Presidential Elections, Divided Politics, and Happiness in the U.S., 2012-2016: Negative impact on well-being for losers, no gains for winners

Presidential Elections, Divided Politics, and Happiness in the U.S. Sergio Pinto  et al.
Chicago Univ., Human Capital and Economic Opportunity Working Group WP No 2019-015, https://econpapers.repec.org/paper/hkawpaper/2019-015.htm

Abstract: We examine the effects of the 2016 and 2012 U.S. presidential election outcomes on the subjective well-being of Democrats and Republicans using large-scale Gallup survey data and a regression discontinuity approach. We use metrics that capture two dimensions of well-being – evaluative (life satisfaction) and hedonic (positive and negative affect) – and document a significant negative impact on both dimensions of well-being for Democrats immediately following the 2016 election and a negative but much smaller impact for Republicans following the 2012 election. However, we found no equivalent positive effect for those identifying with the winning party following either election. The results also vary across gender and income groups, especially in 2016, with the negative well-being effects more prevalent among women and middle-income households. In addition, in 2016 the votes of others living in the respondent’s county did not have a large impact on individual well-being, although there is some suggestive evidence that Democrats in more pro-Trump counties suffered a less negative effect, while Republicans in less pro-Trump and more typically urban counties were actually negatively impacted by the election outcome. We also find evidence that being on the losing side of the election had negative effects on perceptions about the economy, financial well-being, and the community of residence. Lastly, the evaluative well-being gaps between the different party affiliations tend to persist longer, with those in expected life satisfaction lasting until at least the end of 2016, while the hedonic well-being gaps typically dissipate within the two weeks following the election.

Keywords: Elections; political parties; subjective well-being; life satisfaction; emotions

Check also  Losers lose more than winners win: Asymmetrical effects of winning and losing in elections. Sune Welling Hansen, Robert Klemmensen, Soren Serritzlew. European Journal of Political Research, March 15 2019. https://doi.org/10.1111/1475-6765.12329

Abstract: Being on the winning or the losing side in elections has important consequences for voters’ perceptions of democracy. This article contributes to the existing literature by showing that being on the losing side has persistent effects over a surprisingly long time. Based on a dataset that measures voters’ satisfaction with democracy three years after elections were held, it first shows that losers are significantly more dissatisfied with democracy than winners on both input and output side measures of perceptions of democracy. Furthermore, the article shows that turning from winning to losing has significant negative effects on voters’ satisfaction, and that this finding is robust across a number of different specifications. These results are remarkable given that the data used is from Denmark – a country that constitutes a least‐likely case for finding effects of being on the winning or the losing side.

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Presidential Elections, Divided Politics, and Happiness in the U.S. Sergio Pinto  et al.
1.Introduction

 Elections are the cornerstone of modern representative democracy with the outcomes often leading toresounding changes and transformationsthat reverberatethrough time, as in the case of Abraham Lincoln and the Civil War or the election of Franklin Delano Rooseveltand the New Deal. The impact of politics and elections on various economic and political outcomes ranging from stock market performancetoconflict recurrencehas been studiedacross different disciplines(Addoum and Kumar, 2016; Flores and Nooruddin, 2012). Yet, the influence of politics extends far beyond financialand political spheres.The outcome of the most recentU.S. presidential electionwas seen as unexpected by many and has been tied to geographic factors, dissatisfaction in life,and increasingpopulism, among other factors (Monnat and Brown, 2017; Rothwell and Diego-Rosell, 2016). Furthermore, there are early signs that the 2016 election, beyond influencing policy-making for thefollowingyears, has also had an effect on social norms, at least in a lab setting(Huang and Low, 2017).However, very little research has been conducted on how election outcomes affect individual happiness, which is whatwe hope to shed light on.We examine the effectsof the 2016and 2012 U.S. presidential electionson the subjective well-beinggap betweenindividuals who identify as Democrats and Republicansusingdata from alarge-scale, nationally representative Gallup survey. Recent studies in happiness economics show just how important broader measures of well-being, beyond economic indicators, are (De Neve and Oswald, 2012; Graham, 2012).Weprimarily study the effectsof the electionson two distinct dimensions of subjective well-being: evaluative (life satisfaction) and hedonic(affect)well-being.Evaluative well-being captures how people think about and assess their lives, whereas hedonic well-beingcaptures how individuals experience their daily lives and their moods during daily






