French media bias and the vote on the European constitution

This article analyses the behavior of the French media during the campaign for the 29 May 2005 referendum on the Treaty Establishing a Constitution for Europe. The media were biased in favour of the Treaty. The media bear a share of responsibility in the rejection of the Treaty in leading people who felt that the media were disconnected from the people's concerns to vote against the Treaty.     

Measuring partisan media bias in US newscasts from 2001 to 2012

This paper investigates the positioning in political news coverage of the big four US newscasts, ABC News, CBS News, FOX News and NBC News, as well as how they alter their positions when president Barack Obama took over from George W. Bush. Our empirical analysis is based on the tonality of their political coverage using more than 815,000 news items on Democrats and Republicans from 2001 through 2012. Using the Political Coverage Index (PCI), we find evidence for partisan and biased news coverage across all of the newscasts, with a general tendency of ABC News, CBS News, and NBC News to be slightly more critical of the Republicans, and of FOX News with a clear tendency to be more critical of Democrats. Moreover, and even more interesting, two of the newscasts – CBS News and NBC News – changed their political coverage such that it became more conservative when Democrat Barack Obama became president. This effect becomes even more pronounced when observations from election campaign periods are dropped. We interpret these results as evidence for a watchdog-like anti-government bias on the part of the observed newscasts. In contrast, FOX News remains Democrat-critical independent of who is in office and can be seen as partisan from this perspective. The results are confirmed when controlling for differences in reporting rates between the parties and the administrations using interaction terms.     

More ads more revs: A note on media bias in review likelihood

This paper analyzes the existence of a possible media bias by determining the impact of the automobile manufactures' advertisements on the probability that two leading German car magazines review their products. By accounting for a possible endogeneity bias, we find a positive impact of advertising volumes on test probabilities.     

Persistent Inequality

When human capital accumulation generates pecuniary externalities across professions, and capital markets are imperfect, persistent inequality in utility and consumption is inevitable in any steady state. This is true irrespective of the degree of divisibility in investments. However, divisibility (or fineness of occupational structure) has implications for both the multiplicity and Pareto-efficiency of steady states. Indivisibilities generate a continuum of inefficient and efficient steady states with varying per capita income. On the other hand, perfect divisibility typically implies the existence of a unique steady state distribution which is Pareto-efficient.     

Exponential discounting bias

We address intertemporal utility maximization under a general discount function that nests the exponential discounting and the quasi-hyperbolic discounting cases as particular specifications. Under the suggested framework, the representative agent adopts, at some initial date, an optimal behavior that shapes her consumption trajectory over time. This agent desires to take a constant discount rate to approach the optimization problem, but bounded rationality, under the form of a present bias, deviates the individual from the intended goal. As a result, decreasing impatience will end up dominating the agent’s behavior. The individual will not be aware of her own time inconsistency and, therefore, she will not revise her plans as time elapses, what makes the problem relatively simple to address from a computational point of view. The general discounting framework is used to approach a standard optimal growth model in discrete time. Transitional dynamics and stability properties of the corresponding dynamic setup are studied. An extension of the standard utility maximization model to the case of habit persistence is also considered.     

Non-parametric test of time consistency: Present bias and future bias

This paper reports the elicited time preference of human subjects in a laboratory setting. The model allows for non-linear utility functions, non-separability between delay and reward, and time inconsistency including future bias in addition to present bias. In particular, the experiment (1) runs a non-parametric test of time consistency and (2) estimates the form of time discount function independently of instantaneous utility functions, and then (3) the result suggests that many subjects exhibiting future bias, indicating an inverse S-curve time discount function.     

Bayesian endogeneity bias modeling

We propose to model endogeneity bias using prior distributions of moment conditions. The estimator can be obtained both as a method-of-moments estimator and in a Ridge penalized regression framework. We show the estimator’s relation to a Bayesian estimator.     

