Increase In Generosity Research Articles

Unemployment Insurance in Macroeconomic Stabilization

Abstract I study unemployment insurance (UI) in general equilibrium with incomplete markets, search frictions, and nominal rigidities. An increase in generosity raises the aggregate demand for consumption if the unemployed have a higher marginal propensity to consume than the employed or if agents precautionary save in light of future income risk. This raises output and employment unless monetary policy raises the nominal interest rate. In an analysis of the U.S. economy over 2008–2014, UI benefit extensions had a contemporaneous output multiplier around 1. The unemployment rate would have been as much as 0.4 pp higher absent these extensions.

Generosity during COVID-19: investigating socioeconomic shocks and game framing

This paper investigates two research questions. First, we examine the impact of the negative socioeconomic shock of the COVID-19 pandemic on generosity towards different types of recipients, and changes in generosity as the shock worsens over time. This is carried out by analysing the responses of 1255 US citizens to four dictator games played over 8 weeks of the early stages of the COVID-19 pandemic, corresponding to four different recipients: relatives, neighbours, strangers, and the state. Second, we investigate whether the order in which the games are played create a framing effect that influences social preferences in terms of generosity towards the different recipients. Results capture an increase in generosity despite the worsening pandemic, indicating strong perceived increasing marginal benefits of generosity in times of hardship. There is significant heterogeneity in the effects of additional regressors, such as perceived contagion risk, on the likelihood and amount donated to strangers, family members, or the government. At the same time, some significant effects of framing bring new evidence regarding the stability of social preferences.

Optimal Automatic Stabilizers

Abstract Should the generosity of unemployment benefits and the progressivity of income taxes depend on the presence of business cycles? This paper proposes a tractable model where there is a role for social insurance against uninsurable shocks to income and unemployment, as well as business cycles that are inefficient due to the presence of matching frictions and nominal rigidities. We derive an augmented Baily–Chetty formula showing that the optimal generosity of the social insurance system depends on a macroeconomic stabilization term. This term pushes for an increase in generosity when the level of economic activity is more responsive to social programmes in recessions than in booms. A calibration to the US economy shows that taking concerns for macroeconomic stabilization into account substantially raises the optimal unemployment insurance replacement rate but has a negligible impact on the optimal progressivity of the income tax. More generally, the role of social insurance programmes as automatic stabilizers affects their optimal design.

Association of State-Level Earned Income Tax Credits With Rates of Reported Child Maltreatment, 2004-2017.

Poverty is an important predictor of child maltreatment. Social policies that strengthen the economic security of low-income families, such as the Earned Income Tax Credit (EITC), may reduce child maltreatment by impeding the pathways through which poverty leads to it. We used variations in the presence and generosity of supplementary EITCs offered at the state level and administrative child maltreatment data from the National Child Abuse and Neglect Data System (NCANDS) to examine the effect of EITC policies on state-level rates of child maltreatment from 2004 through 2017. Two-way fixed effects models indicated that a 10-percentage point increase in the generosity of refundable state EITC benefits was associated with 241 fewer reports of neglect per 100,000 children (95% Confidence Interval [CI] [-449, -33]). An increase in EITC generosity was associated with fewer reports of neglect both among children ages 0-5 (-324 per 100,000; 95% CI [-582, -65]) and children ages 6-17 (-201 per 100,000; 95% CI [-387, -15]). Findings also suggested associations between the EITC and reductions in other types of maltreatment (physical abuse, emotional abuse); however, those did not gain statistical significance. Economic support policies may reduce the risk of child maltreatment, especially neglect, and improve child wellbeing.

Unemployment Insurance in Macroeconomic Stabilization

I study unemployment insurance (UI) in general equilibrium with incomplete markets, search frictions, and nominal rigidities. An increase in generosity raises the aggregate demand for consumption if the unemployed have a higher marginal propensity to consume (MPC) than the employed or if agents precautionary save in light of future income risk. This raises output and employment unless monetary policy raises the nominal interest rate. In a quantitative analysis of the U.S. economy over 2008-2014, UI benefit extensions had a contemporaneous output multiplier around 1 or higher. At its peak, the unemployment rate would have been 0.5pp higher absent these extensions.

