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Monday, September 29, 2014

Not my job

Labor Market Fluidity and Economic Performance

Steven Davis & John Haltiwanger
NBER Working Paper, September 2014

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

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The Changing Roles of Education and Ability in Wage Determination

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

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

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

Peter Cappelli
NBER Working Paper, August 2014

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

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Endogenous age discrimination

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

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

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Demographics and Entrepreneurship

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

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

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

Robert Gordon
NBER Working Paper, August 2014

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

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

Daron Acemoglu et al.
NBER Working Paper, August 2014

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

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Long Workweeks and Strange Hours

Daniel Hamermesh & Elena Stancanelli
NBER Working Paper, September 2014

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

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The Changing Benefits of Early Work Experience

Charles Baum & Christopher Ruhm
NBER Working Paper, August 2014

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

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The Effects of Minimum Wages over the Business Cycle

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

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

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A life-cycle model of unemployment and disability insurance

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

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

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Taxation and the quality of entrepreneurship

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

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

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

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

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

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Do Tips Increase Workers' Income?

Oz Shy
Management Science, forthcoming

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

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Unemployed but Optimistic: Optimal Insurance Design with Biased Beliefs

Johannes Spinnewijn
Journal of the European Economic Association, forthcoming

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

By KEVIN LEWIS | 09:00:00 AM

Sunday, September 28, 2014

Smarty pants

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

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

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

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Why complex cognitive ability increases with absolute latitude

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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Metabolic costs and evolutionary implications of human brain development

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

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

By KEVIN LEWIS | 09:00:00 AM

Saturday, September 27, 2014

With abandon

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

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

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

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Guilt Enhances the Sense of Control and Drives Risky Judgments

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

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

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Extraverted populations have lower savings rates

Jacob Hirsh
Personality and Individual Differences, forthcoming

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

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Self-regulation and Health

Henry Saffer
NBER Working Paper, September 2014

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

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

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

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

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Mindset induction effects on cognitive control: A neurobehavioral investigation

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

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

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

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

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

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Neuroanatomy Predicts Individual Risk Attitudes

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

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

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The Role of Hope in Financial Risk Seeking

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

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

By KEVIN LEWIS | 09:00:00 AM

Friday, September 26, 2014

For your health

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

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

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

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

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

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

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

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

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

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

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

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

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

Jonathan Gruber & Robin McKnight
NBER Working Paper, September 2014

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

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

Karen Joynt et al.
Health Services Research, forthcoming

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

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

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

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

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Process Learning and the Implementation of Medicaid Reform

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Roi Livne
American Sociological Review, forthcoming

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

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

Brenda Sirovich et al.
JAMA Internal Medicine, forthcoming

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

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

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

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

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

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

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

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

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

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Health Insurance and Chronic Conditions in Low-Income Urban Whites

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

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

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Do Patient-Centered Medical Homes Reduce Emergency Department Visits?

Guy David et al.
Health Services Research, forthcoming

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

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

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

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

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

By KEVIN LEWIS | 09:00:00 AM

Thursday, September 25, 2014

It's a local issue

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

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

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

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Focusing on the Negative: Cultural Differences in Expressions of Sympathy

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

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

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The Agricultural Origins of Time Preference

Oded Galor & Ömer Özak
NBER Working Paper, August 2014

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

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Public Opinion and the French Capital Punishment Debate of 1908

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

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

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Individualist–Collectivist Culture and Trust Radius: A Multilevel Approach

André van Hoorn
Journal of Cross-Cultural Psychology, forthcoming

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

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Arab Jew in Palestine

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

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

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

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

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

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

Kosuke Takemura
Journal of Cross-Cultural Psychology, forthcoming

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

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On Metacognition and Culture

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

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

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

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

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

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Knowledge and Belief Understanding Among Iranian and Australian Preschool Children

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

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

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

Leonardo Bursztyn & Davide Cantoni
NBER Working Paper, August 2014

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

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

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

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

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

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

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

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The Subtlety of Sound: Accent as a Marker for Culture

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

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

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

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

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

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

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

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

By KEVIN LEWIS | 09:00:00 AM

Wednesday, September 24, 2014

Vaulting

Monetary Stability and the Rule of Law

Mark Koyama & Blake Johnson
Journal of Financial Stability, forthcoming

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

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

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

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

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

Alan Jagolinzer et al.
Stanford Working Paper, August 2014

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

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Failure to Refinance

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

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

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Savings and Prize-Linked Savings Accounts

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

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

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

Daniel Hartley
Regional Science and Urban Economics, forthcoming

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

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A Century of Capital Structure: The Leveraging of Corporate America

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

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

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

Claudine Gartenberg
Management Science, forthcoming

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

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

Anil Kumar
Federal Reserve Working Paper, June 2014

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

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

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

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

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Does Banking Competition Affect Innovation?

