Spending Decisions Research Articles

The Rise of Xylazine Shows Why Local Data Must Inform Policy and Spending Decisions.

Local governments have been given direct control over a substantial amount of opioid settlement funding. While state-level data sources are valuable inputs, city and county leaders should consider local data sources when making decisions to ensure timely responses to emerging threats, as is exemplified by the rise of xylazine.

Development of the system of public duties. A legal and fiscal study

Tax is a complex legal and economic category, conditioning the functioning of the state, affecting the entire economic circulation. The economic significance of the tax is related to the change in the income and property situation of the subjects paying the tribute. Payment of tax influences the decisions made by economic agents in the sphere of savings, consumer spending or economic decisions. Taxes are the primary means of collecting public revenue and financing expenditures. It should be emphasized that, from the point of view of the science of finance, any economic, legal phenomenon that has all the above-mentioned characteristics is a tax, even if the name used by the legislator indicates a completely different nature of the legal and economic relationship, e.g. customs duty, fee, contribution, "voluntary payment", etc. There is a consensus in the literature that a tax should be characterized by six features: gratuitousness, compulsory, non-refundable, monetary form, generality and unilateral imposition.

Football-Generated Rent Sharing and Expenditures on Women’s Intercollegiate Athletics

Recent research contains evidence of rent sharing in intercollegiate athletic programs from revenues generated by football and men’s basketball and regulations restricting compensation to athletes. Title IX mandates equal opportunities for male and female college athletes, clearly impacting athletic department budgets. These factors create a rich environment for analyzing athletic spending decisions. We analyze spending on women’s sports for about 120 NCAA public FBS athletic departments. Results from instrumental variables models that account for the endogeneity of the rent proxy variable, head football coach salary, indicate the presence of rent sharing from football-generated rents to spending on women’s sports.

Sustainability and Dividends: Complements or Substitutes?

We examine the relationship between environmental, social, and governance commitment levels (ESG) and firm dividend-payer status. Given that larger and more profitable firms are positively associated with both payer status and ESG, it could be that ESG and dividends are complements. However, given that both dividends and ESG relate to firm spending decisions, it may be that the choice is “either/or”, and that ESG and dividends are substitutes. We document a positive relationship between ESG and dividend-payer status in U.S. firms over the period 1991–2016. In particular, we find that the proportion of dividend-payers is roughly 13% higher for firms with positive ESG compared to those with negative ESG. Including ESG in the models used to predict payer status provides, on average, a nearly 26% improvement in relative forecast accuracy. Our results are robust in regards to estimation techniques and the inclusion of variables known to be determinants of payer status. The results indicate that, on average, firms are not forced to sacrifice dividends in favor of ESG spending.

IMPACT OF FISCAL DECENTRALIZATION ON THE ECONOMIC GROWTH OF KADUNA STATE.

The economic development of local governments in Nigeria faces several challenges, including revenue allocation, lack of autonomy, and constant interference by the State Government. There is a widespread belief that Fiscal Decentralization (FD) is the remedy to these challenges, and this study used panel data from 2006 to 2021 to examine the effect of fiscal decentralization on economic growth in the 23 local government areas of Kaduna state. Fiscal Decentralization between Kaduna state and each local government was measured using four indicators, namely, revenue indicator (RI), expenditure indicator (EI), autonomy indicator (AI) and capital indicator (CI). Except for the expenditure indicator, the study's findings indicate that all measures of fiscal decentralization are positively and significantly correlated with economic growth. Further findings revealed that a possible explanation for why the expenditure indicator is negatively related to economic growth is that Local Governments are often used as administrative spending units, where spending decisions reflect the state government’s policies regardless of the immediate needs of the local government area in question. Based on the findings of this research, it is recommended that Kaduna state government should promote true fiscal decentralization by assigning more fiscal responsibilities to Local governments in order to bring about faster economic growth in all regions of the state.

The role of digital payments in overspending behavior: a mental accounting perspective

