SENTIMENT BIAS AND ASSET PRICES: EVIDENCE FROM SPORTS BETTING MARKETS AND SOCIAL MEDIA

Previous research using attendance‐based proxies for sentiment bias in sports betting markets confirmed the presence of investor sentiment in these markets. We use data from social media (Facebook “Likes”) to proxy for sentiment bias and analyze variation in bookmakers' prices investor sentiment. Based on betting data from seven professional sports leagues in Europe and North America, we find evidence that bookmakers increase prices for bets on teams with relatively more Facebook “Likes,” indicating the presence of price‐insensitive investors with sentiment bias. These price changes do not affect informational efficiency in this market. (JEL L81, G14)     

CONSUMPTION BENEFITS OF NATIONAL HOCKEY LEAGUE GAME TRIPS ESTIMATED FROM REVEALED AND STATED PREFERENCE DEMAND DATA

This paper examines the demand for hockey game trips among metropolitan and nonmetropolitan residents of Alberta, Canada. Using data on both revealed and stated preference game‐trip behavior from a telephone survey conducted throughout Alberta, we estimate the effect of ticket prices, team quality, arena amenities, and capacity on the latent demand for National Hockey League hockey games. We find that lower ticket prices, higher team quality, and additional capacity encourage attendance. In the status quo scenario, consumer surplus per game is $50 for those who had attended hockey games and about 50% less for those who had not attended games. Exploiting the stated preference data, we develop a number of other consumer surplus estimates. We also include travel costs in the estimation of the demand function and estimate the full value of the game trip considering both ticket prices and travel costs. Sold‐out arenas in Calgary and Edmonton generate annual consumption benefits of $40 and $35 million when only ticket prices are used to calculate consumer surplus (i.e., excluding travel costs). Considering the full‐price consumer surplus for the Calgary Flames of $103 per game trip, the annual consumption benefits may be as high as $82 million. (JEL R22, L83, D61)     

OWN‐NATIONALITY BIAS: EVIDENCE FROM UEFA CHAMPIONS LEAGUE FOOTBALL REFEREES

We examine the existence and magnitude of own‐nationality bias. Using player‐match level data from 12 seasons of the UEFA Champions League (UCL) and referee assignment policies that pair players and referees from the same country, we determine the bias that referees exhibit toward players from their native country. Players officiated by a referee from the same country receive a 10% increase in beneficial foul calls. Referees' own‐nationality bias is more pronounced for national team players, players at home, and in later stages of the tournament. Elite referees exhibit as much, or more, own‐nationality bias as their less experienced counterparts. (JEL L83, J15)     

INEQUALITY AND TRUST: NEW EVIDENCE FROM PANEL DATA

We estimate the causal link from income inequality to generalized trust by reconsidering the country‐level evidence on this issue. First, we exploit the panel dimension of the data, thus controlling for any country unobservable time‐invariant variables, and find a negative relationship between the two variables that holds only for developed countries. Second, we focus on these advanced economies and provide instrumental variable estimates using the predicted exposure to technological change as an exogenous driver of inequality. According to our findings, the negative causal effect of inequality on trust is even larger than that coming from ordinary least squares estimation. We also provide new insights on the effects of different dimensions of inequality, exploiting measures of both static inequality—such as the Gini index and top income shares—and dynamic inequality—proxied by intergenerational income mobility. (JEL D31, O15, Z13)     

BUILDING THE EVIDENCE BASE FROM LONGITUDINAL DATA

Survey data from cross-sectional snapshots give an incomplete picture of the social fabric. Without longitudinal information, planners, practitioners, social scientists and policy makers would be in the dark about dynamics, durations and pathways of human development. Longitudinal data collected in birth cohort studies give a better guide to long-term processes and outcomes and are more informative about the causal relations that are the drivers of disadvantage or success. The content and structure of Britain's Birth Cohort Studies are described to illustrate the challenges of creating and studying longitudinal evidence. Examples of findings and policies based on these prospective longitudinal studies are given, along with a discussion of the practical decisions that have to be confronted in undertaking them.     

EFFECTS OF CARBON REDUCTION LABELS: EVIDENCE FROM SCANNER DATA

We investigate the effects of carbon reduction labels using a detailed scanner data set. Using a difference‐in‐differences estimation strategy, we find that having a carbon label has no impact on detergent prices or demand. We also investigate possible heterogeneous effects of carbon labels using the synthetic control method. We find no evidence to indicate that the prices for the counterfactual detergents without the label would have been any different from the prices of the carbon‐labeled detergents. We investigate the reasons for these results and conclude that the specific design of the carbon label is responsible for its lack of success. (JEL D12, D83, L15, Q54)     

