Despite multiple court cases and repeated efforts at reform, there are still significant concerns about the equity and the adequacy in Connecticut’s public K–12 education funding. One vital component of any attempt to reform education finance is a methodologically rigorous evaluation of what it would cost school districts across the state to achieve target performance standards given their student characteristics. This report addresses that need, evaluating the equity and the adequacy of school spending in Connecticut based on education costs. Different from actual school expenditure, a district’s education cost is an estimation based on its cost factors that are outside the direct control of local officials at any given point in time;efficiency levels are held constant across school districts in the estimation. This report finds large disparities in education costs due to differences among school districts in cost factors. It also finds that, despite existing state aid programs, disparities in cost-adjusted spending across the state remain large. Spending in some districts is well below the levels needed to achieve common performance goals. Among the specific findings of this report is that in the last year for which data were analyzed, the average costs of school districts with the lowest socioeconomic status and highest level of student need were 62 percent greater than those of districts with the highest socioeconomic status and the lowest level of student need. When this report holds every district’s efficiency at the statewide average level, it finds that more than half of Connecticut’s public school students attended districts where spending was insufficient to meet the “predicted costs” to achieve the statewide average student test performance level. A direct, negative consequence of spending inadequacy is student underperformance relative to the common student performance target. This report recommends that the state consider adopting the cost measure as the basis of a new, scientifically grounded, equitable, and adequate formula that allocates more state aid to districts with higher costs. It also suggests that many districts need to increase their spending to meet their predicted costs and close the gap between student performance and the common goal. The exact amount of the additional spending needed partly depends on the state’s choices for the student performance target and the common level of district efficiency. For example, this report estimates that in the last year analyzed, with district efficiency held at the statewide average level, an additional $940 million, or an increase of 12.3 percent from statewide public K–12 school spending, would have been needed to fully fund the predicted costs required to achieve the statewide average student test performance level in every district. While the state and local governments now face great fiscal difficulties induced by the COVID-19 pandemic, they should remain committed to the inve
{"title":"Measuring Disparities in Cost and Spending across Connecticut School Districts","authors":"Bo Zhao, Nicholas Chiumenti","doi":"10.2139/ssrn.3832289","DOIUrl":"https://doi.org/10.2139/ssrn.3832289","url":null,"abstract":"Despite multiple court cases and repeated efforts at reform, there are still significant concerns about the equity and the adequacy in Connecticut’s public K–12 education funding. One vital component of any attempt to reform education finance is a methodologically rigorous evaluation of what it would cost school districts across the state to achieve target performance standards given their student characteristics. This report addresses that need, evaluating the equity and the adequacy of school spending in Connecticut based on education costs. Different from actual school expenditure, a district’s education cost is an estimation based on its cost factors that are outside the direct control of local officials at any given point in time;efficiency levels are held constant across school districts in the estimation. This report finds large disparities in education costs due to differences among school districts in cost factors. It also finds that, despite existing state aid programs, disparities in cost-adjusted spending across the state remain large. Spending in some districts is well below the levels needed to achieve common performance goals. Among the specific findings of this report is that in the last year for which data were analyzed, the average costs of school districts with the lowest socioeconomic status and highest level of student need were 62 percent greater than those of districts with the highest socioeconomic status and the lowest level of student need. When this report holds every district’s efficiency at the statewide average level, it finds that more than half of Connecticut’s public school students attended districts where spending was insufficient to meet the “predicted costs” to achieve the statewide average student test performance level. A direct, negative consequence of spending inadequacy is student underperformance relative to the common student performance target. This report recommends that the state consider adopting the cost measure as the basis of a new, scientifically grounded, equitable, and adequate formula that allocates more state aid to districts with higher costs. It also suggests that many districts need to increase their spending to meet their predicted costs and close the gap between student performance and the common goal. The exact amount of the additional spending needed partly depends on the state’s choices for the student performance target and the common level of district efficiency. For example, this report estimates that in the last year analyzed, with district efficiency held at the statewide average level, an additional $940 million, or an increase of 12.3 percent from statewide public K–12 school spending, would have been needed to fully fund the predicted costs required to achieve the statewide average student test performance level in every district. While the state and local governments now face great fiscal difficulties induced by the COVID-19 pandemic, they should remain committed to the inve","PeriodicalId":246231,"journal":{"name":"Federal Reserve Bank of Boston Research Paper Series","volume":"1 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2021-04-22","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"122829249","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Access to health care is a major concern across the northern New England states?Maine, New Hampshire, and Vermont?where rising operating costs and population loss threaten the stability of hospitals and other medical facilities that serve their surrounding rural communities. New analysis of financial data shows that many rural hospitals are operating at losses that are predictive of financial distress or even closure. Consequently, the communities served by these hospitals may be at risk of losing the benefits they provide to public health and the local economy. Addressing the financial health of medical facilities in rural areas poses a complicated challenge for policymakers working to sustain or revitalize the economies of these communities. This report reviews recent data on hospital profitability and explores health care from a geographic perspective, looking at how a community?s distance from a hospital or other medical facility affects the health and well-being of residents and the local economy.
