Using a new survey of firms’ inflation expectations in France, we provide novel evidence about the measurement and formation of inflation expectations on the part of firms. First, French firms report inflation expectations with a smaller, but still positive, bias than households and display less disagreement. Second, we characterize the extent and manner in which the wording of questions matters for the measurement of firms’ inflation expectations. Third, we document whether and how the position of the respondent within the firm affects the provided responses. Fourth, because our survey measures firms’ expectations about aggregate and firm-level wage growth along with their inflation expectations, we can show that expectations about wages are even more condensed than firms’ inflation expectations and almost completely uncorrelated with them, indicating that firms perceive little link between price and wage inflation. Finally, an experimental treatment indicates that an exogenous change in firms’ inflation expectations has no effect on their aggregate wage expectations.
{"title":"Firms’ Inflation Expectations: New Evidence from France","authors":"Frédérique Savignac, Erwan Gautier, Yuriy Gorodnichenko, Olivier Coibion","doi":"10.1093/jeea/jvae015","DOIUrl":"https://doi.org/10.1093/jeea/jvae015","url":null,"abstract":"Using a new survey of firms’ inflation expectations in France, we provide novel evidence about the measurement and formation of inflation expectations on the part of firms. First, French firms report inflation expectations with a smaller, but still positive, bias than households and display less disagreement. Second, we characterize the extent and manner in which the wording of questions matters for the measurement of firms’ inflation expectations. Third, we document whether and how the position of the respondent within the firm affects the provided responses. Fourth, because our survey measures firms’ expectations about aggregate and firm-level wage growth along with their inflation expectations, we can show that expectations about wages are even more condensed than firms’ inflation expectations and almost completely uncorrelated with them, indicating that firms perceive little link between price and wage inflation. Finally, an experimental treatment indicates that an exogenous change in firms’ inflation expectations has no effect on their aggregate wage expectations.","PeriodicalId":48297,"journal":{"name":"Journal of the European Economic Association","volume":"35 1","pages":""},"PeriodicalIF":3.6,"publicationDate":"2024-02-28","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"140035482","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":2,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
This paper examines the extent to which personal biases affect political views, in the context of how antisemitism influences opinions about Israel. Two empirical analyses are conducted. The first one analyzes social media chatter about Jews and Israel in the UK, revealing a strong, positive relationship between negative chatter about both of them at the daily-location level. In order to establish causality, social media chatter about a “Jewish” football team in the English Premier League (Tottenham) is used as an instrument for negative expressions about Jewish people to explain negativity towards Israel. The second empirical analysis uses the 2016 wave of the German Social Survey, which reveals a strong and robust relationship between several commonly used measures of antisemitic beliefs and holding anti-Israel views. A causal interpretation of this finding is supported by an IV analysis motivated by Voigtländer and Voth (2015) who show that Nazi indoctrination during the WWII period had a lifelong impact on antisemitic views. In both analyses, the IV estimates are considerably larger than OLS coefficients.
