Spend like the ultra-rich!
The question of whether supply-side or trickle-down economics—that is, giving incentives to wealthy capitalists to spend and invest—really helps the masses has been central to economic policy debates for decades now. But, according to professors in the business school at the University of Chicago, putting more money in the pockets of rich people does affect the masses in one clear way: It spurs them to empty their own pockets.
When the income and spending of the higher-income households in a state were further above that of middle-income households, the latter spent more of their income. This pattern was not explained by middleincome households’ expectations of higher or more stable future income or wealth, in view of higher-income households’ success. Instead, middle-income households seemed to be getting caught up in the luxury consumption driven by higher-income households.
This consumption was facilitated by the increasing availability of credit—which was, in turn, encouraged by politicians ostensibly worried about inequality—such that “rising income inequality might have been a contributing factor in the recent financial
Bertrand, M. & Morse, A., “Trickle-Down Consumption,” National Bureau of Economic Research (March 2013).
Why women went to school
Recently, American women have overtaken men in the amount of education they receive. But this wasn’t always true; girls used to be educated less than boys, until a relatively speedy change about a century ago. What happened? Analyzing census data, several economists found that the passage of laws granting property rights to married women—laws that were passed by most states in the second half of the 19th century—was the cause of a significant increase in girls’ school attendance relative to boys, especially among 15- to 19-year-olds, who were beyond the compulsory attendance age. The theory is that giving someone the right to control her own earnings and property increases the incentive to develop her knowledge and skills through education.
Geddes, R. et al., “Human Capital Accumulation and the Expansion of Women’s Economic Rights,” Journal of Law and Economics (November 2012).
The overconfident lawyer
Lawyers are hired to be zealous advocates for their client’s position. But how much do they believe their own rhetoric—and does it make a
difference to the outcome of the case? In a recent study, law professors surveyed students who had been randomly assigned to argue one or the other position in moot court cases. The students tended to believe their assigned positions to be legally and morally superior. However, this bias was not exacerbated—and, if anything, was reduced—for those who spent more time preparing their case. Moreover, believing in the legal superiority of one’s position was associated with significantly lower scores from judges.
Eigen, Z. & Listokin, Y., “Do Lawyers Really Believe Their Own Hype, and Should They? A Natural Experiment,” Journal of Legal Studies (June 2012).
What football refs miss
In a sport like football, where many players interact forcefully at the same time, referees have a tough job maintaining law and order. How tough? In a new analysis of officiating in the NFL, an economist at the University of Mississippi finds that a repositioning of one of the officials from behind the defensive line to behind the offensive line shifted the balance of holding penalties from the defense to the offense by 20 percent. Extrapolating this effect suggests that the officials are picking up only around 60 percent of penalties that players commit, so “there is plenty of reason for coaches to be screaming up and down the sidelines at officials for missed calls that potentially affect the outcome of games.”
Kitchens, C., “Identifying Changes in the Spatial Distribution of Crime: Evidence from a Referee Experiment in the National Football League,” Economic Inquiry (forthcoming).
Another step toward ‘Minority Report’
One day, people may have their brains scanned to see if they’re likely to commit crimes. Sounds like science fiction, right? Hardly. In a recent study, a team of researchers scanned the brains of inmates before their release from New Mexico correctional facilities. The probability of being arrested for a felony after release was significantly lower for those with higher activity in the anterior cingulate cortex, an area of
the brain associated with impulse control.
Aharoni, E. et al., “Neuroprediction of Future Rearrest,” Proceedings of the National Academy of Sciences (forthcoming).
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