RISK PREFERENCES AND EXPECTED UTILITY: EVIDENCE FROM LABOR SUPPLY DATA

This paper adds to the growing body of evidence that observed risk preferences are not consistent with expected‐utility theory. Using the link between labor supply decisions and utility as outlined by Chetty (“A Bound on Risk Aversion Using Labor Supply Elasticities.” The American Economic Review, 96(5), 2006, 1821–34), I compute the curvature of utility over wealth for 3,900 individuals in the 1996 Panel Study of Income Dynamics. I then compare this estimate to a measure of relative risk aversion based on the respondents' answers to hypothetical gambling questions and find virtually zero correlation. Finally, I investigate how the two measures and their correlations change by demographic groups and risky behavior. (JEL C81, D80, J22)     

INTERTEMPORAL SUBSTITUTION AND CONSTRAINTS ON LABOR SUPPLY: EVIDENCE FROM PANEL DATA

This paper tests an intertemporal labor supply model for workers who say they face quantity constraints on their hours and for workers who say they do not. The data reject the model for the first group but not for the second. I conclude from this evidence that employment fluctuations result mainly from changes in the severity of constraints—that is, changes in involuntary unemployment—rather than intertemporal substitution. It also appears that liquidity constraints influence labor supply. Finally, the paper proposes a new approach to identifying intertemporal labor supply equations.     

TRADE COSTS AND JOB FLOWS: EVIDENCE FROM ESTABLISHMENT‐LEVEL DATA

Changes in the costs of trading inputs or final goods affect establishment‐level job flows. Using a longitudinal database containing the universe of manufacturing establishments in California from 1992 to 2004, we find that a decline in input or final‐good trade costs is associated with job destruction in the least productive establishments, job creation in the most productive establishments, and an increase in the death likelihood of the least productive establishments. The evidence is consistent with predictions of models of trade with heterogeneous firms. Additionally, the evidence shows that the effects of input trade costs on establishment‐level job flows are larger than the effects of final‐good trade costs. (JEL F14, F16)     

ENERGY USE AND TEMPERATURE HABITUATION: EVIDENCE FROM HIGH FREQUENCY THERMOSTAT USAGE DATA

Using micro‐level thermostat data from 27,000 U.S. households, we analyze how home heating/cooling decisions respond to weather. Responses are greater for extreme heat than for extreme cold and persist for at least 30 days after exposure, due in part to transaction costs but also to changes in intrinsic preferences. Failure to understand habit can lead us to overestimate the impact of short‐term policy nudges but underestimate the long‐run impact of small changes. Higher frequency estimates of how behavior responds to weather improve our understanding of climate adaptation as climate change affects not only mean temperatures but also variances. (JEL C55, D03, Q4)     

HOTEL DEMAND BEFORE,DURING, AND AFTER SPORTS EVENTS: EVIDENCE FROM CHARLOTTE,NORTH CAROLINA

This paper uses daily hotel occupancy data to examine the effects of a wide variety of political and sporting events on the hotel room market of Charlotte, North Carolina from 2005 to 2014. Two political conventions and NASCAR auto races are associated with large increases in hotel occupancy, prices, and revenue, but many other events have no discernable effect on Charlotte's hotel market. The results also indicate that occupancy effects before or after most events are modest at best. Back‐of‐the‐envelope calculations show incremental hotel‐tax receipts fall short of the debt service incurred in constructing and maintaining the city's sports venues. (JEL H71, Z23, Z28)     

ATTRIBUTION ERROR IN ECONOMIC VOTING: EVIDENCE FROM TRADE SHOCKS

This article exploits the international transmission of business cycles to examine the prevalence of attribution error in economic voting in a large panel of countries from 1990 to 2009. We find that voters, on average, exhibit a strong tendency to oust the incumbent governments during an economic downturn, regardless of whether the recession is home‐grown or merely imported from trading partners. However, we find important heterogeneity in the extent of attribution error. A split sample analysis shows that countries with more experienced voters, more educated voters, and possibly more informed voters—all conditions that have been shown to mitigate other voter agency problems—do better in distinguishing imported from domestic growth. (JEL E3, E6)     

IQ IN THE PRODUCTION FUNCTION: EVIDENCE FROM IMMIGRANT EARNINGS

We show that a country’s average IQ score is a useful predictor of the wages that immigrants from that country earn in the United States, whether or not one adjusts for immigrant education. Just as in numerous microeconomic studies, 1 IQ point predicts 1% higher wages, suggesting that IQ tests capture an important difference in cross‐country worker productivity. In a cross‐country development accounting exercise, about one‐sixth of the global inequality in log income can be explained by the effect of large, persistent differences in national average IQ on the private marginal product of labor. This suggests that cognitive skills matter more for groups than for individuals. (JEL J24, J61, O47)     

POST-REFORM INDUSTRIAL PRODUCTIVITY PERFORMANCE OF CHINA: NEW EVIDENCE FROM THE 1985 INDUSTRIAL CENSUS DATA

Beginning in the late 1970s, a series of reforms to improve industrial productivity were implemented in China. We estimate changes in productivity growth and identify its sources in the post-reform period 1980-85. Our work is based on the newest and most comprehensive data set available on Chinese industrial activities. Productivity growth estimates are shown to be strongly affected by output specification. Overall, we find sharp increases in productivity growth in the 1984-85 period as compared to the 1980-84 period. Collective and private enterprises show higher output and productivity gains than do state-owned enterprises.     

