THE QUANTITATIVE IMPORTANCE OF OPENNESS IN DEVELOPMENT

This paper deals with a classic development question: how can the process of economic development—transition from stagnation in a traditional technology to industrialization and prosperity with a modern technology—be accelerated? Lewis (1954) and Rostow (1956) argue that the pace of industrialization is limited by the rate of capital formation which in turn is limited by the savings rate of workers close to subsistence. We argue that access to capital goods in the world market can be quantitatively important in speeding up the transition. We develop a parsimonious open‐economy model where traditional and modern technologies coexist (a dual economy in the sense of Lewis 1954). We show that a decline in the world price of capital goods in an open economy increases the rate of capital formation and speeds up the pace of industrialization relative to a closed economy that lacks access to cheaper capital goods. In the long run, the investment rate in the open economy is twice as high as in the closed economy and the per capita income is 23% higher. (JEL O11, F43, O14)     

THE IMPORTANCE OF FINANCIAL CONSIDERATIONS IN DIVORCE DECISIONS

This paper studies the linkage between the expected financial consequences of divorce and the decision to become divorced. A standard choice-theoretic model predicts that the probability of divorce will be negatively related to the financial opportunity cost of divorce. This opportunity cost is measured as the difference in the present values of the future income streams that a married woman might expect if she were to stay married rather than become divorced. Our empirical results indicate that the expected short-term financial consequences are a better predictor of subsequent divorce than are the longer-term consequences.     

THE TRAVELS OF A BANK DEPOSIT IN TURBULENT TIMES: THE IMPORTANCE OF DEPOSIT INSURANCE DESIGN FOR CROSS-BORDER DEPOSITS

We examine the impact of the existence on an explicit deposit insurance (DI) scheme and its design features on bilateral cross-border deposits (CBD) in a gravity model setting. We find that both the absolute quality of a country's DI and its relative quality vis-à-vis other countries' DI generally affect depositor behavior. However, during systemic banking crises, cross-border depositors primarily seek countries with the best DI schemes. Similarly, during the 2008–2009 great financial crisis, the emergency actions taken by the governments, which supply and maintain these safe havens, have led to substantial relocations of CBD. (JEL F34, G18)     

A COMPARISON OF THE VIABILITY OF MAIL SURVEYS IN JAPAN AND THE UNITED STATES

A comparison of response rates and patterns to a mail surveyconducted simultaneously on random samples drawn from telephonelistings in Seattle, Washington, and Kobe, Japan, is presented.When undeliverable surveys (those for which the intended respondenthad moved or passed away) are subtracted from the original samples,a comparison of the differences in the response rate percentagesfor the two countries is found to be statistically insignificant.Adherence to the theoretical foundation of the Total DesignMethod is claimed to be the principal reason for success inachieving a higher response rate than predicted by Japanesescholars to the mail survey in Japan. These results show thatthere is potential for adapting survey research techniques developedin the United States to non-Occidental settings.     

MEASURING HAPPINESS IN SURVEYS: A TEST OF THE SUBTRACTION HYPOTHESIS

Responses to an item on general happiness can change when thatitem follows one on marital happiness. Asking about maritalhappiness first sometimes reduces reported levels of overallhappiness. This reduction may result from a change in the interpretationof the general happiness item. According to this hypothesis,when the general item follows the item on marital happiness,respondents take the item to ask about aspects of their livesother than their marriages-in effect, the respondents subtracttheir (mostly happy) marriages in answering the general item.The study reported here tests this subtraction hypothesis byasking versions of the general happiness item that correspondto the different interpretations. A version of the general itemthat asked about general happiness "aside from your marriage"yielded responses that were quite similar to those given tothe standard item when it followed the item on marital happiness.Another version that asked about general happiness "includingyour marriage" elicited responses quite similar to those elicitedby the standard item when it preceded the marital happinessitem. However, reanalysis of the studies that originally demonstratedthe impact of the order of the two happiness items casts doubton the subtraction hypothesis and related models as explanationsof the earlier findings.     

