: in competitive tasks, participants competing vs. merely identifiable counterparts displayed greater perseverance and performed better than participants whose counterparts were undetermined; in a dyadic bid setting, participants offered more money to outbid an identifiable counterpart for an auctioned product than an unspecified counterpart. In addition, we found that the effects of identifiability on competitors’ behavior were associated more strongly with the motivation not to lose than with the desire to win.

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A (Creative) Portrait of the Uncertain Individual: Self-Uncertainty and Individualism Enhance Creative Generation

Kimberly Rios et al.
Personality and Social Psychology Bulletin, forthcoming

Abstract:
Building on findings that self-uncertainty motivates attempts to restore certainty about the self, particularly in ways that highlight one’s distinctiveness from others, we show that self-uncertainty, relative to uncertainty in general, increases creative generation among individualists. In Studies 1 to 3, high (but not low) individualists performed better on a creative generation task after being primed with self-uncertainty as opposed to general uncertainty. In Study 4, this effect emerged only among those who were told that the task measured creative as opposed to analytical thinking, suggesting that the positive effects of self-uncertainty on performance are specific to tasks that bolster perceptions of uniqueness. In Study 5, self-uncertain individualists experienced a restoration of self-clarity after being induced to think about themselves as more (vs. less) creative. Implications for compensatory responses to self-uncertainty and factors that influence creativity are discussed.

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Pre-Crastination: Hastening Subgoal Completion at the Expense of Extra Physical Effort

David Rosenbaum, Lanyun Gong & Cory Adam Potts
Psychological Science, forthcoming

Abstract:
In this article, we describe a phenomenon we discovered while conducting experiments on walking and reaching. We asked university students to pick up either of two buckets, one to the left of an alley and one to the right, and to carry the selected bucket to the alley’s end. In most trials, one of the buckets was closer to the end point. We emphasized choosing the easier task, expecting participants to prefer the bucket that would be carried a shorter distance. Contrary to our expectation, participants chose the bucket that was closer to the start position, carrying it farther than the other bucket. On the basis of results from nine experiments and participants’ reports, we concluded that this seemingly irrational choice reflected a tendency to pre-crastinate, a term we introduce to refer to the hastening of subgoal completion, even at the expense of extra physical effort. Other tasks also reveal this preference, which we ascribe to the desire to reduce working memory loads.

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A Comparison of the Effects of Transcranial Direct Current Stimulation and Caffeine on Vigilance and Cognitive Performance during Extended Wakefulness

Lindsey McIntire et al.
Brain Stimulation, forthcoming

Objective: Our objective was to evaluate the efficacy of anodal transcranial direct current stimulation (tDCS) applied to the pre-frontal cortex at 2 mA for 30 minutes to remediate the effects of sleep deprivation and to compare the behavioral effects of tDCS with those of caffeine.

Methods: Three groups of 10 participants each received either active tDCS with placebo gum, caffeine gum with sham tDCS, or sham tDCS with placebo gum during 30 hours of extended wakefulness.

Results: Our results show that tDCS prevented a decrement in vigilance and led to better subjective ratings for fatigue, drowsiness, energy, and composite mood compared to caffeine and control in sleep-deprived individuals. Both the tDCS and caffeine produced similar improvements in latencies on a short-term memory task and faster reaction times in a psychomotor task when compared to the placebo group. Interestingly, changes in accuracy for the tDCS group were not correlated to changes in mood; whereas, there was a relationship for the caffeine and sham groups.

Conclusion: Our data suggests that tDCS could be a useful fatigue countermeasure and may be more beneficial than caffeine since boosts in performance and mood last several hours.

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Deep Brain Stimulation Induces Striatal Dopamine Release in Obsessive-Compulsive Disorder

Martijn Figeeemail et al.
Biological Psychiatry, 15 April 2014, Pages 647–652

Background: Obsessive-compulsive disorder is a chronic psychiatric disorder related to dysfunctional dopaminergic neurotransmission. Deep brain stimulation (DBS) targeted at the nucleus accumbens (NAc) has recently become an effective treatment for therapy-refractory obsessive-compulsive disorder, but its effect on dopaminergic transmission is unknown.

Methods: We measured the effects of NAc DBS in 15 patients on the dopamine D2/3 receptor availability in the striatum with [123I]iodobenzamide ([123I]IBZM) single photon emission computed tomography. We correlated changes in [123I]IBZM binding potential (BP) with plasma levels of homovanillic acid (HVA) and clinical symptoms.

Results: Acute (1-hour) and chronic (1-year) DBS decreased striatal [123I]IBZM BP compared with the nonstimulated condition in the putamen. BP decreases were observed after 1 hour of stimulation, and chronic stimulation was related to concurrent HVA plasma elevations, implying DBS-induced dopamine release. BP decreases in the area directly surrounding the electrodes were significantly correlated with changes in clinical symptoms (45% symptom decrease).

Conclusions: NAc DBS induced striatal dopamine release, which was associated with increased HVA plasma levels and improved clinical symptoms, suggesting that DBS may compensate for a defective dopaminergic system.

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Some participants may be better than others: Sustained attention and motivation are higher early in semester

Michael Nicholls et al.
Quarterly Journal of Experimental Psychology, forthcoming

Abstract:
Many studies use multi-experiment designs where experiments are carried out at different times of semester. When comparing between experiments, the data may be confounded by between-participants effects related to motivation. Research indicates that course-credit participants who engage in research early in semester have different personality and performance characteristics compared to those tested late in semester. This study examined whether the semester effect is caused by internal (inherent motivation of the participant) or external (looming exams, essays) factors. To do this, sustained attention and intrinsic/extrinsic motivation was measured in groups of course-credit (n=40) and paid (n=40) participants early and late in semester. While there was no difference in sustained attention between the groups early in semester, the course-credit group performed significantly worse late in semester. The course-credit group also showed a significant decrease in intrinsic motivation with time whereas the paid participants showed no change. Because changes were not seen for both groups, the semester difference cannot be due to external factors. Instead, the data demonstrate that course-credit participants who engage early have high sustained attention and intrinsic motivation compared to their late counterparts, who leave their participation to the last minute. Researchers who use multi-experimental designs across semester need to control for these effects – perhaps by using paid participants who do not vary across semester.

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The impact of perspective in visualizing health-related behaviors: First-person perspective increases motivation to adopt health-related behaviors

Laura Rennie, Peter Harris & Thomas Webb
Journal of Applied Social Psychology, forthcoming

Abstract:
Two experiments investigated the effects of perspective and visualization on motivation to engage in health-related behaviors. Participants visualized themselves donating blood (Experiment 1) or quitting smoking (Experiment 2) from either the first-person (own) or third-person (observer's) perspective. Subsequently, motivation to engage in the visualized behavior was assessed. Contrary to previous findings showing the benefits of taking a third-person perspective on behaviors not related to health, visualizing using the first-person perspective had greater effects on motivation than visualizing using the third-person perspective. Indeed, visualizing using the third-person perspective was no more effective than not visualizing anything (Experiment 2). The theoretical implications and potential applications of these findings are discussed.

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How Will “I” Versus “We” Perform? An Investigation of Future Outlooks and Self-Construals

Kristy Dean & Wendi Gardner
Personality and Social Psychology Bulletin, forthcoming

Abstract:
Previous theory and research suggests that people generate predictions to prepare for an uncertain future, often basing predictions on task-relevant information like prior performance. Four studies test the hypothesis that preparation via prediction occurs more readily when interdependent (vs. independent) self-construals are salient. This hypothesis was supported when examining chronic tendencies to generate negative predictions (Study 1) and spontaneous predictions in response to task-relevant information (Studies 2, 3, and 4), as well as when self-construals were measured (Studies 1, 2, and 4) and primed (Study 3). Moreover, performance prediction occurs in conjunction with increases in task persistence, but only for individuals with interdependent self-construals. Individuals with independent self-construals tend toward preparation via prediction only when preparation is urgent. Discussion centers on the applicability of within-cultural differences in self-construal on cross-cultural investigations, and implications for future research on predictive judgments.

