Department of Regulation
Dirk Schoenmaker
Economics Letters, forthcoming
Abstract:
The financial trilemma states that financial stability, financial integration and national financial policies are incompatible. Any two of the three objectives can be combined but not all three; one has to give. This paper develops a model to underpin the financial trilemma.
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Raymond Peck
IATSS Research, forthcoming
Abstract:
This paper reviews the evaluation literature on the effectiveness of classroom and behind-the-wheel driver training. The primary focus is on North America programs as originally taught in high schools but now also by private instructors. Studies from the United Kingdom, Australia, New Zealand and Scandinavia are also included. By far the most rigorous study to date was the experimental study in DeKalb, Georgia, U.S.A. This study used a randomized design including a control group and a very large sample size to provide reasonable statistical precision. I reexamine the DeKalb data in detail and conclude that the study did show evidence of small short-term crash and violation reductions per licensed driver. However, when the accelerated licensure caused by the training is allowed to influence the crash and violation counts, there is evidence of a net increase in crashes. The other studies reviewed present a mixed picture but the better designed quasi-experimental evaluation usually showed no effects on crash rates but almost all suffer from inadequate sample size. I show that as many as 35,000 drivers would be required in a two group design to reliably detect a 10% reduction in crash rates.
The advent of GDL laws in North America and other countries has largely remedied the concern over accelerated licensure of high risk teenage drivers by delaying the progress to full licensure. Conventional driver training programs in the U.S. (30 hours classroom and 6 hours on-the-road) probably reduce per licensed driver crash rates by as little as 5% over the first 6-12 months of driving. The possibility of an effect closer to 0 cannot be dismissed. Some GDLs contain an incentive for applicants to complete an advanced driver training program in return for shortening the provisional period of the GDL. The results of Canadian studies indicate that any effects of the driver training component are not sufficient to offset the increase in accidents due to increased exposure. There is no evidence or reason to believe that merely lengthening the number of hours on the road will increase effectiveness. Programs directed toward attitude change and risk taking better address the underlying cause of the elevated crash risk of young drivers but these behaviors are notoriously resistant to modification in young people.
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Giovanni Mastrobuoni
Journal of Public Economics, forthcoming
Abstract:
In 1995, the Social Security Administration started sending out the annual Social Security Statement. It contains information about the worker's estimated benefits at the ages 62, 65, and 70. I use this unique natural experiment to analyze the retirement and claiming decision making. First, I find that, despite the previous availability of information, the Statement has a significant impact on workers' knowledge about their benefits. These findings are consistent with a model where workers need to gather costly information in order to improve their retirement decision. Second, I use this exogenous variation in knowledge to analyze the optimality of workers' decisions. Several findings suggest that workers do not change their retirement behavior: i) Workers do not change their expected age of retirement after receiving the Statement; ii) monthly claiming patterns do not show any change after the introduction of the Social Security Statement; iii) workers do not become more sensitive to Social Security incentives after receiving the Statement. More research is needed to establish whether workers are already behaving optimally or they are not, but the information contained in the Statement is not sufficient to improve their retirement behavior.
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Precision and Rhetoric in Media Reporting About Contamination in Farmed Salmon
Shannon Amberg & Troy Hall
Science Communication, December 2010, Pages 489-513
Abstract:
This study examined how health risks and benefits are presented in newsprint stories about contamination in farmed salmon. Following recent research, the quality of information was captured as the level of numerical and contextual precision. The authors supplemented and critiqued this analysis with an examination of rhetorical markers of certainty and magnitude. In a census of 83 stories focusing on two research studies, most statements presented information in a qualitative format, deemed to be the least informative for readers, although most stories contained a limited amount of high-precision information, generally as guidelines for consumers. However, journalists' rhetorical practices conveyed conflicting interpretations of the same data, leading to inconclusive messages about risks and benefits. Even highly precise numeric data were often presented in ways that were likely to confuse readers. Results illustrate a need to go beyond analyzing precision levels when studying how the media present scientific research with implications for consumer health, as rhetorical formulations change the meaning of risk statements.