{"title":"Policies or Prejudices? an Analysis of Antisemitic and Anti-Israel Views on Social Media and Social Surveys","authors":"Noam Binstok, Eric D Gould, Todd Kaplan","doi":"10.1093/jeea/jvae013","DOIUrl":"https://doi.org/10.1093/jeea/jvae013","url":null,"abstract":"This paper examines the extent to which personal biases affect political views, in the context of how antisemitism influences opinions about Israel. Two empirical analyses are conducted. The first one analyzes social media chatter about Jews and Israel in the UK, revealing a strong, positive relationship between negative chatter about both of them at the daily-location level. In order to establish causality, social media chatter about a “Jewish” football team in the English Premier League (Tottenham) is used as an instrument for negative expressions about Jewish people to explain negativity towards Israel. The second empirical analysis uses the 2016 wave of the German Social Survey, which reveals a strong and robust relationship between several commonly used measures of antisemitic beliefs and holding anti-Israel views. A causal interpretation of this finding is supported by an IV analysis motivated by Voigtländer and Voth (2015) who show that Nazi indoctrination during the WWII period had a lifelong impact on antisemitic views. In both analyses, the IV estimates are considerably larger than OLS coefficients.","PeriodicalId":48297,"journal":{"name":"Journal of the European Economic Association","volume":"51 1","pages":""},"PeriodicalIF":3.6,"publicationDate":"2024-02-24","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"139948107","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":2,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
We study, both theoretically and experimentally, a communication game with and without seller competition and embed it in a psychological-game framework where players experience costs for lying, misleading others, and being disappointed. We derive the equilibrium predictions of this model, compare them to the setting without psychological payoffs, and test these predictions in a laboratory experiment, in which we induce both material and psychological payoffs. We find that the setting in which players have both material and psychological payoffs features more trade, trades goods of marginally better quality, and does so without welfare losses to either side of the market relative to the setting with material payoffs only. However, the introduction of competition counteracts this improvement and lowers welfare for both sides of the market. This happens due to a surge in dishonesty by sellers in the competitive setting and the buyers’ inability to detect this deception.
{"title":"Trust Me: Communication and Competition in a Psychological Game","authors":"Marina Agranov, Utteeyo Dasgupta, Andrew Schotter","doi":"10.1093/jeea/jvae012","DOIUrl":"https://doi.org/10.1093/jeea/jvae012","url":null,"abstract":"We study, both theoretically and experimentally, a communication game with and without seller competition and embed it in a psychological-game framework where players experience costs for lying, misleading others, and being disappointed. We derive the equilibrium predictions of this model, compare them to the setting without psychological payoffs, and test these predictions in a laboratory experiment, in which we induce both material and psychological payoffs. We find that the setting in which players have both material and psychological payoffs features more trade, trades goods of marginally better quality, and does so without welfare losses to either side of the market relative to the setting with material payoffs only. However, the introduction of competition counteracts this improvement and lowers welfare for both sides of the market. This happens due to a surge in dishonesty by sellers in the competitive setting and the buyers’ inability to detect this deception.","PeriodicalId":48297,"journal":{"name":"Journal of the European Economic Association","volume":"61 1","pages":""},"PeriodicalIF":3.6,"publicationDate":"2024-02-24","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"139948106","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":2,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
José Ramón Enríquez, Horacio Larreguy, John Marshall, Alberto Simpser
Social media’s capacity to quickly and inexpensively reach large audiences almost simultaneously has the potential to promote electoral accountability. Beyond increasing direct exposure to information, high saturation campaigns—which target substantial fractions of an electorate—may induce or amplify information diffusion, persuasion, or coordination between voters. Randomizing saturation across municipalities, we evaluate the electoral impact of non-partisan Facebook ads informing millions of Mexican citizens of municipal expenditure irregularities in 2018. The vote shares of incumbent parties that engaged in zero/negligible irregularities increased by 6-7 percentage points in directly-targeted electoral precincts. This direct effect, but also the indirect effect in untargeted precincts within treated municipalities, were significantly greater where ads targeted 80%—rather than 20%—of the municipal electorate. The amplifying effects of high saturation campaigns are driven by citizens within more socially-connected municipalities, rather than responses by politicians or media outlets. These findings demonstrate how mass media can ignite social interactions to promote political accountability.
