DOES BEAUTY MATTER IN UNDERGRADUATE EDUCATION?

Physically attractive individuals achieve greater success in terms of earnings and status than those who are less attractive. However, whether this “beauty premium” arises primarily because of differences in ability or confidence, bias, or sorting remains unknown. We use a rich dataset from a women's college to evaluate each of these three mechanisms at the college level. We find that students judged to be more attractive perform significantly worse on standardized tests but, conditional on test scores, are not evaluated more favorably at the point of admission, suggesting that more attractive people do not possess greater abilities at the beginning of college. Controlling for test scores, more attractive students receive only marginally better grades in some specifications, and the magnitudes of the differences are very small. Finally, there is substantial beauty‐based sorting into areas of study and occupations. (JEL J16, I21, I23)     

PEER EFFECTS IN HIGHER EDUCATION: DOES THE FIELD OF STUDY MATTER?

Does the peer effect vary with the field of study? Using data from a middle‐sized public university located in southern Italy and exploiting the random assignment of first‐year students to college accommodation, we find that roommate peer effects for freshmen enrolled in the hard sciences are positive and significantly larger than for freshmen enrolled in the humanities and social sciences. We present a simple theoretical model which suggests that the uncovered differences between fields in the size of the peer effect could plausibly be generated by between‐field variation in labor market returns, which affect optimal student effort. (JEL I21, Z13, J24)     

DOES THE NUMBER OF COUNTRIES IN INTERNATIONAL BUSINESS CYCLE MODELS MATTER?

Until the 1980s, standard models with two large open economies (i.e., the United States and Europe) provided plausible representations of the world economy. However, with the emergence of many developing countries since the 1990s, this approach no longer seems reasonable. In line with this change to the global economic environment, cross-country output correlations between the United States and other countries have risen. This paper extends the standard two-country model to many countries to show that doing so produces closer cross-country correlations to the data. In particular, based on analytical investigation with a simple model and quantitative analysis with a more general model, I show that the cross-country output correlation rises and the cross-country consumption correlation falls as the number of countries in the two models increases. (JEL F40, F41, F44)     

FINANCIAL AND INSURANCE SERVICES TRADE: DOES EXCHANGE RATE OR INCOME MATTER?

This paper aims to investigate the impacts of exchange rate and income changes on financial and insurance services trade by utilizing the quarterly bilateral trade data of the United States and its major trading partners from 2003 to 2017. No long‐run exchange rate effects on imports and exports of insurance services trade are found. The impact of exchange rates on insurance services may be weak since competition among service providers depends on product differentiation than on exchange rates. On the contrary, income demonstrates significant impacts on both financial and insurance services trade in the United Kingdom, Canada, Japan and Australia. (JEL C22, F14, G20)     

WAGE DIFFERENTIALS ACROSS LABOR MARKETS AND WORKERS: DOES COST OF LIVING MATTER?

Wage differential studies rarely account for interarea differences in cost of living, owing both to data limitations and theoretical ambiguity. This study develops a price index for 185 metropolitan areas comprising about 70% of the U.S. labor force. Current Population Survey data for 1985–95 and data on site-specific amenities are used to estimate earnings differentials based on nominal wages, wages fully adjusted for measured cost of living, and a simple approximation of "real" wages with partial adjustment for price-level differences. Dispersion in approximate real wages across 185 labor markets and differentials by region and city size are substantially lower than dispersion in nominal or full adjustment wages. Estimates of racial and ethnic differentials display moderate sensitivity to choice of a wage measure, whereas other standard differentials do not. Both nominal wages and wages fully adjusted for cost of living may provide misleading estimates of real wage differentials. Absent data on interarea prices and amenities, researchers should include detailed controls for region and city size in nominal wage equations. ( JEL J31, R23)     