Jess Cornaggia et al.
Journal of Financial Economics, forthcoming

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

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

Christopher Witko
British Journal of Political Science, forthcoming

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

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Do Relationships Matter? Evidence from Loan Officer Turnover

Alejandro Drexler & Antoinette Schoar
Management Science, forthcoming

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

By KEVIN LEWIS | 09:00:00 AM

Tuesday, September 23, 2014

High and low

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

Monica Deza
Journal of Econometrics, forthcoming

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

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How different are smokers? An analysis based on personal finances

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

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

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

Kathleen Parks et al.
Psychology of Addictive Behaviors, forthcoming

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

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

Marcus Bachhuber et al.
JAMA Internal Medicine, forthcoming

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

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

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

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

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

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Exposure to violence, substance use, and neighborhood context

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

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

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

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

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

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

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

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

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

Carlos Blanco et al.
JAMA Psychiatry, forthcoming

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

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

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

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

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

Matthew Johnson et al.
Journal of Psychopharmacology, forthcoming

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

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

Nora Charles et al.
Psychology of Addictive Behaviors, forthcoming

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

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The Incentives Created by a Harm Reduction Approach to Smoking Cessation

Jennifer Maki
International Journal of Drug Policy, forthcoming

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

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

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

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

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

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

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

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

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

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

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Correlates of Prescription Drug Market Involvement among Young Adults

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

By KEVIN LEWIS | 09:00:00 AM

Monday, September 22, 2014

Under control

Creative Destruction: Barriers to Urban Growth and the Great Boston Fire of 1872

Richard Hornbeck & Daniel Keniston
NBER Working Paper, September 2014

Abstract:
Historical city growth, in the United States and worldwide, has required remarkable transformation of outdated durable buildings. Private land-use decisions may generate inefficiencies, however, due to externalities and various rigidities. This paper analyzes new plot-level data in the aftermath of the Great Boston Fire of 1872, estimating substantial economic gains from the created opportunity for widespread reconstruction. An important mechanism appears to be positive externalities from neighbors' reconstruction. Strikingly, gains from this opportunity for urban redevelopment were sufficiently large that increases in land values were comparable to the previous value of all buildings burned.

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Land Use Regulation and Welfare

Matthew Turner, Andrew Haughwout & Wilbert van der Klaauw
Econometrica, July 2014, Pages 1341–1403

Abstract:
We evaluate the effect of land use regulation on the value of land and on welfare. Our estimates are based on a decomposition of the effects of regulation into three components: an own-lot effect, which reflects the cost of regulatory constraints to the owner of a parcel; an external effect, which reflects the value of regulatory constraints on one's neighbors; a supply effect, which reflects the effect of regulated scarcity of developable land. Using this decomposition, we arrive at a novel strategy for estimating a plausibly causal effect of land use regulation on land value and welfare. This strategy exploits cross-border changes in development, prices, and regulation in regions near municipal borders. Our estimates suggest large negative effects of regulation on the value of land and welfare in these regions.

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Does the Revolving Door Affect the SEC’s Enforcement Outcomes?

Ed DeHaan et al.
Stanford Working Paper, March 2014

Abstract:
We investigate the consequences of the “revolving door” for lawyers at the SEC’s enforcement division. If future job opportunities make SEC lawyers exert more enforcement effort to develop and showcase their expertise, then the revolving door phenomenon will promote more aggressive regulatory activity (the “human capital” hypothesis). In contrast, SEC lawyers can relax enforcement efforts in order to develop networking skills and/or curry favor with prospective employers at private law firms (the “rent seeking hypothesis”). We collect data on the career paths of 336 SEC lawyers that span 284 SEC enforcement actions against accounting misrepresentation over the period 1990-2007. We find evidence consistent with the human capital hypothesis. Specifically, enforcement outcomes are more aggressive for lawyers that leave the SEC to join law firms that specialize in defending clients before the SEC. We find no notable difference in enforcement outcomes for lawyers hired by the SEC from private law firms (“inbound revolvers”). Due to data limitations, we are unable to comprehensively analyze every aspect of the revolving door phenomenon, including whether revolving door incentives influence SEC lawyers’ choice of which cases to pursue. Nevertheless, our results provide an important first empirical look into the effects of revolving door incentives on the SEC’s enforcement process.

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Financial Regulation Policy Uncertainty and Credit Spreads in the U.S.

Gabriela Nodari
Journal of Macroeconomics, September 2014, Pages 122–132

Abstract:
This paper investigates the linear and nonlinear effects of financial regulation policy uncertainty shocks on U.S. macroeconomic aggregates within a Vector Autoregressive (VAR) framework. Financial regulation policy uncertainty (FRPU) is quantified with a news-based index developed by Baker et al. (2013). Particular attention is paid to the reaction of corporate credit spreads to FRPU shocks. The linear VAR results suggest that exogenous increases in the FRPU index trigger increases in the cost of external finance as well as a persistent negative impact on the real economy. By using a nonlinear (Smooth-Transition) VAR model, I then show that these effects are asymmetric over the business cycle, i.e., credit spreads are estimated to rise three times more during recessions than in non-recessionary periods. Importantly, in both the linear and nonlinear models, FRPU shocks account for large shares of the variability of unemployment and credit spreads. My findings are supported by various robustness checks.

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Cheating in Contests: Anti-doping Regulatory Problems in Sport

Vijay Mohan & Bharat Hazari
Journal of Sports Economics, forthcoming

Abstract:
We examine the impact of regulation on the doping decisions of athletes in a Tullock contest. The regulatory measures we consider are greater monitoring by sports authorities and a lowering of the prize in the contest. When legal efforts and illegal drugs are substitutes, an increase in anti-doping regulation may, counterintuitively, increase the levels of doping activity by athletes. Anti-doping regulation can also have the undesirable consequence of decreasing legal efforts; in our model, this always occurs when legal efforts and illegal drugs are complements, and under certain circumstances when they are substitutes.

