THE WELFARE EFFECT OF ACCESS TO CREDIT

I present a model in which credit and outside money can be used as means of payment in order to analyze how access to credit affects welfare when credit markets feature limited participation. Allowing more agents to use credit has an ambiguous effect on welfare because it may make consumption‐risk sharing more inefficient. I calibrate the model using U.S. data on credit‐card use and show that the increase in access to credit from 1990 to the near present has had a slightly negative impact on welfare. (JEL E51, E41)     

A TEST FOR THE EFFECT OF CONFORMITY ON CRIME RATES USING VOTER TURNOUT

Using voter turnout to measure conformity, this article examines whether conformity with social norms moderates the crime rate in the United States at the state and county levels. If people are fairly consistent in their response to the perceived local degree of conformity with norms about voting and against crime, analysis predicts a unique quadratic relationship between reported crime rates and voter turnout. A pooled multivariate regression analysis of state crime rates for several index crimes in 1960, 1970, and 1980 confirms the predicted relationship, as do county-level analyses of the violent crime rate in 1985 and 1991. This method might also be used to assess the effect of social conformity on other social choices.     

SIGNALING IN HIGHER EDUCATION: THE EFFECT OF ACCESS TO ELITE COLLEGES ON CHOICE OF MAJOR

I propose a model of postsecondary education in which major field of study can be used by individuals to signal productivity to employers. Under this signaling model, I show that geographic areas with high access to elite universities result in fewer science, technology, engineering, and mathematics (STEM) majors among lower ability students at nonelite colleges. This is distinct from the prediction of a full information model in which access to elite schools should only affect high ability individuals directly. Using data from the National Center for Education Statistics' Baccalaureate & Beyond survey, I find evidence that is consistent with the signaling model prediction, specifically a 2.3–3.7 percentage point or 16%–25% decrease in the probability of choosing a STEM major among lower ability students in areas with greater access to elite colleges. (JEL I21, J24)     

THE EFFECTS OF ASSET FORFEITURE ON POLICING: A PANEL APPROACH

Asset forfeiture has proven highly controversial in the United States since its expansion in 1984. Most contentious is the widespread policy that allows police agencies to keep the assets seized, which both proponents and critics assert changes police behavior. From newly developed panel data sets, we find some statistical support for the proposition that police agencies change the intensity and pattern of policing in response to forfeiture. However, in economic terms these effects are very weak and do not support the proposition that forfeiture provides vital funds and incentives for crime policing. (JEL H39, H71, K42)     

IDENTIFYING THE ROLE OF RISK SHOCKS IN THE BUSINESS CYCLE USING STOCK PRICE DATA

I analyze the sources of U.S. business cycle fluctuations in an estimated Dynamic Stochastic General Equilibrium model with a rich set of nominal and real rigidities and various exogenous disturbances. The model includes a shock to the expected risk‐premium, which introduces a time‐varying wedge between the policy rate set by the central bank and the cost‐of‐capital of firms. In the aggregate data, most U.S. corporations finance their investment using internal funds, and stock prices reveal the opportunity cost of this type of financing. I therefore use corporate market value and dividend data in the Bayesian estimation of the model to identify risk shocks. Variance decomposition exercises show that these shocks account for a substantial part of the variation in the stock market, as well as the variation in output and investment, especially at short forecast horizons. The variation of these variables at longer forecast horizons are mainly captured by shocks to investment‐specific technological change. Historical decomposition points to the important role played by risk shocks in the run up of stock prices and output in the late 90s, and in the reversal of these variables in the early 2000s and during the recent recession. (JEL E32, E44)     

A NOTE ON THE VANISHING LIQUIDITY EFFECT OF MONEY ON INTEREST

This paper provides a brief review and critique of some of the results and conclusions of Melvin [1983] concerning the effects of inflation on the response pattern of interest rates to changes in money growth rates. It also presents results concerning the significance of two different measures of the inflationary environment ––– the actual rate of inflation and the variance of the inflation rate ––– in explaining this response. The conclusion drawn here is that the variance of the inflation rate better explains the changing money-interest relationship. This conclusion is rather different from that of Melvin.     

A GUIDE TO THE PITFALLS OF IDENTIFYING PRICE DISCRIMINATION

This paper demonstrates that plausible cost-based explanations exist for what are commonly perceived to be cases of price discrimination. We explain such commonly discussed problems as the price spreads of retail gasoline products, the "high" price of dinners at restaurants, the "high" price of popcorn at movie theaters, and the fact that airline ticket prices vary with how long the ticket is purchased before the flight's departure. Our explanations benefit from not relying on consumer ignorance or implicit collusion among numerous sellers.     