DOES THE SAMARITAN'S DILEMMA MATTER? EVIDENCE FROM U.S. AGRICULTURE

The Samaritan's dilemma posits a downside to charity: recipients may rely on free aid instead of their own efforts. Anecdotally, the expectation of free assistance is thought to be important for decisions about insurance and risky behavior in numerous settings, but reliable empirical evidence is scarce. We estimate whether the Samaritan's dilemma exists in U.S. agriculture, where both private crop insurance and frequent federal disaster assistance are present. We find that bailout expectations are qualitatively and quantitatively important for the insurance decision. Furthermore, aid expectations reduce both expenditure on farm inputs and subsequent crop revenue. (JEL D72, H84, Q18)     

QUANTITATIVE EASING AND THE UK STOCK MARKET: DOES THE BANK OF ENGLAND INFORMATION DISSEMINATION STRATEGY MATTER?

We use intraday aggregate stock market data and an event‐study framework to assess the UK's equity market reaction to the unexpected element of the Bank of England Monetary Policy Committee's (MPC) asset purchase announcements for the 2009–2017 period. We assess the reactions of equity returns and their volatility over various time frames, both preceding and following the MPC announcements. Our results show that the UK unconventional monetary policy shocks have a significant impact on domestic equity returns and volatilities. The strength of this impact depends on the Bank's information dissemination through inflation reports and the publication of the MPC's voting records. (JEL G14, E44, E52)     

DOES WHOM YOU KNOW MATTER? UNRAVELING THE INFLUENCE OF PEERS' NETWORK ATTRIBUTES ON ACADEMIC PERFORMANCE

This paper examines how students' network size, distance, prestige, and connections to influential individuals impact academic performance. Larger and closer networks facilitate information exchange, but may also increase distractions that decrease productivity. We resolve this ambiguity using administrative data from a business school that features random assignment of students to multiple overlapping sets of peers, allowing us to calculate degree, closeness, eigenvector, and Katz‐Bonacich centrality for each node. We find that increasing closeness centrality within the network negatively affects student performance measured by grade point average, suggesting that synergy reduction and information processing costs outweigh benefits from greater information access. (JEL I23, L14, L23)     

GETTING INTO THE WEEDS: DOES LEGAL MARIJUANA ACCESS BLUNT ACADEMIC PERFORMANCE IN COLLEGE?

This paper examines the effect of legal access to marijuana on student performance stemming from a voter-approved initiative legalizing marijuana for those 21 and older in the State of Washington. Using panel data from a medium-sized public university, we use a within-student and within-class estimator to show that legalization reduces students' grades, with an effect size about one-half the impact of gaining legal access to alcohol. Consistent with how marijuana consumption affects cognitive functioning, we find that students' grades fall furthest in courses that require more quantitative skills. These effects are largely driven by men and low performers. (JEL I23, I18, K32)     

WHAT PREDICTS RELIGIOUS PARTICIPATION AND GIVING? IMPLICATIONS FOR RELIGION IN THE UNITED STATES

In this article, we test whether or not positive/negative sanctioning increases religious behavior. Using data from the 1998 congregational module of the General Social Survey we find that, net of other predictors, immediate positive sanctions (receiving help from the congregation) and immediate negative sanctions (receiving criticism from the congregation) significantly increase the amount of money given by respondents to religious organizations. Our results also indicate that sanctions promised in the future (belief in Heaven and belief in Hell) have little to no effect on religious giving. Furthermore, we find that immediate positive and negative sanctions as well as future negative sanctions predict greater participation in religious organizations, while future positive sanctions show no such effects. The results are discussed in the context of the emerging trend of waning religious involvement in the contemporary United States.     

EFFECTIVE EUROPEAN ANTITRUST: DOES EC MERGER POLICY GENERATE DETERRENCE?