By KEVIN LEWIS | 09:00:00 AM

Friday, June 6, 2014

Corner office

Political connections and SEC enforcement

Maria Correia
Journal of Accounting and Economics, April–May 2014, Pages 241–262

Abstract:
In this study, I examine whether firms and executives with long-term political connections through contributions and lobbying incur lower costs from the enforcement actions by the Securities and Exchange Commission (SEC). I find that politically connected firms on average are less likely to be involved in SEC enforcement actions and face lower penalties if they are prosecuted by the SEC. Contributions to politicians in a strong position to put pressure on the SEC are more effective than others at reducing the probability of enforcement and penalties imposed by an enforcement action. Moreover, the amounts paid to lobbyists with prior employment links to the SEC, and the amounts spent on lobbying the SEC directly, are more effective than other lobbying expenditures at reducing enforcement costs faced by firms.

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Tailspotting: Identifying and profiting from CEO vacation trips

David Yermack
Journal of Financial Economics, forthcoming

Abstract:
This paper shows connections between chief executive officers’ (CEOs’) absences from headquarters and corporate news disclosures. I identify CEO absences by merging records of corporate jet flights and CEOs’ property ownership near leisure destinations. CEOs travel to their vacation homes just after companies report favorable news, and CEOs return to headquarters right before subsequent news releases. When CEOs are away, companies announce less news, mandatory disclosures occur later, and stock volatility falls sharply. Volatility increases when CEOs return to work. CEOs spend fewer days out of the office when ownership is high and when weather is bad at their vacation homes.

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Class Action Lawsuits and Executive Stock Option Exercise

Daniel Bradley, Brandon Cline & Qin Lian
Journal of Corporate Finance, August 2014, Pages 157–172

Abstract:
In a large sample of shareholder initiated class action lawsuits from 1996 to 2011, we find a significant increase in informed insider option exercises during the class action period compared to the preceding quarter, and we find this change is positively related to the probability of litigation. The market reaction to the announcement of lawsuits is negatively related to abnormal informed option exercises, but positively related to suits that ultimately get dismissed. These results suggest that the market can at least partially anticipate the merits and severity of the class action suit. In subsequent analyses, we find CEO turnover is positively related to litigation, but not option exercises. Collectively, our results indicate that insiders knowingly trade on their private information.

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Throwing Caution to the Wind: The Effect of CEO Stock Option Pay on the Incidence of Product Safety Problems

Adam Wowak, Michael Mannor & Kaitlin Wowak
Strategic Management Journal, forthcoming

Abstract:
Stock options are thought to align the interests of CEOs and shareholders, but scholars have shown that options sometimes lead to outcomes that run counter to what they are meant to achieve. Building on this research, we argue that options promote a lack of caution in CEOs that manifests in a higher incidence of product safety problems. We also posit that this relationship varies across CEOs, and that the effect of options will depend upon CEO characteristics such as tenure and founder status. Analyzing product recall data for a large sample of FDA-regulated companies, we find support for our theory.

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The Hidden Nature of Executive Retirement Pay

Robert Jackson & Colleen Honigsberg
Virginia Law Review, forthcoming

Abstract:
There are two competing theories of why public companies pay executives generous retirement benefits. One is that retirement pay is easier to hide from shareholders than other forms of compensation. The other is that retirement benefits align executives' interests with those of long-term creditors, since the executives may not receive their payouts if the firm goes bankrupt. The latter view depends on the assumption that retirement benefits put executives in a similar contractual position as the company's creditors. Yet no previous work has tested that assumption. This Article provides the first systematic study of the contractual structure of executive retirement payouts. Using retirement pay data for thousands of executives, we show that a large proportion of executives link the value of their payouts to the company's stock price and receive the bulk of these payouts immediately following their departure -- features that contradict the incentive-alignment theory of retirement pay. The evidence also shows that the full amount and structure of retirement pay are undisclosed -- findings consistent with the camouflage theory. While the structure of some executives' payouts can be reconciled with the incentive-alignment theory, current rules do not give investors the information they need to tell the difference between payouts that align incentives and those that camouflage compensation. Lawmakers should require companies to reveal the magnitude and structure of these payouts, and neither regulators nor commentators should assume that retirement benefits suppress top managers' appetite for risk.

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Do Managers Tacitly Collude to Withhold Industry-Wide Bad News?

Jonathan Rogers, Catherine Schrand & Sarah Zechman
University of Chicago Working Paper, March 2014

Abstract:
That managers would choose to withhold firm-specific bad news is not only intuitive, but supported by theory, observed disclosure patterns, and survey responses. When the bad news is industry wide, however, managers are subject to additional pressure to disclose. If any one firm chooses to disclose, traders infer signal arrival and capital market pressure will force withholding firms to disclose. In addition, the costs of being the second mover are greater for industry-wide news. However, if managers anticipate that the adverse news could improve or never materialize, they should prefer to withhold to avoid presumably costly stock return volatility. But withholding is only sustainable if all firms cooperate (“tacitly collude”). We document cases of increased intra-industry obfuscation in the annual 10-K, controlling for changes in fundamentals, consistent with intra-industry cooperation to withhold adverse news. Coordinated withholding is more likely in industries that are more likely to have large, correlated, negative shocks, industries with more significant equity incentives, and greater litigation risk and less likely in industries in which observable/public macro-economic data relevant to firm valuation is available. The results have implications for understanding when economic forces are sufficient to generate voluntary disclosure of industry-wide adverse news.

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D&O Insurance and IPO Performance: what can we learn from insurers?

Martin Boyer & Léa Stern
Journal of Financial Intermediation, forthcoming

Abstract:
We investigate whether a firm’s directors’ and officers’ liability insurance contract at the time of the IPO is related to insured firms’ first year post-IPO performance. We find that insurers charge a higher premium per dollar of coverage to protect the directors and officers of firms that will subsequently have poor first year post-IPO stock performance. A higher price of coverage is also associated with a higher post-IPO volatility and lower Sharpe ratio. Our results are robust to various econometric specifications and suggest that even when the high level of information asymmetry inherent to the IPO context prevails, insurers have information about the firms’ prospects that should be valuable to outside investors.

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Distracted directors: Does Board Busyness Hurt Shareholder Value?

Antonio Falato, Dalida Kadyrzhanova & Ugur Lel
Journal of Financial Economics, forthcoming

Abstract:
We use the deaths of directors and chief executive officers as a natural experiment to generate exogenous variation in the time and resources available to independent directors at interlocked firms. The loss of such key co-employees is an attention shock because it increases the board committee workload only for some interlocked directors — the ‘treatment group.’ There is a negative stock market reaction to attention shocks only for treated director-interlocked firms. Interlocking directors’ busyness, the importance of their board roles, and their degree of independence magnify the treatment effect. Overall, directors’ busyness is detrimental to board monitoring quality and shareholder value.

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CEO Ideology as an Element of the Corporate Opportunity Structure for Social Activists

Forrest Briscoe, M.K. Chin & Donald Hambrick
Academy of Management Journal, forthcoming

Abstract:
In an effort to comprehend activism toward corporations, scholars have proposed the concept of corporate opportunity structure, or the attributes of individual firms that make them more (or less) attractive as activist targets. We theorize that the personal values of the firm's elite decision makers constitute a key element of this corporate opportunity structure. We specifically consider the political ideology, or conservatism vs. liberalism, of the company's CEO as a signal for employees who are considering the merits of engaging in activism. As an initial test of our theory, we examine the formation of LGBT employee activist groups in Fortune 500 companies in the period 1985-2005, during which the formation of such groups was generally perceived to be risky for participants. Using CEOs' records of political donations to measure their personal ideologies, we find strong evidence that the political liberalism of CEOs influences the likelihood of activism. We also find that CEOs' ideologies influence activism more strongly when CEOs are more powerful, when they oversee more conservative (i.e. less liberal) workplaces, and when the social movement is in the early phase of development. In supplemental analyses, we examine instances of recent CEO succession, showing that a new CEO's liberalism relative to the predecessor CEO especially heightens the likelihood of activism. Our theory and findings contribute to research on social movements, corporate stakeholders, and upper echelons. We identify promising future research opportunities in each of those areas.

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A Dynamic Process Model of Contentious Politics: Activist Targeting and Corporate Receptivity to Social Challenges

Mary-Hunter McDonnell, Brayden King & Sarah Soule
Georgetown University Working Paper, May 2014

Abstract:
This project explores whether and how corporations become more receptive to social activist challenges over time. Drawing from social movement theory, we suggest a dynamic process through which contentious interactions lead to increased receptivity. First, a company's prior responses to activist challenges shape the likelihood that it will be targeted by future activists. When firms are targeted, they respond defensively to these attacks by adopting strategic management devices that help them better manage social issues. Finally, these defensive devices empower independent monitors and increase corporate accountability, which in turn increases a firm's receptivity to future activist challenges. We test our theory using a unique longitudinal dataset that tracks contentious attacks and the adoption of social management devices among a population of 300 large firms from 1991-2009.

