Economic Payoffs Research Articles

Revisiting Internet Use and Depression Among the Elderly

Four years ago in a paper entitled Internet Use and Depression Among the Elderly, my colleague and I presented evidence indicating that Internet use reduces symptoms of depression among older Americans (55 or older). This showing was based on the sample of over 7,000 retired persons taken from the Health and Retirement Study (“HRS”) conducted at the University of Michigan. Applying a variety of advanced empirical techniques, we found that Internet use is associated with a 20% reduction in depression classification based on a commonly used measure of depressive symptoms (a eight-item CESD score). In this PERSPECTIVE I present the results of an update to the earlier analysis that uses additional data and more sophisticated econometric techniques. Specifically, while the data we used in our first paper was large, the HRS is nonetheless a longitudinal survey. Since depression, at least in some forms, is often a recurrent condition that may persist over a number of years, we decided to exploit the time series component of the HRS to study the role of past depression and Internet use on current depression in older adults. To do so, we use a dynamic probit model, which in some cases is enhanced by matching algorithms. This updated analysis of the data again reveals that Internet use reduces depression categorization and does so by 34%, a reduction similar to, but slightly larger than, that found in our earlier research (20-28%). Thus, consistent with our earlier findings, as depression is estimated to cost the United States about $100 billion annually, the data indicate that policies which expand Internet use among the elderly may have significant economic payoffs.

The propensity to use incentive compensation for non‐family managers in SME family firms

Purpose– The purpose of this paper is to use the socio-emotional wealth perspective to examine how the level of family involvement reduces the propensity to use incentives to non-family managers in small to medium-sized enterprises (SME) family firms. Design/methodology/approach – Primary data were collected from US firms. To evaluate the hypotheses, a logit model was employed on a final sample of 2,019 small family firms.Findings– Results suggest that family influence and control and intra-family transgenerational succession intentions are negatively related to the propensity to use incentives. Also, the interaction effects of family management and ownership reduce the propensity to use incentives.Originality/value– The paper’s empirical findings imply that despite their potential economic benefits, family involvement reduces the probability that incentives will be offered to non-family managers because such incentives are perceived to be inconsistent with the preservation of the family’s socioemotional wealth. Also, choices that reflect a preference for socioemotional wealth may not only be a function of decision framing and loss aversion but also by the size of the economic pay-offs that might be available. The findings suggest that non-family managers in SME family firms may be affected by a family’s preoccupation with its socioemotional endowments. Thus, the authors expect that this paper provides further avenues to explore the decisions about attaining non-economic and economic goals and other strategic issues in family firms.

Terrorism and the Invisible Hook

This article investigates and compares the root causes of transnational terrorism and piracy. In order to accomplish this, we construct a novel data set that catalogues terrorist activity and piracy over the years 1992–2008, paying particular attention to the Arabian Sea and Indian Ocean since 1991. These data are then merged with other information detailing the economic, political, and security posture of each organization during the same period so that we can examine the relationship between economic prosperity, security, terrorism, and piracy. The main conclusion is that terrorism is mostly unrelated to economic conditions, while piracy responds to both economic payoffs and military deterrents.

Incorporating Economic and Political Considerations in Inter-Basin Water Allocations: A Case Study

When an inter-basin water transfer is expected among basins with some level of unfriendliness or hostility, ignoring political considerations, which are generally not integrated in economic investigations, can impede an integrated and efficient management. In this paper, a new economic-political methodology is proposed for the optimal and efficient allocation of water resources among water users in inter-basin water transfer systems. The proposed framework quantifies both the economic payoffs using an “n-person real fuzzy cooperative game”, and the political formation prospect of any coalition, using a Modified Political Accounting System (MPAS). The proposed economic-political methodology is applied to a large scale inter-basin water allocation problem including water donor and receiving basins struggling with water scarcity. The results show how including political considerations in the study may provide a more satisfactory solution compared to the just cost-effective water allocations.

Can Birds of a Feather Fly Together? Evidence For the Economic Payoffs of Ethnic Homophily

Does ethnic homophily (love for ethnically similar individuals) influence investment decisions and their payoffs? We investigate this question using novel data on the ethnic origins of 22,000 U.S.-...

