Product boycott a good idea for controlling child labor? A theoretical investigation

A popular form of action to curb child labor and uphold international labor standards in general is a `product boycott' by consumers. There are labeling agencies that inform us if, for instance, a carpet or a hand-stitched soccer ball is free of child labor. The presence of a consumer boycott will typically mean that products tainted by child labor will command a lower price on the market than ones certified to be untainted. It is popularly presumed that such consumer activism is desirable. The paper formally investigates this presumption and shows that consumer product boycotts can, in a wide class of situations, have an adverse reaction that causes child labor to rise rather than fall. This happens under weak and plausible assumptions. Hence, there has to be much greater caution in the use of consumer activism, and one has to have much more detailed information about the context where child labor occurs, before using a boycott.child labor, product boycott, labor standards

Inequality of Happiness: Evidence of the Compression of the Subjective-Well-Being Distribution with Economic Growth

The use of Subjective Wellbeing (SWB) measures in economics research has grown markedly (Kahneman and Krueger 2006). This has come about for at least two reasons. First, the measures have been systematically validated as reliable for examining a range of questions. Second, economists have long relied on income as a proxy for wellbeing. However, research shows that there are potentially large slippages between economic indicators and wellbeing (Diener and Seligman 2004). Thus, SWB measures have become an important alternative proxy for wellbeing. Indeed, SWB measures have also caught the attention of policy makers. The OECD launched the Better Life Index in 2011 as an alternative wellbeing measure; and the former French President Nicolas Sarkozy formed the Stiglitz Commission in 2008 to identify the limits of gross domestic product (GDP) as a measure of wellbeing and to identify alternative measures (Stiglitz, Sen, and Fitoussi 2010). When studying the distribution of income, economists have long recognized the importance of examining measures of central tendency and dispersion, as the latter are necessary to understand income inequality and poverty (Stiglitz, Sen, and Fitoussi 2010). Thus, there is a vast literature analyzing both the first and second moments of the distribution of income. For example, the Lorenz and Kuznets curves try to model the distribution of income, and the Gini coefficient summarizes the entire distribution in a scalar (see Atkinson 1970; Gastwirth 1972; Gini 1921; Gottschalk and Smeeding 1887; Kuznets 1955; and Lorenz 1905). In contrast, the vast majority of SWB research focuses on mean SWB. Given the current interest in SWB measures, and recognizing that the entire distribution of SWB merits study, we believe it is important to study SWB inequality (dispersion) as well as mean SWB. In this paper, we contribute to the emerging SWB literature by investigating the relationship between economic growth and SWB inequality using data from the World Values Survey (WVS) and the World Bank’s World Development Indicators (WDI). The results suggest that economic growth is inversely related to SWB inequality in cross-sectional analysis. There is also some evidence from time-series analysis that countries that experience greater economic growth rates also experience the greater decreases in SWB inequality, although this pattern does not hold for two of the fastest growing countries in the dataset. This is important because it indicates that economic growth may reduce SWB inequality over time, even if it does not increase mean SWB. The paper proceeds as follows. Section II reviews the related literature. Section III describes the data. Section IV presents the results. Section V concludes

Is Product Boycott a Good Idea for Controlling Child Labor?

A popular form of action to curb child labor and uphold international labor standards in general is a product boycott by consumers. There are labeling agencies that inform us if, for instance, a carpet or a hand-stitched soccer ball is free of child labor. The presence of a consumer boycott will typically mean that products tainted by child labor will command a lower price on the market than ones certified to be untainted. It is popularly presumed that such consumer activism is desirable. The paper formally investigates this presumption and shows that consumer product boycotts can, in a wide class of situations, have a backlash that causes child labor to rise rather than fall. This happens under weak and plausible assumptions. Hence, there has to be much greater caution in the use of consumer activism and one has to have much more detailed information about the context, where child labor occurs, before using a boycott.

The Great Recession and Life Satisfaction: The Unique Decline for Americans Approaching Retirement Age

During the 2007-09 Great Recession, the American economic environment was bleak: unemployment roughly doubled, median household incomes fell 5 per cent, average household net worth declined by a third, and consumer spending dropped markedly. Each month, the Bureau of Labor Statistics reported massive lay-offs, disappointing job creation numbers, and a dismal outlook for future job growth. The literature studying the impact of the Great Recession on American households finds that those nearing retirement age were particularly hard hit. For example, using data from the American Life Panel, Hurd and Rohwedder (2010) find that 25 per cent of respondents aged 50-59 lost at least 35 per cent of their retirement savings, and many took early retirement due to unemployment. Chakrabarti et al. (2015) corroborate these findings using data from credit report records and various household surveys. Using asset and labour market data from the Health and Retirement Study, Gustman et al. (2012) find that those approaching retirement age during the Great Recession lost retirement wealth, whereas older cohorts gained retirement wealth when they had approached retirement age prior to the Great Recession. We explore the effects of the Great Recession on the SWB of adult working-age Americans and conduct various analyses to examine whether those approaching retirement age were more adversely impacted. 1 We use a difference-in-differences (DD) approach, comparing the change in pre- to post-recession SWB of those approaching retirement age to younger working-age adults. For younger working-age adults, we find no difference in their pre-to post-recession SWB. In contrast, we find that the post-recession SWB of those approaching retirement age was significantly lower than prerecession. We explore channels through which the Great Recession may have differentially impacted the SWB of those approaching retirement age and find evidence suggestive of wealth effects. The result and mechanism are specific to a context in which the institution of retirement is the norm and is funded with personal wealth; this is increasingly relevant as countries develop economically, and older adults become less likely to finance consumption with labour income

