How do benefit adjustments for government transfer programs compare with their participants' inflation experiences?

The authors measure the inflation experienced by demographic groups that likely received benefits from major government transfer programs during the period 1980–2010. They then compare the group-specific inflation measures with the transfer programs’ benefit adjustments, which are typically based on aggregate inflation. The extent to which the program benefits keep up with group inflation differs across the programs and their targeted groups, depending on both the ways in which the benefits are adjusted for price changes and the spending patterns of the various groups.Inflation (Finance) - United States ; Public welfare

Comparing patterns of default among prime and subprime mortgages

This article compares default patterns among prime and subprime mortgages, analyzes the factors correlated with default, and examines how forecasts of defaults are affected by alternative assumptions about trends in home prices. The authors find that extremely pessimistic forecasts of home price appreciation could have generated predictions of subprime defaults that were closer to the actual default experience for loans originated in 2006 and 2007. However, for prime loans one would have also had to anticipate that defaults would become much more sensitive to home prices.

Risk taking and the quality of informal insurance: gambling and remittances in Thailand

More than 35% of Thai households either give or receive remittances, and remittances account for about one-third of the income of the receiving households. Remittance relationships may be an important source of protection against adverse events for the individuals involved. This paper provides evidence that remittances behave in a way that is consistent with insurance: they are sensitive to shocks to regional rainfall and they respond to household level events. The paper goes on to consider how the quality of insurance that is offered through remittances affects household risk taking behavior. Specifically, we show that the likelihood and the amount of gambling increase with the quality of informal insurance. The findings suggest that households who are more insured shift their portfolios toward riskier investments.Gambling industry ; Payment systems ; Insurance

Distinguishing limited commitment from moral hazard in models of growth with inequality

We use non-parametric, reduced form and structural techniques to distin-guish the micro-economic foundations of two models of growth with increasing inequality using new data from rural and semi-urban households in Thailand. We estimate a limited commitment model that is similar to Evans and Jovanovic (1989) and a moral hazard model that is an extension of Aghion and Bolton (1996). Both models emphasize the role of occupational choice and financial constraints. While the models share many implications, they are distinguished by their assumptions about the nature of financial market imperfections. We provide structural and reduced form evidence that the dominant source of credit market imperfections varies with wealth. For poorer households limited commit-ment is the dominant concern. However, as wealth increases moral hazard gains importance. These findings provide a rationale for important characteristics of the financial environment in Thailand.Financial markets ; Wealth

Strategies for success in financial education

The Federal Reserve Bank of Chicago will host a conference, Financial Literacy, Financial Education, and the Federal Reserve: Strategies for Success, on September 11, 2009. This article reviews some of the financial education activities throughout the Federal Reserve System.Financial literacy

Enhancing financial stability: the case of financial market utilities

The sweeping overhaul of the nation’s financial regulatory system that was signed into law on July 21, 2010, will touch virtually every aspect of financial markets. This Chicago Fed Letter focuses on provisions in the Dodd–Frank Wall Street Reform and Consumer Protection Act that affect “financial market utilities,” critical behind-the-scenes institutions and arrangements that ensure the smooth functioning of financial markets.Financial crises ; Financial markets

Lineage Regulators Direct BMP and Wnt Pathways to Cell-Specific Programs during Differentiation and Regeneration

SummaryBMP and Wnt signaling pathways control essential cellular responses through activation of the transcription factors SMAD (BMP) and TCF (Wnt). Here, we show that regeneration of hematopoietic lineages following acute injury depends on the activation of each of these signaling pathways to induce expression of key blood genes. Both SMAD1 and TCF7L2 co-occupy sites with master regulators adjacent to hematopoietic genes. In addition, both SMAD1 and TCF7L2 follow the binding of the predominant lineage regulator during differentiation from multipotent hematopoietic progenitor cells to erythroid cells. Furthermore, induction of the myeloid lineage regulator C/EBPα in erythroid cells shifts binding of SMAD1 to sites newly occupied by C/EBPα, whereas expression of the erythroid regulator GATA1 directs SMAD1 loss on nonerythroid targets. We conclude that the regenerative response mediated by BMP and Wnt signaling pathways is coupled with the lineage master regulators to control the gene programs defining cellular identity

A Major Role for Side-Chain Polyglutamine Hydrogen Bonding in Irreversible Ataxin-3 Aggregation