We estimate the deterrence effects of European Commission (EC) merger policy instruments over the 1990–2009 period. Our empirical results suggest phase‐1 remedies uniquely generate robust deterrence as—unlike phase‐1 withdrawals, phase‐2 remedies, and preventions—phase‐1 remedies lead to fewer merger notifications in subsequent years. Furthermore, the deterrence effects of phase‐1 remedies work best in high‐concentration industries, that is, industries where the Herfindahl Hirschman Index is above the 0.2 cut‐off level employed by the EC. Additionally, we find phase‐1 remedies do not deter clearly pro‐competitive mergers, but do deter potentially anti‐competitive mergers in high‐concentration industries. (JEL K21, K40, L40)     

DOES RELATIVE THINKING EXIST IN REAL‐WORLD SITUATIONS? A FIELD EXPERIMENT WITH BAGELS AND CREAM CHEESE

Many experiments show that consumers consider relative price differences even when only absolute price differences are relevant from an economic perspective, a phenomenon that was denoted “relative thinking.” These experiments, however, were conducted using hypothetical questions. To test whether the relative thinking bias also exists in real‐world situations, a field experiment where subjects could purchase either a bagel or a bagel with cream cheese was conducted. The monetary addition for the cream cheese was kept constant ($0.20) in both treatments, but the bagel's price varied ($0.05 in one treatment and $0.30 in the other). Relative thinking then implies that more people should add the cream cheese when the bagel's price is higher, because the relative price increase for the cream cheese is then smaller. However, the results did not document any relative thinking—more people (in percentage of those who purchase) added the cream cheese when the bagel's price was lower (the difference between the treatments, however, was not statistically significant). A replication of the experiment as a hypothetical‐scenario experiment did document relative thinking, suggesting that introduction of financial incentives might alleviate relative thinking. (JEL C93, D01, D10, L00, M31)     

‘IF I FEEL LIKE THIS,HOW DOES THE CHILD FEEL?’ CHILD PROTECTION WORKERS,SUPERVISION, MANAGEMENT AND ORGANISATIONAL RESPONSES TO PARENTAL VIOLENCE

This study analysed workers’ experiences of supervision following interactions with hostile and intimidating parents. This analysis examined management and organisational responses to worker stress, and assessed the adequacy of support that workers received. An online survey was designed to collect data on workers’ experiences and free text responses were qualitatively analysed for references to the supervision they received in response to working with parents. 590 participants responded to the survey. 402 were qualified social workers, and 423 worked in child protection. Participants had experienced a range of violent behaviour from parents. The overwhelming theme in responses was the lack of support and supervision workers received, often in stressful and frightening circumstances. Approximately one quarter of participants only used organisational procedures, guidelines or protocols on dealing with hostile parents. Workers reported that mismanaged parental hostility affected their practice and the quality of protection that children received. The violence experienced had a significant negative impact on their personal and professional lives. Organisational responses in the form of supervision and education were often inadequate and resulted in children receiving reduced quality of protection. Recommendations for policy and practice change are discussed, with the aim of caring for workers and the children they protect.     

HOW DOES INFRASTRUCTURE AFFECT ECONOMIC GROWTH? INSIGHTS FROM A SEMIPARAMETRIC SMOOTH COEFFICIENT APPROACH AND THE CASE OF TELECOMMUNICATIONS IN CHINA

This paper attempts to shed new empirical light on infrastructure's role in economic growth using a semiparametric smooth coefficient model to avoid specification problems in some existing studies and admit infrastructure‐induced nonlinearity and parameter heterogeneity. Estimated by a three‐step procedure that controls for endogeneity in both the regressors and the environmental variable (infrastructure), the model is applied to the empirical context of telecommunications infrastructure in a fast‐growing economy, China. The results reveal that telecommunications contribute to output through various sources, namely its neutral and non‐neutral impacts. The total/net effect is positive but largely decreases with telecommunications stocks. (JEL L96, O4, O1)     

SOCIAL-ETHNIC SCHOOL COMPOSITION AND SCHOOL MISCONDUCT: DOES SENSE OF FUTILITY CLARIFY THE PICTURE?