Affect and Overconfidence: A Laboratory Investigation

We conduct two incentivized random-assignment experiments to investigate whether overconfidence is impacted by (1) incidental mild positive affect, or (2) incidental mild negative affects-anger, fear, and sadness. We measure overconfidence using overestimation of past quiz-performance and overestimation of past quiz-performance compared to peers. The results of the first experiment indicate that the effect of positive affect on both measures of overconfidence is positive and significant for male subjects. While mood-inducement is equally successful for female subjects, their overconfidence is unaffected by positive affect. These positive-affect results are robust to various specification checks. In the second experiment, we find consistent evidence of neither anger, fear, nor sadness\u27s effect on overconfidence; the lack of a result is attributable either to a genuine lack of relationship between these affects and overconfidence or to confounded mood-inducements. The effect of positive affect on overconfidence may help explain the relationship between mood and speculative bubbles and between mood and trading volume. Further, our results have implications for the effect of happiness on overconfidence and the role of emotions in economic decision-making, in general. Finally, we examine the neural evidence supported by our data

Pricing Competition: A New Laboratory Measure of Gender Differences in the Willingness to Compete

Experiments have demonstrated that men are more willing to compete than women. We develop a new instrument to “price” willingness to compete. We find that men value a $2.00 winner-take-all payment significantly more (about$0.28 more) than women; and that women require a premium (about 40 %) to compete. Our new instrument is more sensitive than the traditional binary-choice instrument, and thus, enables us to identify relationships that are not identifiable using the traditional binary-choice instrument. We find that subjects who are the most willing to compete have high ability, higher GPA’s (men), and take more STEM courses (women)

The rapid evolution of homo economicus: Brief exposure to neoclassical assumptions increases self-interested behavior

Economics students have been shown to exhibit more selfishness than other students. Because the literature identifies the impact of long-term exposure to economics instruction (e.g., taking a course), it cannot isolate the specific course content responsible; nor can selection, peer effects, or other confounds be properly controlled for. In a laboratory experiment, we use a within- and across-subject design to identify the impact of brief, randomly-assigned economics lessons on behavior in the ultimatum game (UG), dictator game (DG), prisoner\u27s dilemma (PD), and public-goods game (PGG). We find that a brief lesson that includes the assumptions of self-interest and strategic considerations moves behavior toward traditional economic rationality in UG, PD, and DG. Despite entering the study with higher levels of selfishness than others, subjects with prior exposure to economics instruction have similar training effects. We show that the lesson reduces efficiency and increases inequity in the UG. The results demonstrate that even brief exposure to commonplace neoclassical economics assumptions measurably moves behavior toward self-interest

Do Gender-Variant Preferences for Competition Persist in the Absence of Performance?

The well-established gender gap in preferences for competition has been attributed to gender-variant feelings about performing in competitive environments. Using a novel task with agency, in which subjects experience competition but cannot perform, we find evidence that performing may be sufficient but not necessary to generate gender-variant preferences for competition. This suggests that the gender-gap cannot be eliminated by correcting beliefs alone; that eliminating performance—for example, routinizing tasks—may not eliminate the gender gap; and that there may be heretofore unidentified determinants of preferences for competition—for example, men may prefer payment schemes that are based on social comparison. (JEL J16, C91, J24

Trends in the Happiness of Single Mothers: Evidence from the General Social Survey

We study the subjective well being (SWB) of single mothers from 1972 to 2008 using data from the General Social Survey. While past literature has examined the outcomes of single mothers, an investigation of SWB is warranted, since it has been shown that there are potentially large slippages between economic indicators and SWB. Our results indicate that (i) single mothers report being significantly less happy than non-single-mothers, and (ii) this happiness gap shrank between 1972 and 2008

Local neighbors as positives, regional neighbors as negatives: Competing channels in the relationship between others’ income, health, and happiness

That well-being is decreasing in others’ income is termed the “relative income hypothesis” (RIH) by scholars of subjective well-being (SWB) and has substantial empirical support. Some studies, however, present evidence of both positive and negative explanatory channels in the relationship between others’ income and SWB. We develop a theoretical framework integrating four distinct channels through which neighbors’ income can affect utility: public goods, cost of living, expectations of future income, and direct effects (RIH or altruism). We estimate the relationship with SWB data from the U.S. Gallup-Healthways Well-Being Index and median-income data from the American Community Survey for ZIP codes and MSAs. The relationship is proximity-dependent: positive (negative) when using ZIP-code (MSA) median income as reference income, suggesting that positive (negative) channels dominate locally (regionally) and reconciling the literature’s seemingly divergent results. These findings are consistent across SWB measures and many health-related indices. Additional analyses support the public-goods and cost­of-living channels