RELIEF FOR THE ENVIRONMENT? THE IMPORTANCE OF AN INCREASINGLY UNIMPORTANT INDUSTRIAL SECTOR

Deindustrialization, stagnant real incomes of production workers, and increasing inequality are latter day features of many economies. It is common to assume that such developments pressure policymakers to relax environmental standards. However, when heavily polluting industries become less important economically, their political importance also tends to diminish. Consequently, a regulator may increase the stringency of environmental policies. Like some other studies, we find that declining industrial employment translates into stricter environmental standards. In contrast to previous studies, but consistent with our argument, we find that greater income inequality is associated with policies that promote a cleaner environment. ( JEL Q58, P16, J31, C23)     

THE IMPORTANCE OF SECTORAL AND AGGREGATE SHOCKS IN BUSINESS CYCLES

The theoretical literature on business cycles proposes numerous causes for their occurrence. This paper attempts to measure the relative importance of aggregate, whether real or nominal, and sectoral factors in generating real economic fluctuations, as well as to identify economic variables that are correlated with the various factors. Empirical results indicate that both aggregate and industry-level factors are statistically significant in explaining variations in output with the aggregate factor being the most important. Some evidence is presented that links the aggregate factor with monetary variables.     

EDUCATED GUESSES: THE PROCESS OF ANSWERING FACTUAL KNOWLEDGE QUESTIONS IN SURVEYS

Responses to autobiographical questions are known to representmore than simply retrieval of information from memory; inference,cuing, and "availability" all play a role. Using responses toitems in four different surveys, we find that respondent motivationand ability, together with contextual cues, help determine howsurvey respondents answer knowledge questions about the worldaround us. Thus, we extend the domain of factual items for whichthe role of inferential processes is recognized, and we specifymore precisely the kinds of factors that respondents use inanswering such questions. We also find suggestive evidence thatattitudes influence answers to information questions, thus extendingas well the kinds of factors seen as likely to affect reportsabout facts.     

EMPLOYER AND OCCUPATIONAL INSTABILITY IN TWO COHORTS OF THE NATIONAL LONGITUDINAL SURVEYS

Previous research on trends in employer and occupational stability found evidence of declines in stability among men but contradictory results for women. I provide new insights into these patterns by simultaneously analyzing employer and occupation changes, and by examining a more detailed set of transition types. I show that the patterns for women are quite similar to those of men but are masked by declines in transitions from employment to out of the labor force. Finally, I find that while some of the changes may bring increased opportunities for wage increases, they bring even greater risks of wage losses.     

MAIL SURVEYS FOR ELECTION FORECASTING?: AN EVALUATION OF THE COLUMBUS DISPATCH POLL

Because of slow turnaround time and typically low response rates,mail surveys have generally been considered of little valuein election forecasting. However, statewide mail surveys conductedby the Columbus Dispatch newspaper since 1980 have made remarkablyaccurate forecasts of Ohio election outcomes. In comparisonto statewide surveys by two other organizations employing conventionaltelephone interview methods, the mail surveys were consistentlymore accurate and were generally less susceptible to sourcesof inaccuracy such as high rolloff and low publicity. The mailsurvey's advantage is attributable at least in part to largersample sizes, sampling and response procedures that yieldedmore representative samples of voters, lack of the need to allocateundecided respondents, and superior questionnaire design. Thesefindings suggest that mail surveys not only may be viable alternativesto telephone surveys but may actually be superior to them undersome conditions. Further-more, these results demonstrate thatsurveys with low response rates are not necessarily low in validity.     

PRICE ELASTICITY AND ADVERSE SELECTION IN THE DEMAND FOR SUPPLEMENTARY HEALTH INSURANCE

Probit regression estimates show the effects of the price of insurance, anticipated medical expenditures, and other factors on reported decisions about purchasing hypothetically offered supplementary insurance policies. The demand estimates can characterize how much supplemental insurance would be purchased under different tax policies affecting health insurance purchases. Although eliminating the current tax subsidy to insurance is shown to decrease demand, the results indicate a substantial demand for supplementary insurance even in the absence of present tax incentives. However, our results on adverse selection raise concerns about the potential stability of supplemental insurance markets.     

