Knowledge that Transforms

This paper investigates the extent of vengeful feelings and their determinants using data on more than 116,000 individuals from 66 countries. Country characteristics as well as personal attributes of the individuals influence vengeful feelings. The magnitude of vengeful feelings is greater for people in countries with low levels of education, low-income countries, and interrupted democracies. Personal education has an impact on vengeful feelings in lower-income countries. The results suggest that some puzzles about individual choice can best be explained by considering the interplay of personal and economic factors.

We present evidence that Washington State judges respond to political pressure by sentencing serious crimes more severely. Sentences are around 10% longer at the end of a judge's political cycle than at the beginning; judges' discretionary departures above the sentencing guidelines range increase by 50% across the electoral cycle, accounting for much of the greater severity. Robustness specifications, nonlinear models, and falsification exercises allow us to distinguish among explanations for increased sentencing severity at the end of judges' political cycles. Our findings inform debates over judicial elections, and highlight the interaction between judicial discretion and the influence of judicial elections.

Abstract Occupational shares of various ethnic groups have grew tremendously in regional U.S. labor markets from 1980 to 2000. Using U.S. Census data, we examine the extent to which this growth is attributed to network effects by studying the relationship between the occupational choice of recently arrived immigrants with those of established immigrants from the same country, We find strong evidence of network effects. First, new arrivals are choosing the same occupations as their compatriots, a decision that is operating at the regional level. Second, individuals who choose the most common occupation of their compatriots enjoy a large and positive earnings effect.

Countercyclical variation in individuals' idiosyncratic labor income risk could generate substantial welfare costs. Following past research, we infer income volatility—the variance of permanent income shocks, a standard proxy for income risk—from the rate at which cross-sectional variances of income rise over the life cycle for a given cohort. Our novelty lies in exploiting cross-state variation in state economic conditions or state sensitivity to national economic conditions. We find that income volatility is higher in good state times than bad; during good national times, we find volatility is higher in states that are more sensitive to national conditions.

Abstract We measure unit value electricity prices using 2 million annual observations on U.S. manufacturing plants from 1963 to 2000. These prices display tremendous cross-sectional dispersion, 85–95% of which reflects differences by plant location and purchase quantity. Spatial differentials decline markedly until the late 1980s for large purchasers but rise over time for small purchasers. Unit value price gaps between larger and smaller purchasers are enormous, diminish through the late 1970s, and then stabilize at still-high levels. There are major differences across states in cost and regulatory factors that we relate to the changing structure of unit value prices.

Pension benefit guarantees have been introduced in several countries to protect private plan members from the loss of income associated with the termination of an underfunded plan. Most such schemes face financial difficulty. Consequently, policy reforms are being contemplated. Economic theory suggests that such schemes will suffer moral hazard problems. We test a specific theoretical prediction: insured plans will invest more heavily in risky assets. Our test exploits policy differences across Canadian jurisdictions. We find that insured plans invest about 5% more in equities than do similar plans without benefit guarantees.

Abstract The literature documents that charitable giving is responsive to tax subsidies but often ignores the spillover effects of such policies. This paper investigates the spillover effects of charitable subsidies on religious participation using individual-level panel data. The results show that religious giving and participation are complements. The implied cross-price elasticity of religious participation with respect to the after-tax price of giving is −0.27. Furthermore, a 1% increase in the amount of religious contributions is associated with a 0.4% increase in religious attendance. These results are robust under several different specifications and highlight the positive externalities created by charitable subsidies.

Abstract We examine the issue of market foreclosure by airline partnerships with antitrust immunity. Overlapping data on frequency of service and passenger volumes on nonstop transatlantic routes with information on the dynamics of airline partnerships, we find evidence consistent with the airlines operating under antitrust immunity refusing to accept connecting passengers from the outside carriers at respective hub airports. Following the antitrust immunity, airlines outside the partnership reduce their traffic to the partner airlines' hub airports by 4.1% to 11.5%. We suggest regulators should take possible market foreclosure effects into account when assessing the competitive effects of antitrust immunity for airline alliances.

We investigate to what extent worker heterogeneity explains the well-known wage and productivity exporter premiums, employing a matched employer-employee data set for Norwegian manufacturing. The wage premium falls by roughly 50% after controlling for observed and unobserved worker characteristics, while the total factor productivity premium falls by 25% to 40%, suggesting that sorting explains up to half of these premiums. Recent trade models emphasize the role of within-industry reallocation of labor in response to various shocks to the economy. Our findings suggest that aggregate productivity gains due to reallocation may be overstated if not controlling for sorting between firms and workers.