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Weak Versus Strong Net Neutrality

Joshua Gans
NBER Working Paper, May 2014

Abstract:
This paper provides a framework to classify and evaluate the impact of net neutrality regulations on the allocation of consumer attention and the distribution of surplus between consumers, ISPs and content providers. While the model provided largely nests other contributions in the literature, here the focus is on including direct payments from consumers to content providers. With this additional price it is demonstrated that the type of net neutrality regulation (i.e., weak versus strong net neutrality) matters for such regulations to have real effects. In addition, we provide support for the notion that strong net neutrality may stimulate content provider investment while the model concludes that there is unlikely to be any negative impact from such regulation on ISP investment. Counter to many claims, it is argued here that ISP competition may not be a substitute for net neutrality regulation in bringing about these effects.

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Institutional and Political Sources of Legislative Change: Explaining How Private Organizations Influence the Form and Content of Consumer Protection Legislation

Shauhin Talesh
Law & Social Inquiry, forthcoming

Abstract:
This article explores how private organizations influence the content and meaning of consumer protection legislation. I examine why California forced consumers to use a private dispute resolution system that affords consumers fewer rights, while Vermont adopted a state-run disputing structure that affords consumers greater rights. Drawing from historical and new institutional theories, I analyze twenty-five years of legislative history, as well as interviews with drafters of the California and Vermont laws, to show how automobile manufacturers weakened the impact of a powerful California consumer warranty law by creating dispute resolution venues. As these structures became institutionalized in the lemon law field, manufacturers reshaped the meaning of legislation. Unlike California, the political alliances in Vermont and a different developmental path led to a state-run dispute resolution structure. I conclude that how social reform laws are designed and how businesses influence social reform legislation can increase or decrease the achievement of a statute's social reform goals.

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Consumer Inattention and Bill-Shock Regulation

Michael Grubb
Review of Economic Studies, forthcoming

Abstract:
For many goods and services such as electricity, healthcare, cellular-phone service, debit-card transactions, or those sold with loyalty discounts, the price of the next unit of service depends on past usage. As a result, consumers who are inattentive to their past usage but are aware of contract terms may remain uncertain about the price of the next unit. I develop a model of inattentive consumption, derive equilibrium pricing when consumers are inattentive, and evaluate bill-shock regulation requiring firms to disclose information that substitutes for attention. When inattentive consumers are sophisticated but heterogeneous in their expected demand, bill-shock regulation reduces social welfare in fairly-competitive markets, which may be the effect of the FCC's recent bill-shock agreement. If some consumers are attentive while others naively fail to anticipate their own inattention, however, then bill-shock regulation increases social welfare and can benefit consumers. Hence requiring zero-balance alerts in addition to the Federal Reserve's new opt-in rule for debit-card overdraft protection may benefit consumers.

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New Estimates of the Value of a Statistical Life Using Air Bag Regulations as a Quasi-Experiment

Chris Rohlfs, Ryan Sullivan & Thomas Kniesner
American Economic Journal: Economic Policy, forthcoming

Abstract:
Due to Federal regulations, automobile air bag availability was a model-specific discontinuous function of model year for used vehicles in the 1990s and early 2000s. We use the discontinuities and the gradual increase in the supply of air bags to trace out the demand curve for air bags and the implied distribution of the Value of a Statistical Life (VSL) across consumers. Although imprecise, our preferred point estimates indicate that the median VSL is between $9 million and $11 million and that a sizable portion of consumers placed negative values on air bags, probably due to distrust of the technology.

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Effects of a Driver Cellphone Ban on Overall, Handheld, and Hands-Free Cellphone Use while Driving: New Evidence from Canada

Christopher Carpenter & Hai Nguyen
Health Economics, forthcoming

Abstract:
We provide new evidence on the effects of increasingly common driver cellphone bans on self-reported overall, handheld, and hands-free cellphone use while driving by studying Ontario, Canada, which instituted a 3-month education campaign in November 2009 followed by a binding driver cellphone ban in February 2010. Using residents of Alberta as a control group in a difference-in-differences framework, we find visual and regression-based evidence that Ontario's cellphone ban significantly reduced overall and handheld cellphone use. We also find that the policies significantly increased hands-free cellphone use. The reductions in overall and handheld use are driven exclusively by women, whereas the increases in hands-free use are much larger for men. Our results provide the first direct evidence that cellphone bans have the unintended effect of inducing substitution to hands-free devices.

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Effects of Intelligent Advanced Warnings on Drivers Negotiating the Dilemma Zone

Leo Gugerty et al.
Human Factors: The Journal of the Human Factors and Ergonomics Society, September 2014, Pages 1021-1035

Objective: We investigated whether intelligent advanced warnings of the end of green traffic signals help drivers negotiate the dilemma zone (DZ) at signalized intersections and sought to identify behavioral mechanisms for any warning-related benefits.

Background: Prior research suggested that warnings of end of green can increase slowing and stopping frequency given the DZ, but drivers may sometimes respond to warnings by speeding up.