 less liberalin their ideology. Perhaps more surprisingly, the results also suggest that Republicans living in counties where Trump’s voting share was lower, which are typicallymoreurban settings, may have suffered a mild negativeimpact from the electionresult, which is not present for those counties with a higher Trumpvotingshare. The income and gender associated results are nuanced,especiallyin terms of the negative well-being impact. In 2016, the well-being of women and those in middle-income households(to some extent, also those in high-income households)appear to have suffered more following the election, despite theincreasingattention paid tothe voters who were left behind economically.These heterogeneities are especially present in 2016,compared to 2012,partly due to the larger magnitude of the election well-being effectsin 2016. The gender and income divides on both evaluative and negative hedonic indicatorswere less visiblein 2012.We also examine changesin perceptions about the economy, financial well-being, and communityfollowing the 2016 election. We find significantly negative changes in the perceptions regarding all three for those who identify with the losing party.However, again,with substantial heterogeneity: as before, it was primarily women and middle-income respondents who appear to be driving the resultsamong Democrats.For the winning Republican side,the effects were more mixed.On one hand, there was a large positive change inexpectations about the economy, broadly sharedacross income and gender lines;on the other hand,somewhat surprisingly, there was a negative impact on some financial and community perception indicatorswhich, similarly to Democrats, seems to be driven by women and middle-income respondents.The duration of the post-election effects on evaluative and hedonic well-being differed, consistent with the view in the extant literature that these are indeed different dimensions of well-being. In 2016, theeffects on the evaluative well-being gap between Democrats and Republicans 4as measured by future expected life satisfaction (an optimism measure) persisted at least until the end of the year; the effectson current life satisfaction persisted for about 4 weeks after the election. On the contrary, the highly significant hedonic well-being effects (i.e., change in mood and emotions such as smiling or stress) subsidedfaster,withalmost all the effects dissipating within two weeks.The persistenceof the well-being effectswas quite similar afterthe 2012 election.Our studyadds to the existing literature by shedding light on the relationship between election outcomes and individualwell-being by using a large, nationally representative dataset,a range ofindicators that capture multiple dimensions of subjective well-being,andby comparing national elections that resulted in the elections of an anti-systemnew president and an incumbent, respectively.Wehighlight the intricacies inpost-election well-being by quantifying the economic significance of such effects, examining theirduration, exploring the roles of local voting patterns, income, and gender, and analyzing changing perceptions about important aspects of lifefollowing the elections.We review the relevant literature in Section 2 and describe our data and methodology in Sections 3 and 4, respectively. Our findings are discussed in Section 5, and Section 6 concludes.2.Relevant literatureGiven the importance of political participation, extensive literature across disciplines has studiedthe causesand consequencesof political participation and voting behavior (Che et al., 2016).McCarty et al. (2006),for instance,point to income inequality as a determinant of voting behavior, while Oswald and Powdthavee (2010)concentrateon personal characteristicsanddocument that having daughters makes people more likely to vote for left-wing political parties.Severalrecent studiesexamined the determinants of voting in the 2016 presidential election. Autor et al. (2016)show that exposure of local labor markets to increased import 5competition from China increased Republican vote share gains. Rothwell and Diego-Rosell (2016)study the individual and geographic factors that predict a higher probability of viewing Donald Trump favorably and findthat living in racially isolated communities with worse health outcomes, lower social mobility, less social capital, greater reliance on social security income,and less reliance on capital income predicts higher levels of Trump support. Similarly, Monnat and Brown (2017)describe the characteristics of places where Trump performed much better than expected, andBilal et al. (2018)found thatincreased mortalityat the county level in prior yearswas associated withswing voting in 2016. Schill and Kirk (2017)examine how voter attitudes on certain themessuch as loss, nostalgia and belongingaffected the choice of undecided voters. As for the consequencesof the 2016 election, Huang and Low (2017) found that the election results had an impact on behavior in the lab: individuals were less cooperative in general after the election, and this was particularly driven by men acting more aggressively toward women.This is consistent with a major strand of literature that showshow broader political and world events can impact behavior such as generosity, fairness,reciprocity, cooperation, group bias,and health insurance uptake (Grossman and Baldassarri, 2012; Tilcsik and Marquis, 2013). More directly relatedto our study is the growing bodyof research examining the relationship betweenpolitical participation and subjective well-being.Most of these studies focus onhowthe procedural aspect of voting and political participation in other forms,rather thanelection outcomes,affecthappiness (Barker and Martin, 2011; Frey and Stutzer, 2000; Winters and Rundlett, 2015; Napier and Jost, 2008). For example, Flavin and Keane (2012)find that individuals who are more satisfied with their lives are more likely to turn out to vote and participate in the political process through other avenues in the U.S.Lorenzini (2015)focuseson unemployed and employed youth in Switzerlandand findthat life dissatisfaction fosters the participation of 6employed youthincontacting politicians, officials, and media, but not that of unemployed youth.Oncontrary, for protestactivities, he found that it is life satisfaction that fosters participation of unemployed youth.In the U.K.context, Dolan et al. (2008) find that subjective well-being can affect voting intention:right-wing voters who are satisfied with their liveswereless likely to intend to vote.Ward (2015)shows that country-levellife satisfaction can bemore of a predictor of election resultsthan standard macroeconomic variables using data from 15 European countries. Interestingly, Miller (2013)points out that feelings of happiness unrelated to politics can also affect electionresultsby examiningmayoral elections in 39 American cities and professional sports records.He found that sports outcomes exerciseda strong effect on the probability of incumbentswinningreelection.Overall, these studies on political participation and happiness find a two-way effect: Individuals who are more satisfied with their lives are more likely turn out to vote, and the act of voting itself can also have a positive effect although more researchhas been conductedon the formerthan the latter. Weitz-Shapiro and Winters (2011), for example, examinethe relationship between voting and individual life satisfaction in Latin Americaand argue that individual happiness is more likely to be a cause rather than an effect of voting in this region. A few existing studies specifically examine the effect of electionoutcomeson individual happiness, which is an areawe aim to shed further light on.Dolan et al. (2008)in the aforementioned paper find that electionoutcomeshave no effect on subjective well-being from looking at three consecutive elections in the U.K.Di Tella and MacCulloch (2005)document that individuals are happier when the party they support is in power.Herrin et al. (2018) examined how changes in the community measures of well-being since 2012 affected electoral changes in the 72016 U.S. presidential election.They found that areas of the U.S.which had the largestshifts away from the incumbent party hadlower well-being and larger declinein well-being when compared withareas that did not shift. Prior literature also showsindividuals are in general not good at predictingtheir well-beingand emotional reaction to major events(Graham et al., 2010),which seems to extend to elections.Using a sample of 284 undergraduates at Dartmouth College, Norris et al. (2011)found that McCainsupporters overpredicted their negative affect in response to the future election of BarackObamain the 2008 presidential election. Obama supporters, however, underpredicted their happiness in response to hisfuture victory. Similarly, in a smaller study with 57 participants, Gilbert et al.(1998) reported that winners in the 1994 Texas gubernatorial election(i.e., those who voted for the winner, George W. Bush) wereas happy as they had predicted they would be, whereas losers(i.e., those who voted for the losing candidate, Ann Richards) were happier than they had predicted they wouldbeone month following the election.In this paper, we aim to better understand the relationship between election outcomes and subjective well-being at the individual level and add to the existing literature by using a large, nationallyrepresentative dataset and a range of subjective well-beingmeasures along different dimensions. We explore the intricacies of the well-beingeffectsof those who identify with the winning and losing parties experience following the elections by quantifying the economic significance of such well-being effects, examining theirduration, and exploring the rolesof localvoting patterns,income, gender, and changing perceptionsonpost-election well-being.83.DataOur main data sourceis Gallup Healthways (GH), a cross-sectional nationally representative survey that is collected daily for adult individuals across the U.S. GH interviewed an average of approximately 1000 individuals per day from 2008 to 2012 and 500 individuals from 2013to 2016. This gives us a substantially largerdataset than those used in the vast majority of priorstudies.Toassess the impact of the two most recent U.S.presidential elections on subjective well-being (SWB), we utilize multiple measures along two distinct dimensions of SWBthat arewell established in the literature: evaluative and hedonic. Evaluative well-beingcaptures how people think about and assess their lives, and we use both current and expected life satisfaction questions on a 0-10 integer scalefrom worst to best possible life. Hedonic well-being, on the other hand,captures howindividuals experience their daily lives and their moods during dailyexperiences. We use multiple measures of positive (having felt enjoyment, happiness, smiled or laughedinthe previous day) and negative affect(having feltstress, worry, anger, or sadness in the previous day). The hedonicindicatorsare all binary.We also used a series of indicators as measures of perceptions about the country’s economy, the respondent’s financial well-being,and the communityin 2016.1The descriptions of these well-being variables and the wording of the corresponding GH questions are provided in Appendix 1. We use a variety of socio-demographic characteristics as control variables: age, gender, race, income, marital status, educational level, employment status, religious preference, urban/rural location, state of residence, and a series of self-reported health-related behaviors and characteristics.The dataset also includes information on the day each respondent was surveyed, 1We use these measures only for 2016becauseGH only started collecting data on most of these indicators in 2014.9allowing us to identify whether it preceded or followed a presidential election, as well as the time gap between the election and the interview date.We also control for the day of the week (Monday to Sunday) and for the day after major holidays like Thanksgiving and Christmas.2The detailed descriptions of these variables are also provided in Appendix1. Additionally, GH also collects data on self-reported political identificationof the respondents. Specifically, the GH survey asks the following question: “In politics, as of today, do you consider yourself a Republican, a Democrat, or an Independent?”In our analyses, we focus only on the respondents who identify as either Democrats orRepublicans. Appendix 2presents the descriptive statistics of our variables.It should be noted that, in addition to GHhalving the number of interviewees per day from 2013,the subset of the sample to whom the GH survey asks the party identification questionalso changes markedly over time. Whereas 90% or more of the respondents were asked about their political identification in 2011 and 2012, less than 30% of the respondentswere asked this question from 2013 to 2015. Thispercentagethenincreased in 2016to 65% of the sample3.The daily number of individuals sampled to answer the party identification question increasedfurtherby a factor of three after June 9in 2016, which is approximately 22weeks before the election. Thislarger daily samplesizeallows for substantially more precise estimates.4For additional analyses involving county-level characteristics, we used various other data sources. We collected the percent of voters who voted for the Democrat and Republican candidates in 2016 at the county level from the Politico website. We obtained annual data on county 2We do not control for the holidays themselves because no interviews are fielded then. Likewise, no interviews are fielded on Christmas Eve or on New Year’s Eve.3The substantially smaller number of respondents for 2016 when compared to the 2011-2012 period, despite the relatively large percentage of the sample being asked the questions, reflects in part thishalving of the samplefrom 2013.4This is also whyour empirical approach and main specifications rely only on the data from the election year itself to produce its estimates. The smaller daily sample size in 2015 makesestimates from that year substantially less precise.

