Social and Behavioral Sciences Commons^™

Préférences Économiques Mesurées Par Des Jeux Expérimentaux Au Burkina Faso : Confiance, Bien Public, Risque Et Patience, Michael J. Kevane, Alain Joseph Sissao, Félix Compaoré

Economics

Certaines préférences économiques pourraient être très importantes pour le développement : la coopération pour le bien public, la confiance via à vis des étrangers, les attitudes de prise de risques calculés, et la patience du retour des investissements sont des enjeux importants pour toute société. Ces préférences peuvent être mesurées sur la base de questionnaires et de jeux expérimentaux. Cet article présent les résultats de trois séances de jeux expérimentaux avec 557 jeunes lettrés ruraux de 15 à 24 tenus en mai 2013, août 2013, et mai 2014 au Burkina Faso. Les résultats des jeux sont assez normaux, si on …

The Rapid Evolution Of Homo Economicus: Brief Exposure To Neoclassical Assumptions Increases Self-Interested Behavior, John Ifcher, Homa Zarghamee

Economics

Economics students have been shown to exhibit more selfishness than other students. Because the literature identifies the impact of long-term exposure to economics instruction (e.g., taking a course), it cannot isolate the specific course content responsible; nor can selection, peer effects, or other confounds be properly controlled for. In a laboratory experiment, we use a within- and across-subject design to identify the impact of brief, randomly-assigned economics lessons on behavior in the ultimatum game (UG), dictator game (DG), prisoner's dilemma (PD), and public-goods game (PGG). We find that a brief lesson that includes the assumptions of self-interest and strategic considerations …

The Great Recession And Life Satisfaction: The Unique Decline For Americans Approaching Retirement Age, John Ifcher, Homa Zarghamee, Amanda Cabacungan

Economics

During the 2007-09 Great Recession, the American economic environment was bleak: unemployment roughly doubled, median household incomes fell 5 per cent, average household net worth declined by a third, and consumer spending dropped markedly. Each month, the Bureau of Labor Statistics reported massive lay-offs, disappointing job creation numbers, and a dismal outlook for future job growth. The literature studying the impact of the Great Recession on American households finds that those nearing retirement age were particularly hard hit. For example, using data from the American Life Panel, Hurd and Rohwedder (2010) find that 25 per cent of respondents aged 50-59 …

Local Neighbors As Positives, Regional Neighbors As Negatives: Competing Channels In The Relationship Between Others’ Income, Health, And Happiness, John Ifcher, Homa Zarghamee, Carol Graham

Economics

That well-being is decreasing in others’ income is termed the “relative income hypothesis” (RIH) by scholars of subjective well-being (SWB) and has substantial empirical support. Some studies, however, present evidence of both positive and negative explanatory channels in the relationship between others’ income and SWB. We develop a theoretical framework integrating four distinct channels through which neighbors’ income can affect utility: public goods, cost of living, expectations of future income, and direct effects (RIH or altruism). We estimate the relationship with SWB data from the U.S. Gallup-Healthways Well-Being Index and median-income data from the American Community Survey for ZIP codes …

International Reserves And Global Interest Rates, Gonçalo Pina

Economics

In this paper we study the relationship between foreign currency international reserve holdings and global interest rates. To guide empirical work we solve a simple, small open-economy model with money, where the central bank manages international reserves to smooth inflation over time. This model shows that changes in interest rates are positively related to the target level of reserves. As a consequence interest rate hikes increase reserve transfers, defined as the change in international reserves net of the interest earned on reserves. Using quarterly data for 75 countries between 2000 and 2013, we document a positive relationship between interest-rate changes …

California Water Reallocation: Where'd You Get That?, Damian Park

Economics

When thirsty, Californians often avoid going to the market for more water. Instead, they might borrow some from their rich neighbors, they might sue them or more commonly, they simply take more from users without much of a voice (e.g. the fish or future generations). These alternatives are often superior to using markets. Within markets, a surprising detail emerges – it is uncommon for farmers to fallow fields in order to sell water to another user. Rather, many water transfers are structured so sellers can have their cake and eat it too. While some of these transfers rightly bring about …

The Saving & Loan Insolvencies And The Costs Of Financial Crisis, Alexander J. Field

Economics

At the time they occurred, the savings and loan insolvencies were considered the worst financial crisis since the Great Depression. Contrary to what was then believed, and in sharp contrast with 2007–2009, they in fact had little macroeconomic significance. Savings and Loan (S&L) remediation cost between 2 percent and 3 percent of Gross Domestic Product (GDP), whereas the Troubled Asset Relief Program (TARP) and the conservatorships of Fannie and Freddie actually made money for the US Treasury. But the direct cost of government remediation is largely irrelevant in judging macro significance. What matters is the cumulative output loss associated with …

Pegxit Pressure: Evidence From The Classical Gold Standard, Kris James Mitchener, Gonçalo Pina

Economics

We develop a simple model that highlights the costs and benefits of fixed exchange rates as they relate to trade, and show that negative export-price shocks reduce fiscal revenue and increase the likelihood of an expected currency devaluation. Using a new high-frequency data set on commodity-price movements from the classical gold standard era, we then show that the model’s main prediction holds even for the canonical example of hard pegs. We identify a negative causal relationship between export-price shocks and currency-risk premia in emerging market economies, indicating that negative export-price shocks increased the probability that countries abandoned their pegs.

