LABOR'S SHARE,THE FIRM'S MARKET POWER,AND TOTAL FACTOR PRODUCTIVITY

We investigate the relationship between labor's share, firm's market power, and the elasticity of output with respect to labor input using an approach based on an unobserved components model. The approach yields time‐varying estimates of market power and the elasticity. Evidence on the market power of firms (which we find to be rising since 2000) gives a deeper understanding of movements in labor's share and the labor wedge. The generated values of the elasticity yield revised estimates of total factor productivity growth which is informative about the extent of the downward bias inherent in traditional estimates which use labor's share as a proxy for the elasticity. (JEL O47, C32, E25)     

OUTCOME UNCERTAINTY,FAN TRAVEL,AND AGGREGATE ATTENDANCE

The uncertainty of outcome hypothesis (UOH) informs economists' understanding of consumer decisions to attend sporting events and team revenue generation. We develop a model of fan behavior based on standard expected utility methods which incorporates fan heterogeneity in terms of decisions to travel to away games and strong preferences for wins. The model reflects aggregate attendance outcomes across local and visiting fans, generates predictions consistent with the UOH, and gives rise to concave league-wide revenue functions. Empirical analysis of game outcomes and attendance at regular season National Basketball association games from 1979 to 2013 supports key predictions of the model. (JEL L83, D12, Z20)     

Predicting a Partner's End‐of‐Life Preferences,or Substituting One's Own?

Numerous studies comparing patients' end‐of‐life health care treatment preferences with their surrogates' reports of those preferences indicate that partners do not know one another's treatment preferences: Random guesses are just as likely as surrogate choices to match the patients' preferences. The present study uses the empathic accuracy model and the assumed similarity model to shed further light on accuracy and bias in surrogate reports. The data come from the National Center for Family and Marriage Research/Knowledge Networks Pilot Study 2010, a national sample of 1,075 heterosexual American couples age 18 to 64. Surrogate reports were simultaneously biased (i.e., correlated with the surrogate's own preference) and accurate (i.e., correlated with the partner's actual preference). Higher relationship quality and legal marriage (vs. cohabitation) were associated with increased assumed similarity bias. These findings suggest that practitioners working in end‐of‐life care need to be familiar with their partnered patients' relationship dynamics.     

THE EFFECT OF MINIMUM WAGES ON EMPLOYMENT: A FACTOR MODEL APPROACH

This paper uses factor model methods to resolve issues in the minimum wage‐employment debate. Factor model methods provide a more flexible way of addressing concerns related to unobserved heterogeneity that are robust to critiques from either side of the debate. The factor model estimators produce minimum wage‐employment elasticity estimates that are much smaller than the traditional ordinary least squares (OLS) results and are not statistically different from zero. These results hold for many specifications and datasets from the minimum wage‐employment literature. A simulation shows that unobserved common factors can explain the different estimates seen across methodologies in the literature. (JEL C23, J21, K31)     

Influential factors in the choice of public transportation or cars as the mode of transportation in habitual commutes / Factores que influyen en la elección del transporte público o el automóvil como modo de transporte en los desplazamientos habituales

The goal of this study is to analyse the differences in attitudes towards habitual modes of transportation among users of public and private transportation. The explanatory capacity of attitudes when determining the mode choice, along with the structural and sociodemographic factors, are also verified. The study was performed in three Spanish cities with 742 participants. The results revealed that cars are better rated than public modes of transportation in the attributes associated with immediate advantages (i.e., speed and availability) and convenience. Subways are highly rated in both immediate and deferred advantages (environment, safety, cost and health). Buses are the mode rated the lowest of the three. Using logistic regression, it was verified that the variance explained by a model that includes attitudes (R² = .639) is higher than the variance explained by a model based solely on variables related to infrastructures (R² = .489). The discussion of these results includes proposals aimed at decreasing car use.     