In the lab: Those with an East German background cheat significantly more on an abstract die-rolling task than those with a West German background, but only when exposed to West Germany's system

The impact of two different economic systems on dishonesty. Dan Ariely et al. European Journal of Political Economy, March 13 2019. https://doi.org/10.1016/j.ejpoleco.2019.02.010

Abstract: Using an artefactual field experiment, this paper tests the long-term implications of living in a specific economic system on individual dishonesty. By comparing cheating behaviour across individuals from the former socialist East with those of the capitalist West of Germany, we examine behavioural differences within a single country. We find long-term implications of living in a specific economic system for individual dishonesty when social interactions are possible: participants with an East German background cheat significantly more on an abstract die-rolling task than those with a West German background, but only when exposed to the enduring system of former West Germany. Moreover, our results indicate that the longer individuals had experienced socialist East Germany, the more likely they were to cheat on the behavioural task.

Keywords: Social behaviourCheatingDishonestyArtefactual field experiment

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1. Introduction
Individual dishonesty is very costly for society as a whole. For example, the average annual tax gap in the US for the years 2008-2010 is estimated to be $458 billion (Internal Revenue Service, 2016). The costs of insurance fraud (excluding health insurance) is estimated to be more than $40 billion per year, which translates to costs in the form of increased premiums between $400 and $700 per year for an average US family (U.S. Department of Justice, 2018). Understanding determinants of dishonest behaviour is thus a major concern for society. In this paper, we investigate a context effect of dishonesty by asking the question: What are the long-term implications of living in a specific economic system for individual dishonesty? We explore whether existing economic systems, socialism and capitalism, have a different effect on people’s dishonesty. To understand how exposure to real economic systems influences individual behaviour, we make use of an historical event, the division of Germany into two different formerly existing economic regimes within a single country, socialist East and capitalist West Germany. Specifically, we compare cheating behaviour between East Germans, who were exposed to socialism for over 40 years, and West Germans, who were at the same time living in a market economy. Several studies have documented differences in individual behaviour between citizens of former East and West Germany, for example in national solidarity (Ockenfels and Weimann, 1999; Brosig-Koch et al., 2011) or preferences for redistribution and levels of social trust (Alesina and Fuchs-Schündeln, 2017; Heineck and Süssmuth, 2013). Heineck and Süssmuth (2013) even find that specific cultural traits appear to be passed down through generations. We add to this strand of literature by investigating the persistence of behavioural differences in dishonesty. Moreover, we compare the impact of two really existing economic systems within one single country to better understand the effect of extant socialistic versus capitalistic regimes on individual dishonesty. 
 It is important to note that social interactions—between friends as well as strangers—seem to influence dishonest behaviour. People cheat more when they observe others behaving dishonestly (Gino et al., 2009). In this vein, Diekmann et al. (2016) and Rauhut (2013) find support for social conformity to the observed behaviour in the form of contagiousness and spread of norm violations. Mann et al. (2014) also show a transmission through social networks and documents that people’s tendency to lie is associated with the lying behaviour of their friends and family members. However, social interaction can also lead to anti-conformity in behaviour. An experimental study by Fortin et al. (2007) finds evidence of a social anti-conformity effect, which suggests that individuals prefer to deviate from the tax compliance behaviour of their reference group, using an income reporting task. In the specific case of former East and West Germany, fairness considerations may spur social interaction effects, since fervent debate erupted after the reunification of Germany about whether economic and social injustice befell parts of the country because of the reunion (Schmitt and Maes, 1998). Individuals who believe they were treated unfairly in an interaction with another person are more likely to cheat in a subsequent unrelated game (Houser et al., 2012). Moreover, when individuals are aware that they were poorly compensated relative to another group, they cheat more to increase their earnings (John et al., 2014). In this paper, we explore whether social interactions might explain individual differences in dishonesty between citizens from socialist versus capitalist systems. We use an artefactual field experiment (Harrison and List, 2004) to investigate the impact of different economic systems within a single country on individual cheating behaviour. We compare cheating among people exposed to the two existing economic systems of former Germany. In particular, we compare Germans living in Berlin, where citizens with East and West German backgrounds co-exist, with Germans living outside of Berlin, where citizens typically live with peers sharing only the same historical background. To measure cheating behaviour, we use a die task adapted from previous research where participants were paid based on the number of dots on reported die rolls (Fischbacher and Föllmi-Heusi, 2013; Jiang, 2013; Mann et al. 2016; see Garbarino et al. 2016 and Abeler et al. 2018 for two excellent meta studies). It has been shown that even abstract cheating tasks predict behaviour in the field. A widely used reporting task in the lab significantly predicts classroom misbehavior in middle and high school students (Cohn and Maréchal, 2018) and it has been shown that abstract as well as contextualized cheating tasks in the lab correlate with rule violations in real life (Dai et al., 2017). Our results show that social interaction is an important mechanism underlying individual cheating: participants with an East German background cheat significantly more on an abstract die-rolling task than those with a West German background, but only when exposed to the enduring capitalist system of West Germany. Moreover, our results indicate that the longer individuals living in Berlin had experienced socialist East Germany, the more likely they were to cheat on the behavioural task. In contrast, we did not observe differences in cheating behaviour between East and West German individuals living in the respective cities of Leipzig (East Germany) and Dortmund (West Germany). Unlike in Berlin, individuals from Leipzig and Dortmund have less opportunity for comparison against the alternative economic system, due to being situated at some distance from the former inner German border. The remainder of the paper is structured as follows. Section 2 outlines related literature on differences between former East and West Germany. Thereafter, section 3 presents our materials and methods. Section 4 lays out the empirical results of our study. Section 5 concludes. 



