Social and Behavioral Sciences Commons^™

Job-Destroying Effects Of $15 Minimum Wage By Metro, Industry And Occupation, Andrew Hanson, Zackary Hawley

Economics Faculty Research and Publications

No abstract provided.

Does Eco-Labeling Of Services Matter? Evidence From Higher Education, Daniel C. Hickman, Andrew G. Meyer

Economics Faculty Research and Publications

Eco-labeling of services has become increasingly common, yet little empirical evidence exists concerning its effectiveness. We address this gap in the literature by analyzing a highly visible eco-label, the American College and University Presidents’ Climate Commitment (ACUPCC), in the sector of higher education. We match information about the ACUPCC to the US Department of Education IPEDS database to examine the impact of signing on student applications, admissions, and enrollment. We mainly utilize a difference-in-difference approach to identify the effects of interest but confirm results with an interrupted time series model. We find that signing the ACUPCC increases applications and admitted …

Effects Of Foreign Direct Investment On Firm-Level Technical Efficiency: Stochastic Frontier Model Evidence From Chinese Manufacturing Firms, Miao Grace Wang, Sunny Wong

Economics Faculty Research and Publications

It has been recognized that multinational corporations can spill over to non-affiliated firms in host economies. Existing studies of foreign direct investment (FDI) and productivity growth often assume firms are perfectly efficient. Our paper relaxes this assumption and explores how FDI affects a firm’s technical efficiency improvement as well as its technical progress in a stochastic frontier model. The stochastic frontier model estimates a firm’s production frontier given a set of production inputs. The deviation of a firm’s actual output level from its maximum level of output is defined as technical inefficiency. Using data from more than 12,000 Chinese manufacturing …

Shock, But No Shift: Hospitals' Responses To Changes In Patient Insurance Mix, Kathryn L. Wagner

Economics Faculty Research and Publications

Medicaid reimburses healthcare providers for services at a lower rate than any other type of insurance coverage. To account for the burden of treating Medicaid patients, providers claim that they must cost-shift by raising the rates of individuals covered by private insurance. Previous investigations of cost-shifting has produced mixed results. In this paper, I exploit a disabled Medicaid expansion where crowd-out was complete to investigate cost-shifting. I find that hospitals reduce the charge rates of the privately insured. Given that Medicaid is expanding in several states under the Affordable Care Act, these results may alleviate cost-shifting concerns of the reform.

Is Unemployment Good For The Environment?, Andrew G. Meyer

Economics Faculty Research and Publications

Environmental quality is a public good, potentially impacted by everybody. Individual level pro-environmental behavior affects environmental quality in the aggregate. Therefore, it is important to understand what causes individual’s pro-environmental behaviors to change. We quantify the causal effect of one determinant, unemployment, using an EU-27 population representative Eurobarometer survey. Drawing on results from the theory of the private provision of public goods, and recognizing that unemployment decreases income and the opportunity cost of time, we formulate testable predictions that unemployment will decrease the extent of pro-environmental behaviors that require monetary contributions and increase the extent of pro-environmental behaviors that mainly …

(Wp 2016-05) Hodgson, Cumulative Causation, And Reflexive Economic Agents, John B. Davis

Economics Working Papers

This paper examines Geoff Hodgson’s interpretation of Veblen in agency-structure terms, and argues it produces a conception of reflexive economic agents. It then sets out an account of cumulative causation processes using this reflexive agent conception, modeling them as a two-part causal process, one part involving a linear causal relation and one part involving a circular causal relation. The paper compares the reflexive agent conception to the standard expected utility conception of economic agents, and argues that on a cumulative causation view of the world the completeness assumption essential to the standard view of rationality cannot be applied. The final …

(Wp 2016-06) The Effectiveness Of Central Bank Forward Guidance Under Inflation And Price-Level Targeting, Stephen J. Cole

Economics Working Papers

This paper examines the effectiveness of central bank forward guidance under inflation and price-level targeting monetary policies. The results show that the attenuation of the effects of forward guidance can be solved if a central bank switches from inflation targeting to price-level targeting. Output and inflation respond more favorably to forward guidance with price-level targeting than inflation targeting. A monetary policy rule that aggressively reacts to inflation and includes interest rate inertia narrows the performance gap between the two policy regimes. However, forward guidance with price-level targeting is still preferred to forward guidance with inflation targeting after performing multiple robustness …

Metropolitan Area Home Prices And The Mortgage Interest Deduction: Estimates And Simulations From Policy Change, Hal Martin, Andrew Hanson