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Capital Gains Lock-In and Governance Choices

Stephen Dimmock et al.
NBER Working Paper, May 2014

Abstract:
Because of differences in accrued gains and investors’ tax-sensitivity, capital gains “lock-in” varies across mutual funds even for the same stock at the same time. Using this variation, we show that tax lock-in affects funds’ governance decisions. Higher tax lock-in decreases the likelihood a fund sells a stock prior to contentious votes, and increases the likelihood the fund votes against management. Consistent with tax motivations, these findings are concentrated among funds with tax-sensitive investors. High aggregate capital gains across funds holding a stock predicts a higher likelihood management loses a vote and a lower likelihood a contentious vote is proposed.

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Fee pressure and audit quality

Michael Ettredge, Elizabeth Emeigh Fuerherm & Chan Li
Accounting, Organizations and Society, May 2014, Pages 247–263

Abstract:
This study investigates the association of audit fee pressure with an inverse measure of audit quality, misstatements in audited data, during the recent recession. Fee pressure in a year is measured as the difference between benchmark “normal” audit fees and actual audit fees. We find fee pressure is positively and significantly associated with accounting misstatements in 2008, the center of the recession. Our results suggest that auditors made fee concessions to some clients in 2008, and that fee pressure was associated with reduced audit quality in that year.

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On the Importance of Golden Parachutes\

Eliezer Fich, Anh Tran & Ralph Walkling
Journal of Financial and Quantitative Analysis, December 2013, Pages 1717-1753

Abstract:
In acquisitions, target chief executive officers (CEOs) face a moral hazard: Any personal gain from the deal could be offset by the loss of the future compensation stream associated with their jobs. Larger, more important parachutes provide greater relief for these losses. To explicitly measure the moral hazard target CEOs face, we standardize the parachute payment by the expected value of their acquisition-induced lost compensation. We examine 851 acquisitions from 1999–2007, finding that more important parachutes benefit target shareholders through higher completion probabilities. Conversely, as parachute importance increases, target shareholders receive lower takeover premia, while acquirer shareholders capture additional rents from target shareholders.

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Do Going-Private Transactions Affect Plant Efficiency and Investment?

Sreedhar Bharath, Amy Dittmar & Jagadeesh Sivadasan
Review of Financial Studies, forthcoming

Abstract:
We examine whether constraints on public firms affect firms' efficiency by testing if going private improves plant-level productivity relative to peer control groups. We find that, despite increases in productivity after going private, there is little evidence of efficiency gains relative to peer groups of plants constructed to control for industry, age, size, past productivity, and the endogeneity of the going-private decision. Going-private firms do extensively restructure their portfolio of plants, selling and closing plants more quickly than others. Our findings cast doubt on the view that public markets cause listed firms to operate plants less efficiently due to overinvestment but indicate that going private increases restructuring activity.

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CEO Duality and Firm Performance: Evidence from an Exogenous Shock to the Competitive Environment

Tina Yang & Shan Zhao
Journal of Banking & Finance, forthcoming

Abstract:
Regulators and governance activists are pressuring firms to abolish CEO duality (the Chief Executive Officer is also the Chairman of the Board). However, the literature provides mixed evidence on the relation between CEO duality and firm performance. Using the exogenous shock of the 1989 Canada-United States Free Trade Agreement, we find that duality firms outperform non-duality firms by 3-4% when their competitive environments change. Further, the performance difference is larger for firms with higher information costs and better corporate governance. Our results underscore the benefits of CEO duality in saving information costs and making speedy decisions.

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Corporate Governance and the Development of Manufacturing Enterprises in Nineteenth-Century Massachusetts

Eric Hilt
NBER Working Paper, May 2014

Abstract:
This paper analyzes the use of the corporate form among nineteenth-century manufacturing firms in Massachusetts, from newly collected data from 1875. An analysis of incorporation rates across industries reveals that corporations were formed at higher rates among industries in which firm size was larger. But conditional on firm size, the industries in which production was conducted in factories, rather than artisanal shops, saw more frequent use of the corporate form. On average, the ownership of the corporations was quite concentrated, with the directors holding 45 percent of the shares. However, the corporations whose shares were quoted on the Boston Stock Exchange were ‘widely held’ at rates comparable to modern American public companies. The production methods utilized in different industries also influenced firms’ ownership structures. In many early factories, steam power was combined with unskilled labor, and managers likely performed a complex supervisory role that was critical to the success of the firm. Consistent with the notion that monitoring management was especially important among such firms, corporations in industries that made greater use of steam power and unskilled labor had more concentrated ownership, higher levels of managerial ownership, and smaller boards of directors.

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How CEO Hubris Affects Corporate Social (Ir)responsibility

Yi Tang et al.
Strategic Management Journal, forthcoming

Abstract:
Grounded in the upper echelons perspective and stakeholder theory, this study establishes a link between CEO hubris and corporate social responsibility (CSR). We first develop the theoretical argument that CEO hubris is negatively related to a firm's socially responsible activities but positively related to its socially irresponsible activities. We then explore the boundary conditions of hubris effects and how these relationships are moderated by resource dependence mechanisms. With a longitudinal dataset of S&P 1500 index firms for the period 2001–2010, we find that the relationship between CEO hubris and CSR is weakened when the firm depends more on stakeholders for resources, such as when its internal resource endowments are diminished as indicated by firm size and slack, and when the external market becomes more uncertain and competitive. The implications of our findings for upper echelons theory and the CSR research are discussed.

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Prior Client Performance and the Choice of Investment Bank Advisors in Corporate Acquisitions

Valeriy Sibilkov & John McConnell
Review of Financial Studies, forthcoming

Abstract:
Contrary to earlier studies, we find that prior client performance is a significant determinant of the likelihood that an investment bank will be chosen as the advisor by future acquirers and of the changes through time in banks’ shares of the advisory business. Further, the changes in the market values of acquirers at the announcement of acquisition attempts are positively correlated with contemporaneous changes in the market values of their advisors. Two implications arise: (1) acquirers consider advisors’ prior client performance when choosing their advisors and (2) market forces work to align advisors’ and clients’ interests in the acquisition market.

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Short sales and class-action lawsuits

Benjamin Blau & Philip Tew
Journal of Financial Markets, forthcoming

Abstract:
Gande and Lewis (2009) show class-action lawsuit filings are anticipated by investors. In this paper, we examine short-selling activity surrounding lawsuit filings and find that short activity surges in the days before the filing. However, short-selling activity remains significantly high until a few days after the filing. We also find some evidence that both pre- and post-filing short activity can be used to predict the outcome of the filing. In particular, we find that, after controlling for a variety of firm-specific factors, short activity during the filing period increases the likelihood that the lawsuit eventually generates money for the plaintiff.

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Bonuses and managerial misbehavior

Caspar Siegert
European Economic Review, May 2014, Pages 93–105

Abstract:
Profit-based bonus payments have been criticised for encouraging managers to take excessively risky actions or to engage in other activities that are not in the firm׳s best interest. We show, however, that large bonuses may discourage managers from such misbehaviour, because they have more to lose in the event that misbehaviour is detected. Thus, large bonuses may be an optimal way for firms to control misbehaviour. Our finding sheds new light on recent proposals to regulate bonuses.

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Executive compensation: A general equilibrium perspective

Jean-Pierre Danthine & John Donaldson
Review of Economic Dynamics, forthcoming

Abstract:
We study the dynamic general equilibrium of an economy where risk averse shareholders delegate the management of the firm to risk averse managers. The optimal contract has two main components: an incentive component corresponding to a non-tradable equity position and a variable “salary” component indexed to the aggregate wage bill and to aggregate dividends. Tying a manager's compensation to the performance of her own firm ensures that her interests are aligned with the goals of firm owners and that maximizing the discounted sum of future dividends will be her objective. Linking managers' compensation to overall economic performance is also required to make sure that managers use the appropriate stochastic discount factor to value those future dividends. General equilibrium considerations thus provide a potential resolution of the “pay for luck” puzzle. We also demonstrate that one sided “relative performance evaluation” follows equally naturally when managers and shareholders are differentially risk averse.