{"title":"Declining Access to Health Care in Northern New England","authors":"Riley Sullivan","doi":"10.2139/ssrn.3499229","DOIUrl":"https://doi.org/10.2139/ssrn.3499229","url":null,"abstract":"Access to health care is a major concern across the northern New England states?Maine, New Hampshire, and Vermont?where rising operating costs and population loss threaten the stability of hospitals and other medical facilities that serve their surrounding rural communities. New analysis of financial data shows that many rural hospitals are operating at losses that are predictive of financial distress or even closure. Consequently, the communities served by these hospitals may be at risk of losing the benefits they provide to public health and the local economy. Addressing the financial health of medical facilities in rural areas poses a complicated challenge for policymakers working to sustain or revitalize the economies of these communities. This report reviews recent data on hospital profitability and explores health care from a geographic perspective, looking at how a community?s distance from a hospital or other medical facility affects the health and well-being of residents and the local economy.","PeriodicalId":246231,"journal":{"name":"Federal Reserve Bank of Boston Research Paper Series","volume":"54 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2019-04-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"131263386","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
We empirically investigate the effect that relationship lending has on the availability and pricing of interbank liquidity. Our analysis is based on a daily panel of unsecured overnight loans between 1,079 distinct German bank pairs from March 2006 to November 2007, a period that includes the 2007 liquidity crisis that marked the beginning of the 2007/08 global financial crisis. We find that (i) relationship lenders are more likely to provide liquidity to their closest borrowers, (ii) particularly opaque borrowers obtain liquidity at lower rates when borrowing from their relationship lenders, and (iii) during the crisis, relationship lenders provided cheaper loans to their closest borrowers. Our results hold after controlling for search frictions as well as a large set of (time-varying) bank and bank-pair control variables and fixed effects. While we find some indication that lending relationships help banks reduce search frictions in the over-the-counter interbank market, our results establish that bank-pair relationships have a significant impact on interbank credit availability and pricing due to mitigating uncertainty about counterparty credit quality.