REFERENCE‐DEPENDENT PREFERENCES,LOSS AVERSION,AND LIVE GAME ATTENDANCE

We develop a consumer choice model of live attendance at a sporting event with reference‐dependent preferences. The predictions of the model motivate the “uncertainty of outcome hypothesis” (UOH) as well as fans' desire to see upsets and to simply see the home team win games, depending on the importance of the reference‐dependent preferences and loss aversion. A critical review of previous empirical tests of the UOH reveals significant support for models with reference‐dependent preferences, but less support for the UOH. New empirical evidence from Major League Baseball supports the loss aversion version of the model. (JEL L83, D12)     

QUANTIFYING BIAS IN DRIVING‐UNDER‐THE‐INFLUENCE ENFORCEMENT

As the marginal suspect and propensity to commit crime are unobserved across racial categories, it is difficult to quantify racial bias with law enforcement outcomes data. We test for racial bias in driving‐under‐the‐influence of alcohol enforcement. The assessment outcome variable, blood alcohol content (BAC), provides information about motorist's choices and allows for a more refined test for racial bias compared with other law enforcement outcome data. We find no evidence of racial bias in the relevant range where our model applies. However, we do find differences in find rates at the lowest levels of BAC, where there should be no impairment. (JEL J7, K42)     

AN EXPERIMENTAL STUDY OF ALTERNATIVE CAMPAIGN FINANCE SYSTEMS: TRANSPARENCY,DONATIONS, AND POLICY CHOICES

We experimentally study the transparency effect of alternative campaign finance systems on donations, election outcomes, policy choices, and welfare. Three alternatives are considered: one where donors' preferences and donations are unobserved by the candidate and public; one where they are observed by the candidate but not the public; and one where they are observed by all. We label them full anonymity (FA), partial anonymity (PA), and no anonymity (NA), respectively. We find that in NA and PA candidates consistently respond to donations by choosing policies favoring the donors. FA, in contrast, is the most successful in limiting the influence of donations on policy choices. Donors benefit greatly from the possibility of donations whereas social welfare may be harmed in some treatments. To our knowledge, this article is the first to investigate the effect of different campaign finance systems distinguished by their transparency level. (JEL D72)     

COMMODITY PRICES AND BANK LENDING

We analyze the transmission of changes in commodity prices to bank lending in a large sample of developing countries. A bank-level analysis shows that a fall in commodity net export prices is associated with a reduction of bank lending, particularly for commodity exporters and during episodes of terms-of-trade decline. We complement this analysis with loan-level data from a credit register, which allows us to identify the effect of a commodity price shock on the supply of credit, controlling for unobserved factors that could drive borrowers' credit demand. Results show that banks with relatively lower deposits and poor asset quality transmit the changes in commodity prices to lending more aggressively. (JEL F30, F34, G21, Q02)     

MEASURING THE WORLD NATURAL RATE OF INTEREST

This article makes the first attempt to estimate the time‐varying natural rate jointly with the output gap and trend potential output growth for the world as a whole using a simple unobserved components model broadly following the methodology developed by Laubach, T., and J. Williams (“Measuring the Natural Rate of Interest.” Review of Economics and Statistics, 85(4), 2003, 1063–1070). We find that the world natural rate has been trending down for the past few decades. Over a quarter of the variation in the natural rate is accounted for by the trend potential output growth rate. However, the relationship between the world natural interest rate and the world trend growth is modest and not statistically significant. (JEL E4, E52, E32, C32)     

PRODUCT DIFFERENTIATION UNDER CONGESTION: HOTELLING WAS RIGHT

We introduce negative network externalities—“congestion costs”—into H. Hotelling's (1929) model of spatial competition with linear transportation costs. For any firm locations on opposite sides of the midpoint, a pure strategy price equilibrium exists and is unique if congestion costs are strong enough relative to transportation costs. We analyze product differentiation and find that Hotelling's Principle of Minimum Differentiation comes closer to holding in the presence of congestion costs. The greater are congestion costs, the less differentiated products can be in (locationally symmetric) equilibrium. In fact, minimum differentiation comes arbitrarily close to holding depending on the magnitude of these costs relative to transportation costs. Intuitively, greater congestion effects stabilize competition at closer quarters, eliminating aggressive pricing equilibria. Thus, negative network externalities can play a significant role in product differentiation. (JEL D21, L15, R12)     

YOUR RIGHT ARM FOR A PUBLICATION IN AER?