Economics Faculty Research and Publications

We simulate changes to metropolitan area home prices from reforming the Mortgage Interest Deduction (MID). Price simulations are based on an extended user cost model that incorporates two dimensions of behavioral change in home buyers: sensitivity of borrowing and the propensity to use tax deductions. We simulate prices with both inelastic and elastic supply. Our results show a wide range of price effects across metropolitan areas and prospective policies. Considering behavioral change and no supply elasticity, eliminating the MID results in average home price declines as steep as 13.5% in Washington, D.C., and as small as 3.5% in Miami-Fort Lauderdale, …

(Wp 2016-04) Shock, But No Shift: Hospitals' Responses To Changes In Patient Insurance Mix, Kathryn L. Wagner

Economics Working Papers

Medicaid reimburses healthcare providers for services at a lower rate than any other type of insurance coverage. To account for the burden of treating Medicaid patients, providers claim that they must cost-shift by raising the rates of individuals covered by private insurance. Previous investigations of cost-shifting has produced mixed results. In this paper, I exploit a disabled Medicaid expansion where crowd-out was complete to investigate cost-shifting. I find that hospitals reduce the charge rates of the privately insured. Given that Medicaid is expanding in several states under the Affordable Care Act, these results may alleviate cost-shifting concerns of the reform.

Competition, Cost Innovation, And X-Inefficiency In Experimental Markets, Andrew Smyth

Economics Faculty Research and Publications

This paper examines the relationship between competition, cost innovation, and x-inefficiency in experimental markets. In the lab, oligopolists make closer-to-optimal cost innovation expenditures than do monopolists, which result in lower x-inefficiency in oligopoly than in monopoly. Oligopolies also increase total surplus relative to monopoly, and consumer surplus makes up a larger portion of total surplus in oligopoly than monopoly. The data illustrate how x-inefficiency affects surplus dynamically and suggest price as a mechanism by which competitive pressure increases cost efficiency.

The Economic Trinity: Communion With The Triune God In A Market Economy, David Glenn Butner Jr.

Dissertations (1934 -)

Many theological approaches to economics claim that the market economy can help develop an economic agent in virtue, while others argue that market economies undermine virtue, impede authentic spirituality, or result in injustice. Similarly, experimental and behavioral economists have identified market constructions that influence economic agents in terms of their motivations, perceptions, actions, and self-understanding in positive or negative ways. This dissertation theologically analyzes these two bodies of literature under the conviction that any redemptively significant development that an economic agent undergoes in the economy must be attributed to God’s grace. This project develops a Reformed and trinitarian theology of …

(Wp 2016-03) Economics, Neuroeconomics, And The Problem Of Identity, John B. Davis

Economics Working Papers

This paper reviews the debate in economics over neuroeconomics’ contribution to economics. It distinguishes majority and minority views, argues that this debate has been framed by mainstream economics’ conception of itself as an isolated science, and argues that this framing has put off the agenda in economics issues such as individual identity that are increasingly important in connection with the social and historical context of economic explanations in a changing complex world. The paper first discusses how the debate over neuroeconomics has been limited to the question of what information from other sciences might be employed in economics. It then …

(Wp 2016-02) The Limits Of Central Bank Forward Guidance Under Learning, Stephen J. Cole

Economics Working Papers

Central bank forward guidance emerged as a pertinent tool for monetary policymakers since the Great Recession. Nevertheless, the effects of forward guidance remain unclear. This paper investigates the effectiveness of forward guidance while relaxing two standard macroeconomic assumptions: rational expectations and frictionless financial markets. Agents forecast future macroeconomic variables via either the rational expectations hypothesis or a more plausible theory of expectations formation called adaptive learning. A standard Dynamic Stochastic General Equilibrium (DSGE) model is extended to include the financial accelerator mechanism. The results show that the addition of financial frictions amplifies the differences between rational expectations and adaptive learning …

Explaining The Fixed Cost Component Of Discounting: The Importance Of Students' Liquidity Constraints, Andrew G. Meyer

Economics Faculty Research and Publications

Utilizing experimental data on choices over real monetary rewards made by university students, we provide evidence that two measures of liquidity, income and employment status, significantly explain differences in patterns of discounting. We find an average fixed cost component of discounting in the range of $5 for unemployed students and near $0 for employed students. An increase in annual disposable income of $1000 decreases the fixed cost component of discounting by approximately $0.20 to $0.25. These findings can help resolve the puzzle that some studies in the literature find evidence of present-bias and magnitude effects and some do not.

Local Labor Markets And The Federal Earned Income Tax Credit, Andrew Hanson, Zackary Hawley

Economics Faculty Research and Publications

The Earned Income Tax Credit (EITC), which offers relief from federal income-tax payments for a targeted group of taxpayers, is based on national income limits and the presence of dependent children. Benefits determinations are made with a flat national maximum level of assistance. The EITC is extended to nearly 29 million families and costs the U.S. Treasury about $64 billion annually.