{"title":"Relationship Lending in the Interbank Market and the Price of Liquidity","authors":"Falk Bräuning, Falko Fecht","doi":"10.1093/ROF/RFW042","DOIUrl":"https://doi.org/10.1093/ROF/RFW042","url":null,"abstract":"We empirically investigate the effect that relationship lending has on the availability and pricing of interbank liquidity. Our analysis is based on a daily panel of unsecured overnight loans between 1,079 distinct German bank pairs from March 2006 to November 2007, a period that includes the 2007 liquidity crisis that marked the beginning of the 2007/08 global financial crisis. We find that (i) relationship lenders are more likely to provide liquidity to their closest borrowers, (ii) particularly opaque borrowers obtain liquidity at lower rates when borrowing from their relationship lenders, and (iii) during the crisis, relationship lenders provided cheaper loans to their closest borrowers. Our results hold after controlling for search frictions as well as a large set of (time-varying) bank and bank-pair control variables and fixed effects. While we find some indication that lending relationships help banks reduce search frictions in the over-the-counter interbank market, our results establish that bank-pair relationships have a significant impact on interbank credit availability and pricing due to mitigating uncertainty about counterparty credit quality.","PeriodicalId":246231,"journal":{"name":"Federal Reserve Bank of Boston Research Paper Series","volume":"67 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2016-07-14","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"122491043","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
This report considers the New England states’ past preparedness for revenue downturns caused by business cycle fluctuations and assesses policy actions that could promote greater fiscal stability in the future. During the recessions in 2001 and in 2007-2009, state governments experienced an unusually high degree of fiscal stress partially due to the increased sensitivity of their revenues to the business cycle: after periods of strong growth, many states saw their tax receipts fall steeply. Rainy day funds are one mechanism by which states can set aside funds to weather these cycles. However, in setting the size of their rainy day funds, most states follow guidelines that do not reflect both the magnitude of business cycles and the variation in how individual states’ revenues respond to business cycles. As a result, state rainy day fund balances have generally been insufficient to compensate for the revenue shortfalls associated with economic downturns. The research finds that the rainy day fund caps adopted by most of the states in New England — most notably by Connecticut, Rhode Island, and Vermont — are lower than they would have needed to be to avoid having to raise taxes and fees or reduce expenditures during a typical downturn. The authors consider how states might strengthen state rainy day funds to support greater fiscal stability and discuss the role of tax reform in promoting the same goal.
{"title":"Achieving Greater Fiscal Stability: Guidance for the New England States","authors":"Yolanda K. Kodrzycki, Bo Zhao","doi":"10.2139/ssrn.2671800","DOIUrl":"https://doi.org/10.2139/ssrn.2671800","url":null,"abstract":"This report considers the New England states’ past preparedness for revenue downturns caused by business cycle fluctuations and assesses policy actions that could promote greater fiscal stability in the future. During the recessions in 2001 and in 2007-2009, state governments experienced an unusually high degree of fiscal stress partially due to the increased sensitivity of their revenues to the business cycle: after periods of strong growth, many states saw their tax receipts fall steeply. Rainy day funds are one mechanism by which states can set aside funds to weather these cycles. However, in setting the size of their rainy day funds, most states follow guidelines that do not reflect both the magnitude of business cycles and the variation in how individual states’ revenues respond to business cycles. As a result, state rainy day fund balances have generally been insufficient to compensate for the revenue shortfalls associated with economic downturns. The research finds that the rainy day fund caps adopted by most of the states in New England — most notably by Connecticut, Rhode Island, and Vermont — are lower than they would have needed to be to avoid having to raise taxes and fees or reduce expenditures during a typical downturn. The authors consider how states might strengthen state rainy day funds to support greater fiscal stability and discuss the role of tax reform in promoting the same goal.","PeriodicalId":246231,"journal":{"name":"Federal Reserve Bank of Boston Research Paper Series","volume":"111 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2015-10-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"127320216","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
A number of countries have implemented faster payment services that allow consumers and businesses to rapidly transfer money between bank accounts. These services compete with slower, existing payment services. In 2008, the United Kingdom implemented its Faster Payments Service (FPS) at a cost of less than ₤200 million (.014 percent of U.K. GDP, or $307 million) spread over seven years, plus investment costs borne by each participating bank to connect to the FPS. This paper examines the economic cost-benefit analysis underlying the U.K. FPS investment decision and describes the subsequent diffusion and use of FPS through 2013. The paper also assesses the effects that FPS likely had on the rest of the U.K. payment system and highlights key unanswered questions for future research. Based on this U.K. experience, the paper describes implications for the U.S. payment system, which the Federal Reserve has proposed to make faster in recent policy announcements.