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The Effect of Securities Litigation on External Financing

Don Autore et al.
Journal of Corporate Finance, forthcoming

Abstract:
Using a comprehensive sample of securities litigation, we examine the effect of financial fraud on the subsequent use of external financing. We find that firms with a recent history of securities litigation, particularly more severe litigation, are less likely to seek external debt and equity financing. This negative relationship between prior litigation and external financing is stronger for firms with high information asymmetry. Furthermore, firms significantly reduce their investments in capital expenditures and research and development during the three years following a litigation filing. Thus, the reduction in the availability of external financing due to allegations of financial fraud can have a tangible impact upon the investment opportunities of the firm.

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Performance of acquirers of divested assets: Evidence from the U.S. software industry

Tomi Laamanen, Matthias Brauer & Olli Junna
Strategic Management Journal, June 2014, Pages 914–925

Abstract:
We provide a comparative analysis of acquirer returns in acquisitions of public firms, private firms, and divested assets. On the basis of a sample of 5,079 acquisitions by U.S. software industry companies during 1988–2008, we find that acquisitions of divested assets outperform acquisitions of privately held firms, which in turn outperform acquisitions of publicly held firms. While the higher returns for acquisitions of divested assets relative to stand-alone acquisition targets can be explained by market efficiency arguments, seller distress and improved asset fit further enhance the positive returns of acquirers of divested assets consistent with the relative bargaining power explanation. Finally, we find that the effects of these buyer bargaining advantages are mutually strengthening and that they also hold for longer-term acquirer performance.

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The implications of ineffective internal control and SOX 404 reporting for financial analysts

Sarah Clinton, Arianna Spina Pinello & Hollis Skaife
Journal of Accounting and Public Policy, forthcoming

Abstract:
The mandatory reporting of firms’ internal control effectiveness continues to be debated by equity market participants, U.S. regulatory agencies and oversight committees. We investigate the implications of material weaknesses in internal control and SOX 404 required reporting of such for financial analysts because analysts are important intermediaries in the U.S. capital market and it is not known whether analysts’ forecasts or coverage decisions are affected by firms’ internal control problems or reporting, respectively. Results of our empirical tests indicate that analysts provide less accurate forecasts and there is greater forecast dispersion for firms with ineffective internal control. We also find that firms that disclose internal control problems have less analyst coverage and that analyst following declines after the material weakness in internal control is disclosed. The results are robust to controlling for potential self-selection bias and management earnings guidance. Our study documents the consequences of ineffective internal control for an important class of financial statement users and suggests the required reporting on the effectiveness of internal control is beneficial to understanding the properties of analysts’ forecasts.

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Advance Disclosure of Insider Trading

Stephen Lenkey
Review of Financial Studies, forthcoming

Abstract:
Using a strategic rational expectations equilibrium framework, we show that forcing a well-informed insider to disclose her trades in advance tends to increase welfare for both the insider and less-informed outsiders. Advance disclosure generates price risk for the insider, and to mitigate this risk, the insider trades less aggressively on her private information. Consequently, outsiders face lower adverse selection costs, which improves risk sharing and increases welfare. The drop in trading aggressiveness also causes market efficiency to decline. Furthermore, pretrade disclosure encourages excessive risk taking but may either encourage or discourage managerial effort.

By KEVIN LEWIS | 09:00:00 AM

Thursday, June 5, 2014

Expecting

Do highly educated women choose smaller families?

Moshe Hazan & Hosny Zoabi
Economic Journal, forthcoming

Abstract:
We present evidence that the cross-sectional relationship between fertility and women's education in the U.S. has recently become U-shaped. The number of hours women work has concurrently increased with their education. In our model, raising children and homemaking require parents’ time, which could be substituted by services such as childcare and housekeeping. By substituting their own time for market services to raise children and run their households, highly educated women are able to have more children and work longer hours. We find that the change in the relative cost of childcare accounts for the emergence of this new pattern.

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Race, Restrictive State Abortion Laws and Abortion Demand

Marshall Medoff
Review of Black Political Economy, June 2014, Pages 225-240

Abstract:
A disproportionately large number of abortions are performed on black and Hispanic women. This study empirically investigates whether restrictive state abortion laws differentially affect the abortion demand of white, black and Hispanic women for the year 2005. A state Medicaid abortion funding restriction significantly decreases the abortion rate of all three races. However, Hispanic women’s abortion demand is more sensitive to a Medicaid funding restriction than either white women or black women. Parental involvement laws and mandatory counseling laws have no significant impact on the abortion rates of the three racial groups. Two-visit laws are associated with a significant decrease in the abortion rate of white women, but have no significant effect on the abortion rates of black and Hispanic women.

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The Effects of Contraception on Female Poverty

Stephanie Browne & Sara LaLumia
Journal of Policy Analysis and Management, forthcoming

Abstract:
Poverty rates are particularly high among households headed by single women, and childbirth is often the event preceding these households’ poverty spells. This paper examines the relationship between legal access to the birth control pill and female poverty. We rely on exogenous cross-state variation in the year in which oral contraception became legally available to young, single women. Using census data from 1960 to 1990, we find that having legal access to the birth control pill by age 20 significantly reduces the probability that a woman is subsequently in poverty. We estimate that early legal access to oral contraception reduces female poverty by 0.5 percentage points, even when controlling for completed education, employment status, and household composition.

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Welfare Reform and Immigrant Fertility

Catalina Amuedo-Dorantes, Susan Averett & Cynthia Bansak
San Diego State University Working Paper, April 2014

Abstract:
Immigration policy continues to be at the forefront of policy discussions, and the use of welfare benefits by immigrants has been hotly debated. In 1996, Congress enacted welfare reform legislation (PRWORA), which denied the use of most means-tested assistance to non-citizens and lowered immigrant welfare dramatically. While Federal legislation imposed strict restrictions on eligibility for non-citizens, a number of states allowed previously eligible women to continue to receive benefits similar to those before 1996, whereas others imposed the new Federal cutbacks. Using data from the Current Population Survey (CPS) for the years 1994-2000, we examine whether immigrant women adjusted their childbearing in response to cutbacks in the generosity of welfare benefits at the state-level. Our findings suggest that non-citizen women, especially those of Hispanic origin, altered their fertility decisions in response to the legislation. In addition, they increased their labor force participation, possibly to obtain employer-sponsored benefits. Our results are robust to alternative definitions of our treatment and control groups and do not appear to be driven by pre-existing trends. Finally, we find no evidence that women who anticipated having children migrated to the more generous states. Overall, the results provide further evidence that immigrants respond to variation in state-level policies and provide insight into the potential impacts of comprehensive immigration reform, particularly the components related to the path to citizenship and access to public benefits.

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Dopamine Receptor Gene D4 Polymorphisms and Early Sexual Onset: Gender and Environmental Moderation in a Sample of African-American Youth

Steven Kogan et al.
Journal of Adolescent Health, forthcoming

Purpose: Early sexual onset and its consequences disproportionately affect African-American youth, particularly male youth. The dopamine receptor D4 gene (DRD4) has been linked to sexual activity and other forms of appetitive behavior, particularly for male youth and in combination with environmental factors (gene × environment [G × E] effects). The differential susceptibility perspective suggests that DRD4 may exert this effect by amplifying the effects of both positive and negative environments. We hypothesized that DRD4 status would amplify the influence of both positive and negative neighborhood environments on early sexual onset among male, but not female, African-Americans.

Methods: Hypotheses were tested with self-report, biospecimen, and census data from five prospective studies of male and female African-American youth in rural Georgia communities, N = 1,677. Early sexual onset was defined as intercourse before age 14.

Results: No significant G × E findings emerged for female youth. Male youth with a DRD4 long allele were more likely than those with two DRD4 short alleles to report early sexual onset in negative community environments and not to report early onset in positive community environments.

Conclusions: Dopaminergic regulation of adolescent sexual behaviors may operate differently by gender. DRD4 operated as an environmental amplification rather than a vulnerability factor.

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Does Fertility Behavior Spread among Friends?