 2. Differences between former East and West Germany
From 1961 to 1989, the Berlin Wall divided one nation into two distinct economic and political regimes: socialism (East Germany) and capitalism (West Germany). Socialist systems in the past have been characterized by extensive scarcity, which in the case of East Germany, ultimately led to the collapse of the German Democratic Republic (GDR). In many instances, socialism pressured or forced people to work around official laws. For example, in East Germany stealing a load of building materials in order to trade it for a television set might have been the only way for a person to be able to acquire such a valuable good and connect to the outside world (Hornuf and Rieger, 2017). Moreover, a high degree of infiltration by intelligence apparatuses is also considered as a key characteristic of socialist systems. In East Germany, the secret service (Staatssicherheit) kept records on more than one third of its citizens (Koehler, 1999). Unlike in democratic societies, freedom of speech was not a virtue upheld in socialist regimes and it was therefore often necessary for citizens to misrepresent their thoughts to avoid repression. Earlier studies have shown differing degrees of national solidarity between East and West Germans. In a laboratory experiment with economics students, East Germans showed significantly less solidarity five years after the German reunification (Ockenfels and Weimann, 1999). Asked how much money Germans would be willing to hand over to anonymous future losers if they won 10 Deutsche Mark in a solidarity game, East Germans were willing to give up roughly half as much as West Germans. Interestingly, East Germans also expected to receive much less from potential winners. These results were recently confirmed by another study showing that there was no convergence in solidarity 20 years after the German reunification, which the authors attribute to slow changes in social behaviour due to the necessity of coordination on social norms in the society as well as complementarities involved in individual social behaviour (Brosig-Koch et al., 2011). Based on data from the German Socioeconomic Panel (GSOEP), Alesina and Fuchs-Schündeln (2007) provide evidence that East Germans have stronger preferences for public policies that involve redistribution. They find that economic and political regimes greatly shape individual preferences for state interventions and that these preferences tend to change slowly. According to the authors’ analysis, one fourth of the effect that East Germans’ have stronger preferences for state intervention is because East Germans became poorer during the socialist epoch, while the remainder can be attributed to the impact of socialism on individual preferences itself. Yet, one limitation of the study is that people might distort their true preferences when responding to a survey like GSOEP. For example, people might overstate their willingness to contribute to redistributive policies because they do not actually have to pay for them. Using a discrete choice experiment, another study shows that the stated preferencesof East Germans towards redistribution indeed differ from their actual preferences (Pfarr et al., 2013). While East Germans indicate that they prefer higher degrees of redistribution, they are not actually willing to pay for such policies. Based on the GSOEP data Heineck and Süssmuth (2013) investigate the effect of the economic regime on individuals’ trust and risk preferences as well as their cooperativeness. Relative to West Germans, East Germans showed persistently lower levels of social trust and were less inclined to see others as fair. This study also suggested that East Germans are more risk-loving. Most importantly, the authors find that these cultural traits appear to be passed down through generations. While this research provides valuable insights on differences in solidarity and individual social preferences, little is known about how the economic systems of former East and West Germany influenced individual dishonesty. Torgler (2003) indicates that at one point in time, East Germans were more likely than West Germans to say that cheating on their taxes cannot be justified, but that this difference disappeared seven years after the German reunification. However, this finding is based on self-stated preferences in a survey and therefore might not reflect individuals’ actual behaviour when put in a position where dishonesty financially pays off.

What are the cognitive and emotional effects of CAPTCHA tests? They are associated with feelings of alienation and the user’s self-perception of humanity is influenced

You need to show that you are not a robot. Leopoldina Fortunati et al. New Media & Society, March 14, 2019. https://doi.org/10.1177/1461444819831971

Abstract: Given that today 60% of Internet traffic is generated by bots, ‘CAPTCHA’ (Completely Automated Public Turing Test to tell Computers and Humans Apart) tests that are supposedly impossible to be done by robots have been introduced. What are the cognitive and emotional effects of these tests on Internet users? Does this request to demonstrate they are not a robot affect users’ identity as human beings? To answer these questions, we selected two groups (117 and 116 respondents, respectively). An online questionnaire that differed only in the task was proposed: we asked the first group to complete some CAPTCHA tests, and the second group to complete some logic tests. In addition to other questions in both versions, we introduced the TLX scale (NASA). Preliminary results show that CAPTCHA execution is associated with feelings of alienation and that the user’s self-perception of humanity is influenced by the execution of the two different types of test.

