Lending patterns in poor neighborhoods

Concentrated poverty has been said to impose a double burden on those that confront it. In addition to an individual's own financial constraints, institutions and social networks of poor neighborhoods can further limit access to quality services and resources for those that live there. This study contributes to the characterization of the relationship between subprime lending and poor neighborhoods by including a spatial dimension to the analysis, in an attempt to capture social effect differences in poor and less poor neighborhoods. The analysis is applied to 2004-2006 census tract level data in Cuyahoga County, home to Cleveland, Ohio, a region that features urban neighborhoods highly segregated by income and race. The patterns found in poor neighborhoods suggest stronger social interaction effects inducing subprime lending in comparison to less poor neighborhoods.Poverty ; Bank loans ; Subprime mortgage

MEASURING PRODUCTION EFFICIENCY USING AGGREGATE DATA

This paper develops a measure of efficiency when data have been aggregated. Unlike the most commonly used efficiency measures, our estimator handles the heteroskedasticity created by aggregation appropriately. Our estimator is compared to estimators currently used to measure school efficiency. Theoretical results are supported by a Monte Carlo experiment. Results show that for samples containing small schools (sample average may be about 100 students per school but sample includes several schools with about 30 students), the proposed aggregate data estimator performs better than the commonly used OLS and only slightly worse than the multilevel estimator. Thus, when school officials are unable to gather multilevel or disaggregate data, the aggregate data estimator proposed here should be used. When disaggregate data is available, standardizing the value-added estimator should be considered.Productivity Analysis,

Spatial Differences of Land Use Change within Oklahoma's Wheat Belt

Farm Service Agency acreage data for the nine Oklahoma Agricultural Statistics Service districts is analyzed to determine the degree of price response in wheat acreage allocation decisions. Some critics have stated that land use after Freedom to Farm would change little, however these findings show acreage shifted greatly after the policy throughout the state.Land Economics/Use,

FEEDER CATTLE PRICE SLIDES

A theoretical model is developed to explain the economics of determining price slides for feeder cattle. The contract is viewed as a dynamic game with continuous strategies where the buyer and seller are the players. The model provides a solution for the price slide that guarantees an unbiased estimate of cattle weight. An empirical model using Superior Livestock Auction (SLA) data shows price slides used are smaller than those needed to cause the producer to give unbiased estimates of weight. Consistent with the model's predictions, producers slightly underestimate cattle weights.Demand and Price Analysis,

AIDS VERSUS ROTTERDAM: A COX NONNESTED TEST WITH PARAMETRIC BOOTSTRAP

A Cox nonnested test with parametric bootstrap is developed to select between the linearized version of the First Difference Almost Ideal Demand System (FDAIDS) and the Rotterdam model. The Cox test with parametric bootstrap is expected to be more powerful than the various orthodox tests used in past research. The new approach is then used for U. S. meat demand (beef, pork, and chicken) and compared to results obtained with an orthodox test. The orthodox test gives inconsistent results. In contrast, under the same varied conditions, the Cox test with parametric bootstrap consistently indicates that the Rotterdam model is preferred to the FDAIDS.Demand and Price Analysis,

AIDS VERSUS THE ROTTERDAM DEMAND SYSTEM: A COX TEST WITH PARAMETRIC BOOTSTRAP

A Cox test with parametric bootstrap is developed to select between the linearized version of the First-Difference Almost Ideal Demand System (FDAIDS) and the Rotterdam model. A Cox test with parametric bootstrap has been shown to be more powerful than encompassing tests like those used in past research. The bootstrap approach is used with U.S. meat demand (beef, pork, chicken, fish) and compared to results obtained with an encompassing test. The Cox test with parametric bootstrap consistently indicates the Rotterdam model is preferred to the FDAIDS, while the encompassing test sometimes fails to reject FDAIDS.Research Methods/ Statistical Methods,

USING BOTH SOCIOLOGICAL AND ECONOMIC INCENTIVES TO REDUCE MORAL HAZARD

Economists tend to focus on monetary incentives. In the model developed here, both sociological and economic incentives are used to diminish the apparent moral hazard problem existing in commodity grading. Training that promotes graders' response to sociological incentives is shown to increase expected benefits. The model suggests that this training be increased up to the point where the marginal benefit due to training equals its marginal cost. It may be more economical to influence the grader's behavior by creating cognitive dissonance through training and rules rather than by using economic incentives alone.Marketing,

Using Both Sociological and Economic Incentives to Reduce Moral Hazard

Economists tend to focus on monetary incentives. In the model developed here, both sociological and economic incentives are used to diminish the apparent moral hazard problem existing in commodity grading. Training that promotes graders' response to sociological incentives is shown to increase expected benefits. The model suggests this training be increased up to the point where the marginal benefit due to training equals its marginal cost. It may be more economical to influence the grader's behavior by creating cognitive dissonance through training and rules rather than by using economic incentives alone.grading, incentives, moral hazard, norms, social sanctions, Institutional and Behavioral Economics,

THE EFFECT OF ROUNDING ON THE PROBABILITY DISTRIBUTION OF REGRADING IN THE U.S. PEANUT INDUSTRY

This article determines the effect of rounding (pointing-off) of grade percentages to the nearest whole number on the probability distribution of regrading in the peanut industry. Results show that rounding causes graders to have to regrade an extra 4% of samples even when they follow all directions and make no mistakes. When rounding was not used, the sample weight had little effect on the probability of regrading. With rounding, the probability of regrading was reduced by beginning with a larger than 500-gram sample. Thus, rounding provides an incentive to take overweight samples in order to avoid regrading. Overweight samples can overestimate the value of peanuts. A low-cost way to improve peanut grading accuracy would be to round to tenths rather than whole numbers.grading, normal-jump distribution, peanuts, regrading, rounding, Crop Production/Industries,