PurposeThe paper examines how individuals can be susceptible to payment biases in the context of digital payment behavior by utilizing the concept of mental accounting. Furthermore, the paper investigates the moderating effects of Digital Financial Literacy (DFL) on the relationship between payment methods and spending behavior.Design/methodology/approachThe study employs a survey-based approach to collect data from 503 individuals who use digital payment methods, utilizing purposive sampling from Pakistan. The collected data is analyzed using Smart-PLS 4 software to assess the direct impact of payment methods on spending behavior and the moderating influence of DFL.FindingsThe research findings demonstrate that both digital and cash payments significantly affect spending behavior. However, digital payments have a more substantial impact on spending behavior compared to cash payments. The findings also show that DFL significantly positively moderates individual spending. The study validates the mental accounting perspective by evaluating the direct impact of payment methods on consumers' spending behavior.Practical implicationsThe findings have practical implications for policymakers, financial institutions, and educators. Policymakers can leverage the insights to design effective strategies that promote responsible spending behavior and enhance the adoption of digital payment methods. Financial institutions can design user-friendly platforms that cater to users' spending preferences, while educators can develop programs to enhance Digital Financial Literacy (DFL) among the public.Social implicationsThis study’s social implications lie in its potential to contribute to individuals' financial well-being by promoting responsible spending through digital payment methods. Enhanced financial literacy and informed spending decisions can lead to better financial management and ultimately contribute to societal financial stability.Originality/valueThe study enriches the understanding of mental accounting, shedding light on how overspending behavior can manifest through digital payment channels. In addition, this research practically provides valuable insights into enhancing the adoption and financial literacy of digital payments among the public.

Sustaining Prosperity: Exploring Fiscal and Financial Sustainability in the Context of Dynamic Fiscal Policy

Purpose: This study explores how fiscal policy and financial sustainability support sustainable economic prosperity amid global instability. It examines the impact of government taxation and spending decisions on economic outcomes, aggregate demand, employment, inflation, social welfare, infrastructure development, and income inequality. Financial sustainability is analyzed through prudent fiscal management and debt sustainability, focusing on long-term government finance viability and mitigating fiscal risks. Research Design and Methodology: The study employs a qualitative methodology, incorporating a comprehensive literature review of theoretical works, empirical studies, and policy analyses. Data is collected through systematic reviews of scholarly articles, books, policy reports, and official publications. Thematic analysis techniques, including coding and categorization, synthesize findings, with reflexivity to consider assumptions and biases. Findings and Discussion: The research underscores the importance of flexibility and adaptability in fiscal policy, highlighting automatic stabilizers and countercyclical policies for economic stabilization and sustainable growth. Prudent debt management, including debt restructuring and fiscal consolidation, is vital for mitigating fiscal risks and ensuring debt sustainability. The findings emphasize integrating fiscal sustainability with broader economic and social goals and the need for institutional reforms and international cooperation to enhance fiscal governance. Implications: The study provides insights for policymakers on the importance of fiscal prudence and sustainability. It advocates for a balanced approach that addresses short-term stabilization and long-term goals and calls for institutional reforms to improve fiscal discipline, transparency, and accountability. By integrating interdisciplinary perspectives, policymakers can develop resilient and sustainable fiscal policies that promote long-term prosperity and social equity.

Co-production and the Use of Constituency Development Funds (CDFs) in Poverty Alleviation: A Case of Selected Constituencies in Zambia

Constituency Development Fund (CDF) is the generic name for a policy tool that dedicates public money to benefit specific political subdivisions through allocations and/or spending decisions influenced by their representatives in the national parliament (Centre for International Development 2009: 8-9). Dissimilar to large national development projects, CDF-financed projects are essentially community based and driven with the major aim of bringing facilities and services closer to people for purposes of improving their social economic living conditions, especially reducing poverty. In the 2022 Zambia National Budget, CDF saw an unprecedented increase in the size of funding and scope of its mandate. For the year 2023, CDF was increased from K25.7 million (USD 1,070,833) to K28.3 million (USD 1,179,167) per constituency while being expanded to include additional components such as youth, disabled and women empowerment programs as well as secondary school bursaries that will now be locally administered. It is in this regard that the authors undertook a study to assess the impact of CDFs on poverty alleviation in 12 constituencies selected namely, Kankoyo, Moomba, Bweengwa, Mpika, Rufunsa, Monze, Chawama, Mufulira, Kaoma, Kantanshi, Mbala and Solwezi. Data was collected from men, youth and the disabled from the said constituencies. Due to the nature of data collected, mixed methodology research was used. Qualitative data was analysed with the aid of ATLAS.ti while quantitative data was analysed using SPSS Version 30. Key findings are that the general public is aware of the existence of the CDFs and that it is a government empowerment programme especially for funding education and skills acquisition through school bursaries and skills development components, community projects and empowerment loans. However, empirical evidence on the ground point to challenges of the CDFs through political patronage, nepotism, the abdication of key decision making to the politician (Member of parliament) who has massive influence as he/she has power to arbitrary hand-pick 6 members out of 12 to the main CDF committee responsible for administration of CDF funds.