The protein ataxin-3 consists of an N-terminal globular Josephin domain (JD) and an unstructured C-terminal region containing a stretch of consecutive glutamines that triggers the neurodegenerative disorder spinocerebellar ataxia type 3, when it is expanded beyond a critical threshold. The disease results from misfolding and aggregation, although the pathway and structure of the aggregation intermediates are not fully understood. In order to provide insight into the mechanism of the process, we monitored the aggregation of a normal (AT3Q24) ataxin-3, an expanded (AT3Q55) ataxin-3, and the JD in isolation. We observed that all of them aggregated, although the latter did so at a much slower rate. Furthermore, the expanded AT3Q55 displayed a substantially different behavior with respect to the two other variants in that at the latest stages of the process it was the only one that did the following: i) lost its reactivity towards an anti-oligomer antibody, ii) generated SDS-insoluble aggregates, iii) gave rise to bundles of elongated fibrils, and iv) displayed two additional bands at 1604 and 1656 cm−1 in FTIR spectroscopy. Although these were previously observed in other aggregated polyglutamine proteins, no one has assigned them unambiguously, yet. By H/D exchange experiments we show for the first time that they can be ascribed to glutamine side-chain hydrogen bonding, which is therefore the hallmark of irreversibly SDS-insoluble aggregated protein. FTIR spectra also showed that main-chain intermolecular hydrogen bonding preceded that of glutamine side-chains, which suggests that the former favors the latter by reorganizing backbone geometry

TMEM106B is a genetic modifier of frontotemporal lobar degeneration with C9orf72 hexanucleotide repeat expansions

Hexanucleotide repeat expansions in chromosome 9 open reading frame 72 (C9orf72) have recently been linked to frontotemporal lobar degeneration (FTLD) and amyotrophic lateral sclerosis, and may be the most common genetic cause of both neurodegenerative diseases. Genetic variants at TMEM106B influence risk for the most common neuropathological subtype of FTLD, characterized by inclusions of TAR DNA-binding protein of 43 kDa (FTLD-TDP). Previous reports have shown that TMEM106B is a genetic modifier of FTLD-TDP caused by progranulin (GRN) mutations, with the major (risk) allele of rs1990622 associating with earlier age at onset of disease. Here, we report that rs1990622 genotype affects age at death in a single-site discovery cohort of FTLD patients with C9orf72 expansions (n = 14), with the major allele correlated with later age at death (p = 0.024). We replicate this modifier effect in a 30-site international neuropathological cohort of FTLD-TDP patients with C9orf72 expansions (n = 75), again finding that the major allele associates with later age at death (p = 0.016), as well as later age at onset (p = 0.019). In contrast, TMEM106B genotype does not affect age at onset or death in 241 FTLD-TDP cases negative for GRN mutations or C9orf72 expansions. Thus, TMEM106B is a genetic modifier of FTLD with C9orf72 expansions. Intriguingly, the genotype that confers increased risk for developing FTLD-TDP (major, or T, allele of rs1990622) is associated with later age at onset and death in C9orf72 expansion carriers, providing an example of sign epistasis in human neurodegenerative disease

Rare coding variants in PLCG2, ABI3, and TREM2 implicate microglial-mediated innate immunity in Alzheimer's disease

We identified rare coding variants associated with Alzheimer’s disease (AD) in a 3-stage case-control study of 85,133 subjects. In stage 1, 34,174 samples were genotyped using a whole-exome microarray. In stage 2, we tested associated variants (P<1×10-4) in 35,962 independent samples using de novo genotyping and imputed genotypes. In stage 3, an additional 14,997 samples were used to test the most significant stage 2 associations (P<5×10-8) using imputed genotypes. We observed 3 novel genome-wide significant (GWS) AD associated non-synonymous variants; a protective variant in PLCG2 (rs72824905/p.P522R, P=5.38×10-10, OR=0.68, MAFcases=0.0059, MAFcontrols=0.0093), a risk variant in ABI3 (rs616338/p.S209F, P=4.56×10-10, OR=1.43, MAFcases=0.011, MAFcontrols=0.008), and a novel GWS variant in TREM2 (rs143332484/p.R62H, P=1.55×10-14, OR=1.67, MAFcases=0.0143, MAFcontrols=0.0089), a known AD susceptibility gene. These protein-coding changes are in genes highly expressed in microglia and highlight an immune-related protein-protein interaction network enriched for previously identified AD risk genes. These genetic findings provide additional evidence that the microglia-mediated innate immune response contributes directly to AD development