Method: In two simulator studies, we compared six types of roadway or in-vehicle warnings with a no-warning control condition. Using multilevel modeling, we tested mediation models of the behavioral mechanisms underlying the effects of warnings.

Results: In both studies, warnings led to more stopping at DZ intersections and milder decelerations when stopping compared with no warning. Drivers’ predominant response to warnings was anticipatory slowing on approaching the intersection, not speeding up. The increased stopping with warning was mediated by increased slowing. In Study 1, anticipatory slowing given warnings generalized to green-light intersections where no warning was given. In Study 2, we found that lane-specific warnings (e.g., LED lights embedded in each lane) sometimes led to fewer unsafe emergency stops than did non-lane-specific roadside warnings.

Conclusion: End-of-green warnings led to safer behavior in the DZ and on the early approach to intersections. The main mechanism for the benefits of warnings was drivers’ increased anticipatory slowing on approaching an intersection. Lane-specific warnings may have some benefits over roadside warnings.

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The Real Product Market Impact of Mergers

Albert Sheen
Journal of Finance, forthcoming

Abstract:
I document sources of value creation in mergers by analyzing novel data on the quality and price of goods sold by merging firms. When two competitors in a product market merge, their products converge in quality, and prices fall relative to the competition. These effects take two to three years to be fully realized and are stronger in mature industries. Prices do not fall, however, when the acquirer is diversifying into a new product market. This direct evidence of real changes induced by merger activity is consistent with consolidation by related merging firms to achieve operational efficiencies and lower costs.

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Futures Market Failure?

Philip Garcia, Scott Irwin & Aaron Smith
American Journal of Agricultural Economics, forthcoming

Abstract:
In a well-functioning futures market, the futures price at expiration equals the price of the underlying asset. This condition failed to hold in grain markets for most of 2005-2010, calling into question the ability of these markets to perform their price discovery and risk management functions. During this period, futures contracts expired up to 35% above the cash grain price. We develop a dynamic rational expectations model of commodity storage that explains how these recent convergence failures were generated by the institutional structure of the delivery system. When delivery occurs on a grain futures contract, the firm on the short side of the market provides a delivery instrument (a warehouse receipt or shipping certificate) to the firm on the long side of the market. The firm taking delivery may hold the delivery instrument indefinitely, providing it pays a daily storage rate. The futures exchange sets the maximum allowable storage rate at a fixed value. We show that non-convergence arises in equilibrium when the market price of physical grain storage exceeds the maximum storage rate on delivery instruments. We call the difference between the price of carrying physical grain and the maximum storage rate the wedge, and demonstrate theoretically and empirically that the magnitude of the non-convergence equals the expected present discounted value of a function of future wedges.

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Goods Prices and Availability in Cities

Jessie Handbury & David Weinstein
Review of Economic Studies, forthcoming

Abstract:
This paper uses detailed barcode data on purchase transactions by households in 49 U.S. cities to calculate the first theoretically-founded urban price index. In doing so, we overcome a large number of problems that have plagued spatial price index measurement. We identify two important sources of bias. Heterogeneity bias arises from comparing different goods in different locations, and variety bias arises from not correcting for the fact that some goods are unavailable in some locations. Eliminating heterogeneity bias causes 97 percent of the variance in the price level of food products across cities to disappear relative to a conventional index. Eliminating both biases reverses the common finding that prices tend to be higher in larger cities. Instead, we find that price level for food products falls with city size.

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Who Benefits from Industrial Concentration? Evidence from U.S. Manufacturing

Rigoberto Lopez, Elena Lopez & Carmen Lirón-España
Journal of Industry, Competition and Trade, September 2014, Pages 303-317

Abstract:
This article estimates the impact of industrial concentration on aggregate welfare as well as consumer and producer surpluses taking into account market power and cost efficiency effects. Using a sample of 232 U.S. manufacturing industries, empirical results indicate that an across-the-board increase in concentration would enhance aggregate welfare in 69% of the industries due to widespread efficiency gains, although these accrue mostly to producers and are not passed on to consumers. Further results indicate that greater concentration is likely to enhance aggregate welfare in industries with low or moderate initial concentration that exhibit economies of scale and have greater exposure to international trade. However, consumers benefit only from increased concentration in industries whose initial levels are low and which face more import competition, lower exports and smaller markets. Producers benefit in symmetrically opposite ways, except for the case of low initial levels of concentration. In the absence of government intervention, Pareto improvements wherein everyone benefits from greater concentration are only guaranteed in industries with low levels of initial concentration in which efficiency gains yield price reductions that benefit consumers as well as producers.

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Neighborhood Governments and Their Role in Property Values

Daniel Scheller
Urban Affairs Review, forthcoming

Abstract:
More U.S. citizens live in neighborhoods governed by homeowners (HOAs) or neighborhood associations (NAs) than in any period of American history. Property values are typical association goals. Research fails to consider all types of associations in the examination of the effects of neighborhood governance on property values. In this article, I study the effects of HOAs and NAs on property values. I find that HOAs increase property values, while NAs exert no influence on property values.