Seasonal altruism: How Christmas shapes unsolicited charitable giving

Christmas is a holiday of Christian origin with traditions that emphasize prosocial behavior, including charitable giving, but does it actually make people more altruistic? Responding to this question poses a challenge because of the confounding factors of charitable tax breaks, reciprocity motives, pressure from the solicitors and persuasive campaigns for giving that are more prevalent in December. In this paper, I use a unique solicitation situation where these factors are eliminated. Based on nine years of data and more than 50 million giving decisions, I provide three main results. First, the month of December is associated with a 14% increase in the probability to make a donation, thereby providing strong support to the notion of seasonal altruism. Second, exploiting a reform that changed the price of giving, I find that this December effect is equivalent to a 32% discount on charitable giving. Finally, half of the December increase in generosity persists into January before returning to the baseline in February.

Seasonal Social Preferences.

Christmas is when people are expected to act selflessly for the well-being of others, but are people actually more altruistic at this time of the year? Responding to this question poses a challenge because of the confounding factors of charitable tax breaks, reciprocity motives, direct social pressure and persuasive campaigns for giving that are more prevalent in December. In this paper, I use a unique solicitation situation where these factors are eliminated. Using nine years of data and more than 50 million individual giving decisions, I provide three main results. First, the month of December is associated with an 18 percent increase in the proportion of donors, thereby providing strong support to the notion of seasonal social preferences. Second, exploiting a reform that changed the price of giving, I find that this December effect is equivalent to a 42 percent discount on charitable giving. Finally, half of the December increase in generosity persists into January before returning to the baseline in February.

Effects of religious versus conventional cognitive-behavioral therapy on generosity in major depression and chronic medical illness: A randomized clinical trial.

© 2015 American Psychological Association. Generosity can be an effective coping strategy for dealing with mental and physical health problems. This study examined whether religiously-integrated cognitive behavioral therapy (RCBT) was more effective than conventional CBT (CCBT) on increasing generosity among religious persons with major depressive disorder (MDD) and chronic medical illness (CMI). Participants (N = 132) with MDD and CMI were randomized to receive 10 sessions of RCBT or CCBT. Assessment measures administered at baseline, 12 weeks, and 24 weeks included the Interpersonal Generosity Scale, a 29-item scale for religious involvement, and depression diagnosis and severity. Effects of treatment group on generosity were examined from baseline through 24 weeks. Mixed effect regression models were used to compare trajectories of change in generosity. Also examined were the effect of baseline religiosity on generosity trajectory and the effect of baseline generosity on depressive symptom trajectory. Generosity increased significantly over time; however, no significant difference was found between RCBT and CCBT in their effects on generosity. Client religiosity did not moderate these effects. However, higher baseline religiosity predicted increases in generosity over time independent of treatment group. Although greater baseline generosity did not predict a faster decline in depressive symptoms over time, an increase in generosity during treatment was associated with a decline in depressive symptoms. In conclusion, both RCBT and CCBT led to an increase in generosity. Higher baseline religiosity predicted an increase in generosity over time regardless of treatment group, and an increase in generosity during treatment was associated with a decline in depressive symptoms over time.

When Does Gossip Promote Generosity? Indirect Reciprocity Under the Shadow of the Future

Reputation through gossip is a key mechanism promoting cooperation. The present research proposes that gossip promotes cooperation when one anticipates future interdependence with the gossip recipient (Hypothesis 1), that this effect is more pronounced for proself, compared to prosocial, individuals (Hypothesis 2), and explores the mediating role of reputational concern and expected indirect benefits in the relation between gossip and cooperation. Results from three studies supported these hypotheses, showing that people are more generous in response to gossip to their future interaction partner(s), compared with gossip to other(s) they would never meet or no gossip. Moreover, proselfs, compared with prosocials, showed a larger increase in generosity when they anticipated future interactions with the gossip recipient(s). The observed gossip-based generosity was primarily mediated by reputational concern rather than expected indirect benefits from future partners, and the mediation of reputational concern was more pronounced for proselfs than for prosocials.

A friend in need: Time-dependent effects of stress on social discounting in men

Stress is often associated with a tend-and-befriend response, a putative coping mechanism where people behave generously towards others in order to invest in social relationships to seek comfort and mutual protection. However, this increase in generosity is expected to be directed only towards a delimited number of socially close, but not distant individuals, because it would be maladaptive to befriend everyone alike. In addition, the endocrinological stress response follows a distinct temporal pattern, and it is believed that tend-and-befriend tendencies can be observed mainly under acute stress. By contrast, the aftermath (>1h after) of stress is associated with endocrinological regulatory processes that are proposed to cause increased executive control and reduced emotional reactivity, possibly eliminating the need to tend-and-befriend. In the present experiment, we set out to investigate how these changes immediately and >1h after a stressful experience affect social-distance-dependent generosity levels, a phenomenon called social discounting. We hypothesized that stress has a time-dependent effect on social discounting, with decisions made shortly after (20min), but not 90min after stress showing increased generosity particularly to close others. We found that men tested 20min after stressor onset indeed showed increased generosity towards close but not distant others compared to non-stressed men or men tested 90min after stressor onset. These findings contribute to our understanding on how stress affects prosocial behavior by highlighting the importance of social closeness and the timing of stress relative to the decision as modulating factors in this type of decision making in men.

