THE ROLE OF FINANCIAL LITERACY IN DETERMINING RETIREMENT PLANS

Workers nearing retirement face many important, and often irreversible, choices. We collected detailed demographic and financial literacy data on over 1,500 workers nearing retirement at three large companies to assess how individuals are planning for retirement. Many respondents display limited knowledge and understanding of public and company‐provided retirement benefits. Controlling for basic demographics and wealth, we find that misconceptions about eligibility ages and plan generosity influence workers' expected age of retirement. Although retirement‐related decisions will affect workers' well‐being for the remainder of their lifetimes, many do not possess enough basic financial knowledge to confidently make optimal choices. (JEL J26, J320, J240)     

WHY DO INCREASED ARREST RATES APPEAR TO REDUCE CRIME: DETERRENCE,INCAPACITATION, OR MEASUREMENT ERROR?

This paper attempts to discriminate between deterrence, incapacitation, and measurement error as explanations for the negative empirical relationship between arrest rates and crime. Measurement error cannot explain the observed patterns in the data. Incapacitation suggests that an increase in the arrest rate for one crime will reduces all crime rates; deterrence predicts that an increase in the arrest rate for one crime will lead to a rise in other crimes as criminals substitute away from the first crime. Empirically, deterrence appears to be the more important factor, particularly for property crimes. ( JEL K42)     

POINT SHAVING IN COLLEGE BASKETBALL: A CAUTIONARY TALE FOR FORENSIC ECONOMICS

Point shaving is the practice by favored teams of attempting to win by less than the point spread to yield profits for gamblers who bet on the underdog. Consistent with point shaving, strong favorites are anomalously likely to win by less than the spread. To distinguish between innocent and criminal explanations, we (1) exploit information in line movements and (2) isolate games without betting lines to identify games where point shaving is implausible and document similar patterns. The data are better explained by strategic efforts to maximize the probability of winning. These findings highlight the importance of methodology design. ( JEL L83, K42)     

HOURS OF OPERATION RESTRICTIONS AND COMPETITION AMING RETAIL FIRMS

This study examines the redistributive effects of government regulations concerning the hours in which retail stores may remain open for business. Throughout Canada, municipal by -laws restrict nighttime shopping hours to a few specified days of the week. In analyzing the outcome of these restrictions, a model of consumer behaviour is used which emphasizes the consumers's decision concerning the allocation of purchases between small and large retail outlets. The empirical results are consistant with the theoretical model, indicating that such market intervention redistributes sales from large to small stores     

CAMPAIGN ADVERTISEMENTS VERSUS TELEVISION NEWS AS SOURCES OF POLITICAL ISSUE INFORMATION

Relative contributions of television news and campaign advertisingto U.S. voters' knowledge about candidate issue differencesare compared. Empirical comparisons are based on interview datafrom six campaign surveys of voters, in various election settingsfrom 1984 to 1992. In hierarchical regression analyses, aftercontrols for demographic and political interest variables, measuresof attention to television news consistently account for a significantincrement of slightly more than 2 percent of variance in issueknowledge. Parallel measures representing attention to candidates'televised advertisements produce a much more variable patternin terms of variance explained in knowledge. Usually the effectsof advertisements are less than those of news, and sometimesthey are nonsignificant; but in one hotly contested ideologicalrace the informative effect attributable to advertisements exceedsthat of TV news. These patterns hold up after further controlsfor other media use variables, including newspaper reading.     

UNANTICIPATED MONEY GROWTH AND OUTPUT FLUCTUATIONS

A rational expectations model is developed in which prices are fixed during a period. The implications of this model are that output fluctuations are correlated with unanticipated aggregate demand but not with unanticipated inflation. Empirical tests of the model indicate that the persistence of business cycles cannot be explained solely by unanticipated aggregate demand .     

Teaching and Learning Responsible Research Conduct: Influences of Prior Experiences on Acceptance of New Ideas

Despite requirements for Responsible Conduct of Research (RCR) training, little is known about how much this training actually influences the thinking and behaviors of participants. Interview-based qualitative research methods were used to study the reactions of Ph.D. students and postdoctoral fellows to what was taught in an RCR course. For trainees with limited prior RCR experience, or who agreed with what was taught, it was relatively easy to influence their attitudes and how they thought they would use the new information in the future. However, if their prior experiences or existing knowledge conflicted with what was taught they resisted and often rejected new ideas that were presented. Interviews also revealed the tremendously complex process trainees must undergo trying to resolve or integrate all of the different perspectives they receive on RCR from other sources. These results revealed the importance of viewing RCR training from the perspective of learning theory and how prior knowledge influences what people learn. The results also support the need for periodic rather than one-time RCR training to counter the often conflicting views and practices young scientists experience in real-life research settings.     

UNCERTAIN EFFECTS OF MONEY AND THE LINK BETWEEN THE INFLATION RATE AND INFLATION UNCERTAINTY

In the postwar period high rates of inflation are associated with high levels of inflation uncertainty. In this paper I argue that the inflation rate and inflation uncertainty are linked by forecasters' uncertainty about the impact of money growth on the price level, and I present evidence indicating that this has been the case. As long as the impact of money growth on the price level remains unpredictable, then even predictable money growth will cause inflation uncertainty with its accompanying adverse effects on employment and output.     

TAKEOVERS: MANAGERIAL INCOMPETENCE OR MANAGERIAL SHIRKING?

Agency theory identifies managerial shirking as the cause for takeovers, while other explanations focus on low ability managers. This paper formalizes Jensen's free cash flow variant of agency theory by constructing a simple two-period game which captures the distinctive empirical implications of the two theories.
Using data for petroleum firms following the oil price shock of 1979-80, we find that firms undergoing financial restructuring exhibited higher values of Tobin's q. Additionally, evidence of management turnover and workforce cuts emphasizes that takeovers appear primarily designed to address agency concerns.