Persistent gaps and default traps

We show how vicious circles in countries' credit histories arise in a model where output persistence is coupled with asymmetric information about output shocks. In such an environment, default signals the borrower's vulnerability to adverse shocks and creates a pessimistic growth outlook. This translates into higher interest spreads and debt servicing costs relative to income, raising the cost of future repayments, thereby creating “default traps”. We build a long and broad cross-country dataset to show the existence of a history-dependent “default premium” and of significant effects of output persistence on sovereign creditworthiness, consistent with the model's predictions.     

Endogenous Persistent Occupations and Inequality

The paper argues that human capital is the leading force determining inequality persistence. We show that, in a context of a perfect capital market where agents inherit human capital and wealth, it is the inherited human capital level that determines agents' occupational choice and investment. The critical assumption is that the entrepreneurial activity is of increasing returns to scale. This creates a higher profile of revenue for entrepreneurs. Although every agent can choose to become an entrepreneur, and although there is no barrier of entry in entrepreneurship, only those who receive a relatively higher human capital will do so. Agents whose inherited human capital is lower than the human capital threshold, endogenously determined, are better off becoming workers. Even in the context of a perfect capital market, which allows less endowed agents to borrow and invest in education, it turns out that the agents who inherit a low level of human capital bear a greater utility cost in their education investment. So they are better off investing less in education, lending their savings, and working as workers. As a result, agents' occupational choice depends on the intergenerational transmission of human capital. In the long run, the population is polarized into the rich entrepreneurs and the poor workers, magnifying inequality persistence in human capital level and revenue.     

Persistent poverty and informal credit

This paper explores the consequences of nonlinear wealth dynamics for the formation of bilateral credit arrangements to help manage idiosyncratic risk. Using original data on expected wealth dynamics, social networks and informal loans among southern Ethiopian pastoralist households, we find that the threshold at which expected wealth dynamics bifurcate serves as a focal point at which lending is concentrated. Informal lending responds to recipients' losses but only so long as the recipients are not “too poor”. Our results suggest that when shocks can have long term effects, loans are best understood as providing a safety net rather than a scale-neutral insurance mechanism. Furthermore, the persistently poor are excluded from social networks that are necessary to obtain loans given in response to shocks.     

Urban bias and wage inequality

This paper explores how urban bias affects skilled–unskilled wage inequality through building several general equilibrium models. In the basic model, we find that an increase in the degree of urban bias will widen wage inequality if the unskilled sector is more capital intensive than the skilled sector and reduce wage inequality if the skilled sector is more capital intensive than the unskilled sector. In the extended models, we find that the conclusion obtained in the basic model almost still holds under different conditions.     

Party governance and ideological bias

Informed opinions are essential to a good functioning of democratic institutions. Political intermediaries, such as parties, make up the free-riding voters' informational deficit. Public opinion and voting outcomes are shaped by those parties whom the voters trust.The credibility of parties is fashioned by their internal organization. The paper investigates one aspect of party governance, namely the allocation of control rights over platform design. The party's leadership either selects a platform, or simply recommends a platform for adoption by the rank-and-file. Under the latter (democratic) institution, the leadership has no formal authority, but for informational and procedural reasons may still have substantial real control over the final platform, depending on the congruence between leadership and rank-and-file. In particular, the rank-and-file is generally more concerned with the ideological content of the platform than the leadership, who is motivated by the benefits from electoral office. The paper argues that in centrist parties, the high congruence of interest between the rank-and-file and office seekers leads to systematic rubberstamping of the leadership's electoral platforms; the resulting weak internal control mechanism hurts party credibility.     

Urban bias and multinational firms

This paper explores how urban bias in the host country affects the movement of multinational capital owned by multinational firms in the source country and the production in the invested sector. If the degree of urban bias in one of the urban sectors in the host country increases, then the amount of multinational capital flowing into the host country will increase, but the production in the invested sector will have different changes in different situations.     

Local media ownership and media quality

The Federal Communications Commission regulates local media ownership to promote competition, diversity and the provision of local programming. This study investigates how local media cross-ownership, co-ownership and ownership diversity are associated with media market outcomes. Cross-sectional regressions indicate that television station ownership consolidation is associated with increased local TV news production but lower news ratings. However, panel estimation finds that changes in local media ownership are uncorrelated with local media usage or programming, producing confidence intervals that are tightly centered around zero.     