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The effect of pictorial warnings on cigarette packages on attentional bias of smokers
Sabine Loeber et al.
Pharmacology Biochemistry and Behavior, forthcoming
Abstract:
Given that previous studies demonstrated that smoking-related cues (like cigarette packages) grab the attention of smokers and thereby contribute to craving and tobacco seeking we investigated how pictorial health warnings presented on cigarette packages affect attention allocation towards cigarette packages. The WHO advises the use of pictorial health warnings on cigarette packages. However, at present no experimental studies are available investigating if pictorial warnings modulate incentive properties of cigarette packages. Fifty-nine tobacco smokers and 55 non-smokers performed a visual dot probe task to assess attention allocation towards cigarette packages with and without health warnings. Smokers were divided a priori in a group of light smokers (< 20 cigarettes/day; n=39) and heavy smokers (≥ 20 cigarettes/day; n=20). Psychometric measures on anxiety and nicotine craving were administered. Light smokers showed an attentional bias towards packages without pictorial warnings while no effects were observed in the other groups. In heavy smokers attention allocation towards pictorial health warnings was associated with an increase of craving and anxiety. The results have a potential public health perspective as pictorial health warnings might be an effective strategy to reduce attentional bias towards cigarette packages of light smokers, while counterproductive effects in heavy smokers warrant further investigation.
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Political Uncertainty and Corporate Investment Cycles
Brandon Julio & Youngsuk Yook
Journal of Finance, forthcoming
Abstract:
We document cycles in corporate investment corresponding with the timing of national elections around the world. During election years, firms reduce investment expenditures by an average of 4.8% relative to non-election years, controlling for growth opportunities and economic conditions. The magnitude of the investment cycles varies with different country and election characteristics. We investigate several potential explanations and find evidence supporting the hypothesis that political uncertainty leads firms to reduce investment expenditures until the electoral uncertainty is resolved. These findings suggest that political uncertainty is an important channel through which the political process affects real economic outcomes.
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The dark side of financial innovation: A case study of the pricing of a retail financial product
Brian Henderson & Neil Pearson
Journal of Financial Economics, forthcoming
Abstract:
The offering prices of 64 issues of a popular retail structured equity product were, on average, almost 8% greater than estimates of the products' fair market values obtained using option pricing methods. Under reasonable assumptions about the underlying stocks' expected returns, the mean expected return estimate on the structured products is slightly below zero. The products do not provide tax, liquidity, or other benefits, and it is difficult to rationalize their purchase by informed rational investors. Our findings are, however, consistent with the recent hypothesis that issuing firms might shroud some aspects of innovative securities or introduce complexity to exploit uninformed investors.
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Jenny Schuetz, Rachel Meltzer & Vicki Been
Urban Studies, February 2011, Pages 297-329
Abstract:
Many local governments are adopting inclusionary zoning (IZ) as a means of producing affordable housing without direct public subsidies. In this paper, panel data on IZ in the San Francisco metropolitan area and suburban Boston are used to analyse how much affordable housing the programmes produce and how IZ affects the prices and production of market-rate housing. The amount of affordable housing produced under IZ has been modest and depends primarily on how long IZ has been in place. Results from suburban Boston suggest that IZ has contributed to increased housing prices and lower rates of production during periods of regional house price appreciation. In the San Francisco area, IZ also appears to increase housing prices in times of regional price appreciation, but to decrease prices during cooler regional markets. There is no evidence of a statistically significant effect of IZ on new housing development in the Bay Area.