Natural disasters and local government finance: Evidence from Typhoon Haiyan

This paper examines how natural disasters affect local public finances and their interplay with intergovernmental transfers and external resources. Exploiting the randomized nature of the 2013 Typhoon Haiyan, one of the most devastating natural disasters in recent history, we document its causal effect on the local government fiscal dynamics. Combining data on local government finance with reports on the level of damages and using difference-in-differences with instrumental variable to analyze the data, we show that local public revenue and expenditures remain largely unaffected, except for debt payments. However, we find important heterogeneity in local revenue responses: poorer municipalities raised comparatively lower revenue in the aftermath of the Typhoon. We also provide evidence that external funding did not lead to lower tax collection efforts, but instead leads to higher local expenditures, suggesting that disaster aid does not cause a moral hazard problem in local governments' spending decisions.

The Effect of Macroeconomic Uncertainty on Household Spending

We use randomized treatments that provide different types of information about the first and/or second moments of future economic growth to generate exogenous changes in the perceived macroeconomic uncertainty of treated households. The effects on their spending decisions relative to an untreated control group are measured in follow-up surveys. Our results indicate that, after taking into account first moments, higher macroeconomic uncertainty induces households to significantly and persistently reduce their total monthly spending in subsequent months. Changes in spending are broad based across spending categories and apply to larger durable good purchases as well. (JEL D12, D81, D84, E21, E23, G51)

Exploring Fiscal Federalism and the Structure of Public Spending in Nigeria

Globally, there has been a noticeable shift towards fiscal decentralization during the last few decades. As a result, subnational levels of government now have more latitude for revenue generation and spending decisions. Nations all around the world are recognizing the benefits of fiscal decentralization. Fiscal federalism, as a component of fiscal decentralization, deals with the public sector's vertical organization. It examines the functions of the various governmental tiers and their interactions with one another through various fiscal mechanisms. The study aims to investigate the impact of Nigeria's fiscal federalism on public spending and the welfare of its citizens. The Wiseman-Peacock theory was adopted as the theoretical framework. The study was based on a documentary research design. Content analysis was used as a method for analyzing data. The derived findings revealed that Nigeria’s revenue-to-GDP ratio is among the lowest in the world. It also established that revenue shortages have created imbalances in government expenditure, i.e., recurrent above capital expenditure. The study recommends that addressing loopholes in the current tax legal framework, allocating spending more efficiently, and strengthening institutions are approaches to be applied to put Nigeria on a sustainable fiscal path.

Pedagogical Values and the Lawful Rules of Islamic Behavior in Consumption

This research delves into the intricate relationship between Islamic pedagogical values and Muslim consumer behavior, drawing upon the timeless wisdom of the Quran and Sunnah. It establishes a valuable theoretical framework, supported by a generalized logistic model, to illuminate how Islamic principles influence spending decisions within permissible boundaries. The research meticulously outlines the lawful rules governing consumption in Islam, categorized by permissible and prohibited actions to guide Muslims in their choices. Key findings reveal the holistic nature of Islam, highlighting its comprehensive influence on all aspects of life, including consumption. Islamic pedagogical values emerge as a powerful force in shaping behavior, weaving a tapestry of rules encompassing obligations like adhering to Halal principles, and prohibits extravagance, wastefulness, and stinginess. Moderation emerges as a cornerstone, steering consumers away from both extremes and illustrating how the Islamic framework accommodates increased income without necessarily leading to a proportional increase in consumption. The research challenges mainstream economic assumptions, presenting Islam’s perspective on spending and shedding light on the religious dimensions that shape consumer behavior within an Islamic framework. Beyond economic principles, the research highlights the exemplary life of Prophet Muhammad, offering practical examples of simplicity, moderation, and ethical consumer behavior, even in challenging circumstances. It advocates for integrating these values into decision-making processes, particularly in consumption matters, encouraging individuals to align their financial choices with Islamic jurisprudence and contribute to the overall well-being of the Muslim community. In conclusion, this research significantly enhances our understanding of Muslim consumer behavior, emphasizing the role of pedagogical values and lawful rules. The findings hold valuable implications for stakeholders like marketers, policymakers, and businesses seeking to engage with Muslim consumers, offering insights into product categorization and tailored engagement strategies. The research also introduces practical tools for further analysis and exploration, while acknowledging limitations and encouraging future research to refine our understanding across diverse cultural and religious landscapes.

Analysis of household consumption function based on permanent income hypothesis in Sabah, Malaysia: A conceptual framework

In the past, Sabah has often been reported as Malaysia’s poorest state, with the recorded highest incidence of absolute poverty among all the other states. The consumption patterns of households in Sabah have been significantly impacted by such circumstances. This further draws light on the adverse impact on the broader economy, as low levels of spending may restrict demand for products and services, stifling economic growth. The understanding of households’ consumption functions based on the Permanent Income Hypothesis (PIH) will advance knowledge in identifying the key factors that influence the households’ spending decisions. Pointing out the scant number of past studies done within this very context, and focusing on the Sabah state in particular, further motivated this study, this paper aims to develop a conceptual framework that can estimate and examine the households’ consumption functions in Sabah. As such, the methodology of drawing upon narrative reviews from research in the past will be used in this paper to develop the conceptual framework. The result of this study built upon the framework developed will help in identifying the factors that explain the households’ consumption patterns, in particular, whether the function estimated will be consistent with the Permanent Income Hypothesis (PIH). It is hoped that the conceptual framework built will aid in providing valuable empirical insight for policymakers in designing effective policies that can uplift households that are living in poverty.