By KEVIN LEWIS | 09:00:00 AM

Sunday, September 21, 2014

Smackdown

Violent Video Games and Real-World Violence: Rhetoric Versus Data

Patrick Markey, Charlotte Markey & Juliana French
Psychology of Popular Media Culture, forthcoming

Abstract:
Laboratory and correlational studies often find a link between violent video games and minor or benign forms of aggressive behaviors (e.g., exposing an opponent to an unpleasant noise). Based on these studies, the media, lawmakers, and researchers often imply a link between violent video games and violent criminal behavior. Using a similar methodology employed by researchers to examine predictors of severe violent behaviors (Anderson et al., Journal of Personality and Social Psychology 73: 1213–1223, 1997), 4 time-series analyses investigated the associations among violent crime (homicides and aggravated assaults), video game sales, Internet keyword searches for violent video game guides, and the release dates of popular violent video games (both annually and monthly). Contrary to the claims that violent video games are linked to aggressive assaults and homicides, no evidence was found to suggest that this medium was positively related to real-world violence in the United States. Unexpectedly, many of the results were suggestive of a decrease in violent crime in response to violent video games. Possible explanations for these unforeseen findings are discussed and researchers are cautioned about generalizing the results from laboratory and correlational studies to severe forms of violent behavior.

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Marching into battle: Synchronized walking diminishes the conceptualized formidability of an antagonist in men

Daniel Fessler & Colin Holbrook
Biology Letters, August 2014

Abstract:
Paralleling behaviours in other species, synchronized movement is central to institutionalized collective human activities thought to enhance cooperation, and experiments demonstrate that synchrony has this effect. The influence of synchrony on cooperation may derive from an evolutionary history wherein such actions served to signal coalitional strength to both participants and observers — including adversaries. If so, then synchronous movement should diminish individuals' estimations of a foe's formidability. Envisioned physical size and strength constitute the dimensions of a representation that summarizes relative fighting capacity. Experiencing synchrony should therefore lead individuals to conceptualize an antagonist as smaller and weaker. We found that men who walked synchronously with a male confederate indeed envisioned a purported criminal as less physically formidable than did men who engaged in this task without synchronizing.

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Cross-Gender Social Normative Effects for Violence in Middle School: Do Girls Carry a Social Multiplier Effect for At-Risk Boys?

Lisa Yarnell et al.
Journal of Youth and Adolescence, September 2014, Pages 1465-1485

Abstract:
A social multiplier effect is a social interaction in which the behavior of a person in a social network varies with the normative behavior of others in the network, also known as an endogenous interaction. Policies and intervention efforts can harness social multiplier effects because, in theory, interventions on a subset of individuals will have “spillover effects” on other individuals in the network. This study investigates potential social multiplier effects for violence in middle schools, and whether there is evidence for a social multiplier effect transmitted from girls to boys. Three years of longitudinal data (2003–2005) from Project Northland Chicago were used to investigate this question, with a sample consisting of youth in Grades 6 through 8 in 61 Chicago Public Schools (N = 4,233 at Grade 6, N = 3,771 at Grade 7, and N = 3,793 at Grade 8). The sample was 49.3 % female, and primarily African American (41.9 %) and Latino/a (28.7 %), with smaller proportions of whites (12.9 %), Asians (5.2 %) and other ethnicities. Results from two sets of regression models estimating the effects of 20th (low), 50th (average), and 80th (high) percentile scores for girls and boys on levels of violence in each gender group revealed evidence for social multiplier effects. Specifically, boys and girls were both influenced by social multiplier effects within their own gender group, and boys were also affected by normative violence scores among girls, typically those of the best-behaved (20th percentile) girls. The finding that girls may have positive social influence on boys’ levels of violent behavior extends prior findings of beneficial social effects of girls on boys in the domains of education and risky driving. Further, this social normative effect presents a potential opportunity to improve school-based intervention efforts for reducing violence among youth by leveraging girls as carriers of a social multiplier effect for reduced violence in the middle school environmental context, particularly among boys, who are at greater risk.

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Just "Harmless Entertainment"? Effects of Surveillance Reality TV on Physical Aggression

Bryan Gibson et al.
Psychology of Popular Media Culture, forthcoming

Abstract:
Reality TV programs are extremely popular, though little research has examined how they affect viewers. In particular, many reality TV programs contain acts of aggression, mainly verbal or relational forms of aggression. The current study evaluates how different content within reality TV affected viewer aggression. Participants watched a surveillance reality program containing verbal and relational aggression, a surveillance reality program containing supportive family interactions, or a violent crime drama. To see whether surveillance reality programs increase aggression by increasing narcissistic responding, half the participants received an ego threat. Aggression was measured using the intensity and duration of noise administered to an ostensible opponent on a competitive reaction time task. Surveillance reality viewers exposed to relational aggression were more aggressive than those watching either a supportive family surveillance reality program or a violent crime drama. Viewers of the violent crime drama were also more aggressive than those watching the family themed surveillance reality program. Ego threat did not moderate the increase in aggression seen in negative surveillance reality program viewers, suggesting that these programs did not increase narcissistic responding. This is one of the first studies to use an experimental method to document causal effects of reality TV viewing on viewers of these programs. Surveillance reality programs that include relational aggression are not simply “harmless entertainment” — they increase physical aggression.