Nicoletta Balbo & Nicola Barban
American Sociological Review, June 2014, Pages 412-431

Abstract:
By integrating insights from economic and sociological theories, this article investigates whether and through which mechanisms friends’ fertility behavior affects an individual’s transition to parenthood. By exploiting the survey design of the Add Health data, our strategy allows us to properly identify interaction effects and distinguish them from selection and contextual effects. We use a series of discrete-time event history models with random effects at the dyadic level. Results show that, net of confounding effects, a friend’s childbearing increases an individual’s risk of becoming a parent. We find a short-term, curvilinear effect: an individual’s risk of childbearing starts increasing after a friend’s childbearing, reaches its peak approximately two years later, and then decreases.

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Does the Family and Medical Leave Act (FMLA) Increase Fertility Behavior?

Colin Cannonier
Journal of Labor Research, June 2014, Pages 105-132

Abstract:
The Family and Medical Leave Act (FMLA), implemented in August 1993, grants job-protected leave to any employee satisfying the eligibility criteria. One of the provisions of the FMLA is to allow women to stay at home for a maximum period of 12 weeks to give care to the newborn. The effect of this legislation on the fertility response of eligible women has received little attention by researchers. This study analyzes whether the FMLA has influenced birth outcomes in the U.S. Specifically, I evaluate the effect of the FMLA by comparing the changes in the birth hazard profiles of women who became eligible for FMLA benefits such as maternity leave, to the changes in the control group who were not eligible for such leave. Using a discrete-time hazard model, results from the difference-in-differences estimation indicate that eligible women increase the probability of having a first and second birth by about 1.5 and 0.6 % per annum, respectively. Compared to other women, eligible women are giving birth to the first child a year earlier and about 8.5 months earlier for the second child.

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Understanding the Complexity of Ambivalence Toward Pregnancy: Does It Predict Inconsistent Use of Contraception?

Sam Hyun Yoo, Karen Benjamin Guzzo & Sarah Hayford
Biodemography and Social Biology, Spring 2014, Pages 49-66

Abstract:
Ambivalence towards future pregnancy is common and may increase the risk of unprotected sex and unintended pregnancy. We propose that ambivalent attitudes toward pregnancy consist of subtypes that are differentially associated with contraceptive use. Using data from a nationally representative survey of unmarried young adults (N = 1,147), we constructed four categories of ambivalence based on attitudes toward a hypothetical pregnancy. Multivariate analyses examined characteristics of ambivalence and the association between ambivalence and contraceptive use. Approximately one third of sexually active unmarried young adults are ambivalent about pregnancy. Having positive ambivalence (important to avoid a pregnancy but would be happy if it occurred) is associated with age, gender, education, and Hispanic origin. Although ambivalence toward pregnancy is associated with lower contraceptive use, this is true only among women with negative ambivalence (not important to avoid a pregnancy but would be unhappy if a pregnancy occurred). Attitudes toward pregnancy are multifaceted, and a more nuanced understanding of women’s attitudes toward pregnancy can help target prevention programs and related policies for women at risk of unintended pregnancy.

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Prenatal maternal stress predicts autism traits in 6½ year-old children: Project Ice Storm

Deborah Walder et al.
Psychiatry Research, forthcoming

Abstract:
Research implicates prenatal maternal stress (PNMS) as a risk factor for neurodevelopmental disorders; however few studies report PNMS effects on autism risk in offspring. We examined, prospectively, the degree to which objective and subjective elements of PNMS explained variance in autism-like traits among offspring, and tested moderating effects of sex and PNMS timing in utero. Subjects were 89 (46F/43M) children who were in utero during the 1998 Quebec Ice Storm. Soon after the storm, mothers completed questionnaires on objective exposure and subjective distress, and completed the Autism Spectrum Screening Questionnaire (ASSQ) for their children at age 6½. ASSQ scores were higher among boys than girls. Greater objective and subjective PNMS predicted higher ASSQ independent of potential confounds. An objective-by-subjective interaction suggested that when subjective PNMS was high, objective PNMS had little effect; whereas when subjective PNMS was low, objective PNMS strongly affected ASSQ scores. A timing-by-objective stress interaction suggested objective stress significantly affected ASSQ in first-trimester exposed children, though less so with later exposure. The final regression explained 43% of variance in ASSQ scores; the main effect of sex and the sex-by-PNMS interactions were not significant. Findings may help elucidate neurodevelopmental origins of non-clinical autism-like traits, from a dimensional perspective.

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Maternal nutrition at conception modulates DNA methylation of human metastable epialleles

Paula Dominguez-Salas et al.
Nature Communications, April 2014

Abstract:
In experimental animals, maternal diet during the periconceptional period influences the establishment of DNA methylation at metastable epialleles in the offspring, with permanent phenotypic consequences. Pronounced naturally occurring seasonal differences in the diet of rural Gambian women allowed us to test this in humans. We show that significant seasonal variations in methyl-donor nutrient intake of mothers around the time of conception influence 13 relevant plasma biomarkers. The level of several of these maternal biomarkers predicts increased/decreased methylation at metastable epialleles in DNA extracted from lymphocytes and hair follicles in infants postnatally. Our results demonstrate that maternal nutritional status during early pregnancy causes persistent and systemic epigenetic changes at human metastable epialleles.

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Semen quality, infertility and mortality in the USA

Michael Eisenberg et al.
Human Reproduction, forthcoming

Study question: What is the relationship between semen parameters and mortality in men evaluated for infertility?

Study design, size, duration: A study cohort was identified from two centers, each specializing in infertility care. In California, we identified men with data from 1994 to 2011 in the Stanford Reproductive Endocrinology and Infertility semen database. In Texas, we identified men with data from 1989 to 2009 contained in the andrology database at the Baylor College of Medicine Special Procedures Laboratory who were evaluated for infertility. Mortality was determined by data linkage to the National Death Index or Social Security Death Index. Comorbidity was estimated based on calculation of the Charlson Comorbidity Index or Centers for Medicare & Medicaid Services-Hierarchical Condition Categories Model.

Main results and the role of chance: Compared with the general population, men evaluated for infertility had a lower risk of death with 69 deaths observed compared with 176.7 expected (Standardized mortality rate 0.39, 95% CI 0.30–0.49). When stratified by semen parameters, however, men with impaired semen parameters (i.e. male factor infertility) had significantly higher mortality rates compared with men with normal parameters (i.e. no male factor infertility). Low semen volume, sperm concentration, sperm motility, total sperm count and total motile sperm count were all associated with higher risk of death. In contrast, abnormal sperm morphology was not associated with mortality. While adjusting for current health status attenuated the association between semen parameters and mortality, men with two or more abnormal semen parameters still had a 2.3-fold higher risk of death compared with men with normal semen (95% CI 1.12–4.65).

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Maternal exposure to hurricane destruction and fetal mortality

Sammy Zahran et al.
Journal of Epidemiology & Community Health, forthcoming

Background: The majority of research documenting the public health impacts of natural disasters focuses on the well-being of adults and their living children. Negative effects may also occur in the unborn, exposed to disaster stressors when critical organ systems are developing and when the consequences of exposure are large.

Methods: We exploit spatial and temporal variation in hurricane behaviour as a quasi-experimental design to assess whether fetal death is dose-responsive in the extent of hurricane damage. Data on births and fetal deaths are merged with Parish-level housing wreckage data. Fetal outcomes are regressed on housing wreckage adjusting for the maternal, fetal, placental and other risk factors. The average causal effect of maternal exposure to hurricane destruction is captured by difference-in-differences analyses.

Results: The adjusted odds of fetal death are 1.40 (1.07–1.83) and 2.37 (1.684–3.327) times higher in parishes suffering 10–50% and >50% wreckage to housing stock, respectively. For every 1% increase in the destruction of housing stock, we observe a 1.7% (1.1–2.4%) increase in fetal death. Of the 410 officially recorded fetal deaths in these parishes, between 117 and 205 may be attributable to hurricane destruction and postdisaster disorder. The estimated fetal death toll is 17.4–30.6% of the human death toll.

Conclusions: The destruction caused by Hurricanes Katrina and Rita imposed significant measurable losses in terms of fetal death. Postdisaster migratory dynamics suggest that the reported effects of maternal exposure to hurricane destruction on fetal death may be conservative.