The Internet and Local Wages: A Puzzle

How did the diffusion of the internet affect regional wage inequality? We examine the relationship between business investment in advanced internet technology and local variation in US wage growth between 1995 and 2000. We identify a puzzle. The internet is widespread, but the economic payoffs are not. Advanced internet technology is only associated with substantial wage growth in the 6 percent of counties that were already highly wealthy, educated, and populated and had IT-intensive industry. Advanced internet and wage growth appear unrelated elsewhere. Overall, advanced internet explains over half the difference in wage growth between already well-off counties and all others. JEL: J31, L86, O33, R11, R23

Science, technology and innovation in a 21st century context

Linking the words ‘‘science,’’ ‘‘technology,’’ and ‘‘innovation,’’ may suggest that we know more about how these activities are related than we really do. This very common linkage implicitly conveys a linear progression from scientific research to technology creation to innovative products. More nuanced pictures of these complex activities break them down into components that interact with each other in a multi-dimensional socio-technologicaleconomic network. A few examples will help to make this clear. Science has always functioned on two levels that we may describe as curiosity-driven and need-driven, and they interact in sometimes surprising ways. Galileo’s telescope, the paradigmatic instrument of discovery in pure science, emerged from an entirely pragmatic tradition of lens-making for eye-glasses. And we should keep in mind that the industrial revolution gave more to science than it received, at least until the last half of the nineteenth century when the sciences of chemistry and electricity began to produce serious economic payoffs. The flowering of science during the era, we call the enlightenment owed much to its links with crafts and industry, but as it gained momentum science created its own need for practical improvements. After all, the frontiers of science are defined by the capabilities of instrumentation, that is, of technology. The needs of pure science are a huge but poorly understood stimulus for technologies that have the capacity to be disruptive precisely because these needs do not arise from the marketplace. The innovators who built the World Wide Web on the foundation of the Internet were particle physicists at CERN, struggling to satisfy their unique need to share complex information. Others soon discovered ‘‘needs’’ of which they had been unaware that could be satisfied by this innovation, and from that point the Web transformed the Internet from a tool for the technological elite into a broad platform for a new kind of economy.

Optimal groundwater extraction under uncertainty: Resilience versus economic payoffs

Summary This paper evaluates the trade-off between resilience and economic payoffs in terms of groundwater extraction where there is a risk of an irreversible and catastrophic event. A dynamic and spatial model is developed that incorporates a stochastic recharge process and the risk of an irreversible catastrophic event (such as saltwater intrusion) that arises when hydraulic heads fall below a given threshold. The results show that if the threshold is uncertain then controlling both the rate and depth of extraction can generate a higher economic return and a lower probability of crossing the threshold than only controlling the rate of extraction. This occurs even if the extraction rate is set optimally and is less than the extraction rate than when two forms of control are used. The model and findings provide an applied framework to understand and to quantify where there might be ‘win–win’ outcomes, and trade-offs between economic payoffs and resilience in terms of groundwater extraction.

“Modernization” increases parental investment and sibling resource competition: evidence from a rural development initiative in Ethiopia

Evolutionary models of parental investment often assume that negative effects of competition between offspring (i.e., quantity-quality trade-off effects) will be most apparent under conditions of resource scarcity. However, improvements in resource access associated with “modernization” may reduce levels of extrinsic environmental risk, creating a stronger association between parental investment and offspring success. Here we provide evidence that a rural development initiative in Ethiopia is associated with increased levels of parental investment in offspring status and increased levels of competition for this investment between siblings. Villages with access to an improved water supply, which have reduced levels of childhood mortality, are associated with higher investments in education, and the likelihood of offspring education is more determined by position within the family, compared to neighboring villages without access to water taps. However, there is no evidence of higher parental investment of base-level resources directly related to child health (indicated by childhood vaccination rates). Educational investment may be more sensitive to mortality changes, despite being costly and “surplus” to essential functions, because it has the potential to introduce the greatest economic payoffs for children, e.g., from jobs in an emerging wage-labour market. While tap villages are currently associated with a higher birth rate, we anticipate that in time, and with improved access to family planning, fertility will drop in response to shifts in environmental risk and improved pay-offs to strategies of high parental investment. These villages may be experiencing the initial stages of a demographic transition to small family sizes.

