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Social Studies: Fox News is good for business; what went wrong in Flint

Stress over the water quality in Flint, Mich., appears to have risen even before the discovery of high levels of lead.
Stress over the water quality in Flint, Mich., appears to have risen even before the discovery of high levels of lead.Carlos Osorio/Associated Press

Investing in the party line

A study by finance professors finds that corporations with Republican-leaning management or headquartered in Republican-leaning areas increased investment and borrowing after Fox News was introduced in their area during the George W. Bush presidency — particularly when local viewership was high — even controlling for other company characteristics. The hypothesis is that Fox’s generally positive spin on the economy brightened the outlook of local Republican-leaning managers.

Knill, A. et al., “Media Partisanship and Fundamental Corporate Decisions,” Journal of Financial and Quantitative Analysis (forthcoming).

Subtle biases

In economics, “statistical discrimination” refers to the ostensibly rational decision to discriminate against a group based on the average attributes of its members. A study finds that describing statistical discrimination as potentially rational in a world of uncertainty can be a self-fulfilling prophecy. In an experiment, people with managerial experience who read about statistical discrimination subsequently granted more legitimacy to stereotypes and were more biased in a hiring scenario. Adding a critical commentary reduced this effect.

Tilcsik, A., “Statistical Discrimination and the Rationalization of Stereotypes,” American Sociological Review (forthcoming).

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The power of stress

High levels of lead in the water in Flint, Mich., were discovered a year after the water supply had been changed from Detroit pipelines to the Flint River. But concerns about water quality — measured by smoking levels, which can be a sign of stress — began when the switchover actually happened. In fact, a study finds that pregnant women were 10 percentage points more likely to continue smoking after the pipeline change, compared with pregnant women in other municipalities in Michigan, and that this alone can explain most of the increase in the incidence of low birth weight in Flint. In other words, smoking induced by stress about the water quality “may exceed the footprint of the contamination itself,” given that “fewer than 5 percent of households tested in Flint had water lead levels exceeding federal thresholds.”

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Danagoulian, S. & Jenkins, D., “Rolling Back the Gains: Maternal Stress Undermines Pregnancy Health After Flint’s Water Switch,” Health Economics (forthcoming).

Neighborhood effects

Assessments of real-world social interventions typically compare those who were “treated” with those who were not. But what if changes induced in treated people influence their peers? In that case, a simple comparison will miss the overall effect. This is illustrated in a new study of a randomized intervention for preschool kids on Chicago’s South Side. The program offered parenting education to some families, high-quality preschool to others, and no treatment to others. Benefits accrued to people in all three groups. And it turns out that most of the benefits accrued from peer influence and not from direct treatment.

List, J. et al., “The Social Side of Early Human Capital Formation: Using a Field Experiment to Estimate the Causal Impact of Neighborhoods,” National Bureau of Economic Research (December 2020).