The time tradeoff (TTO) method is popular in medical decision making for valuing health states. We use it to elicit economists' preferences for publishing in top economic journals and for living without limbs. The economists value journal publications highly and have a clear preference among them, with the American Economic Review (AER) the most preferred. Their responses imply they would sacrifice more than half a thumb for an AER publication. These TTO results are consistent with ranking and willingness to pay results, and indicate that journal preferences are not entirely determined by impact factors or by expectations of a salary increase following a publication in a prestigious journal. (JEL A10, B41, I10)     

Getting Out and About: The Relationship Between Urban Form and Senior Travel Patterns

As the overall U.S. population expands outward from the central city and core suburbs and as people age in place, more seniors will reside in suburban and exurban locations. This research seeks to determine whether older adults who live in areas with differing urban forms experience travel pattern variations under controls for other factors related to travel. We analyzed data from a telephone survey of a random sample of seniors aged 75 years and older and we employed a unique approach for establishing the urban form of their residential settings. The results show that urban form does influence travel patterns, including the number of trips and transportation mode, and suggest that the construction of compact, mixed-use communities where today's older adults can age in place may be part of the solution to addressing the mobility needs of our aging population.     

WHAT MOTIVATES POLITICAL PREFERENCES? SELF‐INTEREST,IDEOLOGY, AND FAIRNESS IN A LABORATORY DEMOCRACY

Substantial prior literature has established that subjects in laboratory experiments are typically willing to sacrifice their own well being to make financial allocations more equal among participants. We test the applicability of this result in an environment that contains some of the key contextual issues that are usually excluded from more abstract games, but which might be important in situations involving income redistribution. Our general finding is that votes for a redistributive tax are almost entirely in accordance with self‐interest: above‐average earners vote for low tax rates and below‐average earners vote for high tax rates. A measure of subjects' preferences for fairness or equality, their self‐reported economic ideology, is not directly related to their voting behavior in this experiment. Because the ideology measure should be correlated with any intrinsic preferences regarding inequality aversion, we conclude that any preferences for fairness or inequality that our subjects possess are not strong enough to overcome self‐interest in this context. We do, however, find evidence for a possible indirect effect of ideology on choice behavior in that more conservative subjects tend to be more responsive to their self‐interest than the more liberal subjects. (JEL C90, D63)     

Factors affecting infant toy preferences: Age,gender, experience,motor development,and parental attitude

In contrast to the anecdotal claim that “male infants like cars and female infants like dolls,” previous studies have reported mixed findings for gender‐related toy preferences in infancy. In Experiment 1, we explored the emergence of gender‐related preferences using face–car pairs (Experiment 1a, n = 51, 6–20 months) or face–stove pairs (Experiment 1b, n = 54, 6–20 months). In Experiment 2 (n = 42, 14–16 months), we explore the effect of toy properties, infants' past toy exposure, activity levels, and parental attitudes on such preferences using a wider range of toys. For both studies, infants demonstrated a general preference for faced stimuli over other objects, except for male infants who showed no preference between dolls and cars at around 15 months. Infants' prior experience participating in motor‐intensive activities, with wheeled toys and parental attitudes appeared to relate to female infants' preferences for dynamic toys. These results indicate a range of factors influence gendered toy preferences and suggest that nurture plays an important role.     