This article assesses whether social-ethnic composition influences students' school misconduct. Based on general strain theory, we expect to find that individual sense of futility acts as an intermediate mechanism. Starting from cultural deprivation and oppositional culture theory, however, we hypothesize that a shared school culture of futility acts as mediator. Multilevel analyses of data from the Flemish Educational Assessment, consisting of 11,872 students in 85 schools, showed that ethnic composition has an impact on school misconduct: there is more deviance in ethnically mixed schools than in ethnic concentration schools due to a greater student sense of futility. The presence of a culture of futility did not affect the probability of being deviant. These results were true only for natives: school factors did not affect migrants' deviancy. We conclude that, although a dispersal of ethnically diverse students across all schools is favorable, this can yield negative side effects.     

TALENT AND/OR POPULARITY: WHAT DOES IT TAKE TO BE A SUPERSTAR?

We show that both talent and popularity significantly contribute to stars' market values in German soccer. The talent‐versus‐popularity controversy on the sources of stardom goes back to Rosen (1981) and Adler (1985) . All attempts to resolve the controversy empirically face the difficulty of accurately identifying talent. In professional sports, rank‐order tournaments help in ascertaining talent. Analyzing a team setting, we use 20 different performance indicators to estimate a player's talent according to his ability to increase the team's winning probability. (JEL J31, J44, L83)     

IMPLICATIONS OF A MODERATED COMMON FACTORS APPROACH: DOES IT MOVE THE FIELD FORWARD?

There are a number of similarities between the moderated common factors proposal of Sprenkle and Blow (this issue) and the multilevel, process-based therapeutic change presentation of Sexton, Ridley, and Kleiner (this issue). Despite these areas of agreement there are fundamental differences in our respective positions. We suspect that these differences are not unique to the respective authors, but instead represent the current debate in the field regarding common factors. In this commentary, we discuss what we think are important issues to have emerged from these articles. Our hope is that the issues we present below will take the debate and discussion one step further.     

INNOVATION, ELECTRONIC PUBLISHING AND THE MANAGEMENT OF INTELLECTUAL PROPERTY: What of digital piracy?

This article aims to analyse the effects of piracy on the management of intellectual property (IP) and innovation. The first section discusses the problems associated with digital technologies that are confronting rightholders, and highlights the view that the versatility of these technologies constitutes a major asset for the growth of both electronic publishing and piracy. The effect of piracy on the management of IP and innovation will be discussed in terms of (1) how IP is created; (2) the resources required to stay in the business and the difficulties in maintaining market presence; (3) the means of protection of IP, and (4) the entry barriers to the electronic publishing sector. The analysis is based on an interview sample of thirty-one small- and medium-sized UK-based electronic publishers. The article concludes that while it is right for legislators and those within the industry to seek enhanced copyright protection, it is less clear whether piracy is a material threat to investment in electronic publishing, as it is widely posited to be by the industry.     

HOW DOES GLOBALIZATION AFFECT THE IMPLICIT TAX RATES ON LABOR INCOME,CAPITAL INCOME,AND CONSUMPTION IN THE EUROPEAN UNION?

This article analyzes the effects of globalization on implicit tax rates (ITRs) on labor income, capital income, and consumption in the EU15 and Central and Eastern European New Member States (CEE NMS). We find supportive evidence for an increase in the ITR on labor income in the EU15, but no effect on the ITR on capital income. There is evidence of convergence in terms of the ITR on consumption, as countries with higher than average ITR on consumption respond to globalization by decreasing their tax rates. There are important differences among the welfare regimes within the EU15. Social‐democratic countries have decreased the tax burden on capital, but increased that on labor due to globalization. Globalization exerts a pressure to increase taxes on labor income in the conservative and liberal regimes as well. Taxes on consumption decrease in response to globalization in the conservative and social‐democratic regimes. In the CEE NMS, there is no effect of globalization on the ITR on labor and capital income, but we find a negative impact on the ITR on consumption in the CEE NMS with higher than average ITR on consumption. (JEL H23, H24, H25, F19, F21)