{"title":"MASS POLITICAL INFORMATION ON SOCIAL MEDIA: FACEBOOK ADS, ELECTORATE SATURATION, AND ELECTORAL ACCOUNTABILITY IN MEXICO","authors":"José Ramón Enríquez, Horacio Larreguy, John Marshall, Alberto Simpser","doi":"10.1093/jeea/jvae011","DOIUrl":"https://doi.org/10.1093/jeea/jvae011","url":null,"abstract":"Social media’s capacity to quickly and inexpensively reach large audiences almost simultaneously has the potential to promote electoral accountability. Beyond increasing direct exposure to information, high saturation campaigns—which target substantial fractions of an electorate—may induce or amplify information diffusion, persuasion, or coordination between voters. Randomizing saturation across municipalities, we evaluate the electoral impact of non-partisan Facebook ads informing millions of Mexican citizens of municipal expenditure irregularities in 2018. The vote shares of incumbent parties that engaged in zero/negligible irregularities increased by 6-7 percentage points in directly-targeted electoral precincts. This direct effect, but also the indirect effect in untargeted precincts within treated municipalities, were significantly greater where ads targeted 80%—rather than 20%—of the municipal electorate. The amplifying effects of high saturation campaigns are driven by citizens within more socially-connected municipalities, rather than responses by politicians or media outlets. These findings demonstrate how mass media can ignite social interactions to promote political accountability.","PeriodicalId":48297,"journal":{"name":"Journal of the European Economic Association","volume":"112 1","pages":""},"PeriodicalIF":3.6,"publicationDate":"2024-02-16","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"139764546","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":2,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
We introduce a model in which people exchange some goods and services informally in their community and others formally on a market. We show that enforcement by informal communities and a formal market are complements: if communities ostracize individuals who are caught cheating on the market, this bolsters incentives to comply with exchanges in both settings. Although transactions within a community generate lower gains from trade than those on the wider market, the enhanced incentives from simultaneously transacting in communities and on the overall market can be welfare-enhancing compared to either extreme. We discuss the implications of informal community exchanges in a country’s development as well as how moral or religious beliefs enhance the complementarity between community and formal enforcement.
{"title":"The Incentive Complementarity Between Formal and Informal Enforcement","authors":"Matthew O Jackson, Yiqing Xing","doi":"10.1093/jeea/jvae009","DOIUrl":"https://doi.org/10.1093/jeea/jvae009","url":null,"abstract":"We introduce a model in which people exchange some goods and services informally in their community and others formally on a market. We show that enforcement by informal communities and a formal market are complements: if communities ostracize individuals who are caught cheating on the market, this bolsters incentives to comply with exchanges in both settings. Although transactions within a community generate lower gains from trade than those on the wider market, the enhanced incentives from simultaneously transacting in communities and on the overall market can be welfare-enhancing compared to either extreme. We discuss the implications of informal community exchanges in a country’s development as well as how moral or religious beliefs enhance the complementarity between community and formal enforcement.","PeriodicalId":48297,"journal":{"name":"Journal of the European Economic Association","volume":"152 1","pages":""},"PeriodicalIF":3.6,"publicationDate":"2024-02-10","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"139764489","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":2,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pauline Gandré, Mike Mariathasan, Ouarda Merrouche, Steven Ongena
Following the early implementation of the global over-the-counter (OTC) derivatives market reform in the US and the associated increase in trading costs, US banks shifted up to 60% of their OTC derivatives activity abroad, particularly towards less regulated jurisdictions. Consistent with a cost saving incentive of regulatory arbitrage, we find that this flight abroad is driven by costlier blocks of the reform and subsequently causes a narrowing of swap spreads. We further show that this regulatory arbitrage causes an increase in financial risk as more activity is shifted to more lenient jurisdictions.