ESTIMATING TIME‐VARYING BARGAINING POWER: A FISHERY APPLICATION

We propose an unobserved‐components‐inspired approach to estimate time‐varying bargaining power in bilateral bargaining frameworks. We apply the technique to an ex‐vessel fish market that changed management systems from a regulated open‐access system to an individual fishing quota (IFQ) system over the timespan analyzed. We find that post‐IFQ implementation fishers do improve their bargaining power and thus accrue more of the rents generated by the fishery. However, unlike previous studies, we find that fishers do not move to a point of complete rent extraction. Rather, fishers and processors appear to be in a near‐symmetric bargaining situation post‐IFQ implementation. (JEL C22, L11, Q22)     

Psychological Distress of Cuban Americans Affected by Restrictive U.S. Travel Policies

We describe the mental health consequences of United States travel policies affecting Cuban Americans (CAs) with relatives in Cuba and discuss these policies in the context of U.S. domestic politics and the Bush administration's desire for regime change in Cuba. Policies put into effect in 2004 restrict CAs from visiting relatives in Cuba more than once every 3 years, narrowly define family whom CAs can legally visit, and limit the assistance they can provide their Cuban relatives. We share case reports based on qualitative interviews with 53 Cuban Americans that illustrate travel-related psychological distress (TRPD) experienced by CAs in response to the restrictions. We note the difficulties CAs experience in coping with TRPD and the need for political and mental health interventions to address this condition. TRPD is directly related to the government's violation of the human and constitutional rights of CAs to travel freely. It is the responsibility of the state to restore those rights. Human services professionals should oppose TRPD as antithetical to family well-being.     

INTERNATIONAL AGREEMENTS ON PRODUCT STANDARDS UNDER CONSUMPTION EXTERNALITIES: NATIONAL TREATMENT VERSUS MUTUAL RECOGNITION

This paper provides a comparative analysis of product standards agreements between heterogeneous countries. A simple model of vertical standards is developed where countries have heterogeneous preferences for a negative or positive consumption externality. I compare two major types of standards agreements, those based on national treatment (NT) and mutual recognition (MR). Unlike NT, MR can induce a mismatch of standards between countries, a problem that tends to get worse as country preferences diverge. Due to this mismatch problem, NT tends to become relatively more welfare‐enhancing than MR for countries with more dissimilar preferences. These findings explain why the World Trade Organization, the Trans‐Pacific Partnership, and the European Union choose different types of standards agreements. The paper also sheds new light on the desirability of international harmonization of product standards. (JEL F13, F18, O24)     

DOUBLE MAJORS: ONE FOR ME,ONE FOR THE PARENTS?

At least a quarter of college students in the United States graduate with more than one undergraduate major. This article investigates how students choose the composition of their majors conditional on pursuing more than one major, that is, whether the majors that they choose are substitutes or complements. As the students use both their preferences and expectations about the realizations of future major‐specific outcomes when choosing their college majors, I collect innovative data on subjective expectations from a sample of Northwestern University sophomores. Although there is substantial heterogeneity in beliefs across students, they seem to be aware of differences across majors and have sensible beliefs about the outcomes conditional on major. Students believe that their parents are more likely to approve majors associated with high social status and high returns in the labor market. I incorporate the subjective data in a choice model of double majors that also captures the notion of specialization. I find that enjoying studying the coursework and gaining approval of parents are the most important determinants in the choice of majors. The model estimates reject the hypothesis that students major in one field to pursue their own interests and in another for parents' approval. Instead I find that gaining parents' approval and enjoying studying and working in a field of study are outcomes that are important for both majors in a student's major pair. However, I do find that students act strategically in their choice of majors by choosing majors that differ in their chances of completion and difficulty, and in finding a job upon graduation. (JEL D8, I2, J1)     

TIME PREFERENCE AND THE DISTRIBUTIONS OF WEALTH AND INCOME

This paper examines the connection between time preference heterogeneity and economic inequality in a deterministic environment. Specifically, we extend the standard neoclassical growth model to allow for (1) heterogeneity in consumers' discount rates, (2) direct preferences for wealth, and (3) human capital formation. The second feature prevents the wealth distribution from collapsing into a degenerate distribution. The third feature generates a strong positive correlation between earnings and capital income across consumers. A calibrated version of the model is able to generate patterns of wealth and income inequality that are very similar to those observed in the United States. (JEL D31, E21, O15)