Rounding bias in forecast uncertainty

The European Survey of Professional Forecasters (SPF) is a dataset that is widely used to derive measures of forecast uncertainty. Participants in the SPF provide not only point estimates but also density forecasts for key macroeconomic variables. The mean individual variance, defined as the average of the variances of individual forecasts, shifted up during the Great Recession and has remained elevated since the crisis. The paper seeks to explain this puzzling lack of countercyclicality by applying a smooth transition analysis on data from the European SPF. The analysis indicates that the mean individual variance is a function of the modelling preferences of forecasters and consequently shifts in individual variance are likely to be misleading for the actual changes in the perceived uncertainty. The results remain robust after potential endogeneity has been accounted for.     

Costing bias in economic evaluations

Abstract

Determining the cost-effectiveness of healthcare interventions is key to the decision-making process in healthcare. Cost comparisons are used to demonstrate the economic value of treatment options, to evaluate the impact on the insurer budget, and are often used as a key criterion in treatment comparison and comparative effectiveness; however, little guidance is available to researchers for establishing the costing of clinical events and resource utilization. Different costing methods exist, and the choice of underlying assumptions appears to have a significant impact on the results of the costing analysis. This editorial describes the importance of the choice of the costing technique and it’s potential impact on the relative cost of treatment options. This editorial also calls for a more efficient approach to healthcare intervention costing in order to ensure the use of consistent costing in the decision-making process.     

Endogeneity bias and growth regressions

The problem of regressor endogeneity stemming from reverse casuality is one that has plagued economists working in the field of empirical economic growth for some time. This paper attempts to address the relevant magnitude of this issue in the context of growth regressions based on the Solow growth model. The paper develops a method of running Monte Carlo simulations that allows us to generate simulated data that match the moments of observed real-world data typically used in such regressions while simultaneously allowing us to impose arbitrarily high correlations between the steady-state determinants of the Solow model and the unobserved residual term of the data-generating process. After running simulations that represent a wide sample of the mathematically-possible correlations, we conclude that a between estimator or a random effects estimator will deliever a lower average absolute bias across all coefficients than alternative estimators in almost all of our simulations. Conversely, estimators that use within-country variation will generate lower biases when looking solely at rates of convergence. Furthermore, we conclude that these results are robust when restricting our sample of simulations to several subsets of the assumed parameters and to changing our assumptions about country fixed-effects terms.     

Repeated Bargaining with Persistent Private Information

The paper analyses repeated contract negotiations involving the same buyer and seller where the contracts are linked because the buyer has persistent (but not full y permanent) private information. The size of the surplus being divided is specified as a two-state Markov chain with transitions that are synchronized with contract negotiation dates. Equilibrium involves information cycles triggered by the success or failure of aggressive demands made by the seller. Because there is persistence in the Markov chain generating the surplus, a successful demand induces the seller to make another aggressive demand in the next negotiation, since the buyer's acceptance reveals that the current surplus is large. Rejection of an aggressive demand, on the other hand, leads the seller to be pessimistic about the size of the surplus in the next contract, so the seller makes a "soft" offer that is sure to be accepted. Then, after several such offers have been accepted, the seller is optimistic enough to again make an aggressive demand, creating an information cycle. An interesting feature of this cycle is that the soft price is not constant, but declines as the cycle continues, so as to offset the buyer's option value of re-starting the cycle when the current state is bad. An explicit mapping is given for the relationship between the basic parameters and the equilibrium prices and quantities; in particular, there is a closed-form solution for the threshold belief that makes the seller indifferent between hard and soft offers.     

Declining Industries and Persistent Tariff Protection

The paper uses a political economy framework to explain the empirical observation that trade protection is persistent. The assumptions that are shown to generate endogenous tariff persistence in the model are quite plausible: agents are uncertain about future prices, tariffs are affected by political pressure, and producers of the import–competing good own sector–specific human capital that may be lost if they exit the industry. The model also reveals that, under the conditions listed above, industries decline gradually in response to a price shock even when producers do not face increasing costs of adjustment.