{"title":"Unintended Consequences of the Global Derivatives Market Reform","authors":"Pauline Gandré, Mike Mariathasan, Ouarda Merrouche, Steven Ongena","doi":"10.1093/jeea/jvae010","DOIUrl":"https://doi.org/10.1093/jeea/jvae010","url":null,"abstract":"Following the early implementation of the global over-the-counter (OTC) derivatives market reform in the US and the associated increase in trading costs, US banks shifted up to 60% of their OTC derivatives activity abroad, particularly towards less regulated jurisdictions. Consistent with a cost saving incentive of regulatory arbitrage, we find that this flight abroad is driven by costlier blocks of the reform and subsequently causes a narrowing of swap spreads. We further show that this regulatory arbitrage causes an increase in financial risk as more activity is shifted to more lenient jurisdictions.","PeriodicalId":48297,"journal":{"name":"Journal of the European Economic Association","volume":"24 1","pages":""},"PeriodicalIF":3.6,"publicationDate":"2024-02-09","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"139764292","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":2,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Educational institutions not only build human capital; they also shape culture. We present a model of cultural dynamics produced by cultural transmission through the education system. Groups that are culturally marginalized become economically disadvantaged and exhibit various forms of resistance to education. First, individuals may drop out of education to avoid its cultural content. Second, individuals may invest in other forms of socialization to tune out the cultural content of education. Finally, cultural communities may collectively resist mainstream education by turning out to change curricula or establish their own schools. We show that resistance to education can make it impossible for a policymaker to eliminate alternative cultural traits from the population. In fact, a policymaker may have to moderate the cultural content of education or else face a backlash which increases the spread of alternative cultural traits. Our analysis unifies a growing body of empirical work on the effects of cultural policies and makes new predictions regarding the effect of socializing institutions on cultural dynamics.
{"title":"Resisting Education","authors":"Jean-Paul Carvalho, Mark Koyama, Cole Williams","doi":"10.1093/jeea/jvae008","DOIUrl":"https://doi.org/10.1093/jeea/jvae008","url":null,"abstract":"Educational institutions not only build human capital; they also shape culture. We present a model of cultural dynamics produced by cultural transmission through the education system. Groups that are culturally marginalized become economically disadvantaged and exhibit various forms of resistance to education. First, individuals may drop out of education to avoid its cultural content. Second, individuals may invest in other forms of socialization to tune out the cultural content of education. Finally, cultural communities may collectively resist mainstream education by turning out to change curricula or establish their own schools. We show that resistance to education can make it impossible for a policymaker to eliminate alternative cultural traits from the population. In fact, a policymaker may have to moderate the cultural content of education or else face a backlash which increases the spread of alternative cultural traits. Our analysis unifies a growing body of empirical work on the effects of cultural policies and makes new predictions regarding the effect of socializing institutions on cultural dynamics.","PeriodicalId":48297,"journal":{"name":"Journal of the European Economic Association","volume":"53 1","pages":""},"PeriodicalIF":3.6,"publicationDate":"2024-02-06","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"139764295","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":2,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
We show that the supply of U.S. life annuities is constrained by interest rate risk. We identify this effect using annuity prices offered by life insurers from 1989 to 2019 and exogenous variations in contract-level regulatory capital requirements. The cost of interest rate risk management—conditional on the effect of adverse selection—accounts for about half of annuity markups, or 8 percentage points. The contribution of interest rate risk to annuity markups sharply increased after the Global Financial Crisis, suggesting new retirees’ opportunities to transfer their longevity risk are unlikely to improve in a persistently low interest rate environment.
{"title":"What’s Wrong with Annuity Markets?","authors":"Stéphane Verani, Pei Cheng Yu","doi":"10.1093/jeea/jvae007","DOIUrl":"https://doi.org/10.1093/jeea/jvae007","url":null,"abstract":"We show that the supply of U.S. life annuities is constrained by interest rate risk. We identify this effect using annuity prices offered by life insurers from 1989 to 2019 and exogenous variations in contract-level regulatory capital requirements. The cost of interest rate risk management—conditional on the effect of adverse selection—accounts for about half of annuity markups, or 8 percentage points. The contribution of interest rate risk to annuity markups sharply increased after the Global Financial Crisis, suggesting new retirees’ opportunities to transfer their longevity risk are unlikely to improve in a persistently low interest rate environment.","PeriodicalId":48297,"journal":{"name":"Journal of the European Economic Association","volume":"137 1","pages":""},"PeriodicalIF":3.6,"publicationDate":"2024-02-05","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"139764131","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":2,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
We develop a model of electoral campaigns as dynamic contests in which two office-motivated candidates allocate their budgets over time to affect their odds of winning. We measure the candidates’ evolving odds of winning using a state variable that tends to decay over time, and we refer to it as the candidates’ “relative popularity.” In our baseline model, the equilibrium ratio of spending by each candidate equals the ratio of their initial budgets; spending is independent of past realizations of relative popularity; and there is a positive relationship between the strength of decay in the popularity process and the rate at which candidates increase their spending over time as election day approaches. We use this relationship to recover estimates of the perceived decay rate in popularity leads in actual U.S. subnational elections.
