Expectations in micro data: rationality revisited

An increasing number of longitudinal data sets collect expectations information regarding a variety of future individual level events and decisions, providing researchers with the opportunity to explore expectations over micro variables in detail. We present a theoretical framework and an econometric methodology to use that type of information to test the Rational Expectations (RE) hypothesis in models of individual behavior. This RE assumption at the micro level underlies a majority of the research in applied fields in economics, and it is the common foundation of most work in dynamic models of individual behavior. We present tests of three different types of expectations using two different panel data sets that represent two very different populations. In all three cases we cannot reject the RE hypothesis. Our results support a wide variety of models in economics, and other disciplines, that assume rational behavior. We would like to acknowledge outstanding research assistance from Huan Ni. The Michigan Retirement Research Center (MRRC) and the TIAA-CREF Institute made this research possible through their financial support of two related projects. Benítez-Silva also acknowledges the financial support from NIH grant AG1298502 on a related project, and also from the Fundación BBVA, and the Spanish Ministry of Science and Technology through project number SEJ2005-08783-C04-01, and wants to thank the Department of Economics at the University of Maryland and the Department of Economics at Universitat Pompeu Fabra for their hospitality during the completion of this paper. Three anonymous referees provided excellent comments and suggestions. Any remaining errors are the authors’.     

Privacy concerns on social networking sites: a longitudinal study

This longitudinal cohort study examines whether privacy concerns have changed on social network sites (SNSs), in particular Myspace/Facebook, as both the users and the medium have matured. Tracking a cohort of 15–17-year olds at three points across an 8-year period, it uses focus groups and self-determination theory to investigate the perceptions of control and vulnerability of 45 participants. The findings suggest that while consumers appear to trust SNSs to protect their private information, they are reluctant to trust advertising or brands on these sites. Over time, users’ autonomy, connectedness and competence have shifted from experimenters, who have nothing to lose, to acceptors who felt their social life was more important than their privacy concerns, to managers who strategically controlled their information in order to reduce their vulnerability.     

Work Ethic and Ethical Work: Distortions in the American Dream

Economic progress in the United States has been attributed to the successful combination of two social structures – capitalism as an economic system and democracy as a political system. At the heart of this interaction is a particular work ethic in which hard work is considered the path to both immediate and future rewards. This article examines the evolution of work ethic in the United States, as well as the returns experienced through various adaptations in the country’s history. From this grounding, the information is structured into a proposal that key messages contained in the current, accepted work ethic are subject to distortions that may contribute to unethical decision making. These distortions result from two potentials: (1) efforts to reconcile the work ethic with contradictory messages and (2) exaggerations of the work ethic that become dysfunctional. The intent is to provide a framework that may explain to organizational leaders how people with the same basic work ethic can behave differently in terms of ethical work. Along with this understanding comes the potential to offset possible distortions and to encourage more ethical behavior.     

Higher Taxes for Fiscal Consolidation? Expected and Unexpected Effects of Municipal Tax Policy

International Advances in Economic Research - During episodes of fiscal consolidation in public budgets, there are different instruments to choose from. The literature shows broad consensus that...     

Islamic Banks and Financial Stability: An Empirical Analysis

The relative financial strength of Islamic banks is assessed empirically based on evidence covering individual Islamic and commercial banks in 19 banking systems with a substantial presence of Islamic banking. We find that (a) small Islamic banks tend to be financially stronger than small commercial banks; (b) large commercial banks tend to be financially stronger than large Islamic banks; and (c) small Islamic banks tend to be financially stronger than large Islamic banks, which may reflect challenges of credit risk management in large Islamic banks. We also find that the market share of Islamic banks does not have a significant impact on the financial strength of other banks.     

Why Are Health Care Managers Biased Against Hiring Service Providers With Tattoos?

Although health care managers often prefer to hire employees without tattoos, the source of this bias is unclear. One explanation is that tattoos are associated with being less responsible. An alternative explanation is that managers are concerned tattoos will hurt their organization's image. A sample of 187 dentists were shown a picture of a dental hygienist either with no tattoo, a small tattoo, or a large tattoo, and then asked about the hygienist. Results show that dentists do not associate tattoos with irresponsibility but are concerned about the fit of tattoos with the image of the practice. This means that dentists make hiring decisions based on stereotypes about customer stereotypes.     

Why are interest spreads so high in Uganda?

Using international comparisons and a unique bank-level dataset on the Ugandan banking system over the period 1999 to 2005, we explore the factors behind consistently high interest rate spreads and margins. International comparisons show that the small size of Ugandan banks, persistently high T-Bill rates and institutional deficiencies explain large proportions of the high Ugandan interest rate margins. The Ugandan bank panel confirms the importance of macroeconomic factors, such as high inflation, high T-Bill rates and exchange rate appreciation. There is also evidence for the small market place and high costs of doing business explaining persistently high spreads and margins; smaller banks and banks targeting the low end of the market incur higher costs and therefore higher margins. Spreads and margins also vary significantly with the sectoral loan portfolio composition of banks, while there is little evidence for foreign bank entry, privatization or changes in market structure explaining variation in spreads or margins over time.