DIVIDEND POLICY IN REGULATED NETWORK INDUSTRIES: EVIDENCE FROM THE EU

We study the dividend policy of firms in regulated network industries, focusing on the impact of different regulatory regimes and government control. We link payout and smoothing decisions to different regulatory mechanisms (cost‐based vs. incentive regulation) and state versus private ownership. We test our predictions on a panel of listed European electric utilities, accounting for potential endogeneity of the choice of regulatory and ownership patterns. We find that incentive‐regulated firms smooth their dividends less than cost‐based regulated firms and that they report higher target payout ratios. Consistent with the interest group theory of regulation, we find that incentive regulation schemes are less likely when the state is still an important shareholder in the sector. Additionally, our results show that government control undermines the efficiency‐enhancing effects of incentive regulation on dividend policy, for example, lower smoothing is only due to private firms. (JEL G35, L51, L32, L9)     

PRODUCT SAFETY IN A REGULATED INDUSTRY: EVIDENCE FROM THE RAILROADS

It is sometimes argued that a relaxation of price controls in a regulated industry would lead to a decrease in profits and hence to an incentive for firms to skimp on safety. Theory does not allow us to sign the relationship between prices and safety a priori. Analysis of data from the railroad industry from 1963–67 indicates 1) profitable railroads have fewer accidents per mile than do unprofitable roads; 2) for profitable roads, if there is any relationship at all between accidents and profitability it is positive: more profitable roads have more accidents (per mile); and 3) for unprofitable roads, accident rates rise as losses rise.     

PREDICTORS OF RACIAL LABEL PREFERENCE IN DETROIT: EXAMINING TRENDS FROM 1971 TO 1992

This study examined African Americans' racial label preferences at two time points using data collected in the 1971 and 1992 Detroit Area Studies. Survey respondents chose from the following racial labels: Black, Negro, Colored, Afro-American, African American, or no preference/it makes no difference which label. At both time points, there were significant differences in age and education by preferred labels but gender and income differences by preferred labels were not statistically significant. Racial label preference was associated with protest ideology and perceptions of Whites' discriminatory intent in 1971 and with perceptions of Whites' discriminatory intent in 1992. In multivariate analyses, age, gender, protest ideology, and the perception of Whites' intent were significant predictors of emergent racial labels. Suggestions for future research on the relationship between institutional inequality, self-designation, and identity were discussed.     

RELIGIOUS HOMOPHILY IN A SECULAR COUNTRY: EVIDENCE FROM A VOTING GAME IN FRANCE

Homophily—the tendency individuals have to associate with similar‐others—is a powerful determinant of social networks. Yet research to date does not allow us to determine which dimension, e.g., ethnic, religious, gender, age, or class similarity, drives association. Tests demonstrating homophily are flawed by restricting the range of dimensions in the choice set. We introduce an experimental game in which we exogenously expose subjects to diverse partners to determine which dimension dominates. We find that in a socio‐demographically diverse district of Paris, despite expectations of secularization, religious similarity significantly predicts homophily. Moreover, we provide tentative evidence that religious homophily is taste‐based. (JEL C91, D03, D72, J71, Z12)     

HETEROGENEITY IN STATE‐DEPENDENT UTILITY: EVIDENCE FROM STRATEGIC SURVEYS

A standard result of life‐cycle models under uncertainty is that optimizing individuals equate the expected marginal utility of consumption across states of the world if insurance is available at actuarially fair rates. A small empirical literature has suggested that the marginal utility of consumption is lower in less healthy states. We use a novel survey‐based measure to document significant heterogeneity in health‐state dependence across individuals largely orthogonal to standard controls. We further show that individuals value unhealthy states of the world more when facing work‐limiting disabilities than when facing disabilities requiring long‐term care, and when facing physical rather than mental disabilities. (JEL D12, I10)     

ECONOMIES OF SCALE IN A MULTIPLANT TECHNOLOGY: EVIDENCE FROM THE OILPATCH

A unique micro data set detailing operating costs and technical characteristics of 133 Texas oil leases was used to estimate an econometric cost function, yielding a number of interesting findings. First, evidence of economies of scale in crude extraction implies additional gains from oil field unitization and helps explain the paradox that voluntary unitization often occurs in the later stages of a field's life. Second, marginal operating costs per well were found to be about 30 percent below average costs, explaining why many wells remain operational despite falling crude oil prices. Finally, the results confirmed a number of plausible technical relationships. For example, operating costs rise sharply with depth, explaining the existence of shallow, low-production stripper wells.