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Does State Growth Management Change the Pattern of Urban Growth? Evidence from Florida
Marlon Boarnet, Ralph McLaughlin & John Carruthers
Regional Science and Urban Economics, forthcoming
Abstract:
This paper examines a policy question of acute interest in the fields of urban and regional economics and urban planning: if a state government wanted to alter the spatial pattern of growth, could it? The analysis uses a bidirectional growth model to examine equilibrium densities of people and jobs throughout the Atlantic Southeast, which includes Florida - a state having one of the nation's best-known pieces of growth management legislation. The results suggest that Florida's policy is associated with changes in population density. The Florida program is associated with a lower equilibrium population density and slower adjustment to that equilibrium density in urban counties, but a higher equilibrium population density and a faster adjustment to equilibrium in suburban counties. On net, this is consistent with a shift of development from urban to suburban counties. Our results also highlight the importance of geographic scale, as we note that analyses using counties and metropolitan statistical areas give different results which can be reconciled by examining the patterns across urban, suburban and exurban counties.
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Adam Smith: Class, labor, and the industrial revolution
Michael Perelman
Journal of Economic Behavior & Organization, December 2010, Pages 481-496
Abstract:
Economists of virtually all schools of thought regard Adam Smith sympathetically. This article explores Adam Smith's authoritarian side, showing the close connection between Smith's notion of appropriate behavior and the prevailing economic organization. This article explores how this dimension of Smith's pre-analytic vision shaped his writings.
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Competition, Risk-shifting, and Public Bail-out Policies
Reint Gropp, Hendrik Hakenes & Isabel Schnabel
Review of Financial Studies, forthcoming
Abstract:
This article empirically investigates the competitive effects of government bail-out policies. We construct a measure of bail-out perceptions by using rating information. From there, we construct the market shares of insured competitor banks for any given bank, and analyze the impact of this variable on banks' risk-taking behavior, using a large sample of banks from OECD countries. Our results suggest that government guarantees strongly increase the risk-taking of competitor banks. In contrast, there is no evidence that public guarantees increase the protected banks' risk-taking, except for banks that have outright public ownership. These results have important implications for the effects of the recent wave of bank bail-outs on banks' risk-taking behavior.
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The Utility of Keg Registration Laws: A Cross-Sectional Study
Chris Ringwalt & Mallie Paschall
Journal of Adolescent Health, January 2011, Pages 106-108
Purpose: Many states have implemented keg registration policies to reduce adolescent binge drinking and related consequences. We examined the association between the strength and comprehensiveness of these policies and measures of beer consumption in the general population and adolescent binge drinking, as well as drinking and driving.
Methods: Data concerning the presence and stringency of the states' keg registration laws were secured from the Alcohol Policy Information System. Keg law ratings for each state were correlated with its (1) beer consumption per capita, as well as the 30-day prevalence of the following: (2) adolescent binge drinking, (3) adolescents who drive after drinking, and (4) adolescents who ride with a driver who has been drinking, as assessed by the Youth Risk Behavior Survey.
Results: As hypothesized, the stringency and comprehensiveness of state level keg registration laws were moderately (-.31 to -.41) and negatively associated with each of these outcomes. However, these relationships largely attenuated when controlling for per capita beer sales.
Conclusions: Longitudinal research is needed to examine the relationships between keg registration policies and levels of adolescent alcohol consumption, hazardous drinking, and driving after drinking.
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Valuing Health Effects: The Case of Ozone and Fine Particles in Southern California
Victor Brajer, Jane Hall & Frederick Lurmann
Contemporary Economic Policy, forthcoming
Abstract:
This study presents a conservative estimate of the health benefits that would result from attainment of the federal ozone and fine particle (PM2.5) standards in the South Coast Air Basin of southern California. A three-stage approach is used that links pollution exposures to adverse health outcomes to economic values. The annual value of the aggregate health benefits approaches $500 million (with a range of $295-$646 million) for ozone and exceeds $21 billion (with a range of $12.85-$34.22 billion) for fine particles. Such results are useful to regulatory agencies and other policy makers when evaluating the merits of various air pollution reduction strategies.
