OVERBIDDING AND HETEROGENEOUS BEHAVIOR IN CONTEST EXPERIMENTS: A COMMENT ON THE ENDOWMENT EFFECT

We revisit the meta-analysis of Sheremeta on overbidding in contest experiments and focus on the effect of endowment on overbidding. Sheremeta assumes, and finds evidence of, an increasing linear relationship between endowment and overbidding, Quantal Response Equilibrium (QRE) predicts an increasing concave relationship, while Baik and colleagues find an inverted U-shaped relationship in their analysis of a single experiment. We use the same data as in Sheremeta, but employ a different econometric model which leads to support for both QRE and the inverted U-shaped relationship. Following Baik and colleagues, we posit that the inverted-U relationship may be interpreted in terms of a wealth effect.     

FREEDOM AND ITS ENEMIES: PROBLEMS OF RE‐ESTABLISHING FREEDOM AND DEMOCRACY IN THE EUROPEAN CONTEXT1

The experience of living in non‐free communist societies may have made the people of Eastern Europe particularly sensitive to the weakening and ultimately the loss of freedom. Many see such a process currently taking place in a Europe that increasingly places group rights and entitlements above the rights of individuals. Such a process has been driven by a growing belief in the inevitability of market failure, a desire to use the state for personal gain and a fear of openness, freedom and competition.     

ESTIMATION OF TREATMENT EFFECTS WITHOUT AN EXCLUSION RESTRICTION: WITH AN APPLICATION TO THE ANALYSIS OF THE SCHOOL BREAKFAST PROGRAM

The increase in childhood obesity has garnered the attention of many in policymaking circles. Consequently, school nutrition programs such as the School Breakfast Program (SBP) have come under scrutiny. The identification of the causal effects of such programs, however, is difficult owing to non‐random selection into the program and the lack of exclusion restrictions. Here, we propose two new estimators aimed at addressing this situation. We compare our new estimators to existing approaches using simulated data. We show that while correlations might suggest that SBP causes childhood obesity, SBP is likely to reduce childhood obesity once selection is addressed. Copyright © 2012 John Wiley & Sons, Ltd.     

ESTIMATING PERSON‐CENTERED TREATMENT (PeT) EFFECTS USING INSTRUMENTAL VARIABLES: AN APPLICATION TO EVALUATING PROSTATE CANCER TREATMENTS

This paper builds on the methods of local instrumental variables developed by Heckman and Vytlacil (1999, 2001, 2005) to estimate person‐centered treatment (PeT) effects that are conditioned on the person's observed characteristics and averaged over the potential conditional distribution of unobserved characteristics that lead them to their observed treatment choices. PeT effects are more individualized than conditional treatment effects from a randomized setting with the same observed characteristics. PeT effects can be easily aggregated to construct any of the mean treatment effect parameters and, more importantly, are well suited to comprehend individual‐level treatment effect heterogeneity. The paper presents the theory behind PeT effects, and applies it to study the variation in individual‐level comparative effects of prostate cancer treatments on overall survival and costs. Copyright © 2013 John Wiley & Sons, Ltd.     

EFFECT OF CROSS‐BORDER HEALTH CARE ON QUALITY AND PROGRESSIVITY OF FINANCING

In this study, we examine the effect of cross‐border health care in terms of public health insurance. We consider its effect on healthcare quality and progressivity of financing. We use a two‐country Hotelling model in which consumers are divided into two groups: high and low innate‐talent consumers. Aiming to maximize social welfare, governments impose a progressive income tax on consumers to provide healthcare services. Assuming that a payment scheme for healthcare services is based on diagnosis‐related group pricing, which has been adapted in many countries, we obtain the following results. The promotion of cross‐border health care does not influence healthcare quality or the progressivity of financing in patient‐importing countries, but does reduce healthcare quality and influence the progressivity of financing in patient‐exporting countries.     