{"title":"Costs and Benefits of Building Faster Payment Systems: The U.K. Experience and Implications for the United States","authors":"C. Greene, Marc Rysman, Scott D. Schuh, Oz Shy","doi":"10.2139/SSRN.2564144","DOIUrl":"https://doi.org/10.2139/SSRN.2564144","url":null,"abstract":"A number of countries have implemented faster payment services that allow consumers and businesses to rapidly transfer money between bank accounts. These services compete with slower, existing payment services. In 2008, the United Kingdom implemented its Faster Payments Service (FPS) at a cost of less than ₤200 million (.014 percent of U.K. GDP, or $307 million) spread over seven years, plus investment costs borne by each participating bank to connect to the FPS. This paper examines the economic cost-benefit analysis underlying the U.K. FPS investment decision and describes the subsequent diffusion and use of FPS through 2013. The paper also assesses the effects that FPS likely had on the rest of the U.K. payment system and highlights key unanswered questions for future research. Based on this U.K. experience, the paper describes implications for the U.S. payment system, which the Federal Reserve has proposed to make faster in recent policy announcements.","PeriodicalId":246231,"journal":{"name":"Federal Reserve Bank of Boston Research Paper Series","volume":"6 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2014-10-10","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"114159954","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Lack of data availability has limited research on disparities in credit conditions in different income areas. This report uses a unique dataset from a credit reporting agency to describe credit conditions in Massachusetts in low- and moderate-income (LMI) and middle- and high-income (MUI) census tracts using a unique and nationally representative database of all individuals who have a credit history. The analysis highlights the differences in the percentage of individuals with credit accounts, median balances, monthly payments, delinquency rates, and credit scores in 2006 and 2012. The report shows that the percentage of individuals with active accounts decreased from 2006 to 2012. In particular, the number of consumers with credit cards was significantly lower in 2012 than in 2006 in LMI neighborhoods. Across all types of credit analyzed, delinquency rates were twice as high in LMI tracts than in MUI neighborhoods. Overall, mortgage delinquency rates increased fourfold from 2006 to 2012. Among consumers with credit records, student loans were more prevalent in LMI areas than MUI areas and had the highest delinquency rate of all loans in both income categories. The report shows that 30 percent of individuals with credit records living in LMI areas had subprime credit scores in 2012.
{"title":"Credit Conditions by Neighborhood Income: The Picture in Massachusetts","authors":"A. Muñoz","doi":"10.2139/SSRN.2346319","DOIUrl":"https://doi.org/10.2139/SSRN.2346319","url":null,"abstract":"Lack of data availability has limited research on disparities in credit conditions in different income areas. This report uses a unique dataset from a credit reporting agency to describe credit conditions in Massachusetts in low- and moderate-income (LMI) and middle- and high-income (MUI) census tracts using a unique and nationally representative database of all individuals who have a credit history. The analysis highlights the differences in the percentage of individuals with credit accounts, median balances, monthly payments, delinquency rates, and credit scores in 2006 and 2012. The report shows that the percentage of individuals with active accounts decreased from 2006 to 2012. In particular, the number of consumers with credit cards was significantly lower in 2012 than in 2006 in LMI neighborhoods. Across all types of credit analyzed, delinquency rates were twice as high in LMI tracts than in MUI neighborhoods. Overall, mortgage delinquency rates increased fourfold from 2006 to 2012. Among consumers with credit records, student loans were more prevalent in LMI areas than MUI areas and had the highest delinquency rate of all loans in both income categories. The report shows that 30 percent of individuals with credit records living in LMI areas had subprime credit scores in 2012.","PeriodicalId":246231,"journal":{"name":"Federal Reserve Bank of Boston Research Paper Series","volume":"48 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2013-10-28","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"121455455","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Analysis of oil-price movements is once again an important feature of economic policy discussions. To provide some background for this analysis, this paper summarizes a conference on the oil market held at the Federal Reserve Bank of Boston in June 2010. Four cross-cutting themes emerged from this symposium, which included scientific experts, market participants, business leaders, academics, and policymakers. First, the decline in real oil prices that followed the 1970s' oil shocks is unlikely to be repeated today, because there are fewer ways in which oil-importing countries can reduce oil demand or expand domestic supplies in response to higher prices. The second lesson of the conference, however, is that any prediction about oil markets is highly uncertain, a fact illustrated by the wide confidence intervals that result when futures-market data are used to quantify forecast uncertainty. Third, there is little consensus on whether new financial investment in commodity index funds has increased the volatility of oil prices. Finally, changes in oil prices still have large effects on the economy. Some research suggests that the rapid run-up in oil prices in 2007–08 may have significantly weakened the U.S. economy in the early stages of the Great Recession.