An Unclear Attraction: A Critical Examination of Soft Power as an Analytical Category

The concept of soft power Joseph Nye proposed almost two decades ago has provided academics and policymakers with a tool through which to refer to sources of influence other than military force and economic payoffs. The notion of soft power captures the idea that assets less tangible than bombs or cheque books, such as culture and values, also act as power resources. In Nye’s own words, ‘When you can get others to admire your ideals and to want what you want, you do not have to spend as much on sticks and carrots to move them in your direction.’ 1 Since it was first introduced, the concept of soft power has arguably had impact on both analysts and practitioners of foreign policy. Actors in the policy world have employed the concept of soft power to highlight the importance of a comprehensive foreign policy that incorporates cultural and public diplomacy. Policymakers in various countries have adopted this terminology to advance and justify their international efforts towards cultural promotion and public outreach. As one US State Department official testified before the US Senate, ‘Along with the ‘‘hard power’’ exercised by the military, the ‘‘soft power’’ of public diplomacy ... is an essential support in advancing U.S. interests abroad.’ 2 Similarly, the

Another day, another dollar: Enterprise resilience under terrorism in developing countries

This study extends the literature on entrepreneurship in developing countries by offering a two-stage explanation for the paradoxical observation that enterprise activities often flourish under extreme adversity. Our findings complement the base-of-pyramid and peace-through-commerce attention to the growing role of business in international development by fleshing out the functions of enterprise resilience under terrorism. We first explain how terrorism conditions (outbreak, escalation, and reduction) may create psychological incentives for enterprise resilience; then we show that, controlling for ex ante terrorism conditions, enterprise resilience yields more favorable economic payoffs at higher levels of terrorism, especially for informal entrepreneurs.

Internet Use and Depression Among the Elderly

The American Recovery and Reinvestment Act of 2009 directs over $7 billion to expand broadband Internet availability and adoption in the United States. One target of such funding is the elderly population, a group of Americans for which broadband adoption is relatively low. An interesting question is what benefits do such efforts afford? We employ a dataset of over 7,000 elderly retired persons to evaluate the role of Internet use on mental well-being. Well-being is measured using the eight-point depression scale developed by the Center for Epidemiologic Studies (CES-D). Empirical techniques include single equation regression, instrumental variables and propensity score methods. All procedures indicate a positive contribution of Internet use to mental well-being of elderly Americans, and estimates indicate that Internet use leads to about a 20% reduction in depression classification. As depression is estimated to cost the United States about $100 billion annually, expanding Internet use among the elderly may have significant economic payoffs.

Domestic Supply, Job-Specialization and Sex-differences in Pay

This article proposes an explanation of sex-differences in job-allocation and pay in different institutional contexts. Job-allocation calculations are considered to be related to (1) the distribution of housework and (2) the skill-specialization requirements of jobs. In a context of uncertainty and imperfect information, housework and job-specialization requirements generate a particular incentive structure for each sex. This incentive structure can, however, be altered by governmental action. Welfare policies and services are expected to affect allocation decisions at the micro-level both by reducing the risks of skill-depreciation for women as well as by increasing their intra-household bargaining power. Both effects combined should reduce the economic pay-offs of “traditional” sphere-specialization by sex. This model is tested using a sub-sample of married and cohabiting employees drawn for the second round of the European Social Survey. Results based on nested random-intercept regressions show that sex-differences in job-specialization and housework can explain the wage effects of occupational sex-composition and have a significant direct impact on hourly earnings. Welfare-regime interactions also suggest that the association between housework and earnings is much weaker in societies displaying high levels of defamilialization and decommodification.