THE EFFECT OF ORGANIZATIONAL CULTURE ON COMMUNICATION AND INFORMATION*

The aim of this article is to demonstrate the importance and utility of the notion of organizational culture for scholars and practitioners in the field of information studies. It presents a theoretical and empirical examination of the effects of culture on communication and information in organizations. First, the concepts of organizational culture, information and communication are briefly explored. Then a case study of the effects of organizational culture on communication and information is presented. In particular, we make a detailed examination of how attitudes to communication and information that had their roots in a dominant organizational culture were a strong influence on the demise of the company (which was ultimately acquired by a stronger firm).     

MEASURING THE EFFECT OF NAPSTER ON RECORDED MUSIC SALES: DIFFERENCE‐IN‐DIFFERENCES ESTIMATES UNDER COMPOSITIONAL CHANGES

This paper measures the effect of Napster on record sales. I treat the introduction of Napster as a technological event that only Internet users experienced, and use a difference‐in‐differences (DD) approach. Because of potential compositional changes in Internet users, I examine identifying assumptions for the DD estimator under compositional changes and develop a test for identifying restrictions. To address potential bias due to compositional changes, I extend DD matching estimators to the case of two‐variate propensity scores. I find evidence suggesting that file sharing is likely to explain 20% of total sales decline, which is driven by households with children aged 6–17. Copyright © 2011 John Wiley & Sons, Ltd.     

CARROT AND STICK: HOW RE‐EMPLOYMENT BONUSES AND BENEFIT SANCTIONS AFFECT EXIT RATES FROM WELFARE

To increase the exit from welfare, benefit recipients in the municipality of Rotterdam were exposed to various financial incentives. Once their benefit spell exceeded one year, welfare recipients were entitled to a re‐employment bonus if they found a job that lasted at least 6 months. However, they could also be punished for noncompliance with eligibility requirements and face a sanction, i.e. a temporary reduction of their benefits. We find that the financial sticks in the form of benefit sanctions were effective in stimulating the exit from welfare, while the financial carrots in the form of re‐employment bonuses were not. Copyright © 2011 John Wiley & Sons, Ltd.     

ARE WOMEN REALLY MORE RISK‐AVERSE THAN MEN? A RE‐ANALYSIS OF THE LITERATURE USING EXPANDED METHODS

While a substantial literature in economics and finance has concluded that ‘women are more risk averse than men’, this conclusion merits investigation. After briefly clarifying the difference between making generalizations about groups, on the one hand, and making valid inferences from samples, on the other, this essay suggests improvements to how economists communicate our research results. Supplementing findings of statistical significance with quantitative measures of both substantive difference (Cohen's d, a measure in common use in non‐Economics literatures) and of substantive overlap (the Index of Similarity, newly proposed here) adds important nuance to the discussion of sex differences. These measures are computed from the data on men, women and risk used in 35 scholarly works from economics, finance and decision science. The results are considerably more mixed and overlapping than would commonly be inferred from the broad claims made in the literature, with standardized differences in means mostly amounting to considerably less than one standard deviation, and the degree of overlap between male and female distributions generally exceeding 80%. In addition, studies that look at contextual influences suggest that these contribute importantly to observations of differences both between and within the sexes.     

TOP MANAGEMENT TURNOVER AND CEO SUCCESSION: AN INVESTIGATION OF THE EFFECTS OF TURNOVER ON PERFORMANCE

One strategic action which is often taken by firms in need of a turnaround is to bring in a new chief executive officer (CEO). Many observers argue, however, that having done this the new CEO must replace large numbers of top managers in order to effect a change in the firm's interactions and subsequent performance. Critics of this perspective insist that just the opposite is true. Substantial levels of turnover may only serve to further disrupt the organization decreasing performance still more. This controversy is addressed in the following study using a sample of 84 firms all of which experienced CEO succession during the year 1980. Analyses rely on a three-year-period pre-succession and three-year period post-succession. Three hypotheses are proposed. First, poor performance prior to CEO succession leads to greater turnover afterward. Second, that turnover is curvilinearly related to performance after the succession. And, finally, that successor type (i.e. whether the CEO was an inside or outside candidate) is related to the level of turnover in upper level management positions in the post-succession period. the results from tests of these hypotheses are presented, and the implications of these findings are discussed.     