Pricing Competition: A New Laboratory Measure Of Gender Differences In The Willingness To Compete, John Ifcher, Homa Zarghamee

Economics

Experiments have demonstrated that men are more willing to compete than women. We develop a new instrument to “price” willingness to compete. We find that men value a $2.00 winner-take-all payment significantly more (about $0.28 more) than women; and that women require a premium (about 40 %) to compete. Our new instrument is more sensitive than the traditional binary-choice instrument, and thus, enables us to identify relationships that are not identifiable using the traditional binary-choice instrument. We find that subjects who are the most willing to compete have high ability, higher GPA’s (men), and take more STEM courses (women).

The Increasing Happiness Of Us Parents, Chris M. Herbst, John Ifcher

Economics

Previous research suggests that parents may be less happy than non-parents. We critically assess the literature and examine parents’ and non-parents’ happiness-trends using the General Social Survey (N = 42,298) and DDB Lifestyle Survey (N = 75,237). We find that parents are becoming happier over time relative to non-parents, that non-parents’ happiness is declining absolutely, and that estimates of the parental happiness gap are sensitive to the time-period analyzed. These results are consistent across two datasets, most subgroups, and various specifications. Finally, we present evidence that suggests children appear to protect parents against social and economic forces that may be …

The Earned Income Tax Credit, Mental Health, And Happiness, Casey Boyd-Swan, Chris M. Herbst, John Ifcher, Homa Zarghamee

Economics

We study the impact of the earned income tax credit (EITC) on various measures of subjective well-being (SWB) using the National Survey of Families and Households (NSFH) to estimate intent-to-treat effects of the EITC expansion embedded in the 1990 Omnibus Budget Reconciliation Act. We use a difference-in-differences framework that compares the pre-and post-expansion SWB-changes of women likely eligible for the EITC (low-skilled mothers of working age) to the SWB-changes of a comparison group that is likely ineligible (low-skilled, childless women of working age). Our results suggest that the EITC expansion generated sizeable SWB-improvements in the three major categories of SWB …

Do Gender-Variant Preferences For Competition Persist In The Absence Of Performance?, John Ifcher, Homa Zarghamee

Economics

The well-established gender gap in preferences for competition has been attributed to gender-variant feelings about performing in competitive environments. Using a novel task with agency, in which subjects experience competition but cannot perform, we find evidence that performing may be sufficient but not necessary to generate gender-variant preferences for competition. This suggests that the gender-gap cannot be eliminated by correcting beliefs alone; that eliminating performance—for example, routinizing tasks—may not eliminate the gender gap; and that there may be heretofore unidentified determinants of preferences for competition—for example, men may prefer payment schemes that are based on social comparison. (JEL J16, C91, …

Inequality Of Happiness: Evidence Of The Compression Of The Subjective-Well-Being Distribution With Economic Growth, John Ifcher, Homa Zarghamee

Economics

The use of Subjective Wellbeing (SWB) measures in economics research has grown markedly (Kahneman and Krueger 2006). This has come about for at least two reasons. First, the measures have been systematically validated as reliable for examining a range of questions. Second, economists have long relied on income as a proxy for wellbeing. However, research shows that there are potentially large slippages between economic indicators and wellbeing (Diener and Seligman 2004). Thus, SWB measures have become an important alternative proxy for wellbeing. Indeed, SWB measures have also caught the attention of policy makers. The OECD launched the Better Life Index …

State Promotion Of Local Public Goods: The Case Of Public Libraries, 1880-1929, Michael J. Kevane, William A. Sundstrom

Economics

The public library movement of the late nineteenth and early twentieth centuries led to a significant expansion of library services across the United States. We study the impact of state-level institutional development on the creation of local public goods. State library commissions were modestly funded state entities charged with helping localities establish libraries. State library associations were voluntary organizations with a similar mission, having as members the librarians of existing public libraries. Library-enabling legislation clarified the legality and taxation possibilities for local government entities such as towns, municipalities and counties to support libraries. Employing panel data drawn from a series …

Public Libraries And Political Participation, 1870-1940, Michael J. Kevane, William A. Sundstrom