{"title":"Electoral Campaigns as Dynamic Contests","authors":"Avidit Acharya, Edoardo Grillo, Takuo Sugaya, Eray Turkel","doi":"10.1093/jeea/jvae006","DOIUrl":"https://doi.org/10.1093/jeea/jvae006","url":null,"abstract":"We develop a model of electoral campaigns as dynamic contests in which two office-motivated candidates allocate their budgets over time to affect their odds of winning. We measure the candidates’ evolving odds of winning using a state variable that tends to decay over time, and we refer to it as the candidates’ “relative popularity.” In our baseline model, the equilibrium ratio of spending by each candidate equals the ratio of their initial budgets; spending is independent of past realizations of relative popularity; and there is a positive relationship between the strength of decay in the popularity process and the rate at which candidates increase their spending over time as election day approaches. We use this relationship to recover estimates of the perceived decay rate in popularity leads in actual U.S. subnational elections.","PeriodicalId":48297,"journal":{"name":"Journal of the European Economic Association","volume":"54 1","pages":""},"PeriodicalIF":3.6,"publicationDate":"2024-02-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"139679605","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":2,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
We propose a theory of social norms (or conventions) that implement substantial levels of inequality between men and women, ethnic groups, and classes and that persist over long periods of time despite being inefficient and not supported by formal institutions. Consistent with historical cases, we extend the standard asymmetric stochastic evolutionary game model to allow sub population sizes to differ and idiosyncratic rejection of a status quo convention to be intentional to some degree (rather than purely random as in the standard evolutionary models). In this setting, if idiosyncratic play is sufficiently intentional and the subordinate class sufficiently large relative to the elite, then risk-dominated conventions that are both more unequal and inefficient relative to alternative conventions will be stochastically stable and may persist for long periods. We show that the same is true in a general bipartite network of the population if most of the subordinate groups interactions are local, while the elite is more “cosmopolitan”. We apply the model to the evolution of wage conventions on the bipartite network of workers and employers, and find that an unequal monopsonistic wage convention is robust to the idiosyncratic play of workers that otherwise might displace it.
{"title":"Social Conflict and the Evolution of Unequal Conventions","authors":"Sung-Ha Hwang, Suresh Naidu, Samuel Bowles","doi":"10.1093/jeea/jvae004","DOIUrl":"https://doi.org/10.1093/jeea/jvae004","url":null,"abstract":"We propose a theory of social norms (or conventions) that implement substantial levels of inequality between men and women, ethnic groups, and classes and that persist over long periods of time despite being inefficient and not supported by formal institutions. Consistent with historical cases, we extend the standard asymmetric stochastic evolutionary game model to allow sub population sizes to differ and idiosyncratic rejection of a status quo convention to be intentional to some degree (rather than purely random as in the standard evolutionary models). In this setting, if idiosyncratic play is sufficiently intentional and the subordinate class sufficiently large relative to the elite, then risk-dominated conventions that are both more unequal and inefficient relative to alternative conventions will be stochastically stable and may persist for long periods. We show that the same is true in a general bipartite network of the population if most of the subordinate groups interactions are local, while the elite is more “cosmopolitan”. We apply the model to the evolution of wage conventions on the bipartite network of workers and employers, and find that an unequal monopsonistic wage convention is robust to the idiosyncratic play of workers that otherwise might displace it.","PeriodicalId":48297,"journal":{"name":"Journal of the European Economic Association","volume":"2 1","pages":""},"PeriodicalIF":3.6,"publicationDate":"2024-01-18","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"139516298","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":2,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
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