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Reactions to Media Violence: It’s in the Brain of the Beholder

Nelly Alia-Klein et al.
PLoS ONE, September 2014

Abstract:
Media portraying violence is part of daily exposures. The extent to which violent media exposure impacts brain and behavior has been debated. Yet there is not enough experimental data to inform this debate. We hypothesize that reaction to violent media is critically dependent on personality/trait differences between viewers, where those with the propensity for physical assault will respond to the media differently than controls. The source of the variability, we further hypothesize, is reflected in autonomic response and brain functioning that differentiate those with aggression tendencies from others. To test this hypothesis we pre-selected a group of aggressive individuals and non-aggressive controls from the normal healthy population; we documented brain, blood-pressure, and behavioral responses during resting baseline and while the groups were watching media violence and emotional media that did not portray violence. Positron Emission Tomography was used with [18F]fluoro-deoxyglucose (FDG) to image brain metabolic activity, a marker of brain function, during rest and during film viewing while blood-pressure and mood ratings were intermittently collected. Results pointed to robust resting baseline differences between groups. Aggressive individuals had lower relative glucose metabolism in the medial orbitofrontal cortex correlating with poor self-control and greater glucose metabolism in other regions of the default-mode network (DMN) where precuneus correlated with negative emotionality. These brain results were similar while watching the violent media, during which aggressive viewers reported being more Inspired and Determined and less Upset and Nervous, and also showed a progressive decline in systolic blood-pressure compared to controls. Furthermore, the blood-pressure and brain activation in orbitofrontal cortex and precuneus were differentially coupled between the groups. These results demonstrate that individual differences in trait aggression strongly couple with brain, behavioral, and autonomic reactivity to media violence which should factor into debates about the impact of media violence on the public.

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Men’s Physical Strength Moderates Conceptualizations of Prospective Foes in Two Disparate Societies

Daniel Fessler, Colin Holbrook & Matthew Gervais
Human Nature, September 2014, Pages 393-409

Abstract:
Across taxa, strength and size are elementary determinants of relative fighting capacity; in species with complex behavioral repertoires, numerous additional factors also contribute. When many factors must be considered simultaneously, decision-making in agonistic contexts can be facilitated through the use of a summary representation. Size and strength may constitute the dimensions used to form such a representation, such that tactical advantages or liabilities influence the conceptualized size and muscularity of an antagonist. If so, and given the continued importance of physical strength in human male-male conflicts, a man’s own strength will influence his conceptualization of the absolute size and strength of an opponent. In the research reported here, male participants’ chest compression strength was compared with their estimates of the size and muscularity of an unfamiliar potential antagonist, presented either as a supporter of a rival sports team (Study 1, conducted in urban California, and Study 2, conducted in rural Fiji) or as a man armed with a handgun (Study 3, conducted in rural Fiji). Consistent with predictions, composite measures of male participants’ estimates of the size/strength of a potential antagonist were inversely correlated with the participant’s own strength. Therefore, consonant with a history wherein violent intrasexual selection has acted on human males, a man’s own physical strength influences his representations of potential antagonists.

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Expertise in video game playing is associated with reduced valence-concordant emotional expressivity

André Weinreich, Tilo Strobach & Torsten Schubert
Psychophysiology, forthcoming

Abstract:
In carefully selected groups of video game playing (VGP) experts and nonexperts, we examined valence-concordant emotional expressivity. We measured electromyographic (EMG) activity over the corrugator supercilii muscle while participants viewed pleasant, neutral, and unpleasant pictures. Potential group differences concerning valence-concordant expressivity may arise from differences concerning the participants' emotional reactivity. To control for such differences, we concomitantly measured skin conductance response (SCR) and, in a separate affect misattribution procedure (AMP), valence transfer from the same set of stimuli. Importantly, we found attenuated valence-concordant EMG activity over the corrugator supercilii muscle in VGP experts compared to nonexperts, but no differences were evident concerning SCR or valence transfer in the AMP. The findings suggest that expertise in VGP is particularly associated with reduced valence-concordant emotional expressivity.

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A “Dry Eye” for Victims of Violence: Effects of Playing a Violent Video Game on Pupillary Dilation to Victims and on Aggressive Behavior

Patrícia Arriaga et al.
Psychology of Violence, forthcoming

Objective: The present experiment analyzed the effects of playing a violent video game on player’s sensitivity to victimized people by measuring the involuntary pupil dilation responses (PDRs) during a passive picture viewing paradigm and examining the mediating role of PDR on aggression.

Method: Participants (N = 135) were randomly assigned to play a violent video game or a nonviolent video game. The participants’ PDRs were then recorded while they were exposed to pictures of alleged victims of violence displayed in negative, neutral, and positive contexts. A competitive reaction time task was also used to measure aggression.

Results: Participants in the violent game condition demonstrated both a lower PDR to the victims of violence in a negative circumstances and greater aggression than participants in the nonviolent game condition. Lower PDR to victims displayed in negative context mediated the relationship between violent game play and aggression.

Conclusion: The negative effects of playing violent games are a societal concern. Our results indicate that a single violent gaming session can reduce the player’s involuntary PDRs to pictures of victimized people in negative context and increase participant aggression, a new relevant finding that should encourage further research in this area.