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Economic Uncertainty, Parental Selection, and the Criminal Activity of the 'Children of the Wall'

Arnaud Chevalier & Olivier Marie
University of London Working Paper, November 2013

Abstract:
We explore the link between parental selection and criminality of children in a new context. After the collapse of the Berlin Wall in 1989, East Germany experienced a very large, but temporary, drop in birth rates mostly driven by economic uncertainty. We exploit this natural experiment in a differences-in-differences setup to first estimate that the children from these affected (smaller) cohorts are relatively much more likely to be criminally active. Using individual level data, we provide evidence that women who gave birth in at this period of uncertainty were negatively selected into fertility. Further investigation of the underlying mechanisms reveals that emotional attachment and intergenerational transmission of risk attitudes play important roles in the parental selection-crime of children relationship. Finally, results for siblings support a causal interpretation of our findings.

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Too old to have children? Lessons from natural fertility populations

Marinus Eijkemans et al.
Human Reproduction, June 2014, Pages 1304-1312

What is known already: The median age at last birth (ALB) for females is ∼40–41 years of age across a range of natural fertility populations. This suggests that there is a fairly universal pattern of age-related fertility decline. However, little is known about the distribution of female ALB and in the present era of modern birth control, it is impossible to assess the age-specific distribution of ALB. Reliable information is lacking that could benefit couples who envisage delaying childbearing.

Study design, size, duration: This study is a review of high-quality historical data sets of natural fertility populations in which the distributions of female age at last birth were analysed. The studies selected used a retrospective cohort design where women were followed as they age through their reproductive years.

Participants/materials, setting, methods: Using a common set of eligibility criteria, large data files of natural fertility populations were prepared such that the analysis could be performed in parallel across all populations. Data on the ALB and confounding variables are presented as box and whisker plots denoting the 5th, 25th, 50th, 75th and 95th percentile distribution of the age at last birth for each population. The analysis includes the estimation of Kaplan–Meier curves for age at last birth of each population. The hazard curve for ALB was obtained by plotting the smoothed hazard curve of each population and taking the lowest hazard within a time period of at least 5 years. This lowest hazard curve was then transformed into a cumulative distribution function representing the composite curve of the end of biological fertility. This curve was based on the data from three of the six populations, having the lowest hazards of end of fertility.

Main results and the role of chance: We selected six natural fertility populations comprising 58 051 eligible women. While these populations represent different historical time periods, the distribution of the ages at last birth is remarkably similar. The curve denoting the end of fertility indicates that <3% of women had their last birth at age 20 years meaning that almost 98% were able to have at least one child thereafter. The cumulative curve for the end of fertility slowly increases from 4.5% at age 25 years, 7% at age 30 years, 12% at age 35 years and 20% at age 38 years. Thereafter, it rises rapidly to about 50% at age 41, almost 90% at age 45 years and approaching 100% at age 50 years.

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Announcement effects of health policy reforms: Evidence from the abolition of Austria’s baby bonus

Beatrice Brunner & Andreas Kuhn
European Journal of Health Economics, May 2014, Pages 373-388

Abstract:
We analyze the short-run fertility and health effects resulting from the early announcement of the abolition of the Austrian baby bonus in January 1997. The abolition of the benefit was publicly announced about 10 months in advance, creating the opportunity for prospective parents to (re-)schedule conceptions accordingly. We find robust evidence that, within the month before the abolition, about 8% more children were born as a result of (re-)scheduling conceptions. At the same time, there is no evidence that mothers deliberately manipulated the date of birth through medical intervention. We also find a substantial and significant increase in the fraction of birth complications, but no evidence for any resulting adverse effects on newborns’ health.

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Does in utero Exposure to Illness Matter? The 1918 Influenza Epidemic in Taiwan as a Natural Experiment

Ming-Jen Lin & Elaine Liu
NBER Working Paper, May 2014

Abstract:
This paper tests whether in utero conditions affect long-run developmental outcomes using the 1918 influenza pandemic in Taiwan as a natural experiment. Combining several historical and current datasets, we find that cohorts in utero during the pandemic are shorter as children/adolescents and less educated compared to other birth cohorts. We also find that they are more likely to have serious health problems including kidney disease, circulatory and respiratory problems, and diabetes in old age. Despite possible positive selection on health outcomes due to high infant mortality rates during this period (18 percent), our paper finds a strong negative impact of in utero exposure to influenza.

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Universal coverage of IVF pays off

M.P. Vélez et al.
Human Reproduction, June 2014, Pages 1313-1319

Study question: What was the clinical and economic impact of universal coverage of IVF in Quebec, Canada, during the first calendar year of implementation of the public IVF programme?

Study design, size, duration: This prospective comparative cohort study involved 7364 IVF cycles performed in Quebec during 2009 and 2011 and included an economic analysis.

Participants/materials, setting, methods: IVF cycles performed in the five centres offering IVF treatment in Quebec during 2009, before implementation of the public IVF programme, were compared with cycles performed at the same centres during 2011, the first full calendar year following implementation of the programme. Data were obtained from the Canadian Assisted Reproductive Technologies Register (CARTR). Comparisons were made between the two periods in terms of utilization, pregnancy rates, multiple pregnancy rates and costs.

Main results and the role of chance: The number of IVF cycles performed in Quebec increased by 192% after the new policy was implemented. Elective single-embryo transfer was performed in 1.6% of the cycles during Period I (2009), and increased to 31.6% during Period II (2011) (P < 0.001). Although the clinical pregnancy rate per embryo transfer was lower in 2011 than in 2009 (24.9 versus 39.9%, P < 0.001), the multiple pregnancy rate was greatly reduced (6.4 versus 29.4%, P < 0.001). The public IVF programme increased government costs per IVF treatment cycle from CAD$3730 to CAD$4759. Despite increased costs per cycle, the efficiency defined by the cost per live birth, which factored in downstream health costs up to 1 year post delivery, decreased from CAD$49 517 to CAD$43 362 per baby conceived by either fresh and frozen cycles.

By KEVIN LEWIS | 09:00:00 AM

Wednesday, June 4, 2014

Emergent

Direct and Indirect Implications of Pathogen Prevalence for Scientific and Technological Innovation

Damian Murray
Journal of Cross-Cultural Psychology, July 2014, Pages 971-985

Abstract:
Rates of scientific and technological innovation vary widely across cultures, but why? Given the previously documented effects of disease threat on cultural values and traits that inhibit innovation, this variation may be due, at least in part, to regional variation in the prevalence of disease-causing pathogens. Five country-level measures of innovation were used to investigate this hypothesis. Preliminary results revealed that pathogen prevalence was significantly associated with all five measures of innovation. Further analyses revealed that pathogen prevalence significantly predicted innovation when statistically controlling for other purported causes of cross-cultural variation in innovation, such as education, wealth, and population structure. Finally, mediational analyses revealed that the effect of disease prevalence on innovation was mediated by levels of collectivism and conformity. These results demonstrate that the previously documented impact of disease threat on cultural value systems may have downstream consequences for scientific and technological innovation.

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Measuring institutional quality in ancient Athens

Andreas Bergh & Carl Hampus Lyttkens
Journal of Institutional Economics, June 2014, Pages 279-310

Abstract:
We use the Economic Freedom Index to characterize the institutions of the Athenian city-state in the fourth century BCE. It has been shown that ancient Greece witnessed improved living conditions for an extended period of time. Athens in the fourth century appears to have fared particularly well. We find that economic freedom in ancient Athens is on level with the highest ranked modern economies such as Hong Kong and Singapore. With the exception of the position of women and slaves, Athens scores high in almost every dimension of economic freedom. Trade is probably highly important even by current standards. As studies of contemporary societies suggest that institutional quality is probably an important determinant of economic growth, it may also have been one factor in the relative material success of the Athenians.

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State Capacity and Long-Run Economic Performance

Mark Dincecco & Gabriel Katz
Economic Journal, forthcoming

Abstract:
We present new evidence about the long-run relationship between state capacity-the fiscal and administrative power of states-and economic performance. Our database is novel and spans 11 European countries and 4 centuries from the Old Regime to World War I. We argue that national governments undertook two political transformations over this period: fiscal centralisation and limited government. We find a significant direct relationship between fiscal centralisation and economic growth. Furthermore, we find that an increase in the state's capacity to extract greater tax revenues was one mechanism through which both political transformations improved economic performance. Our analysis shows systematic evidence that state capacity is an important determinant of long-run economic growth.

