Gains and losses reported as other comprehensive income (OCI) and as special items (SI) are often viewed as similar in nature: transitory items with little ability to predict future cash flows and minimal implications for company value. However, current accounting standards require SI gains and losses to be recognized in net income, while OCI gains and losses are deferred until realized. This study empirically compares OCI and SI gains and losses using a model that jointly estimates value relevance, predictive value, and persistence. Results show that both SI and OCI gains and losses are value-relevant, but SI gains and losses exhibit zero persistence (i.e., are transitory), while OCI gains and losses exhibit negative persistence (i.e., partially reverse over time). Further, we find that SI gains and losses have strong predictive value for forecasting both future net income and future cash flows, while OCI gains and losses have weaker predictive value. Data Availability: All data are publicly available from sources indicated in the text.

Each year, more than 250 students in the Chicago Public Schools (CPS) are shot. The authors of this paper worked with the leadership of CPS to build a predictive model of shootings that helped determine which students would be included in a highly targeted and resource intensive mentorship program. This paper describes our predictive model and offers a preliminary evaluation of the mentoring intervention performed by Youth Advocate Programs, Inc. (YAP). We find little evidence that the intervention reduces school misconducts or improves educational outcomes. The scale of intervention was too small to generate meaningful findings on shootings.

Although backward induction is a cornerstone of game theory, most laboratory experiments have found that agents are not able to successfully backward induct. We analyze the play of world-class chess players in the centipede game, which is ill-suited for testing backward induction, and in pure backward induction games—Race to 100 games. We find that chess players almost never play the backward induction equilibrium in the centipede game, but many properly backward induct in the Race to 100 games. We find no systematic within-subject relationship between choices in the centipede game and performance in pure backward induction games.

This paper describes the progress, eight years after matriculating, of 586 individuals who entered one of 27 economics Ph.D. programs in fall 2002. By October 2010, 59 percent of the fall 2002 entering cohort had earned a Ph.D. in economics at the university where they initially matriculated, 37 percent had dropped out, and 4 percent were still writing their dissertations.We examine student outcomes by Ph.D. program tier and investigate factors associated with completion and time to degree. We document and describe the rise in median time to degree from 5.0 to 5.6 years during the period 1996–2010.

We investigate the effect of lane kilometers of roads on vehicle-kilometers traveled (VKT) in US cities. VKT increases proportionately to roadway lane kilometers for interstate highways and probably slightly less rapidly for other types of roads. The sources for this extra VKT are increases in driving by current residents, increases in commercial traffic, and migration. Increasing lane kilometers for one type of road diverts little traffic from other types of road. We find no evidence that the provision of public transportation affects VKT. We conclude that increased provision of roads or public transit is unlikely to relieve congestion.

This study explores decisions related to formal empirical tests of business models and interpretations and uses of those tests. Business models describe managers' rationales as to how their organizations will achieve success. This study documents a test of one company's business model under seemingly favorable conditions for such a test—a successful single-product firm following a consistent strategy over a long period of time with stable management and publicly traded stock. Although the findings provide only weak support for the hypothesized business model, the confidence of the company's top managers in their business model remained high. Further analyses reveal that the managers' response to the test results is consistent with that expected of Bayesian-rational agents. Our analyses provide the basis for development of a framework for understanding the expected value of testing business models in various circumstances. This framework might explain apparent contradictions between previous studies containing normative statements regarding the value of testing business models. Data Availability: The data used in this study are derived from a proprietary dataset and public sources.

In the recent financial crisis we saw liquidity in the stock market drying up as a precursor to the crisis in the real economy. We show that such effects are not new; in fact, we find a strong relation between stock market liquidity and the business cycle. We also show that investors' portfolio compositions change with the business cycle and that investor participation is related to market liquidity. This suggests that systematic liquidity variation is related to a “flight to quality” during economic downturns. Overall, our results provide a new explanation for the observed commonality in liquidity.

We present new estimates of home ownership for black and white households from 1870 to 2007. Black ownership increased by 46 percentage points, whereas white ownership increased by 20 points. Remarkably, 25 of the 26 point narrowing occurred between 1870 and 1910. Part of this early convergence is accounted for by falling white ownership due to movement out of agriculture, but most is accounted for by post-emancipation gains among blacks. After 1910, white and black households increased ownership, but the racial gap barely changed. We discuss the influence of residential segregation, public policy, and permanent income on the ownership gap.

This study jointly evaluates firm-level changes in investor composition and shareholder distributions following a 2003 reduction in the dividend and capital gains tax rates for individuals. We find that directors and officers, but not other individual investors, rebalanced their portfolios to maximize after-tax returns in light of the new tax rules. We also find that firms adjusted their distribution policy (specifically, dividends versus share repurchases) in a manner consistent with the altered tax incentives for individual investors. To our knowledge, this is the first study to employ simultaneous equations to estimate both shareholder and managerial responses to the 2003 rate reductions. We find that the generalized method of moments (GMM) estimates are substantially stronger than OLS estimates, consistent with our expectation that investor and manager responses are simultaneously determined. Failure to estimate systems of equations may account for some of the weak and conflicting results from prior studies of the 2003 rate reductions.