Search Results
Working Paper
How low can you go? Charity reporting when donations signal income and generosity
Consistent with nonprofit fundraising practices, donation visibility has been shown to increase giving. While concern for status is used to explain this response, the authors argue that this explanation relies on the assumption that giving signals only income or generosity. When giving signals both attributes overall status need not increase in donations, and donation-visibility may be harmful when individuals prefer to be perceived as poor-and-generous rather than rich-and-stingy. Using an experiment the authors find that both income-status and generosity-status concerns affect behavior. ...
Working Paper
Informal Work and Official Employment Statistics: What’s Missing?
Using eight consecutive waves of the Survey of Informal Work Participation (SIWP) spanning 2015 through 2022, we investigate informal “gig” work participation in the United States— broadly defined to include online and offline activities—and its implications for the measurement of employment. Our results suggest that employment rates among US household heads were consistently understated in the Current Population Survey (CPS). Under conservative estimates, we find that the employment-to-population ratio would have been 0.25 to 1.1 percentage points higher over the 2015–2022 period ...
Working Paper
Investment decisions and negative interest rates
While the current European Central Bank deposit rate and 2-year German government bond yields are negative, the U.S. 2-year government bond and deposit rates are positive. Insights from Prospect Theory suggest that this situation may lead to an excess flow of funds into the United States. Yet the environment of negative interest rates is different from the environment considered in Prospect Theory and subsequent literature, since decisions are framed in terms of rates of return rather than absolute amounts and the task involves the allocation of funds rather than a choice or a pricing task as ...
Report
Changing patterns in informal work participation in the United States 2013–2015
In light of the weak labor market conditions in the United States from 2008 until recently, one might have expected that participation in alternative income-generating activities, such as informal side-jobs, would have increased during that period. By the same logic, participation in informal work should have declined more recently, as conditions in the formal labor market improved. However, recent technological innovations have created a number of new opportunities for engaging in informal work. Such innovations may have promoted structural increases in informal work participation; if so we ...
Working Paper
Competitive incentives: working harder or working smarter?
Almost all jobs require a combination of cognitive effort and labor effort. This paper focuses on the effect that competitive incentive schemes have on the chosen combination of these two types of efforts. We use an experimental approach to show that competitive incentives may induce agents to work harder but not necessarily smarter. This effect was stronger for women.
Briefing
Asymmetric responses to tax-induced changes in personal income: the 2013 payroll tax hike versus anticipated 2012 tax refunds
As part of the Boston Earned Income Tax Credit Coalition's free tax preparation service offered at the Boston Roxbury Resource Center between January and April 2013, 945 low-to-moderate income individuals were asked about payroll tax changes, financial planning, and their personal characteristics. Using these survey responses, the authors calculated how these individuals planned to respond to the payroll tax hike and their tax refund. The results show that their marginal propensity to consume (MPC) out of the tax refund is 30 percentage points lower than their spending reaction to the tax ...
Working Paper
Seeds to succeed: sequential giving to public projects
The public phase of a capital campaign is typically launched with the announcement of a large seed donation. Andreoni (1998) argues that such a fundraising strategy may be particularly effective when funds are being raised for projects that have fixed production costs. The reason is that the introduction of fixed costs may give rise to both positive and zero provision outcomes, and absent announcements of a large seed gift, donors may get stuck in an equilibrium that fails to provide a desirable public project. Interestingly, Andreoni (1998) demonstrates that announcing seed money can help ...
Working Paper
Relative pay and labor supply
The authors use a labor supply; relative pay; experimental economics laboratory experiment to examine the impact of relative wages on labor supply. They test the hypothesis that, ceteris paribus, making a given wage high (low) relative to other wage levels will lead to an increase (decrease) in labor supply. They find that labor supply does respond significantly to relative pay, and in the expected direction. However, when a strong enough reason is given for the relative low pay, this difference disappears.
Working Paper
Affective decision making: a theory of optimism bias
Optimism bias is inconsistent with the independence of decision weights and payoffs found in models of choice under risk, such as expected utility theory and prospect theory. Hence, to explain the evidence suggesting that agents are optimistically biased, we propose an alternative model of risky choice, affective decision making, where decision weights?which we label affective or perceived risk?are endogenized. Affective decision making (ADM) is a strategic model of choice under risk where we posit two cognitive processes?the "rational" and the "emotional" process. The two processes ...
Discussion Paper
A psychological perspective of financial panic
In spite of large number of financial crises, often depicted as episodes of financial panic, the notion of panic in financial markets is not very well understood. Many have argued that in order to understand financial crises, and in particular panic events, we need to go beyond classic economic arguments. This paper is an effort in that direction, in which we attempt to give a psychological account of panic and of panic in financial markets in particular, by discussing uncertainty, the desire for predictability and control, the illusion of control, and confidence. We suggest how one might ...