Economics

The public library movement of the late 19th and early 20th centuries fostered a rapid increase in the number and quality of public libraries in cities and towns across the United States. One important argument for libraries was that they would enhance American democracy by promoting virtues of citizenship and enabling access to information. This paper examines how voter turnout was affected, in the short-term, by the establishment of public libraries, using a county-by-election year panel. Our empirical strategy exploits the founding dates of public libraries as discrete events that should have influenced subsequent voting behavior. Over the wide range …

Reading Fiction And Economic Preferences Of Rural Youth In Burkina Faso, Michael J. Kevane

Economics

This paper presents results from a reading program for youth living in villages in south-western Burkina Faso. Standard experimental games were used to measure the effects of increased reading of fiction on several attitudes and preferences important for economic development. After six months of access and encouragement to read appropriate young adult fiction, there were few differences in any of four measured outcomes (trust, contribution to public goods, risk, and patience) between those participating in the reading program and the control group. Since the rise of mass-distributed novels in the 1800s, many have hypothesized that fiction would have significant effects …

Altruism, Alexander J. Field

Economics

Altruism is reflected in actions by one individual that benefit another, even when there is no expectation of reward. Altruism is often equated with selflessness and contrasted with selfishness, or alternatively, altruism is seen as other-regarding as opposed to self-regarding behavior. The latter usage is sometimes preferred because of difficulties in classifying behavior for which the individual acting altruistically receives a "warm glow" from helping others. The question raised in this instance is whether such an individual is actually selfish and, if so, whether there is any behavior that, after the fact, could not be interpreted as selfish.

The need …

The Recent Growth Of International Reserves In Developing Economies: A Monetary Perspective, Gonçalo Pina

Economics

The massive accumulation of international reserves in developing economies is a puzzling recent development in the world economy. This paper studies reserve accumulation as the outcome of a simple model in which the central bank smooths inflation. I explore the view that central banks accumulate reserves to face large fiscal shocks that need monetary financing. Central bank revenues are obtained through inflation, but inflation is distortionary. As a result, the central bank optimally accumulates international reserves in order to spread the costs associated with inflation over time. A simple numerical exercise for an average developing economy using data between 1970 …

California’S Flawed Surface Water Rights, Michael Hanemann, Caitlin Dyckman, Damian Park

Economics

California sprang into existence following the discovery of gold in 1848. Aside from domestic use, the first major use of water in California was in mining. The first mining consisted of placer mining of alluvial deposits in stream beds throughout the Sierra foothills. As those deposits were depleted, hydraulic mining arose, in which high-pressure jets of water were used to remove overlying earth from upland gold- bearing deposits. That type of mining, first employed in 1853, required substantial water diversions.

When California entered the Union in 1850, the English common law was adopted as the “rule of decision” in courts, …

Cognitive Function And Human Capital Accumulation Across The Day: Evidence From Randomized School Schedules, Teny Maghakian Shapiro, Kevin M. Williams, James E. West

Economics

This study examines how variation of within-day cognitive function affects human capital accumulation. Cognitive function, which neurobiologists have found varies widely across the day, has thus far been an important omission in the economics literature. We quantify its role on human capital accumulation using data from five cohorts of college freshman at the United States Air Force Academy, where students face randomized scheduling and a common set of classes and exams. We find clear evidence that daily fluctuations in cognitive function affects academic achievement-a student does 0.25 standard deviations better at her highest observed ability than at her worst. Cognitive …

Availability Of Higher Education And Educational Outcomes: Quantifying The Impacts Of College Openings And Cohort Size, Teny Maghakian Shapiro

Economics

Research has established the benefits of higher education and the importance of affordability, however less is known about how the availability of higher education affects educational attainment. By constructing a comprehensive dataset on college openings in the U.S. from 1969 to 1991, I show that exogenous variation in two-year and four-year college availability, caused by changed birth cohort sizes and local college openings, substantially affects educational attainment. New four-year colleges increase the likelihood of obtaining a Bachelor's degree, while new two-year colleges only affect Associate's degree attainment. Additionally, results show that students from larger cohorts are crowded out of four-year …

Gold Mining And Economic And Social Change In West Africa, Michael Kevane

Economics

Economic theory often suggests that social institutions are strongly influenced by specific geographic features of regions. The history of gold mining in West Africa, however, suggests that the relationship between mineral resources and social organization is complex and fluid. First, over the centuries gold mining revenues may have encouraged state formation, but at the same time opportunities for conflict and corruption may have undermined state functioning. Second, while gold extraction and trade required social organization, the interpersonal relationships engendered by gold mining also led to new identities and social institutions. These dialectical considerations illustrate how simple theories of how geography …