Keywords Bots, CAPTCHA, human identity, TLX scale, Turing test

Effects of boardroom gender diversity on CEO compensation & dismissal decisions: Largely disappear when we account for geographic distance (more remote from HQ & more reliant on hard info)

Alam, Zinat S. and Chen, Mark A. and Ciccotello, Conrad S. and Ryan, Harley E., Gender and Geography in the Boardroom: What Really Matters for Board Decisions? (December 18, 2018). SSRN, https://ssrn.com/abstract=3336445

Abstract: Recent literature has shown that gender diversity in the boardroom seems to influence key monitoring decisions of boards. In this paper, we examine whether the observed relation between gender diversity and board decisions is due to a confounding factor, namely, directors’ geographic distance from headquarters. Using data on residential addresses for over 4,000 directors of S&P 1500 firms, we document that female directors cluster in large metropolitan areas and tend to live much farther away from headquarters compared to their male counterparts. We also reexamine prior findings in the literature on how boardroom gender diversity affects key board decisions. We use data on direct airline flights between U.S. locations to carry out an instrumental variables approach that exploits plausibly exogenous variation in both gender diversity and geographic distance. The results show that the effects of boardroom gender diversity on CEO compensation and CEO dismissal decisions found in the prior literature largely disappear when we account for geographic distance. Overall, our results support the view that gender-diverse boards are “tougher monitors” not because of gender differences per se, but rather because they are more geographically remote from headquarters and hence more reliant on hard information such as stock prices. The findings thus suggest that board gender policies, such as quotas, could have unintended consequences for some firms.

Keywords: Board of Directors, Gender, Geography

For women, sex economy has some poor, some middle class, & some millionaires; for men, there is a small number of super-billionaires & huge masses with almost nothing

Attraction Inequality and the Dating Economy. Bradford Tuckfield    . Quillette, March 12, 2019, https://quillette.com/2019/03/12/attraction-inequality-and-the-dating-economy/


[...] The economist Robin Hanson has written some fascinating articles that use the cold and inhuman logic economists are famous for to compare inequality of income to inequality of access to sex. If we follow a few steps of his reasoning, we can imagine the world of dating as something like an economy, in which people possess different amounts of attractiveness (the dating economy’s version of dollars) and those with more attractiveness can access more and better romantic experiences (the dating economy’s version of consumer goods). If we think of dating in this way, we can use the analytical tools of economics to reason about romance in the same way we reason about economies.

One of the useful tools that economists use to study inequality is the Gini coefficient. This is simply a number between zero and one that is meant to represent the degree of income inequality in any given nation or group. An egalitarian group in which each individual has the same income would have a Gini coefficient of zero, while an unequal group in which one individual had all the income and the rest had none would have a Gini coefficient close to one. [...]

Some enterprising data nerds have taken on the challenge of estimating Gini coefficients for the dating “economy.” Among heterosexuals, this actually means calculating two Gini coefficients: one for men, and one for women. This is because heterosexual men and heterosexual women essentially occupy two distinct “economies” or “worlds,” with men competing only with each other for women and women competing only with each other for men. The Gini coefficient for men collectively is determined by women’s collective preferences, and vice versa. If women all find every man equally attractive, the male dating economy will have a Gini coefficient of zero. If men all find the same one woman attractive and consider all other women unattractive, the female dating economy will have a Gini coefficient close to one. The two coefficients do not directly influence each other at all, and each sex collectively sets the Gini coefficient—that is, the level of inequality—for the other sex.

A data scientist representing the popular dating app “Hinge” reported on the Gini coefficients he had found in his company’s abundant data, treating “likes” as the equivalent of income. He reported that heterosexual females faced a Gini coefficient of 0.324, while heterosexual males faced a much higher Gini coefficient of 0.542. So neither sex has complete equality: in both cases, there are some “wealthy” people with access to more romantic experiences and some “poor” who have access to few or none. But while the situation for women is something like an economy with some poor, some middle class, and some millionaires, the situation for men is closer to a world with a small number of super-billionaires surrounded by huge masses who possess almost nothing. According to the Hinge analyst:

On a list of 149 countries’ Gini indices provided by the CIA World Factbook, this would place the female dating economy as 75th most unequal (average—think Western Europe) and the male dating economy as the 8th most unequal (kleptocracy, apartheid, perpetual civil war—think South Africa).

Quartz reported on this finding, and also cited another article about an experiment with Tinder that claimed that that “the bottom 80% of men (in terms of attractiveness) are competing for the bottom 22% of women and the top 78% of women are competing for the top 20% of men.” These studies examined “likes” and “swipes” on Hinge and Tinder, respectively, which are required if there is to be any contact (via messages) between prospective matches.

Another study, reported in Business Insider, found a pattern in messaging on dating apps that is consistent with these findings. Yet another study, run by OkCupid on their huge datasets, found that women rate 80 percent of men as “worse-looking than medium,” and that this 80 percent “below-average” block received replies to messages only about 30 percent of the time or less. By contrast, men rate women as worse-looking than medium only about 50 percent of the time, and this 50 percent below-average block received message replies closer to 40 percent of the time or higher.

If these findings are to be believed, the great majority of women are only willing to communicate romantically with a small minority of men while most men are willing to communicate romantically with most women. The degree of inequality in “likes” and “matches” credibly measures the degree of inequality in attractiveness, and necessarily implies at least that degree of inequality in romantic experiences. It seems hard to avoid a basic conclusion: that the majority of women find the majority of men unattractive and not worth engaging with romantically, while the reverse is not true. Stated in another way, it seems that men collectively create a “dating economy” for women with relatively low inequality, while women collectively create a “dating economy” for men with very high inequality.

[...]

There are no villains in this story. Nobody can or should be blamed for his or her honest preferences, and if women collectively believe that most men are unattractive, what grounds does anyone, male or female, have to argue with them? We may pity the large majority of men who are regarded as unattractive and who have few or no romantic experiences while a small percentage of attractive men have many. Just as much, consider that we live in a monogamous culture, and so the 20 percent of men who are regarded as attractive can only be in committed relationships with at most 20 percent of women. We may just as well pity the rest of the women, who are destined to be in committed relationships, if they pursue a relationship at all, with someone who they regard as unattractive. The only villain in this story is nature, which has molded our preferences so that this tragic mismatch of attraction and availability occurs.