By KEVIN LEWIS | 09:00:00 AM

Saturday, September 20, 2014

First base

Assortative Mating on Ideology Could Operate Through Olfactory Cues

Rose McDermott, Dustin Tingley & Peter Hatemi
American Journal of Political Science, forthcoming

Abstract:
Mates appear to assort on political attitudes more than any other social, behavioral, or physical trait, besides religion. Yet the process by which ideologically similar mates end up together remains ambiguous. Mates do not appear to consciously select one another based on ideology, nor does similarity result from convergence. Recently, several lines of inquiry have converged on the finding that olfactory processes have an important role in both political ideology and mate selection. Here we integrate extant studies of attraction, ideology, and olfaction and explore the possibility that assortation on political attitudes may result, in part, from greater attraction to the scent of those with shared ideology. We conduct a study in which individuals evaluated the body odor of unknown others, observing that individuals are more attracted to their ideological concomitants.

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From Assortative to Ashortative Coupling: Men's Height, Height Heterogamy, and Relationship Dynamics in the United States

Abigail Weitzman & Dalton Conley
NBER Working Paper, August 2014

Abstract:
Studies of online dating suggest that physical attraction is a key factor in early relationship formation, but say little about the role of attractiveness in longer-term relationships. Meanwhile, assortative coupling and exchange models widely employed in demographic research overlook the powerful sorting function of initial and sustained physical attraction. This article observes the effects of one physical characteristic of men — height — on various relationship outcomes in longer-term relationships, including spouses’ attributes, marriage entry and stability, and the division of household labor. Drawing on two different cohorts from the Panel Study of Income Dynamics, the authors show that (1) height-coupling norms have changed little over the last three decades, (2) short, average, and tall men’s spouses are qualitatively different from one another (3) short men marry and divorce at lower rates than others and (4) both men’s height relative to other men and their height relative to their spouse are related to the within-couple distribution of household labor and earnings. These findings depict an enduring height hierarchy among men on in the spousal marriage market. Further, they indicate that at least one physical characteristic commonly associated with physical attraction influences the formation, functioning, and stability of longer-term relationships.

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The Effects of Sexually–Explicit Literature on Sexual Behaviors and Desires of Women

Maria Reese-Weber & Dawn McBride
Psychology of Popular Media Culture, forthcoming

Abstract:
To test 3 prominent theories of media influence, the present study examined the impact of reading the Fifty Shades of Grey novels on young women’s sexual self-esteem, sexual behaviors, and desires. College women (N = 258) completed surveys on sexual self-esteem, sexual behaviors, and desires. Participants were separated into those who had read Fifty Shades (Read; n = 91) and those who had not (Not-Read; n = 167). Those who had not read the books were asked to read the books and report their sexual self-esteem, sexual behaviors, and sexual desires at follow-up (Experimental group; n = 49). Results showed that the Read group reported higher sexual desires than the Not-Read group, supporting the gratification theory. Contrary to recent news media claims, increases in sexual behaviors were not found for the Experimental group. Instead, sexual behaviors decreased, particularly for those who had low character identification, which is contrary to cultivation and media practice theories.

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Affective and Cognitive Determinants of Women's Sexual Response to Erotica

Sandra Vilarinho et al.
Journal of Sexual Medicine, forthcoming

Aim: The aim of the present study was to investigate the contribution of self-reported thoughts and affect to the prediction of women's subjective and genital responses to erotica.

Methods: Twenty-eight sexually functional women (mean age = 32, SD = 6.29) were presented with sexually explicit and nonexplicit romantic films. Genital responses, subjective sexual arousal, state affect, and self-reported thoughts were assessed.

Results: Correlations between subjective and physiological sexual arousal were low (r = −0.05, P > 0.05). Self-reported thoughts and affect were significant predictors of subjective sexual arousal. The strongest single predictor of subjective arousal was sexual arousal thoughts (e.g., “I'm getting excited”) (β = 0.63, P < 0.01). None of the cognitive or affective variables predicted women's genital responses.

Conclusions: Overall, results support the role of cognitive (self-reported thoughts) and affective dimensions in women's subjective sexual arousal to erotica and, consistent with previous findings, suggest that subjective and physiological sexual arousal may be impacted by different processes.

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Sexual Activity with Romantic and Nonromantic Partners and Psychosocial Adjustment in Young Adults

Wyndol Furman & Charlene Collibee
Archives of Sexual Behavior, October 2014, Pages 1327-1341

Abstract:
The present study examined whether positive or negative links occur between psychosocial adjustment and sexual activity with four types of partners — romantic partners, friends, acquaintances, and friends with benefits. We examined longitudinal associations and concurrent between-person and within-person associations. A representative sample of 185 participants (93 males, 92 females), their friends, and mothers completed questionnaires when the participants were 2.5, 4, and 5.5 years out of high school. Regardless of the type of partner, more frequent sexual activity relative to the sexual activity of other young adults was associated with more substance use and risky sexual behavior (i.e., between-person effects). Similarly, for all types of nonromantic partners, more frequrent sexual activity relative to one’s own typical sexual activity was associated with more substance use and risky sexual behavior (i.e., within-person effects). Differences in frequency of sexual activity with friends and acquaintances were associated with greater internalizing and externalizing symptoms as well as lower self-esteem. Follow-up analyses revealed the associations were particularly strong for friends with benefits. Women’s sexual activity frequency with a nonromantic partner was more commonly associated with poorer psychosocial adjustment than such activity by men. More frequent sexual activity with a romantic partner was associated with higher self-esteem and lower internalizing symptoms. Few long-term effects were found for any type of sexual activity. The findings underscore the importance of examining relationship context and illustrate the value of using multiple analytic strategies for identifying the precise nature of associations.