STUDENT DEBT EFFECTS ON FINANCIAL WELL‐BEING: RESEARCH AND POLICY IMPLICATIONS

Reviewing the data regarding effects of student debt on students’ financial outcomes following college – whether successful graduation or premature exit – makes clear that there is a price to pay for having to borrow money to go to college. Indebted college graduates have lower net worth, less home equity, and compromised ability to accumulate assets, as compared to their peers with the same level of education but no student debt. They may also experience poorer educational outcomes, with independent effects on earning power and, then, later wealth accumulation. Especially given the relationship between initial household wealth and children's later educational outcomes, these findings about the post‐college financial outcomes of indebted students and graduates raise the specter of ongoing, sustained, and cross‐generational perpetuation of societal divides. In the United States, higher education is valued not just as a good in itself, but also as a means to the end of greater economic security and the primary lever for economic mobility. Evaluating student loans through this lens underscores the long‐term, volatile, and often hidden effects of student loan dependence and raises the stakes for consideration of alternative approaches to higher education finance.     

DEMOGRAPHIC EFFECTS ON ECONOMIC GROWTH AND CONSEQUENCES FOR THE PROVISION OF PENSIONS

As the population of an economy ages saving declines and, through that channel, economic growth can decline too. Returns to physical capital fall, making the provision of pensions more and more difficult. The income of the working population deteriorates and they respond by having fewer children. This intensifies the problem even further.     

THE STOCK MARKET, HOUSING AND CONSUMER SPENDING: A SURVEY OF THE EVIDENCE ON WEALTH EFFECTS

Abstract.  This paper examines the time-series and micro-econometric evidence on the relationship between stock and house prices and consumer spending. The time-series studies distinguish between short-run and long-run links between consumption, income and wealth. They allow us to identify which variables adjust to restore the long-run equilibrium in the case of a shock, and to determine the time taken by the adjustment process. The micro-econometric literature improves our understanding of the link between wealth and expenditure and distinguishes among the alternative hypotheses – of direct wealth effect, common causality and collateral channel – that have been proposed to explain this relationship. The relationship between wealth and consumer spending appears to be strong, but there is some disagreement as to its size and nature. Furthermore, there appear to be some important differences across countries, which should be allowed for by policy makers when appraising the policy implications of a change in asset prices.     

EFFECTS OF PUBLIC TRANSIT ON AUTOMOBILE OWNERSHIP AND USE IN HOUSEHOLDS OF THE USA

This study develops econometric models to predict the effect of access to and distance to public transit on automobile ownership and miles driven. Ordered logit model is used for automobile ownership and multiple regression model is used for vehicle miles traveled (VMT).
Inverse square root of transit distance is used as a measure for transit accessibility. Important findings in the analysis are (i) the number of licensed drivers is the primary determinant of the number of automobiles owned, (ii) the presence of children is not a significant factor in automobile ownership and VMT, and (iii) the VMT of multi-vehicle households is more sensitive to transit than one-vehicle households. Transit simulations are performed by improving the distance to and access to public transit. The results showed that total VMT in National Ambient Air Quality Standard non-attained metropolitan statistical area is reduced by 11% (approximately 60 billion miles) with 0.1 miles simulation.     

THE ECONOMIC SCIENCE FICTION OF CLIMATE CHANGE: A FREE‐MARKET PERSPECTIVE ON THE STERN REVIEW AND THE IPCC

The Stern Review and the IPCC believe that anthropogenic climate change is a serious global threat and demands an urgent response. Examining the IPCC's projections of future climate change and Stern's estimates of its costs from a free‐market perspective shows that they are based on flawed methodological assumptions and reflect an excessively optimistic approach to knowledge of the future. The foundations of reliable knowledge for a sound policy framework have not been put in place.