Comparing the Point Predictions and Subjective Probability Distributions of Professional Forecasters

We use data from the Survey of Professional Forecasters to compare point forecasts of GDP growth and inflation with the subjective probability distributions held by forecasters. We find that SPF forecasters summarize their underlying distributions in different ways and that their summaries tend to be favorable relative to the central tendency of the underlying distributions. We also find that those forecasters who report favorable point estimates in the current survey tend to do so in subsequent surveys. These findings, plus the inescapable fact that point forecasts reveal nothing about the uncertainty that forecasters feel, suggest that the SPF and similar surveys should not ask for point forecasts. It seems more reasonable to elicit probabilistic expectations and derive measures of central tendency and uncertainty, as we do here.

The Wages of Sin

Edlund and Korn [2002] (EK) proposed that prostitutes are well paid and that the wage premium reflects foregone marriage market opportunities. However, studies of street prostitution in the U.S. have revealed only modest wages and considerable risks of disease and violence, casting doubt on EK's premise of an unexplained wage premium. In this paper, we present evidence from high-end prostitution, the so called escort market, a market that is, if not entirely safe, notably safer than street prostitution. Analyzing wage information on more than 40,000 escorts in the U.S. and Canada collected from a web site, we find strong support for EK. First, escorts in the sample earn high wages, on average $280/hour. Second, while looks decline monotonically with age, wages follow a hump-shaped pattern, with a peak in the 26-30 age bracket, which coincides with the most intensive marriage ages for women in the U.S. Third, the age-wage profile is significantly flatter, and prices are lower (5%), despite slightly better escort characteristics, in cities that rank high in terms of conferences, suggesting that servicing men in transit is associated with less stigma. Fourth, this hump in the age-wage profile is absent among escorts for whom the marriage market penalty is lower or absent: escorts who do not provide sex and transsexuals

Affiliation Bias in the Online Market for Rental Accommodation

We find evidence of taste-based discrimination against rival affiliations in the online market for rental accommodation. Airbnb hosts in college towns increase their listing prices more than hotels on home football games against rival teams. By setting listing prices too high as a result of their affiliation bias against rival fans, hosts experience a 30% reduction in rental income. The overestimation of demand, the cost (inconvenience) of temporary relocation, and the likelihood of incurring damage cannot explain the inverse relation between listing price increases, and rental incomes that is limited to games against rival teams. Instead, greater financial constraints are associated with smaller listing price increases, and higher rental incomes on rival games, suggesting that taste-based discrimination is a luxury

The Causal Impact of Media in Financial Markets

It is challenging to disentangle the causal impact of media reporting from the impact of the events being reported. We solve this problem by comparing the behaviors of investors with access to different media coverage of the same information event. We use zip codes to identify 19 mutually exclusive trading regions, corresponding to 19 large U.S. cities and local newspapers (e.g., the Houston Chronicle). For all earnings announcements of S&P 500 Index firms, we find that local media coverage strongly predicts local trading, after controlling for characteristics of the earnings surprise, firm, local investors, and reporting newspaper(s). Moreover, the local trading-local coverage effect: 1) depends precisely on the specific timing of local reporting (e.g., one day after the earnings announcement, two days afterward, etc.) and 2) disappears entirely during extreme weather events, which leaves media content unchanged, but disrupts transmission to investors

Market Madness? The Case of Mad Money

We study the market's reaction to Jim Cramer's recommendations on the television show Mad Money. Average abnormal overnight returns following his recommendations are over 3% for the entire sample, and 6.7% for stocks in the smallest quintile. Using a novel dataset of television viewership, we nd that the price response is increasing in the number of wealthy viewers who watch the show but unaffected by the number of low income households viewing the recommendations. Consistent with theories of limits to arbitrage, we nd that the overnight return is strongest for stocks with high idiosyncratic volatility. Using data from an ECN, we show that the market's response to the recommendations is immediate even though the show airs after the NYSE's trading hours. These price spikes are followed by partial reversals, and short-selling is signi cantly higher than normal on the day following the recommendations. Equity lending rates are higher in the days following the recommendations, especially for stocks with the largest overnight returns, suggesting that short-selling does not completely eliminate the mispricing in part because it is costly for short-sellers to do so

The Long and Short of It: Evidence of Year-End Price Manipulation by Short Sellers

The research was partially funded by BNPP Hedge Fund Centre at Singapore Management Centre. Copy made available with permission of the authors.</p

The Relationship between Expected Inflation, Disagreement, and Uncertainty: Evidence from Matched Point and Density Forecasts

This paper examines matched point and density forecasts of inflation from the Survey of Professional Forecasters to analyze the relationship between expected inflation, disagreement, and uncertainty. We extend previous studies through our data construction and estimation methodology. Specifically, we derive measures of disagreement and uncertainty by using a decomposition proposed in earlier research by Wallis and by applying the concept of entropy from information theory. We also undertake the empirical analysis within a seemingly unrelated regression framework. Our results offer mixed support for the propositions that disagreement is a useful proxy for uncertainty and that increases in expected inflation are accompanied by heightened inflation uncertainty. However, we document a robust, quantitatively and statistically significant positive association between disagreement and expected inflation

Plasmids and Rickettsial Evolution: Insight from Rickettsia felis

BACKGROUND: The genome sequence of Rickettsia felis revealed a number of rickettsial genetic anomalies that likely contribute not only to a large genome size relative to other rickettsiae, but also to phenotypic oddities that have confounded the categorization of R. felis as either typhus group (TG) or spotted fever group (SFG) rickettsiae. Most intriguing was the first report from rickettsiae of a conjugative plasmid (pRF) that contains 68 putative open reading frames, several of which are predicted to encode proteins with high similarity to conjugative machinery in other plasmid-containing bacteria. METHODOLOGY/PRINCIPAL FINDINGS: Using phylogeny estimation, we determined the mode of inheritance of pRF genes relative to conserved rickettsial chromosomal genes. Phylogenies of chromosomal genes were in agreement with other published rickettsial trees. However, phylogenies including pRF genes yielded different topologies and suggest a close relationship between pRF and ancestral group (AG) rickettsiae, including the recently completed genome of R. bellii str. RML369-C. This relatedness is further supported by the distribution of pRF genes across other rickettsiae, as 10 pRF genes (or inactive derivatives) also occur in AG (but not SFG) rickettsiae, with five of these genes characteristic of typical plasmids. Detailed characterization of pRF genes resulted in two novel findings: the identification of oriV and replication termination regions, and the likelihood that a second proposed plasmid, pRFδ, is an artifact of the original genome assembly. CONCLUSION/SIGNIFICANCE: Altogether, we propose a new rickettsial classification scheme with the addition of a fourth lineage, transitional group (TRG) rickettsiae, that is unique from TG and SFG rickettsiae and harbors genes from possible exchanges with AG rickettsiae via conjugation. We offer insight into the evolution of a plastic plasmid system in rickettsiae, including the role plasmids may have played in the acquirement of virulence traits in pathogenic strains, and the likely origin of plasmids within the rickettsial tree