Economics Insights @ CBS

In six experiments, we investigated the role of resource valence in intergenerational attitudes and allocations. We found that, compared to benefits, allocating burdens intergenerationally increased concern with one's legacy, heightened ethical concerns, intensified moral emotions (e.g., guilt, shame), and led to feelings of greater responsibility for and affinity with future generations. We argue that, because of greater concern with legacies and the associated moral implications of one's decisions, allocating burdens leads to greater intergenerational generosity as compared to benefits.

I examine the impact of a property tax relief program in New York State that lowered the marginal cost of school expenditure to homeowners. I find that a typical school district, which received 20% of its revenue through the program in the school year 2001–2002, raised expenditure by 4.1% and local property taxes by 6.8% in response to the program. I then examine how the preferences of various groups of local taxpayers affect educational spending by identifying systematic variation across districts in the response to fiscal incentives.

Hedge funds often impose lockups and notice periods to limit the ability of investors to withdraw capital. We model the investor's decision to withdraw capital as a real option and treat lockups and notice periods as exercise restrictions. Our methodology incorporates time-varying probabilities of hedge fund failure and optimal early exercise. We estimate a two-year lockup with a three-month notice period costs approximately 1% of the initial investment for an investor with constant relative risk aversion utility and risk aversion of three.

The present investigation explores the possibility that power has increased salience among males but not females. Evidence indicates that stimuli that are self-relevant or related to chronic goals are more likely to capture attention than neutral information. Across three studies we explore the possibility that the premium males place on power influences how they attend to their environment.