To those who study nature, the various gender gaps in romantic life will not come as a surprise. Evolutionary biologists have seen these types of patterns many times before and can explain each of them. The relative perceived attractiveness of younger women vs. older can be explained by the higher fertility of younger adult women. The libido gap can be explained by the different mating strategies instinctively pursued by the distinct sexes.

As for the different Gini coefficients consistently reported for men and women, they are not consistent with a monogamous social structure in which most people can pair with someone of comparable perceived attractiveness. However, this is not surprising: monogamy is rare in nature. The revealed preference among most women to attempt to engage romantically only with the same small percentage of men who are perceived as attractive is consistent with the social system called “polygyny,” in which a small percentage of males monopolize the mating opportunities with all females, while many other males have no access to mates. Again, this will not come as a surprise to scientists. The evolutionary biologist David P. Barash wrote an article in Psychology Today titled “People Are Polygynous,” citing extensive biological and historical evidence that throughout most of history, our species has practiced “harem polygyny,” a form of polygamy.

There are many animals of all kinds that practice polygyny in one form or another, including many of our primate relatives like gorillas and lemurs. For animals, social structures are not an object of reflection or systematic attempted reform—they just do what their instincts and upbringing dictate. But  it is the destiny of humans to constantly fight against nature. We light fires for warmth, build air conditioners for cooling, invent soap and plumbing and antibiotics and trains and radios in an effort to conquer the constraints of nature. But when we turn on our smartphones built on ingeniously developed transistors that show we can overcome nature’s entropy, we log on to dating apps and enter a world that is built on shadows of the social structures of our primeval savanna ancestors. Technology has not enabled us to escape the brutal social inequalities dictated by our animal natures.

This is not to say that we haven’t tried. The institution of monogamy is itself a “redistributive” type of policy: like capping the income of billionaires, it caps the total allowed romantic partners of the most attractive, so that unattractive people have much better chances to find a partner. The marriages that we read about in historical accounts that are based on prudence and family arrangement make more sense when we realize that basing marriage on mutual attraction leads so many—both men and women—to be unsatisfied with the outcome, since most women find most men unattractive. All of the world’s great religious traditions have extolled chastity as a great virtue and taught that there are higher goals than sexual satisfaction—these teachings add meaning to the otherwise “poor” lives of the majority of people who are regarded as perpetually unattractive.

Even in centuries-old fairy tales like The Frog Prince and Beauty and the Beast, we see our culture’s attempt to come to terms with the paradigm of a woman regarded as attractive pairing with a man who she regards as unattractive. The differing Gini coefficients faced by men and women guarantee that this will be a common—or even the most common—romantic pairing in a monogamous culture. In these fairy tales (depending on which version you read), the beautiful woman first accepts or even loves the hideous man. The sincere love of a woman transforms the unattractive man into something better: more handsome, richer, and royal. Allegorically, these stories are trying to show men and women a way to relate one-on-one even though most women find most men unattractive; they are trying to show that sincerely offered love, and love based on something other than sexual attraction, can transmute ugliness to beauty and make even a relationship with unmatching attractiveness levels successful.

[...]

The result of these cultural changes is that the highly unequal social structures of the prehistoric savanna homo sapiens are reasserting themselves, and with them the dissatisfactions of the unattractive “sexually underprivileged” majority are coming back. It is ironic that the progressives who cheer on the decline of religion and the weakening of “outdated” institutions like monogamy are actually acting as the ultimate reactionaries, returning us to the oldest and most barbaric, unequal animal social structures that have ever existed. In this case it is the conservatives who are cheering for the progressive ideal of “sexual income redistribution” through a novel invention: monogamy.

[...]

Danish data on the minimum wage: The hourly wage jumps up by 40pct at the discontinuity of minimum wage rules; employment falls by 33pct and total input of hours decreases by 45pct

Do Lower Minimum Wages for Young Workers Raise Their Employment? Evidence From a Danish Discontinuity. Claus Thustrup Kreiner,  Daniel Reck and  Peer Ebbesen Skov. Review of Economics and Statistics, March 04, 2019. https://doi.org/10.1162/rest_a_00825


Abstract : We estimate the impact of youth minimum wages on youth employment by exploiting a large discontinuity in Danish minimum wage rules at age 18, using monthly payroll records for the Danish population. The hourly wage jumps up by 40 percent at the discontinuity. Employment falls by 33 percent and total input of hours decreases by 45 percent, leaving the aggregate wage payment almost unchanged. We show theoretically how the discontinuity may be exploited to evaluate policy changes. The relevant elasticity for evaluating the effect on youth employment of changes in their minimum wage is in the range 0.6-1.1.