THE EFFECT OF UNIT FEES ON THE CONSUMPTION OF QUALITY

A law-of-demand explanation to the Alchian-Allen, or "shipping the good apples out," proposition rests on a change in the relative price of quality when a unit fee is introduced. However, the manner in which quality is consumed is crucial. In some cases, for instance, there is no substitution between the quality attribute and the priced, quantity-measured attribute. This paper shows that in these cases the relative price of quality is unchanged by a unit fee. Nevertheless, while the "unit fee" proposition fails to obtain for individual choice, it does hold in aggregate.     

THE DANGERS OF PURITY: ON THE INCOMPATIBILITY OF PURE SOCIOLOGY AND SCIENCE

Donald Black insists that sociology must be purged of its psychological elements in order to become a genuinely distinct and scientific discipline. But such purification is simultaneously unnecessary, undesirable, and unattainable. It is unnecessary because the scientific shortcomings of sociology are indigenous and have nothing to do with psychologism. Indeed, a more scientific sociology would look more, not less, like psychology. Purity is undesirable in that it is not only not a scientific virtue, but is antithetical to the very scientific values that Black invokes to justify it. His systems are neither theories nor laws, but heuristics, more akin to common sense than to scientific theory. Finally, purity is unattainable because though society is indeed discontinuous with the individuals who make it up, it and all theorizing about it, are ontologically and conceptually dependent upon them.     

LITTLE WHITE LIES AND SOCIAL SCIENCE MODELS CORRELATED RESPONSE ERRORS IN A PANEL STUDY OF VOTING

One interpretation for the common survey finding that the backgroundcharacteristics of vote overreporters resemble those of actualvoters is that misreporters usually vote. This hypothesis—thatmisreporters regularly voted in earlier elections—is testedwith data from the 1972–74–76 Michigan ElectionPanel. It receives no support: the 1972 and 1974 validated turnoutof the 1976 misreporters was very low. Moreover, misreportingwas a fairly stable respondent characteristic: misreportingabout an election in one interview was correlated with misreportingabout the remaining elections in each of the other two interviews.A comparison of regressions predicting turnout using the validatedreports versus the self-reports shows that the respondent errorscan distort conclusions about the correlates of voting. Forexample, controlling for three other variables, education wasrelated to self-reported voting but not to validated voting.Here, as well as in surveys of other socially desirable or undesirableissues, respondent self-reports may bias survey data in favorof commonsense models of the world.     

ON THE HETEROGENEOUS EMPLOYMENT EFFECTS OF OFFSHORING: IDENTIFYING PRODUCTIVITY AND DOWNSIZING CHANNELS

This article examines the channels through which offshoring affects employment in a representative sample of German establishments, using a difference‐in‐differences matching approach. Offshoring is measured by an increase in the share of foreign to total intermediate inputs at the plant‐level. We identify a positive productivity effect and isolate a negative downsizing effect from offshoring on employment, by exploiting differences between offshoring plants that do and do not simultaneously restructure. Furthermore, we cannot find evidence of negative indirect employment effects on domestic suppliers or competitors. (JEL F16, J23, F23, C21)     

THE EFFECT OF A NEGATIVE INCOME TAX ON RISK-TAKING IN THE LABOR MARKET

Theory argues that negative income taxes will increase the economic risks that workers take in the labor market. Data from the income maintenance experiments is analyzed to reveal that those workers subject to a NIT seemed to bear more risks than their control group counterparts. Implications and reservations about this finding are offered.     

JUST A MINUTE: THE EFFECT OF EMERGENCY DEPARTMENT WAIT TIME ON THE COST OF CARE

Wait times are rising in U.S. emergency departments (EDs). The longer a patient waits to be seen, the more their condition may worsen. Notably, patients in worse condition can cost more to care for. This study estimates the effect of ED wait time on the cost of care by exploiting the quasi-random assignment of patients to triage nurses in an instrumental variables framework. The results suggest that prolonging the wait of a patient who arrives with a serious condition by 10 minutes will increase the hospital's cost to care for the patient by an average of 6%. The magnitude of this effect dissipates (fading to zero) among patients who arrive with less serious conditions.(JEL D24, H41, I10)