How Do Emotions Influence Saving Behavior

Employers have moved away from traditional defined benefit pension plans to defined contribution plans such as 401(k)s. As a result, many individuals are now required to make their own retirement saving and investment decisions, which has raised concerns about their ability and desire to handle these decisions. Since investment choices have major implications for future financial welfare, it is important to understand how individuals make these decisions and to identify potential ways to improve the decision-making process. Researchers have explored various factors affecting retirement saving, such as income, age, job tenure, self-control failure, financial literacy and trust. No prior research, however, has looked at the effects of emotions on retirement savings. This Issue in Brief examines how two different emotions – hope and hopefulness – affect 401(k) participation and asset allocation. The first section defines the terms. The second section describes the structure of a recent field experiment. The third section summarizes the results, which reveal that having high hope (i.e. yearning) – for a secure retirement leads to different investment behaviors than having high hopefulness (i.e. perceived likelihood). Furthermore, threats to hope and threats to hopefulness are found to have different effects on 401(k) participation and investment decisions. The final section concludes.

Why Did Some Employers Suspend Their 401(k) Match?

The employer match of employee contributions is an important characteristic of 401(k) plans. The match was designed to encourage participation and contributions ñ particularly by lower-paid employees. However, at many companies, the employer match became a casualty of the financial collapse and ensuing recession. While several large companies have restored their match, it is still important to understand what causes such a response. This Issue in Brief attempts to explain why some firms suspended their match while others did not. It proceeds as follows. The first section explains the rationale for, and mechanics behind, employer matching of employee contributions. The second section considers the economic impact of the match. The third section describes the companies that have suspended their match. The fourth section examines how several factors impact the probability of an employer suspending its match. The results suggest that liquidity constraints, rather than profitability issues, are the main reasons for suspending the match. The fifth section speculates about the likely impact of the 401(k) match suspensions on employees. The final section concludes that cash-strapped companies appear to have been forced to cut back, and, if the pattern follows that of the 2001 recession, most companies are likely to restore their match once the economy recovers. To the extent that the match is quickly restored, little harm may have been done ñ especially compared with the alternative of laying off workers.

Theory of Light Emission in Sonoluminescence as Thermal Radiation

Based on the model proposed by Hilgenfeldt {\it at al.} [Nature {\bf 398}, 401 (1999)], we present here a comprehensive theory of thermal radiation in single-bubble sonoluminescence (SBSL). We first invoke the generalized Kirchhoff's law to obtain the thermal emissivity from the absorption cross-section of a multilayered sphere (MLS). A sonoluminescing bubble, whose internal structure is determined from hydrodynamic simulations, is then modelled as a MLS and in turn the thermal radiation is evaluated. Numerical results obtained from simulations for argon bubbles show that our theory successfully captures the major features observed in SBSL experiments.Comment: 17 pages, 20 figure

Check Fraud and the Variation of Section 4-401: Why Banks Should Not Be Able to Vary the UCC\u27s Standard Risk Allocation Scheme

Uniform Commercial Code Article 4 governs both a bank’s duties in collecting checks for payment as well as its duties to its depositors. Section 4-401 provides that a bank can charge an item to a customer’s account only if it is properly payable. For an item to be properly payable, it must be authorized by the customer. This Note examines the 2010 case, Cincinnati Insurance Co. v. Wachovia Bank, in which the U.S. District Court for the District of Minnesota stated that a bank can vary section 4-401’s default rule by including negotiated provisions in the deposit agreement. After exploring the structure and history of Article 4, this Note argues that banks should not be able to vary section 4-401’s default rule, and proposes that courts take into account the history of Article 4 when analyzing which default rules banks can vary through deposit provisions

Costs, Institutional Mobility Barriers, and Market Structure: Advertising Agencies as Multiproduct Firms

What accounts for the diversity and limited concentration that has long characterized the organization of the advertising agency industry? This question is addressed by treating an advertising agency as a multiproduct firm. The firm's product line or service mix is defined in terms of the set of different media categories where an agency places the advertising messages which it creates on behalf of its clients. Evidence is presented indicating that the structure of demand and costs in the advertising agency industry conforms to the conditions that MacDonald and Slivinski (1987) showed were required for an industry to sustain an equilibrium with diversified firms. Building on this framework, we formulate a set of three hypotheses relating to the realization of product-specific scale and scope economies. The first two hypotheses posit that given low fixed costs and minimal entry barriers, both media-specific scale and scope economies are available and can be exploited by relatively small-size agencies. The third hypothesis suggests that large agencies may experience diseconomies of scope as a consequence of excessive diversification induced by two pervasive industry institutional phenomena: (i) 'bundling' of agency services to match client demand for a mix of media advertising; and (ii) 'conflict policy' which prohibits an agency from serving competing accounts and operates as a mobility constraint. Utilizing a multiproduct cost function, we estimate media-specific scale and scope economies for a cross-section of 401 U.S. agencies in 1987. The results obtained support the set of three hypotheses outlined above.

HB 828: TANF Eligibility; Drug-Related Felonies

House Bill 828 (HB828) was proposed in 2016 to remove the ban on Temporary Assistance for Needy Families (TANF) for individuals with felony-related drug convictions who are otherwise eligible to receive benefits. The TANF program is designed to help low income families achieve self-sufficiency. States receive block grants to design and operate programs that accomplish one of the purposes of the TANF program: 1) Provide assistance to needy families so children can be cared for in their own homes; 2) Reduce the dependency of parents by promoting job preparation, work, and marriage; 3) Prevent and reduce the incidence of out-of-wedlock pregnancies; 4) Encourage the formation and maintenance of two-parent families (Personal Responsibility and Work Opportunity Reconciliation Act of 1996, Section 401). With nearly 700,000 people released from state and federal prison each year, access to TANF benefits is particularly critical for helping formerly incarcerated individuals transitioning back to their home communities. Significant disparities in convictions and incarceration coupled with variations in state population between Whites and Nonwhites translate into a disproportionate impact of the felony drug ban (The Sentencing Project, 2015). Virginia is one of 14 states with a full ban on TANF benefits for individuals with felony-related drug convictions. Adoption of HB828 proposes to eliminate this lifetime ban and provide an opportunity for low income families to meet their basic needs during the period in which they are in most need