Following the Money: Muslim versus Muslim in Bosnia's Civil War

A largely understudied aspect of the 1992-95 Bosnian war-the intra-Muslim war in northwestern Bosnia-illustrates the importance of local elites and micro-level economic incentives in civil wars.' Though short factual references to the conflict abound, there exists no systematic explanation as to why the intra-Muslim civil war-which resulted in close to twice the number of battleground deaths as the Serb-Muslim conflict in that area-occurred in the first place.2 Why was there violent conflict within the Bosnian Muslim community at a time when its ethnic group was at war, facing intense violence and forcible expulsion by Serb and Croat forces? Primary source materials, including wartime documents as well as personal interviews with some of the war's leading actors, shed light on the reasons behind this abstruse internecine conflict. In civil wars where the broader conflict is cast in ethnic terms and the opportunity cost of fighting is high, that is, where GDP per capita is high, economic incentives can still seriously affect group behavior. In order to have this effect, there have to be high micro-level economic payoffs as well as local elites who can guarantee the survival of their constituents while providing access to these payoffs. Previous hypotheses fail to explain the puzzle of Bosnia's intra-Muslim war. However, simple tools from consumer choice theory can be utilized to lay out a theoretical conceptualization of the trade-off between ethnicity and economic payoffs during civil wars in the presence as well as the absence of strong local elites. Bosnia's intra-Muslim conflict illustrates this theoretical mechanism.

Big Promises: David Berube's Nano-Hype

Big Promises:David M. Berube’s Nano-Hype Bruce E. Seely (bio) In the spring of 2001, David Berube and a colleague from the University of South Carolina visited the National Science Foundation to talk to the program director for Science and Technology Studies (this reviewer) about support for projects examining the societal and ethical implications of nanotechnology. The National Nanotechnology Initiative (NNI), an interagency federal program focused on nano-scale science and technology, was just getting started and nanotechnology was being identified as the "next big thing" by many in the domestic and international science, engineering, and science-policy communities. Since then, funding in the United States has exceeded $1 billion annually, with similar amounts devoted to research in Europe, in Japan, and in south Asia. Berube's NSF visit was the first step in creating a program of nanotechnology research at South Carolina that led, among other things, to Nano-Hype.1 Berube's is an important study about a significant subject. Since the human genome project in the 1980s, large-scale science and technology research initiatives by the federal government have required attention to the ethical, legal, and social implications (ELSI) of emergent fields. NNI borrowed explicitly from the genome project in establishing such a requirement as a very visible element of its research program, in part to limit the type of resistance that surrounded recombinant DNA research and the commercialization of genetically modified organisms. Berube discusses all [End Page 234] of this and much more; indeed, he provides the first detailed study specifically concerned with the societal implications of nanotechnology, including the challenges and obstacles facing societal-implications scholarship. The book's title identifies Berube's organizing theme for exploring the societal implications of research related to exploiting nature at the nano scale (10-9 meters); it is his principal concern. Correctly observing that hype has been a pervasive feature of this rapidly growing research arena, he examines the various reasons that supporters of the NNI and nanotechnology have used to justify the massive commitment of funds: enormous economic payoffs in the form of new technologies; fundamental transformations in the nature of science and technology itself; the insuring of national competitiveness and national security. Indeed, some promoters of nanotechnology promise that it will change everything. They consider it to be the most important development since the Industrial Revolution, since printing, or even since the development of agriculture. Hype indeed! Historians of technology and science inevitably question such claims, and Berube seeks to examine why so very much is claimed for this emerging field. He finds first of all that the development of nanotechnology research has rested to a significant degree on uncritical assertions, on salesmanship, on hype, and his book performs a valuable service in opening to view and studying this phenomenon. But it is also significant that Berube aims to provide more than a detailed review of the societal implications of nanotechnology. As he states early on, "My goal is to provide the reader with a better understanding of how nanotechnology has been communicated to the many audiences willing, sometimes even anxious, to listen" (p. 23). In fact, this volume amounts to a primer that identifies many of the actors involved in the process of developing nanotechnology. After an opening section that specifically reviews the question of hyping nanotechnology, Berube offers chapters on the agencies and officials concerned with nanotechnology, on the governmental initiatives (U.S. and otherwise) funding it, on the promotional reports behind it, and on NGOs. In addition, there are chapters on likely fields of application and on nanohazards and nanotoxicology. The two concluding chapters return to the societal-implications question and to the role of the public in the decision-making process. Thus the book attempts to survey a very broad area. In general it achieves its goals, addressing both the specific question of the place of hype in nanotechnology and the wider attempt to present a snapshot of the entire field at this early stage of its development. But there are some issues worth raising, for—as Berube is well aware—it matters that this first STS review of nanotechnology gets things right. The book rests on an immense research...