The Importance of Unemployment Insurance as an Automatic Stabilizer

We assess the extent to which unemployment insurance (UI) serves as an automatic stabilizer to mitigate the economy's sensitivity to shocks. Using a local labor market design based on heterogeneity in local benefit (defined as the percentage of household income recovered by the unemployment benefit), we estimate that a one standard deviation increase in generosity attenuates the effect of adverse shocks on employment growth by 7% and on earnings growth by 6%. Consistent with the hypothesis that this effect derives from the local demand channel, we find that consumption is less responsive to local labor demand shocks in counties with more generous benefits. Our analysis finds that the local fiscal multiplier of unemployment insurance expenditure is approximately 1.9. Overall, our results suggest that UI has a beneficial effect on the economy by decreasing its sensitivity to shocks.

Salaries in Space

This article, drawing on a rich panel of administrative data comprising all public school teachers employed in Kentucky from 1997 to 2005, utilizes methods developed in spatial econometrics to test for spatial interdependence in the teacher remuneration policies utilized by public school districts. The results of the best fitting model suggest that a 1 percentage point increase in the salary generosity of a particular district’s distance-weighted neighbors yields a 0.57 percentage point increase in the generosity of salaries within that district, even after controlling for relevant district characteristics and including time and district fixed effects. The results are discussed within the context of state education finance reforms, the school choice movement as well as the continued national focus on improving teacher quality as a primary mechanism to increase student achievement.

On The Long-Term Macroeconomic Effects of Social Security Spending: Evidence For 12 Eu Countries

We estimate the long-term impact of social security and social protection spending in a set of twelve EU countries. We estimate country-specific VARs relating GDP, unemployment, savings, and social spending. We find that social spending has a negative effect in most countries while the effects on savings are either not significant or positive but small. In turn, the negative effects on output are significant and in some cases large. Unemployment is the dominant channel through which social spending affects output. Our results imply that any increase in generosity would, under the current situation, bring detrimental macroeconomic effects. In addition, a less distortionary tax mix should be used to finance redistributive spending and the insurance component of the systems should be changed in the direction of a capitalization regime based on defined contributions. Obviously, this transition would take time and would not be costless but neither is maintaining the status quo.

The Value of Teachers' Pensions in England and Wales*

AbstractThe paper examines in detail the value of pension provision to teachers in the public sector in England and Wales, comparing pension accrual under both the pre‐ and the post‐2007 schemes. We find that, at the median, pension accruals under the old scheme rules were worth 14.7 per cent of current salary to members, while if the new scheme rules were applied to all current members this would fall to 11.2 per cent. We find that this reduction in generosity is more than sufficient to offset the increase in generosity implied by rising life expectancies over the last quarter of a century. In addition, we show how the estimates depend on both the shape of the underlying age–earnings profile and the headline pay award. We find that the value of the new scheme rules to Teachers' Pension Scheme (TPS) members is similar to the value of the defined contribution pension offered to civil servants, but worth more than a simple, example, private sector defined contribution scheme.

Who Benefits from the Earned Income Tax Credit? Incidence Among Recipients, Coworkers and Firms

How are hourly wages affected by the Earned Income Tax Credit? Two strategies are utilized to determine the relationship between the credit and hourly wages. First, I use variation in state EITC supplements, which magnify the effect of the federal EITC. I find that a 10 percent increase in the generosity of the EITC is associated with a 4 percent fall in the wages of high school dropouts and a 2 percent fall in the wages of those with only a high school diploma, while having no effect on the wages of college graduates. Given standard estimates of labor demand, this is consistent with the common finding that the EITC boosts labor supply. Although workers with children receive a more generous tax credit than childless workers, and the effect of the credit on labor force participation is larger for those with children, the hourly wages of both groups are similarly affected by an increase in the overall generosity of the EITC. A second strategy is then implemented, based on the insight that the impact of the EITC on wages is determined by the typical EITC parameters in an employee’s labor market, rather than by the individual’s own EITC eligibility. Constructing a simulated instrument for the EITC parameters in an employee’s labor market, I find that wages respond to variation in the fraction of eligible employees and the average EITC rate, but do not respond systematically to changes in the marginal EITC rate.