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Minimumwages,setbylaworbycollectiveagreement,existin3/4ofOECDcountries(OECD,2015).IntheUnitedStates,minimumwageincreaseshavebeenhighonthepolicyagendainrecentyears,motivatedinpartbymanystudies ndingsmallemploymente ectsofminimumwagehikes.Somecities(e.g.LA,Seattle)andthestateofCaliforniahaverecentlylegislatedaminimumwagerateof$15,amuchhigherratethanthecurrentFederalminimumof$7.25perhour.Ashigherminimumwagesbecomecommon,policy-makersareconfrontedwithasecondquestion:shouldahighminimumwageapplytoeveryone?Inparticular,shoulditapplytoyoungerworkers?Youngworkersarelow-skilledandenterthelabormarketwithoutworkexperience,whichmakethempotentiallyvulnerabletohighminimumwages.ManyUSstatesandcities,includingCalifornia,Minnesota,SouthDakota,KansasCityandDesMoines,whichhaverecentlyincreasedtheirminimumwage,havedebated,andattimeslegislatedorplacedontheballot,anexceptionforyoungerworkers(Kreiner,ReckandSkov,2018).Similarly,manyEuropeancountrieswithhighminimumwageshavelowerminimumwagesforyoungerworkers(OECD,2015).Themainquestionweseektoansweris:Holdingtheadultminimumwage xedatagivenlevel,whatisthee ectofachangeintheminimumwageapplyingtoyoungworkersontheiremployment?ExistingUSevidenceandmostotherevidencecannotanswerthisquestionasitstudieschangesinaglobalminimumwageratherthanayouth-speci cminimumwage.Forexample,theelasticityofyouthemploymentwithrespecttotheminimumwageof0.075reportedbytheUSCongressionalBudgetO ceisbasedonchangesinaglobalminimumwage(CongressionalBudgetO ce,2014).OurempiricalevidenceexploitsalargediscontinuityinDanishminimumwagerulesoccurringwhenworkersreachage18.TheDanishcontextisidealforourpurpose.Denmarkhaslargechangesinminimumwagerateswhenworkersturn18(andnochangeatanyotherages)andahighadultminimumwagecomparabletothe$15levelinplaceinCaliforniaandunderconsiderationmoregenerallyintheUS.1Furthermore,wecanstudythee ectoftheagediscontinuityusinghigh-qualitymonthlydataonwages,employment,andhoursworkedfortheentireDanishworkforce.Ourmain ndingsarecontainedinFigure1,whichshowsthattheagediscontinuityinminimumwageshasalargeimpactonemploymentaroundage18.Weexplainthedetailsbehindtheconstructionofthedataset,measurementissues,andthesourceofidentifyingvariationbelow.Figure1aplotsaveragehourlywages,imputedbydividingreportedmonthlywagesbyreportedhoursworkedforeachindividual,asafunctionofage(measuredinmonths),fortwoyearsbeforeandaftertheir18thbirthday.TheaveragehourlywageratejumpsbyDKK46,orabout$7,correspondingtoa40percentchangeinthewagelevelatage18computedusingthemidpointmethod.Figure1bplotstheshareofindividualswhoareemployedbymonthlyage.Weobservea15percentage-pointdecreaseinemploymentatage18,whichcorrespondstoa33percentdecreaseinthenumberofemployedindividuals.Forcomparison,notethatthewageandemploymentratesdevelopsmoothlywhenindividualsturn17and19yearsold,andthatittakestwoyearsbeforetheemploymentrateisbackatthelevelitattainsjustbeforethejumpdownwardsatage18.Subsequentanalysesrevealthatthedropinemploymentwhenworkersturn18re ectsadiscretechangeinjoblosswithoutanydiscretechangeinhiring(wedoobserveasmallanticipatoryslow-downinhiringasworkersapproachage18).Asimpleestimateoftheemploymentelasticity(theextensivemargin)withrespecttothewagechangeisobtainedbydividingtheestimatesofthepercentagechangesinemploymentandhourlywage.Thisgivesanelasticityaround-0.8.Whenlookingattotalhoursworked(theintensiveandextensivemargin),we ndanelasticityof-1.1,indicatingthatmostoftheresponseoccursalongtheextensivemargin.Recallthataunitelasticitywouldimplythattheaveragewagepaymentofallindividuals,includingbothemployedandnon-employedworkers,shouldstayunchangedwhenthewagerateisraised,becauseitse ectontheaveragewagepaymentisfullyo setbyadecreaseinemployment.Consistentwiththisreasoning,we ndnearlynoe ectonaverageearnings.Thisprovidesalternativeevidenceofatotalhoursworkedelasticityaround-1,notdependingonthemeasurementofhourlywages.Weuseeconomictheorytomotivateourempiricalspeci cationandtoshowthat,un-derreasonableassumptions,theestimatedemploymentelasticitymaybeusedtocalculatethee ectonyouthemploymentofachangeintheminimumwagespeci callyforyoungerworkers.First,weprovideasimplemodelinwhichtheelasticityweestimateusingtheagediscontinuityisexactlythesameastheelasticityneededforthedesiredcounterfactualpolicyanalysis.Inthemodel,workershaveexogenous,heterogeneousproductivitiesandarehirediftheirproductivityexceedstheminimumwage(correspondingtoahorizontaldemandforlabormeasuredine ectiveunits).Inthissimplesetting,cross-workere ectsarezero.Accordingtothisbasicmodel,wemaycomputetheconsequencesofincreasingtheminimumwageforyoungworkers(thoseunder18)uptothehigherlevelapplyingtoadultsbyusingourestimatedelasticity.Thiscalculationgivesa15percentagepointdropinyouthemployment,correspondingto33percentofinitialemployment.Amodelwithdownwardslopinglabordemandforlow-skilledworkwouldinsteadsug-gestthattherearecross-workere ects,implyingthatahigheryouthminimumwagemayincreaselow-skilledadultemployment.Suchcross-workere ectsposeapotentialthreattotheidenti cationstrategy.However,weshowthatonecanobtainalowerboundfortheyouthemploymentelasticitybyconsideringtheextremecaseofa xeddemandforlow-skilledwork(implyingthattheemploymente ectfromthediscontinuityanalysisisentirelydrivenbycross-workere ects).Thelowerboundmaybecomputedfromourestimatedelasticityandthewageshareofyoungerworkersinthelow-skilledlabormarket.Wethuscomputethewageshareoflow-skilledworkersunderage18,usingvariousde nitionsofthelow-skilledworkersthatareperfectlysubstitutableforworkersunderage18.Inthemostex-tremeofthesecalculations,inwhichonlyworkersaged18-19aredeemedtobe low-skilled substitutesforworkersunderage18,thelowerboundoftheyouthemploymentelasticitybecomes0.6.Increasingtheminimumwageforyoungworkersuptothelevelofadultwork-erswouldthendecreaseemploymentbyatleast11percentagepoints,or25percentofyouthemployment,whichisstillasubstantialemploymente ect.Wealsoembedoursimplemodelinanequilibriumsearchframeworkincorporatingdy-namicsforaging.Inaccordancewiththeempiricalevidence,themodelpredictsthatthedropinemploymentatage18re ectsadiscretechangeinjobloss,ratherthanadiscretechangeinhiring.Themodelalsopredictsspillovere ectsofanincreaseintheyouthminimumwageonadultemployment,butinthiscasethesignofthespillovere ectisambiguous.Inanycase,ourelasticityestimateisagainagoodapproximationofthee ectonyouthemploymentifyoungworkersconstitutealowshareoftotallow-skilledemployment."Additionalanalysisdemonstratesthatourinterpretationoftheempiricalresultsiscor-rectandstudiesheterogeneityinemploymente ectsacrossworkers.Mostimportantly,wedemonstratethatotherpoliciesthatchangewhenworkersturn18,suchastheeligibilityforDanishsocialwelfareprograms,arenotdrivingourresults.Wealsoshowthatthesizeoftheemploymentelasticityisonlyslightlylargerforworkersoflowerability,asproxiedbyschoolGPAin9thgradeortheincomeofparents.Finally,weprovidesuggestiveevidencethatjoblosseshavepersistente ectsonworkers.Twoyearsaftertheworkers'18thbirthdays,theemploymentrateisabout15percentagepointslowerforworkersloosingtheirjobatage18relativetoworkerswhokepttheirjob.Ourpapercontributestothesizableliteratureonminimumwagesandemployment,asreviewedinCardandKrueger(2015)andNeumarkandWascher(2008).Mostofthislit-eraturestudiesemploymente ectsofglobalminimumwagehikes,whileourfocusisonthee ectsofage-speci cminimumwages,whereevidenceislimited.NeumarkandWascher(2004)showthatcountrieswithhighminimumwagesalsotendtohavehighyouthunem-ployment,but,consistentwithourresults,thiscorrelationisweakerwhencountrieshavealowerminimumwageforyoungworkers.Onenewstudy,Kabátek(2015),analyzesanagediscontinuity,inthiscaseseveralsmallagediscontinuitiesinDutchminimumwages.Theobservedchangesinwagesandemploymentaroundworkers'birthdaysarethereforemuchsmallerandmoredi usethaninourcontext.Theimpliedemploymentelasticityisslightlysmallerthanours.Combiningonelargediscontinuitywiththoroughtheoreticalrea-soningandrichdataallowsustointerpretoure ectsinmoredetailandtoperformcrediblecounterfactualpolicyexercises.Ourresultsmaymakesomereadersconcernedabouttheimpactofglobalincreasesintheminimumwageonemployment,asubjectofintenseongoingdebate.SeveralDDstudies,mostfamouslyCardandKrueger(1994), ndlittletonoimpactofglobalminimumwagehikesonemployment.2Ourestimatesofthee ectofanincreaseinminimumwagesonemploymentaremuchlargerthanthosetypicallyestimatedforglobalminimumwagehikesusingDDdesigns.Therearethreefactorsthatcouldexplainthisdi erence.First,estimatesinexistingDDstudiesmightbeattenuatedbyshort-runfrictions(Baker,BenjaminandStanger,1999;Sorkin,2015;MeerandWest,2015;Aaronson,FrenchandSorkin,2017),whicharenotrelevantinoursetting.Second,ourstudyisbasedonahighminimumwagelevelcomparedtomostpreviousstudies.Minimumwagesmaynotbebindingatlowlevelsand,ifbinding,theymayincreaseemploymentduetolabormarketimperfections(Manning,2003).Third,ourresultsmightbedrivenbycross-agesubstitutionratherthanpurelyadisemploymente ectoftheminimumwage.The rsttwoofthesefactorssuggestthatourresultsaddressshortcomingsoftheexistingliteratureonglobalminimumwagehikes.However,thethirdisanimportantlimitationofourstudy'sabilitytospeaktothisdebate.Cross-agesubstitutionwouldimplythatweestimatehigheremploymentelasticityinoursettingthanwouldbeseenwithaglobalminimumwagechange.Theextenttowhichthisparticularfactordrivesourlargeestimatedeterminestheextenttowhichreadersshouldupdatetheirbeliefsabouttheemploymente ectsofglobalminimumwagehikes.Onthewhole,therefore,itisdi culttoimaginethatour ndingswillmakereaderslessconcernedaboutemploymente ectsofhighminimumwages,butwhetherandtowhatextenttheyshouldbemoreconcerneddependsonwhattheybelieveaboutthemechanismsbehindourresults.Ourworkalsocontributestothetheoreticalliteratureonthee ectsofminimumwages.MuchoftheliteratureattemptstorationalizeearlyDDstudies ndingsmallorevenpositiveemploymente ectsusingmodelswithmonopsonypowerorotherlabormarketimperfections(RebitzerandTaylor,1995;Manning,2003;Flinn,2006).Our ndingsoflarge,negativeemploymente ectsaroundage-basedminimumwagesalignbetterwithbindingminimumwagesinacompetitivelabormarketmodel.Theminimumwageliteratureoftenassumesthatworkers/jobsarehomogenouswithadownwardslopinglabordemandduetoade-creasingmarginalproductoflabor.Thisisincontrasttotheoptimalincometaxliteraturenormallyassumingheterogeneousproductivities(Mirrlees,1971).Ourexplanationsoftheempirical ndingsarebasedontheorywithheterogeneousproductivities,similartootherrecentminimumwageresearch(ClemensandWither,2016;ClemensandStrain,2017).Thefactthatsomeindividualslosetheirjobwhentheyturn18,whileotherskeeptheirjob,stronglysuggeststhatheterogeneousproductivityisanimportantaspectofthelow-skilledlabormarket.