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Size and Dynastic Decline: The Principal-Agent Problem in Late Imperial China, 1700–1850

Tuan-Hwee Sng
Explorations in Economic History, forthcoming

Abstract:
This paper argues that China’s size was one reason behind its relative decline in the nineteenth century. A ruler governing a large country faces severe agency problems. Given his monitoring difficulties, his agents have strong incentives to extort the taxpayers. This forces him to keep taxes low to prevent revolts. Economic expansion could aggravate corruption and cause further fiscal weakening. To support the model’s predictions, I show that the Chinese state taxed and administered sparingly, especially in regions far from Beijing. Furthermore, its fiscal capacity contracted steadily during the prosperous eighteenth century, sowing the seeds for the nineteenth-century crises.

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American Exceptionalism as a Problem in Global History

Robert Allen
Journal of Economic History, June 2014, Pages 309-350

Abstract:
The causes of the United States’ exceptional economic performance are investigated by comparing American wages and prices with wages and prices in Great Britain, Egypt, and India. American industrialization in the nineteenth century required tariff protection since the country's comparative advantage lay in agriculture. After 1895 surging American productivity shifted the country's comparative advantage to manufacturing. Egypt and India could not have industrialized by following American policies since their wages were so low and their energy costs so high that the modern technology that was cost effective in Britain and the United States would not have paid in their circumstances.

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The Legacy of Historical Conflict: Evidence from Africa

Timothy Besley & Marta Reynal-Querol
American Political Science Review, forthcoming

Abstract:
This article exploits variation between and within countries to examine the legacy of recorded conflicts in Africa in the precolonial period between 1400 and 1700. There are three main findings. First, we show that historical conflict is correlated with a greater prevalence of postcolonial conflict. Second, historical conflict is correlated with lower levels of trust, a stronger sense of ethnic identity, and a weaker sense of national identity across countries. Third, historical conflict is negatively correlated with subsequent patterns of development looking at the pattern across grid cells within countries.

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Playing Favorites: How Shared Beliefs Shape the IMF's Lending Decisions

Stephen Nelson
International Organization, May 2014, Pages 297-328

Abstract:
International organizations (IOs) suffuse world politics, but the International Monetary Fund (IMF) stands out as an unusually important IO. My research suggests that IMF lending is systematically biased. Preferential treatment is largely driven by the degree of similarity between beliefs held by IMF officials and key economic policy-makers in the borrowing country. This article describes the IMF's ideational culture as “neoliberal,” and assumes it to be stable during the observation window (1980–2000). The beliefs of top economic policy-makers in borrowing countries, however, vary in terms of their distance from IMF officials' beliefs. When fellow neoliberals control the top economic policy posts the distance between the means of the policy team's beliefs and the IMF narrows; consequently, IMF loans become less onerous, more generous, and less rigorously enforced. I gathered data on the number of conditions and the relative size of loans for 486 programs in the years between 1980 and 2000. I collected data on waivers, which allow countries that have missed binding conditions to continue to access funds, as an indicator for enforcement. I rely on indirect indicators, gleaned from a new data set that contains biographical details of more than 2,000 policy-makers in ninety developing countries, to construct a measure of the proportion of the top policy officials that are fellow neoliberals. The evidence from a battery of statistical tests reveals that as the proportion of neoliberals in the borrowing government increases, IMF deals get comparatively sweeter.

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The stained China miracle: Corruption, regulation, and firm performance

Ting Jiang & Huihua Nie
Economics Letters, forthcoming

Abstract:
Regional corruptness in China has a positive effect on the profitability of private firms, but not that of state-owned firms. A natural experiment of exogenous trade policy change suggests that corruption may help private firms circumvent government regulation.

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The Political Economy of Development in China and Vietnam

Edmund Malesky & Jonathan London
Annual Review of Political Science, 2014, Pages 395-419

Abstract:
Two theories predominate in discussions of why China and Vietnam have, over the past three decades, achieved such rapid economic growth. The first argues that their startling performance can be explained by economic factors associated with late industrialization. The second proposes that China and Vietnam represent novel models of political economic organization that need to be better studied and understood. In this essay we review the voluminous literature on the political economy of China and Vietnam, evaluating the critical debates over the economic benefits of decentralization, experimentation, and state-led development. Although the debate remains unsettled, analysis suggests that growth in the two countries was most robust during periods of state withdrawal from the economy and that current economic difficulties in both countries are now arising from the scale and character of the state's role in both economies.

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A History of Resistance to Privatization in Russia

Paul Castañeda Dower & Andrei Markevich
Journal of Comparative Economics, forthcoming

Abstract:
We investigate the connection between privatization in post-communist Russia and a mass privatization reform in Imperial Russia, the 1906 Stolypin land reform. Specifically, we relate historical measures of conflicts associated with the Stolypin reform to contemporary views on whether the privatization of the 1990’s should be revised. These historical measures could influence contemporary views in two ways: first, differences in privatization-related conflicts in the past could have directly altered attitudes towards privatization in the 1990s and, second, these differences could merely reflect pre-determined dissimilarities in preferences. We first show that historical measures of resistance to privatization are associated with views that favor state ownership. One standard deviation increase in the historical resistance to privatization explains a quarter of the negative sentiment toward private property today. We also find that negative experiences with the Stolypin reform are associated with views on the procedural unfairness of modern privatization reforms, suggesting that pre-determined preferences can not fully explain the weight of history.

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Jurists, Clerics, and Merchants: The Rise of Learned Law in Medieval Europe and its Impact on Economic Growth

Hans-Bernd Schäfer & Alexander Wulf
Journal of Empirical Legal Studies, June 2014, Pages 266–300

Abstract:
Between the years 1200 and 1600, economic development in Catholic Europe gained momentum. By the end of this period, per-capita income levels were well above the income levels in all other regions of the world. We relate this unique development to the resurrection of Roman law, the rise of canon law, and the establishment of law as a scholarly and scientific discipline taught in universities. We test two competing hypotheses on the impact of these processes on economic growth in medieval Europe. The first conjecture is that the spread of substantive Roman law was conducive to the rise of commerce and economic growth. The second and competing conjecture is that growth occurred not as a result of the reception of substantive Roman law but because of the rational, scientific, and systemic features of Roman and canon law and the training of jurists in the newly established universities (Verwissenschaftlichung). This gave the law throughout Europe an innovative flexibility, which also influenced merchant law (lex mercatoria), and customary law. Using data on the population of more than 200 European cities as a proxy for per-capita income, we find that an important impact for economic development was not primarily the content of Roman law, but the rise of law faculties in universities and the emergence of a legal method developed by glossators and commentators in their interpretation and systematization of the sources of Roman law (Corpus Juris Civilis, Digests) and canon law. The endeavor to extract general normative conclusions from these sources led to abstraction, methodology, and the rise of law as a scholarly discipline. Wherever law faculties were founded anywhere in Europe, jurists learned new legal concepts and skills that were unknown before and conducive for doing business.

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Labour productivity and human capital in the European maritime sector of the eighteenth century

Jelle Van Lottum & Jan Luiten Van Zanden
Explorations in Economic History, forthcoming

Abstract:
Pre-modern growth was to a large extent dependent on processes of commercialization and specialization, based on cheap transport. Seminal interpretations of the process of economic growth before the Industrial Revolution have pointed to the strategic importance of the rise of the Atlantic economy and the growth of cities linked to this, but have not really explained why Europeans were so efficient in organizing large international networks of shipping and trade. Most studies concerning early modern shipping have focused on changes in ship design (capital investments) in explaining long-term performance of European shipping in the pre-1800 period; in this paper we argue that this is only part of the explanation. Human capital – the quality of the labour force employed on ships – mattered as well. We firstly demonstrate that levels of human capital on board European ships were relatively high, and secondly that there were powerful links between the level of labour productivity in shipping and the quality of the workforce. This suggests strongly that shipping was a ‘high tech’ industry not only employing high quality capital goods, but also, as a complementary input, high quality labour, which was required to operate the increasingly complex ships and their equipment.

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Was Weber Right? The Role of Urban Autonomy in Europe's Rise

David Stasavage
American Political Science Review, forthcoming

Abstract:
Do strong property rights institutions always help, or might they sometimes actually hinder development? Since Max Weber and before, scholars have claimed that the presence of politically autonomous cities, controlled by merchant oligarchies guaranteeing property rights, helped lead to Europe's rise. Yet others suggest that autonomous cities were a hindrance to growth because rule by merchant guilds resulted in restrictions that stifled innovation and trade. I present new evidence and a new interpretation that reconcile the two views of city autonomy. I show that politically autonomous cities initially had higher population growth rates than nonautonomous cities, but over time this situation reversed itself. My evidence also suggests why autonomous cities eventually disappeared as a form of political organization. Instead of military weakness, it may have been their political institutions that condemned them to become obsolete.