{"title":"Oil and the Macroeconomy in a Changing World: A Conference Summary","authors":"Christopher L. Foote, Jane Sneddon-Little","doi":"10.2139/ssrn.1863963","DOIUrl":"https://doi.org/10.2139/ssrn.1863963","url":null,"abstract":"Analysis of oil-price movements is once again an important feature of economic policy discussions. To provide some background for this analysis, this paper summarizes a conference on the oil market held at the Federal Reserve Bank of Boston in June 2010. Four cross-cutting themes emerged from this symposium, which included scientific experts, market participants, business leaders, academics, and policymakers. First, the decline in real oil prices that followed the 1970s' oil shocks is unlikely to be repeated today, because there are fewer ways in which oil-importing countries can reduce oil demand or expand domestic supplies in response to higher prices. The second lesson of the conference, however, is that any prediction about oil markets is highly uncertain, a fact illustrated by the wide confidence intervals that result when futures-market data are used to quantify forecast uncertainty. Third, there is little consensus on whether new financial investment in commodity index funds has increased the volatility of oil prices. Finally, changes in oil prices still have large effects on the economy. Some research suggests that the rapid run-up in oil prices in 2007–08 may have significantly weakened the U.S. economy in the early stages of the Great Recession.","PeriodicalId":246231,"journal":{"name":"Federal Reserve Bank of Boston Research Paper Series","volume":"76 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2011-06-13","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"127514610","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Markus M. Möbius, M. Niederle, Paul Niehaus, Tanya Rosenblat
We use a series of experiments to understand whether and how people’s beliefs about their own abilities are biased relative to the Bayesian benchmark and how these beliefs then affect behavior. We find that subjects systematically and substantially overweight positive feedback relative to negative (asymmetry) and also update too little overall (conservatism). These biases are substantially less pronounced in an ego-free control experiment. Updating does retain enough of the structure of Bayes’ rule to let us model it coherently in an optimizing framework, in which, interestingly, asymmetry and conservatism emerge as complementary biases. We also find that exogenous changes in beliefs affect subjects’ decisions to enter into a competition and do so similarly for more and less biased subjects, suggesting that people cannot “undo” their biases when the time comes to decide. This paper was accepted by Axel Ockenfels, behavioral economics and decision analysis.
{"title":"Managing Self-Confidence: Theory and Experimental Evidence","authors":"Markus M. Möbius, M. Niederle, Paul Niehaus, Tanya Rosenblat","doi":"10.2139/ssrn.2285056","DOIUrl":"https://doi.org/10.2139/ssrn.2285056","url":null,"abstract":"We use a series of experiments to understand whether and how people’s beliefs about their own abilities are biased relative to the Bayesian benchmark and how these beliefs then affect behavior. We find that subjects systematically and substantially overweight positive feedback relative to negative (asymmetry) and also update too little overall (conservatism). These biases are substantially less pronounced in an ego-free control experiment. Updating does retain enough of the structure of Bayes’ rule to let us model it coherently in an optimizing framework, in which, interestingly, asymmetry and conservatism emerge as complementary biases. We also find that exogenous changes in beliefs affect subjects’ decisions to enter into a competition and do so similarly for more and less biased subjects, suggesting that people cannot “undo” their biases when the time comes to decide. This paper was accepted by Axel Ockenfels, behavioral economics and decision analysis.","PeriodicalId":246231,"journal":{"name":"Federal Reserve Bank of Boston Research Paper Series","volume":"25 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2011-05-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"114193683","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
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 eliminate such inferior outcomes. We investigate this model experimentally to determine whether announcements of seed money eliminate the inefficiencies that may result under fixed costs and simultaneous provision. To assess the strength of the theory we examine the effect of announcements in both the presence and absence of fixed costs. Our findings are supportive of the theory for projects with sufficiently high fixed costs.