Suppressing thoughts often leads to a “rebound” effect; unpleasant thoughts were more prone to rebound in dreams than pleasant ones; may be support for an emotion‐processing theory of dream function

The effects of dream rebound: evidence for emotion‐processing theories of dreaming. Josie Malinowski, Michelle Carr, Christopher Edwards , Anya Ingarfill, , Alexandra Pinto. Journal of Sleep Research, March 12 2019. https://doi.org/10.1111/jsr.12827

Abstract: Suppressing thoughts often leads to a “rebound” effect, both in waking cognition (thoughts) and in sleep cognition (dreams). Rebound may be influenced by the valence of the suppressed thought, but there is currently no research on the effects of valence on dream rebound. Further, the effects of dream rebound on subsequent emotional response to a suppressed thought have not been studied before. The present experiment aimed to investigate whether emotional valence of a suppressed thought affects dream rebound, and whether dream rebound subsequently influences subjective emotional response to the suppressed thought. Participants (N = 77) were randomly assigned to a pleasant or unpleasant thought suppression condition, suppressed their target thought for 5 min pre‐sleep every evening, reported the extent to which they successfully suppressed the thought, and reported their dreams every morning for 7 days. It was found that unpleasant thoughts were more prone to dream rebound than pleasant thoughts. There was no effect of valence on the success or failure of suppression during wakefulness. Dream rebound and successful suppression were each found to have beneficial effects for subjective emotional response to both pleasant and unpleasant thoughts. The results may lend support for an emotion‐processing theory of dream function.