Simple sentences, substitutions, and mistaken evaluations

Many competent speakers initially judge that (i) is true and (ii) is false, though they know that (iii) is true. (i) Superman leaps more tall buildings than Clark Kent. (ii) Superman leaps more tall buildings than Superman. (iii) Superman is identical with Clark Kent. Semantic explanations of these intuitions say that (i) and (ii) really can differ in truthvalue. Pragmatic explanations deny this, and say that the intuitions are due to misleading implicatures. This paper argues that both explanations are incorrect. (i) and (ii) cannot differ in truth-value, yet the intuitions are not due to implicatures, but rather to mistakes in evaluating (i) and (ii)

A Good Policy Gone Bad: The Strange Case of the Non-Refundable State EITC

Twenty states and several cities have adopted their own EITC programs, typically piggy-backing on the federal EITC by offering benefits equal to some designated proportion of the federal benefits. In all but four states, the state EITC is fully refundable, just like the Federal EITC. Using the example of Delaware, which adopted a non-refundable EITC in 2006, I show the peculiar distribution effects of such a policy. Roughly the lower income half of the EITC recipient population is ineligible for the Delaware non-refundable EITC. Married couples and both single-parent and two-parent families with less than two children also often lose eligibility and/or a substantial portion of benefits. The average benefit received by Federal EITC recipients falls by almost two-thirds. It is likely that these impacts of EITC non-refundability results would hold in other states considering such a policy.EITC, Earned Income Tax Credit

"Revisiting Marshall’s Third Law: Why Does Labor’s Share Interact with the Elasticity of Substitution to Decrease the Elasticity of Labor Demand?"

The third Marshall-Hicks-Allen rule of elasticity of derived demand purports to show that labor demand is less elastic when labor is a smaller share of total costs. As Hicks, Allen, and then Bronfenbrenner showed, this rule is not quite correct, and actually is complicated by an unexpected negative relationship involving labor’s share of total costs and the elasticity of substitution. The standard intuitive explanation for the exception to the rule, due to Stigler, describes a situation rather different than the one described in the rule. In this paper, I present an example that illustrates the peculiar negative impact of labor’s share, operating via the elasticity of substitution. I then explain why the unexpected relationship between labor’s share of total cost, the elasticity of substitution, and the elasticity of labor demand holds.Labor Demand, Hicks-Marshall Rules

Game-theoretic approach to risk-sensitive benchmarked asset management

In this article we consider a game theoretic approach to the Risk-Sensitive Benchmarked Asset Management problem (RSBAM) of Davis and Lleo \cite{DL}. In particular, we consider a stochastic differential game between two players, namely, the investor who has a power utility while the second player represents the market which tries to minimize the expected payoff of the investor. The market does this by modulating a stochastic benchmark that the investor needs to outperform. We obtain an explicit expression for the optimal pair of strategies as for both the players.Comment: Forthcoming in Risk and Decision Analysis. arXiv admin note: text overlap with arXiv:0905.4740 by other author

Optimal co-adapted coupling for the symmetric random walk on the hypercube

Let X and Y be two simple symmetric continuous-time random walks on the vertices of the n-dimensional hypercube, Z2n. We consider the class of co-adapted couplings of these processes, and describe an intuitive coupling which is shown to be the fastest in this class

"Employment Effects of the 2009 Minimum Wage Increase: Evidence from State Comparisons of At-Risk Workers (Revised Version)"

In July, 2009, the U.S. Federal minimum wage was increased from $6.55 to$7.25. Individuals in some states were unaffected by this increase, since the state minimum wage already exceeded $7.25. We use this variation to make comparisons of the employment of “at-risk” workers with their peers across states and with workers within states who were arguably unaffected by the increase. Our data come from the 2009 CPS, four and five months before and after the increase. We find little evidence of negative employment effects for teens or less- educated adults, but some stronger evidence of a negative effect for young adults with a high school degree or less. Control for demographic characteristics reduces the size and significance of the estimated effects.Minimum Wage