IS LOVE BLIND? THE EFFECTS OF EXPERIENCE AND INFATUATION ON THE PERCEPTION OF LOVE

We hypothesized that participants in love and more experienced in romantic love (e.g., schematics) would perceive love more accurately than those who were not in love and less experienced. Judges viewed and rated a series of 25 thin-slice video clips of couples for whom their love for another was known via Sternbergs (Psychological Review, 93, 119–135) love scale. Individual differences in love judgment accuracy were large. Not surprisingly, participants who were in love at the time of the study and who reported having had a lengthy romantic relationship were more confident in their love judgment accuracy but, in fact, were less accurate. Apparently the love schemas people develop subjectively may not adequately represent the way in which the construct manifests among the population in general. Although love judgments may come easier to those in love, their perceptions of the love around them may be biased and inaccurate.     

DO MINIMUM WAGE INCREASES INFLUENCE WORKER HEALTH?

This study investigates whether minimum wage increases impact worker health in the United States. We consider self‐reported measures of general, mental, and physical health. We use data on lesser‐skilled workers from the 1993 to 2014 Behavioral Risk Factor Surveillance Survey. Among men, we find no evidence that minimum wage increases improve health; instead, we find that such increases lead to worse health outcomes, particularly among unemployed men. We find both worsening general health and improved mental health following minimum wage increases among women. These findings broaden our understanding of the full impacts of minimum wage increases on lesser‐skill workers. (JEL I1, I11, I18)     

MORTGAGE LENDING TO MINORITIES: WHERE'S THE BIAS?

This paper examines mortgage lending and concludes that studies based on data created by the Boston Fed should be reevaluated. A detailed examination of these data indicates that irregularities in these data, when combined with the most commonly used research methodology, appear to have biased previous research toward a finding of discrimination against minority applicants. When the most severe data irregularities are eliminated, evidence to support a hypothesis of discrimination disappears. The currently fashionable flexible underwriting standards of mortgage lenders may have the unintended consequences of increasing defaults for the beneficiaries of these policies. (JEL J7, G28)     

WHAT IS THE MULTITUDE?

Nicholas Brown and Imre Szeman continue their conversation with Michael Hardt and Antonio Negri. (See ‘The Global Coliseum: On Empire’ in Cultural Studies, 16.2, (March 2002), p. 177–192). In this new interview they press the authors of Empire and Multitude on questions that have arisen both out of their own involvement with the theoretical issues generated by Empire and from new areas opened up by Multitude. Why is the multitude not a class? How can the unity of a political project be maintained in the multiplicity of the multitude? Is democracy still a project for the future? Can a political subject constitute itself outside the structure of sovereignty? In other words, what is the multitude?     

WHO WINS IN AN ENERGY BOOM? EVIDENCE FROM WAGE RATES AND HOUSING

This article presents evidence on the distributional effects of energy extraction by examining the effect of the recent U.S. energy boom on wage rates and housing. The boom increased local wage rates in almost every major occupational category. The increase occurred regardless of whether the occupation experienced a corresponding change in employment, suggesting a tighter labor market that benefited local workers. Wage rates also increased substantially across the entire wage rate distribution, although the percentage increase was slightly higher at the bottom of the distribution than at the top. Local housing values and rental prices both increased, thereby benefiting landowners. For renters, the increase in prices was completely offset by a contemporaneous increase in income. The results suggest that bans on drilling have negative monetary consequences for a large share of local residents. (JEL J23, Q33, R31)     

WHAT IS HAPPENING TO THE IMPACT OF FINANCIAL DEEPENING ON ECONOMIC GROWTH?