Decision Making And Underperformance In Competitive Environments: Evidence From The National Hockey League, Gueorgu I. Kolev, Gonçalo Pina, Federico Todeschini

Economics

We find evidence of suboptimal decisions leading to underperformance in a policy experiment where two teams of professionals compete in a tournament (National Hockey League shootout) performing a task (penalty shot) sequentially. Before an exogenous policy change, home teams had to perform the task second in the sequence. After the policy change, home teams were given the choice to lead or to follow in the sequence. Home teams should move first only when this is optimal, and this should lead them to winning the tournament more often.We find that after given the choice, home teams most of the time choose …

Trends In The Happiness Of Single Mothers: Evidence From The General Social Survey, John Ifcher, Homa Zarghamee

Economics

We study the subjective well being (SWB) of single mothers from 1972 to 2008 using data from the General Social Survey. While past literature has examined the outcomes of single mothers, an investigation of SWB is warranted, since it has been shown that there are potentially large slippages between economic indicators and SWB. Our results indicate that (i) single mothers report being significantly less happy than non-single-mothers, and (ii) this "happiness gap" shrank between 1972 and 2008.

Capital In The Twenty-First Century: A Review Essay, Alexander J. Field

Economics

In the title of his 1968 review of early research in Cliometrics, Lance Davis opined that “it will never be literature.” One of Thomas Piketty's many achievements in Capital in the Twenty-First Century is to prove Davis wrong. Piketty's book is both an exemplary work in quantitative economic history and economic literature in the finest sense, written with the Cartesian clarity we associate with the French scientific tradition. It is, moreover, quite remarkably, also about literature, about the novels of Jane Austen, Henry James, and Honoré de Balzac, and the nineteenth-century wealth dynamics they brought to life. From the vantage …

The Interwar Housing Cycle In The Light Of 2001-2012: A Comparative Historical Approach, Alexander J. Field

Economics

The Financial crisis of 2008 to 2009 and the Great Recession it precipitated forced a rethinking among macroeconomists about the origin, prevention, and potential mitigation of such events. One of the conclusions emerging from a considered examination of the run-up to and the fallout from the events is the limitation of framing the policy issues solely in terms of whether Chairman Bernanke and the Federal Reserve System, as well as President Obama and the Congress, did the right thing when the crisis hit. Most observers believe that the response to the immediate crisis was correct in the sense that they …

Prosociality And The Military, Alexander J. Field

Economics

In this paper, I consider a body of observational evidence not commonly studied by social scientists, namely the behavior of men and women (mostly men) in the military. I focus here on two issues: first the behavioral foundations for creating an effective military unit and second, evidence that infantrymen have historically been reluctant to fire on the enemy and how this reluctance has been overcome in the last half century through changes in military training. The evidence in each of these areas reinforces the appeal of the idea of cognitive modularity, the view that thought and behavior are influenced by …

Schelling, Von Neumann, And The Event That Didn’T Occur, Alexander J. Field

Economics

Thomas Schelling was recognized by the Nobel Prize committee as a pioneer in the application of game theory and rational choice analysis to problems of politics and international relations. However, although he makes frequent references in his writings to this approach, his main explorations and insights depend upon and require acknowledgment of its limitations. One of his principal concerns was how a country could engage in successful deterrence. If the behavioral assumptions that commonly underpin game theory are taken seriously and applied consistently, however, nuclear adversaries are almost certain to engage in devastating conflict, as John von Neumann forcefully asserted. …

Affect And Overconfidence: A Laboratory Investigation, John Ifcher, Homa Zarghamee

Economics

We conduct two incentivized random-assignment experiments to investigate whether overconfidence is impacted by (1) incidental mild positive affect, or (2) incidental mild negative affects-anger, fear, and sadness. We measure overconfidence using overestimation of past quiz-performance and overestimation of past quiz-performance compared to peers. The results of the first experiment indicate that the effect of positive affect on both measures of overconfidence is positive and significant for male subjects. While mood-inducement is equally successful for female subjects, their overconfidence is unaffected by positive affect. These positive-affect results are robust to various specification checks. In the second experiment, we find consistent evidence …

The Development Of Public Libraries In The United States, 1870–1930: A Quantitative Assessment, Michael Kevane, William A. Sundstrom

Economics

The period 1870–1930 witnessed the emergence of the local public library as a widespread and enduring American institution. We document the expansion of public libraries in the United States using data drawn from library surveys conducted by the federal Bureau of Education. We then review causal accounts for that expansion. Exploiting cross-state and temporal variation in the data, we use statistical techniques to assess a number of plausible demand-and-supply factors affecting the pace of library development. Social and economic variables in the analysis include state income or wealth, urbanization, ethnic composition, and gender ratios. We also examine the effect of …