POACHING, ENFORCEMENT, AND THE EFFICACY OF MARINE RESERVES

Marine reserves are promoted as an effective supplement to traditional fishery management techniques of harvest quotas and effort limitation. However, quantitative fishery models have ignored the impact of noncompliance (poaching). Here we link a model of a harvested fish population to a game-theoretic representation of fisherman behavior to quantify the effect of poaching on fishery yield and the enforcement effort required to maintain any desired level of reserve effectiveness. Although higher fish densities inside reserves will typically entice fishermen to poach, we show that the initial investment in enforcement efforts provides the greatest return on maintaining the benefits of the reserve to the fishery. Furthermore, we find that poaching eliminates the positive effect of fish dispersal on yield that is predicted by traditional models that ignore fisherman behavior. Our results broaden a fundamental insight from previous models of marine reserves, the effective equivalence of the harvest quota and reserve fraction, to the more realistic scenario in which fishermen attempt to maximize their economic payoffs.

The Economic Pay-Offs to Informal Training: Evidence from Routine Service Work

This study examines the relationship between informal training and job performance among 2,803 telephone operators in a large unionized U.S. telecommunications company. The authors analyze individual-level data on monthly training hours and job performance over a five-month period in 2001 as provided by the company's electronic monitoring system. The results indicate that the receipt of informal training was associated with higher productivity over time, when unobserved individual heterogeneity is taken into account. Workers with lower pre-training proficiency showed greater improvements over time than did those with higher pre-training proficiency. Finally, whether the trainer was a supervisor or a peer also mattered: workers with below-average pre-training proficiency achieved greater productivity gains through supervisor training, while workers with average pre-training proficiency achieved greater productivity gains through peer training.

Information Technology Adoption and Political Regimes

What explains the different rates of internet use across nations, otherwise known as the worldwide digital divide? Essentially, this is a question about the determinants of technology adoption, a debate that has been dominated by two schools of thought—one focuses on the characteristics of the technology itself, the other, on the characteristics of the adopting body, that is, the social and institutional context in which adopters operate. This paper attempts to integrate these two theories by focusing on the features of both information technologies and adopting entities. We confirm the well-documented findings that income, trade, infrastructure, market-oriented policies, and political liberties explain one measure of the digital divide. However, we also find a more complex relationship between political liberties and internet adoption. Differences in political liberties do not lead to uniform differences in internet use, as the literature often assumes. Specifically, not all authoritarian regimes discourage internet use similarly. High-income, market-oriented autocratic states are less draconian. Although they fear the political consequences of internet expansion, they also welcome its economic payoffs. We provide quantitative and qualitative evidence that the more authoritarian the country, the stronger the impact of income on internet expansion. This may be beneficial for economic development, but contrary to modernization theories, it may not necessarily bolster forces of democratization in these regimes.

The Economic Payoffs from Marine Reserves: Resource Rents in a Stochastic Environment*

In this paper we analysed the economic payoffs from marine reserves using a stochastic optimal control model, with a jump‐diffusion process. The results show that even if the reserve and harvested populations face the same negative shocks, harvesting is optimal, the population is persistent and there is no uncertainty over current stock size, a reserve can increase resource rents. Using fishery data we demonstrate that the payoffs from a reserve, and also optimum reserve size, increase the larger is the magnitude of the negative shock, the greater its frequency and the larger its relative impact on the harvested population.

Employee-stock-options, production/service functions and game theory

The article seeks to (a) analyze the economic and behavioral issues pertaining to accounting for employee stock options (“ESOs”), (b) analyze how ESOs affect traditional assumptions of production functions (in both the manufacturing and service sectors), (c) analyze how ESO transactions can be explained using game theory models [M. Nwogugu, Legal, economic and behavioral issues in accounting for stock options, Managerial Auditing Journal 19(9) (2004) 1078–1118]. ESOs substantially change the traditional production/service function, because ESOs have different psychological impacts (motivation, or de-motivation), can create intangible capital (i.e., Social Capital, Reputational Capital, and Human Capital), and create different economic payoffs. Although Game Theory is a flawed concept, it can be helpful in charactering interactions in ESO transactions. ESOs involve a two-stage game that can be modeled. There are no perfect Nash Equilibria for the two sub-games. The large number of actual and potential participants in these games greatly complicates resolution of equilibria and increases the dynamism of the game(s) in the sense that players are more sensitive to each other’s moves.