Although the finance‐growth relationship is now firmly entrenched in the empirical literature, we show that it is not as strong in more recent data as it was in the original studies with data for the period from 1960 to 1989. We consider several explanations. First, we find that the incidence of financial crises is related to the dampening of the effect of financial deepening on growth. Excessive financial deepening or too rapid a growth of credit may have led to both inflation and weakened banking systems which in turn gave rise to growth‐inhibiting financial crises. Excessive financial deepening may also be a result of widespread financial liberalizations in the late 1980s and early 1990s in countries that lacked the legal or regulatory infrastructure to exploit financial development successfully. However, we find little indication that liberalizations played an important direct role in reducing the effect of finance. Similarly, there is little evidence that the growth of equity markets in recent years has substituted for debt financing and led to a reduced role of financial deepening on growth. (JEL E44, G10, O40)     

DOES THE MINIMUM LEGAL DRINKING AGE SAVE LIVES?

The minimum legal drinking age (MLDA) is widely believed to save lives by reducing traffic fatalities among underage drivers. Further, the Federal Uniform Drinking Age Act, which pressured all states to adopt an MLDA of 21, is regarded as having contributed enormously to this life-saving effect. This article challenges both claims. State-level panel data for the past 30 yr show that any nationwide impact of the MLDA is driven by states that increased their MLDA prior to any inducement from the federal government. Even in early-adopting states, the impact of the MLDA did not persist much past the year of adoption. The MLDA appears to have only a minor impact on teen drinking. ( JEL H11, K42)     

IS STATUS QUO BIAS CONSISTENT WITH DOWNWARD‐SLOPING DEMAND?

We show that status quo bias combined with downward-sloping demand implies addictive behavior. This result does not depend on transitivity, a complete ordering, or even the existence of a preference relation that rationalizes choices. ( JEL D11, D81)     

DOES THE GREAT RECESSION IMPLY THE END OF THE GREAT MODERATION? INTERNATIONAL EVIDENCE

In this paper we examine whether or not the Great Recession had a temporary or permanent effect on output growth volatility after years of low macroeconomic volatility since the early eighties. Based on break detection methods applied to a set of advanced countries, our empirical results do not give evidence to the end of the Great Moderation period but rather that the Great Recession is characterized by a dramatic short‐lived effect on the output growth but not on its volatility. We show that neglecting the breaks both in mean and in variance can have large effects on output volatility modeling based on GARCH specifications. (JEL E32, C22, O40)     

DID REGIONAL ECONOMIC DIVERSITY INFLUENCE THE EFFECTS OF THE GREAT RECESSION?

Using data for U.S. counties from 2005 to 2012, we test whether higher levels of economic diversity mediated the effects of the Great Recession via four measures of stability. Spatial spillover effects are modeled by the use of the spatial Durbin estimator with heteroscedastic errors. The data generally support the central hypothesis that higher levels of diversity within a county are associated with enhanced employment stability across all counties as well as subsets of metro and nonmetro counties. Results for wage stability, however, appear to contradict our other findings. We suggest that underlying labor elasticities can bridge these apparent contradictory results. (JEL R11, R12, O47)     

WHO IS AFRAID OF THE FRIEDMAN RULE?

We explore the connection between optimal monetary policy and heterogeneity among agents in a standard monetary economy with two types of agents where the stationary distribution of money holdings is nondegenerate. Sans type-specific fiscal policy, we show that the zero-nominal-interest rate policy (the Friedman rule) does not maximize type-specific welfare; it may not maximize aggregate ex ante social welfare either. Indeed, one or, more surprisingly, both types may benefit if the central bank deviates from the Friedman rule. ( JEL E31, E51, E58)     

THE VIRTUAL UNIVERSITY IS . . . THE UNIVERSITY MADE CONCRETE?