While the EITC uses national parameters to determine eligibility and benefits, the U.S. labor force is dispersed among a series of disparate labor markets in metropolitan areas. Each market within each geography has unique characteristics, with vastly different wage …

Discrimination In Mortgage Lending: Evidence From A Correspondence Experiment, Andrew Hanson, Zackary Hawley, Hal Martin, Bo Liu

Economics Faculty Research and Publications

We design and implement an experimental test for differential response by mortgage loan originators (MLOs) to requests for information about loans. Our e-mail correspondence experiment is designed to analyze differential treatment by client race and credit score. Our results show net discrimination by 1.8% of MLOs through non-response. We also find that MLOs offer more details about loans and are more likely to send follow up correspondence to whites. The effect of being African American on MLO response is equivalent to the effect of having a credit score that is 71 points lower.

Heterogeneity In The Preferences And Pro-Environmental Behavior Of College Students: The Effects Of Years On Campus, Demographics, And External Factors, Andrew G. Meyer

Economics Faculty Research and Publications

Models from several social science fields have identified factors that lead to pro-environmental behavior. This research builds on those models by analyzing a survey completed by over 500 undergraduates at a US liberal arts university to examine the characteristics of students that are associated with more environmentally friendly behavior and quantify the desirability of different environmental initiatives. There is evidence that the probability of pro-environmental behavior substantially increases with each additional year that a student spends on campus. The magnitude of the effect is between 4 and 10 percentage points per year, depending on the specific behavior and empirical model. …

(Wp 2016-01) Transformation Without Paternalism, John B. Davis, Tom Wells

Economics Working Papers

Human development is meant to be transformational in that it aims to improve people’s lives by enhancing their capabilities. But who does it target: people as they are or the people they will become? This paper argues that the human development approach relies on an understanding of personal identity as dynamic rather than as static collections of preferences, and that this distinguishes human development from conventional approaches to development. Nevertheless this dynamic understanding of personal identity is presently poorly conceptualized and this has implications for development practice. We identify a danger of paternalism and propose institutionalizing two procedural principles as …

Exchange Rate Volatility And Its Effect On Stock Market Volatility, K. Kennedy, Farrokh Nourzad

Economics Faculty Research and Publications

This paper investigates empirically the effect of volatility of the exchange rate of the U.S. dollar vis-à-vis the euro on U.S. stock market volatility while controlling for a number of drivers of stock return volatility. Using a GARCH(1, 1) model and using weekly data covering the period from the week of January 1, 1999 through the week of January 25, 2010, it is found that the 9/11 terrorist attack, bear markets, fluctuations in jobless claims, and negative equity market returns increase financial volatility. On the other hand, no conclusive results are found regarding the effect of fluctuations in M2, or …

How Much Versus Who: Which Social Norms Information Is More Effective?, Andrew G. Meyer, Guanyi Yang

Economics Faculty Research and Publications

We conduct an experiment to investigate how different types of information about social norms affect individuals’ stated contributions to a specific pro-environment program, a student ‘green fee’, in the context of a referendum. Compared to students that receive no information about peer contributions, on average, students that receive information about the dollar value range of contributions at peer institutions contribute less while students that learn about the high percentage of students voting ‘yes’ on green fee programs at peer institutions contribute more. The results are economically significant as the absolute values of both effects represent approximately 25% of average contributions. …

Economics As Science, John B. Davis, Nancy Cartwright

Economics Faculty Research and Publications

No abstract provided.

Individual Attitudes Toward The Impact Of Multinational Corporations On Domestic Businesses: How Important Are Individual Characteristics And Country-Level Traits?, Joseph P. Daniels, Miao Grace Wang, M.C. Sunny Wong

Economics Faculty Research and Publications

We study the importance of individual characteristics and national factors influencing individual attitudes towards the impact of multinational corporations on local businesses. Our sample includes more than 40 000 respondents in 29 countries from the 2003 National Identity Survey conducted by the International Social Survey Programme. We find that individual demographic factors and socioeconomic status, such as gender, age, income and education, are strong predictors of their attitudes. For example, income and education are positively associated with favourable attitudes towards the impact of multinational corporations (MNCs) on local businesses while age is negatively associated with individual attitudes towards MNCs. In …

Review Of Economics Imperialism Versus Multidisciplinarity, John B. Davis

Economics Faculty Research and Publications

This paper examines the implications of Chicago School economist Edward Lazear’s 2000 defense of economics imperialism using standard trade theory. It associates that defense with interdisciplinarity or the idea that the sciences are relatively autonomous, but treats this defense as a mask for a more conventional imperialist strategy of promoting Chicago School neoclassicism. Lazear’s argument actually created a dilemma for Chicago regarding how it could espouse interdisciplinarity while operating in a contrary way. I argue that the solution to this dilemma was for neoclassicism to rebuild economics imperialism around neoclassicism as a theory that sees the world in its own …