{"title":"Seeds to Succeed: Sequential Giving to Public Projects","authors":"Anat Bracha, Michael Menietti, L. Vesterlund","doi":"10.2139/ssrn.1559944","DOIUrl":"https://doi.org/10.2139/ssrn.1559944","url":null,"abstract":"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 eliminate such inferior outcomes. We investigate this model experimentally to determine whether announcements of seed money eliminate the inefficiencies that may result under fixed costs and simultaneous provision. To assess the strength of the theory we examine the effect of announcements in both the presence and absence of fixed costs. Our findings are supportive of the theory for projects with sufficiently high fixed costs.","PeriodicalId":246231,"journal":{"name":"Federal Reserve Bank of Boston Research Paper Series","volume":"62 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2009-12-31","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"130314086","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Much of America’s promise is predicated on the existence of economic mobility—the idea that people are not limited or defined by where they start, but can move up the economic ladder based on their efforts and accomplishments. Family income mobility—changes in individual families’ real incomes over time—is one indicator of the degree to which the eventual economic wellbeing of any family is tethered to its starting point. In the United States, family income inequality has risen from year to year since the mid-1970s, raising questions about whether long-term income is also increasingly unequally distributed; changes over time in mobility, which can offset or amplify the cross-sectional increase in inequality, determine the degree to which the inequality of longer-term income has risen in parallel. ; Using data from the Panel Study of Income Dynamics and a number of mobility concepts and measures drawn from the literature, we examine mobility levels and trends for U.S. working-age families, overall and by race, during the time span 1967–2004. By most measures, we find that mobility is lower in more recent periods (the 1990s into the early 2000s) than in earlier periods (the 1970s). Most notably, mobility of families starting near the bottom has worsened over time. However, in recent years, the down-trend in mobility is more or less pronounced (or even non-existent) depending on the measure, although a decrease in the frequency with which panel data on family incomes are gathered makes it difficult to draw firm conclusions. Measured relative to the overall distribution or in absolute terms, black families exhibit substantially less mobility than whites in all periods; their mobility decreased between the 1970s and the 1990s, but no more than that of white families, although they lost ground in terms of relative income. ; Taken together, this evidence suggests that over the 1967-to-2004 time span, a low-income family’s probability of moving up decreased, families’ later year incomes increasingly depended on their starting place, and the distribution of families’ lifetime incomes became less equal.
{"title":"Trends in U.S. Family Income Mobility, 1967-2004","authors":"K. Bradbury, Jane Katz","doi":"10.2139/ssrn.1475309","DOIUrl":"https://doi.org/10.2139/ssrn.1475309","url":null,"abstract":"Much of America’s promise is predicated on the existence of economic mobility—the idea that people are not limited or defined by where they start, but can move up the economic ladder based on their efforts and accomplishments. Family income mobility—changes in individual families’ real incomes over time—is one indicator of the degree to which the eventual economic wellbeing of any family is tethered to its starting point. In the United States, family income inequality has risen from year to year since the mid-1970s, raising questions about whether long-term income is also increasingly unequally distributed; changes over time in mobility, which can offset or amplify the cross-sectional increase in inequality, determine the degree to which the inequality of longer-term income has risen in parallel. ; Using data from the Panel Study of Income Dynamics and a number of mobility concepts and measures drawn from the literature, we examine mobility levels and trends for U.S. working-age families, overall and by race, during the time span 1967–2004. By most measures, we find that mobility is lower in more recent periods (the 1990s into the early 2000s) than in earlier periods (the 1970s). Most notably, mobility of families starting near the bottom has worsened over time. However, in recent years, the down-trend in mobility is more or less pronounced (or even non-existent) depending on the measure, although a decrease in the frequency with which panel data on family incomes are gathered makes it difficult to draw firm conclusions. Measured relative to the overall distribution or in absolute terms, black families exhibit substantially less mobility than whites in all periods; their mobility decreased between the 1970s and the 1990s, but no more than that of white families, although they lost ground in terms of relative income. ; Taken together, this evidence suggests that over the 1967-to-2004 time span, a low-income family’s probability of moving up decreased, families’ later year incomes increasingly depended on their starting place, and the distribution of families’ lifetime incomes became less equal.","PeriodicalId":246231,"journal":{"name":"Federal Reserve Bank of Boston Research Paper Series","volume":"34 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2009-08-20","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"116563813","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
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