The application of information and communications technologies (ICTs) to higher education has recently gained a new impetus, fired by the promise, and also perhaps the threat, of the 'virtual' university. While there has been much empirical research on individual ICT initiatives, most of this has been narrowly evaluative with little attention paid to their cumulative impacts on the university as an institution. Equally, while there has been much writing on the development of virtual higher education, much of this has been speculative, concerned with the advent of still marginal new institutions and little of it has been empirically grounded. This paper is based on in-depth studies of ICT initiatives in four established universities in the North East of England. It argues that one of the consequences, often unintended, of the introduction of these technologies has been to generate demands and pressures for a more corporate institutional form in which goals, roles, identities and procedures are made explicit and standardized across the institution. To the degree that these demands are met, the result appears to be that the closer that institutions move towards the goal of becoming a virtual university, the more corporate, or 'concrete', their institutional form becomes.     

DO EMPLOYERS PAY FOR CONSISTENT PERFORMANCE?: EVIDENCE FROM THE NBA

In a world of uncertainty in which a worker's performance is variable over time and average performance is unknown when hiring, how will employers determine compensation? We develop a monitoring and signaling model where information is symmetric and parties are risk neutral. Monitoring costs increase with inconsistency, lowering pay for inconsistent workers. If discrimination exists, minority workers will be rewarded less than majority workers for improving consistency. Testing these and other predictions using National Basketball Association data, we find that consistent professional basketball players are paid more, but, in contrast to previous studies, there is no evidence of discrimination. (JEL J3, J7)     

DO REEMPLOYMENT PROGRAMS FOR THE UNEMPLOYED WORK FOR YOUTH? EVIDENCE FROM THE GREAT RECESSION IN THE UNITED STATES

We present experimental evidence on the effects of four U.S. reemployment programs for youth unemployment insurance (UI) recipients during the Great Recession. The three programs that emphasized monitoring and service referrals reduced UI receipt but had minimal effects on employment and earnings; these programs mainly induced the early exit of participants. The fourth program, which combined mandatory job counseling with monitoring, caused the largest reductions in UI receipt and clearly increased employment and earnings. Both early participant exits and effective job counseling underlie these impacts. We conclude that policymakers should require job counseling for youth UI recipients during recessions. (JEL J0, J6, H4)     

IS PHYSICAL INVESTMENT THE KEY TO CHINA'S GROWTH MIRACLE?

This paper applies Jones' test for the empirical validity of AK‐type models to the Chinese economy over the period 1952–2006 (Jones C. I., Quarterly Journal of Economics, 110, 1995a, 495–525). We aim to establish whether large permanent movements in the physical investment rate cause permanent movements in output growth. The evidence indicates that the one‐sector AK model cannot be rejected. We also find that augmenting the model to allow for transitional dynamics—via imbalances in factor endowments, structural transformation, and R&D‐based technology transfer—does a better job in describing China's growth dynamics than the basic AK model. (JEL C22, O41, O47)     

DO HIGHER TOBACCO TAXES REDUCE ADULT SMOKING? NEW EVIDENCE OF THE EFFECT OF RECENT CIGARETTE TAX INCREASES ON ADULT SMOKING

There is a general consensus among policymakers that raising tobacco taxes reduces cigarette consumption. However, evidence that tobacco taxes reduce adult smoking is relatively sparse. In this paper, we extend the literature in two ways: using data from the Current Population Survey Tobacco Use Supplements we focus on recent, large tax changes, which provide the best opportunity to empirically observe a response in cigarette consumption, and employ a novel paired difference‐in‐differences technique to estimate the association between tax increases and cigarette consumption. Estimates indicate that, for adults, the association between cigarette taxes and either smoking participation or smoking intensity is negative, small, and not usually statistically significant. Our evidence suggests that increases in cigarette taxes are associated with small decreases in cigarette consumption and that it will take sizable tax increases, on the order of 100%, to decrease smoking by as much as 5%. (JEL I18, I12)     

IS THE PRICE ELASTICITY OF MONEY DEMAND ALWAYS UNITY?

Including both monetary gold and nonmonetary gold in a standard money‐in‐utility model, we establish a presumption that the price elasticity of money demand should be less than 1 under commodity standards. Applying cointegration methods to data of the world, the United Kingdom, and the United States, we find support for the new theory. (JEL E41, E42)