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What makes a voice masculine: Physiological and acoustical correlates of women's ratings of men’s vocal masculinity

Valentina Cartei, Rod Bond & David Reby
Hormones and Behavior, September 2014, Pages 569–576

Abstract:
Men’s voices contain acoustic cues to body size and hormonal status, which have been found to affect women's ratings of speaker size, masculinity and attractiveness. However, the extent to which these voice parameters mediate the relationship between speakers' fitness-related features and listener’s judgments of their masculinity has not yet been investigated. We audio-recorded 37 adult heterosexual males performing a range of speech tasks and asked 20 adult heterosexual female listeners to rate speakers' masculinity on the basis of their voices only. We then used a two-level (speaker within listener) path analysis to examine the relationships between the physical (testosterone, height), acoustic (fundamental frequency or F0, and resonances or ΔF) and perceptual dimensions (listeners’ ratings) of speakers’ masculinity. Overall, results revealed that male speakers who were taller and had higher salivary testosterone levels also had lower F0 and ΔF, and were in turn rated as more masculine. The relationship between testosterone and perceived masculinity was essentially mediated by F0, while that of height and perceived masculinity was partially mediated by both F0 and ΔF. These observations confirm that women listeners attend to sexually dimorphic voice cues to assess the masculinity of unseen male speakers. In turn, variation in these voice features correlate with speakers’ variation in stature and hormonal status, highlighting the interdependence of these physiological, acoustic and perceptual dimensions.

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Sexual Subjectivity among Adolescent Girls: Social Disadvantage and Young Adult Outcomes

Simon Cheng et al.
Social Forces, forthcoming

Abstract:
A risk framework characterizing teenage sexual activities as dangerous, especially for girls, has dominated research on teenage sexuality. Consequently, girls' sexual subjectivity has been virtually unexamined by large-scale quantitative research. We use the National Longitudinal Study of Adolescent Health to examine teenage girls' expectations of pleasure during intercourse and sexual self-efficacy, reflecting two key components of sexual subjectivity. Our findings indicate that youth from less socioeconomically privileged families report lower expectations than their privileged peers. There are also racial/ethnic disparities: Black-white differences can be explained by class, religion, and regional sexual education variation, but Latina and Asian girls display disadvantages even after controlling for these factors. Using a life-course approach, we show that dimensions of sexual subjectivity offer wide-reaching benefits in young adulthood, spanning multiple domains — including future sexual health, mental and physical health, and socioeconomic standing. We address the implications of our findings for the reproduction of inequality and conceptualizations of sexual risk and well-being.

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Preference for Women's Body Mass and Waist-to-Hip Ratio in Tsimane' Men of the Bolivian Amazon: Biological and Cultural Determinants

Piotr Sorokowski et al.
PLoS ONE, August 2014

Abstract:
The issue of cultural universality of waist-to-hip ratio (WHR) attractiveness in women is currently under debate. We tested men's preferences for female WHR in traditional society of Tsimane'(Native Amazonians) of the Bolivian rainforest (N = 66). Previous studies showed preferences for high WHR in traditional populations, but they did not control for the women's body mass.We used a method of stimulus creation that enabled us to overcome this problem. We found that WHR lower than the average WHR in the population is preferred independent of cultural conditions. Our participants preferred the silhouettes of low WHR, but high body mass index (BMI), which might suggest that previous results could be an artifact related to employed stimuli. We found also that preferences for female BMI are changeable and depend on environmental conditions and probably acculturation (distance from the city). Interestingly, the Tsimane' men did not associate female WHR with age, health, physical strength or fertility. This suggests that men do not have to be aware of the benefits associated with certain body proportions - an issue that requires further investigation.

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Facial fluctuating asymmetry is not associated with childhood ill-health in a large British cohort study

Nicholas Pound et al.
Proceedings of the Royal Society: Biological Sciences, 7 October 2014

Abstract:
The idea that symmetry in facial traits is associated with attractiveness because it reliably indicates good physiological health, particularly to potential sexual partners, has generated an extensive literature on the evolution of human mate choice. However, large-scale tests of this hypothesis using direct or longitudinal assessments of physiological health are lacking. Here, we investigate relationships between facial fluctuating asymmetry (FA) and detailed individual health histories in a sample (n = 4732) derived from a large longitudinal study (Avon Longitudinal Study of Parents and Children) in South West England. Facial FA was assessed using geometric morphometric analysis of facial landmark configurations derived from three-dimensional facial scans taken at 15 years of age. Facial FA was not associated with longitudinal measures of childhood health. However, there was a very small negative association between facial FA and IQ that remained significant after correcting for a positive allometric relationship between FA and face size. Overall, this study does not support the idea that facial symmetry acts as a reliable cue to physiological health. Consequently, if preferences for facial symmetry do represent an evolved adaptation, then they probably function not to provide marginal fitness benefits by choosing between relatively healthy individuals on the basis of small differences in FA, but rather evolved to motivate avoidance of markers of substantial developmental disturbance and significant pathology.

By KEVIN LEWIS | 09:00:00 AM


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