SWITCHING REGRESSION ESTIMATES OF THE INTERGENERATIONAL PERSISTENCE OF CONSUMPTION

The influential economic theory of intergenerational transfers predicts a negative connection between credit constraints and intergenerational mobility of consumption. Existing work has used bequest receipt to signal a parent's access to credit markets when investing in his children's human capital. However, measurement error in bequest receipt generates misclassification error and, in turn, attenuation bias. Employing switching regressions with imperfect sample separation to deal with this error, we show that the intergenerational persistence of consumption in the United States for credit constrained families is much higher than that for unconstrained families, contrary to what the theory implies. This means that children from constrained families are more likely to have consumption levels similar to those of their parents than children from unconstrained families. Our results are robust to the choice of bequest variables and other predictive variables in the switching equation. (JEL C13, D12, E21, J62)     

DIRTY DATA IN BRITAIN AND THE USA: THE RELIABILITY OF "INVARIANT" CHARACTERISTICS REPORTED IN SURVEYS

This section of the Quarterly is reserved for brief reportsof research in progress, discussions of unsolved problems, methodologicalstudies, and public opinion data not extensively analyzed orinterpreted. Succinct case histories are welcomed, as well ashypotheses and insights that may be useful to other studentsof public opinion. Usually, material in this section will beshorter, more informal, and more tentative than in precedingpages of the Quarterly     

THE EFFECT OF MONETARY INCENTIVES AND FOLLOW-UP MAILINGS ON THE RESPONSE RATE AND RESPONSE QUALITY IN MAIL SURVEYS

The joint and comparative effects of the use of monetary incentivesand follow-up mailings were examined in a mail survey of suburbanWashington, DC cable television subscribers. Four experimentalgroups received monetary incentives enclosed with the firstmailing only ($0.25, $0.50, $1.00, or $2.00) and three follow-upmailings. These groups were compared with each other and againsta control group that did not receive an incentive. The resultsindicated that the response rate from the first mailing increasedsignificantly as the incentive amount increased from zero to$0.25, and from $0.25 to $1.00. Four mailings without an incentiveproduced a higher response rate than a single mailing with anincentive, but a combination of follow-up mailings and a $1.00or $2.00 incentive produced a significantly higher responserate than an equivalent number of mailings without an incentive. There was some evidence of intertreatment response bias. Largermonetary incentives tended to produce: (1) a greater degreeof effort expended in completing the questionnaires, as measuredby the number of short answers and comments provided, and thenumber of words written, and (2) comments that were more favorabletoward the survey sponsor.     

AN EXPERIMENTAL TEST OF THE PERSISTENCE OF GENDER‐BASED STEREOTYPES

This paper experimentally investigates the role of gender‐based stereotypes in the forecasting of risk attitudes. Subjects predict the gamble choice of target subjects in one of three treatments: (1) Visual—the predictor can only observe the target; (2) Information—the predictor has individuating information about the targets' response to two statements from a risk‐preference survey; and (3) Combined—the predictor both observes the targets and has the targets' two responses to the risk‐preference survey. Our results suggest that stereotypes play a considerable role in forming predictions about others' risk attitudes and that these stereotypes persist even when individuating information is available. (JEL C91, D8, J16)     

RESPONSE EFFECTS IN MAIL SURVEYS

A variety of response effects that had been found previouslyin interview surveys were tested in a mail survey of a heterogeneouslocal population. These included experiments on question orderresponse order, no-opinion filters, middle-response alternatives,and acquiescence. The results generally supported earlier findingsbased on student samples which had shown that order efects wereeliminated in self-administered surveys but that question-formeffects occurred as in interview surveys. One question-ordereffect, however, was found in the mail survey, and a type ofresponse-order effect (a primacy effect) that had not been previouslytested also occured. Interactions between education and responseeffects that had sometimes been found in interview surveys werenot present in the mail survey.