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Pollution, Health, and Avoidance Behavior: Evidence from the Ports of Los Angeles
Enrico Moretti & Matthew Neidell
Journal of Human Resources, January 2011, Pages 154-175
Abstract:
A pervasive problem in estimating the costs of pollution is that optimizing individuals may compensate for increases in pollution by reducing their exposure, resulting in estimates that understate the full welfare costs. To account for this issue, measurement error, and environmental confounding, we estimate the health effects of ozone using daily boat traffic at the port of Los Angeles as an instrumental variable for ozone. We estimate that ozone causes at least $44 million in annual costs in Los Angeles from respiratory related hospitalizations alone and that the cost of avoidance behavior is at least $11 million per year.
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Acculturation, Ethnicity, and Air Pollution Perceptions
Branden Johnson
Risk Analysis, forthcoming
Abstract:
A globalizing world increases immigration between nations, raising the question of how acculturation (or its lack) of immigrants and their descendants to host societies affects risk perceptions. A survey of Paterson, New Jersey, residents tested acculturation's associations with attitudes to air pollution and its management, and knowledge of and self-reported behaviors concerning air pollution. Linguistic and temporal proxy measures for acculturation were independent variables along with ethnicity, plus controls for gender, age, education, and income in multivariate analyses. About one-fifth of contrasts between non-Hispanic whites, non-Hispanic blacks, English-interviewed Hispanics, and Spanish-interviewed Hispanics were statistically significant (Bonferroni-corrected) and of medium or higher affect size, with most featuring the Spanish-interviewed Hispanics. Knowledge variables featured the most significant differences. Specifically, Spanish-interviewed Hispanics reported less concern, familiarity with pollution, recognition of high pollution, and vigorous outdoor activity, and greater belief that government overregulates pollution than English-interviewed Hispanics (and than the other two groups on most of these variables too). English-interviewed Hispanics did not differ from non-Hispanic whites, but did on several variables from non-Hispanic blacks. Temporal proxies of acculturation among the foreign-born were far less significant, but concern and familiarity with air pollution increased with time spent in the United States, while belief in overregulation and a positive trend in New Jersey pollution increased with time in the nation of origin. Implications of these acculturation and ethnicity findings for risk perception/communication research and practice are discussed.
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What Makes a Technocrat? Explaining Variation in Technocratic Thinking among Elite Bureaucrats
Christina Ribbhagen
Public Policy and Administration, January 2011, Pages 21-44
Abstract:
This article challenges the assertion that civil servants with technical training can be assumed to be technocrats. Contrary to previous findings, the article argues that type of higher education is not a key determinant of variations in technocratic mentality among elite bureaucrats; instead, post-socialization provides a better explanation. One suggested post-socialization mechanism is politicisation, so the more politicized a ministry is, the less technocratic the mentality of the bureaucrats working in it. These suggestions are tested empirically by both re-analysing Putnam's data from the late 1970s and analysing data from a total survey of elite bureaucrats working in the Government Offices of Sweden. As well as demonstrating that the ‘type of training hypothesis' is poorly supported, the empirical analysis demonstrates that the technocratic mentality of bureaucrats varies depending on ministerial affiliation. Furthermore, the level of politicisation is connected to the degree of technocratic mentality among the bureaucrats, though not exactly as hypothesized: more politicisation indeed leads to higher ‘tolerance for politics' among bureaucrats but, counter intuitively, also makes bureaucrats more likely to advocate neutrality rather than political advocacy among civil servants.
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Speed and quality of collective decision making: Incentives for information provision
Hans Peter Grüner & Elisabeth Schulte
Journal of Economic Behavior & Organization, December 2010, Pages 734-747
Abstract:
We study a one-shot information aggregation problem in which agents have to provide effort in order to understand the information they are supposed to process. Agents have a common interest in reaching a good decision but suffer from an individual cost of providing effort. Showing that any problem which is incentive compatible for a single information processor is incentive compatible for a decentralized organization, but not vice versa, we derive a new rationale for decentralized information processing. For a class of problems, the fastest organization - the reduced tree proposed by Radner (1993) - yields also the best incentives for information processing.