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Initial Endowments and Economic Reform in 27 Post-Socialist Countries

Ariel BenYishay & Pauline Grosjean
Journal of Comparative Economics, forthcoming

Abstract:
This study explores how initial endowments at the start of transition have shaped reform outcomes and reform trajectories in 27 former communist countries in Europe and Central Asia. Countries of the former Russian Empire that had a large resources sector at the start of transition underperformed other countries in terms of the speed and the depth of economic reforms. The effect is particularly strong for privatization, enterprise restructuring and competition policy. Within country, Ottoman or Russian provinces that had a large natural resources sector in 1989 have a lower share of entrepreneurs and of small and medium sized enterprises today and also experience endemic corruption. Our results indicate that the propensity, or ability, of special interest groups to capture the reform process that would erode their rents were facilitated by the quality of institutions whose foundations go back centuries; and that the effects on the local economy are real.

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Indirect Rule and State Weakness in Africa: Sierra Leone in Comparative Perspective

Daron Acemoglu et al.
NBER Working Paper, May 2014

Abstract:
A fundamental problem for economic development is that most poor countries have ‘weak states’ which are incapable or unwilling to provide basic public goods such as law enforcement, order, education and infrastructure. In Africa this is often attributed to the persistence of ‘indirect rule’ from the colonial period. In this paper we discuss the ways in which a state constructed on the basis of indirect rule is weak and the mechanisms via which this has persisted since independence in Sierra Leone. We also present a hypothesis as to why the extent to which indirect rule has persisted varies greatly within Africa, linking it to the presence or the absence of large centralized pre-colonial polities within modern countries. Countries which had such a polity, such as Ghana and Uganda, tended to abolish indirect rule since it excessively empowered traditional rulers at the expense of post-colonial elites. Our argument provides a new mechanism which can explain the positive correlation between pre-colonial political centralization and modern public goods and development outcomes.

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Poverty and Crime: Evidence from Rainfall and Trade Shocks in India

Lakshmi Iyer & Petia Topalova
Harvard Working Paper, April 2014

Abstract:
Does poverty lead to crime? We shed light on this question using two independent and exogenous shocks to household income in rural India: the dramatic reduction in import tariffs in the early 1990s and rainfall variations. We find that trade shocks, previously shown to raise relative poverty, also increased the incidence of violent crimes and property crimes. The relationship between trade shocks and crime is similar to the observed relationship between rainfall shocks and crime. Our results thus identify a causal effect of poverty on crime. They also lend credence to a large literature on the effects of weather shocks on crime and conflict, which has usually assumed that the income channel is the most relevant one.

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Income and Population Growth

Markus Brueckner & Hannes Schwandt
Economic Journal, forthcoming

Abstract:
Do populations grow as countries become richer? In this paper we estimate the effects on population growth of shocks to national income that are plausibly exogenous and unlikely to be driven by technological change. For a panel of over 139 countries spanning the period 1960-2007 we interact changes in international oil prices with countries’ average net-export shares of oil in GDP. Controlling for country and time fixed effects, we find that this measure of oil price induced income growth is positively associated with population growth. The IV estimates indicate that a one percentage point increase in GDP per capita growth over a ten year period increases countries’ population growth by around 0.1 percentage points. Further, we find that this population effect results from both a positive effect on fertility and a negative effect on infant and child mortality.

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On the Distributive Costs of Drug-Related Homicides

Nicolás Ajzenman, Sebastian Galiani & Enrique Seira
NBER Working Paper, April 2014

Abstract:
Reliable estimates of the effects of violence on economic outcomes are scarce. We exploit the manyfold increase in homicides in 2008-2011 in Mexico resulting from its war on organized drug traffickers to estimate the effect of drug-related homicides on house prices. We use an unusually rich dataset that provides national coverage on house prices and homicides and exploit within-municipality variations. We find that the impact of violence on housing prices is borne entirely by the poor sectors of the population. An increase in homicides equivalent to one standard deviation leads to a 3% decrease in the price of low-income housing. In spite of this large burden on the poor, the willingness to pay in order to reverse the increase in drug-related crime is not high. We estimate it to be approximately 0.1% of Mexico’s GDP.

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Does the Quality of Electricity Matter? Evidence from Rural India

Ujjayant Chakravorty, Martino Pelli & Beyza Ural Marchand
Journal of Economic Behavior & Organization, forthcoming

Abstract:
This paper estimates the returns to household income due to improved access to electricity in rural India. We examine the effect of connecting a household to the grid and of the quality of electricity, defined as hours of daily supply. The analysis is based on two rounds of a representative panel of more than 10,000 households. We use the district-level density of transmission cables as instrument for the electrification status of the household. We find that a grid connection increases non-agricultural incomes of rural households by about 9 percent during the study period (1994-2005). However, a grid connection and a higher quality of electricity (in terms of fewer outages and more hours per day) increases non-agricultural incomes by about 28.6 percent in the same period.

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Entry, information, and financial development: A century of competition between French banks and notaries

Philip Hoffman, Gilles Postel-Vinay & Jean-Laurent Rosenthal
Explorations in Economic History, forthcoming

Abstract:
Poorly developed financial markets are widely believed to block economic growth, because only modern financial intermediaries such as banks can mobilize large amounts of financial capital at low cost. This claim is supported by cross country regressions, but the regressions assume that credit intermediation is measured accurately before modern financial intermediaries arrive. If traditional intermediaries were mobilizing large amounts of financial capital before banks or other modern intermediaries appear, then the strength of the relationship between financial development and economic growth would be cast into doubt. Using an original panel data set from nineteenth-century France, we provide the first estimates of how much financial capital key traditional intermediaries (notaries) were mobilizing for an entire economy during its first century of economic growth, and we analyze the lending that the notaries made possible in French mortgage market. The amount of capital they mobilized turns out to be large. We then analyze the effect that financial deepening had on the notaries as banks spread and find that the banks’ and notaries’ services were in all likelihood complements. The implication is that the link between financial development and economic growth may therefore be weaker than is assumed.

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What is driving the 'African Growth Miracle'?

Margaret McMillan & Kenneth Harttgen
NBER Working Paper, April 2014

Abstract:
We show that much of Africa’s recent growth and poverty reduction can be traced to a substantive decline in the share of the labor force engaged in agriculture. This decline has been accompanied by a systematic increase in the productivity of the labor force, as it has moved from low productivity agriculture to higher productivity manufacturing and services. These declines have been more rapid in countries where the initial share of the labor force engaged in agriculture is the highest and where commodity price increases have been accompanied by improvements in the quality of governance.

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Income Shocks and HIV in Africa

Marshall Burke, Erick Gong & Kelly Jones
Economic Journal, forthcoming

Abstract:
We examine how variation in local economic conditions has shaped the AIDS epidemic in Africa. Using data from over 200,000 individuals across 19 countries, we match biomarker data on individuals’ serostatus to information on local rainfall shocks, a large source of income variation for rural households. We estimate infection rates in HIV-endemic rural areas increase by 11% for every recent drought, an effect that is statistically and economically significant. Income shocks explain up to 20% of variation in HIV prevalence across African countries, suggesting existing approaches to HIV prevention could be bolstered by helping households manage income risk better.

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Did China's Adoption of IFRS Attract More Foreign Institutional Investment?

Mark DeFond et al.
University of Southern California Working Paper, April 2014

Abstract:
We examine the impact of China’s IFRS adoption on foreign institutional investment. We find that foreign institutional investment does not increase after China’s IFRS adoption, and some evidence that it actually declines, particularly among firms with weaker incentives to credibly implement IFRS, or with greater ability to manipulate IFRS’s fair value provisions. We also find that the association between earnings and returns generally declines after IFRS adoption, consistent with reduced earnings quality. In addition, we find that foreign institutional investors’ returns decline after China’s IFRS adoption. Finally, the decline in foreign institutional investment is greater among investors from countries with weak institutions that have also adopted IFRS. Taken together, our evidence suggests that China’s weak institutional infrastructure impairs IFRS’s ability to improve financial reporting quality and increase foreign institutional investment.

By KEVIN LEWIS | 09:00:00 AM


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