Lancashire puts trust in childcare providers' spending decisions

Lancashire puts trust in childcare providers' spending decisions

Contact or Contactless Payment: Impact of COVID-19 Pandemic on Consumer Decision Making in Money Domain

The COVID-19 pandemic has significantly altered consumer behavior. The significant influence of COVID-19 pandemic on consumption has been documented in an increasing amount of literature; however, limited focus has been placed on how consumer spending decisions differ depending on whether they employ contactless or contact payment methods under COVID-19 and normal conditions. The results of this study, which used a laboratory experiment carried out in the northern part of China, demonstrate that: (1) consumers’ intentions to spend more money when using contactless payments than when they use contact payments; (2) disgust and negative contamination act as mediating factors on the relationship between the degree of contact and consumer spending intention; and (3) COVID-19 moderates this mediating effect. This study concludes by discussing its theoretical contributions and managerial implications, alongside limitations and future research directions.

Investing in a leveraged world

PurposeThroughout the 21st century, US households have experienced unprecedented levels of leverage. This dynamic has been exacerbated by income shortfalls during the COVID-19 crisis. Leveraging and deleveraging decisions affect household consumption. This study investigates the effect of the dynamics of household leverage and consumption on the stock market.Design/methodology/approachThe authors explore the relation between household leverage and consumption in the context of the consumption capital asset pricing model (CCAPM). The authors test the model's implication that leverage has a negative risk premium by transforming the asset pricing restriction into an unconditional linear factor model and estimate the model using the general method of moments procedure. The authors run time-series regressions to estimate individual stocks' exposures to leverage, and cross-sectional regressions to investigate the leverage risk premium.FindingsThe authors show that shocks to household debt have strong and lasting effects on consumption growth. The authors extend the CCAPM to accommodate this effect and find, using various test assets, a negative risk premium associated with household deleveraging. Looking at individual stocks the authors show that the deleveraging risk premium is not explained by well-known risk factors.Originality/valueThis paper contributes to the literature on the role of leverage in economics and finance by establishing a relation between household leverage and spending decisions. The authors provide novel evidence that households' leveraging and deleveraging decisions can be a fundamental and influential force in determining asset prices. Further, this paper argues that household leverage might explain the small, persistent, and predictable component in consumption growth hypothesised in the long-run risk asset pricing literature.

Drug transactions and the dark web: Public perceptions of the locational setting of offenders and support for drug policy outcomes

BackgroundBoth legal and extra-legal factors influence judicial and non-judicial opinions about persons who use drugs. Yet, how the locational setting of drug transactions influences public perceptions of drug control policies remains understudied. In particular, the public's view of drug exchanges on the dark web could directly and indirectly influence drug policy, legal decision making, and spending decisions. The study's aim is to identify whether the location of a drug exchange, specifically the dark web, influences public preferences for drug policy and police resourcing. MethodsA sample (n = 1359) from the United States of America was recruited and participated in a discrete choice experiment. The participants compared and repeatedly chose across five iterations between two drug offender profiles with nine set features, such as the location of drug transactions, all with randomized levels. The resulting sample included a total of 13,590 contest pairs. ResultsAveraging over the non-locational attributes, respondents indicated that, compared to the dark web, several locational settings for drug exchange (such as the street corner, social media, and an unknown location) needed fewer police resources and offenders were less deserving of longer punishments. No statistically significant difference was found for opinions about harm to communities, and offenders involved in drug exchanges on university campuses were considered more deserving of a substance abuse treatment program than offenders on the dark web. ConclusionThere appears to be a preference for more punitive criminal justice policies for drug transactions occurring on the dark web relative to some other common settings. Such preferences may indicate a novelty effect driven by negative sentiment surrounding the dark web or a perceived deficit in the police's ability to deal with drug crimes on the dark web. These findings suggest that the public may prefer supply-side policing efforts over demand-side policies, which emphasizes harm reduction.

Investment into Low-Carbon Economy in the CEE NUTS-2 Regions: Are EU Funds Used where Needed?

This paper explores the spending decisions about the EU Cohesion Policy 2014–20 investment in the low-carboneconomy in the 2 regions of Central and Eastern European countries with regard to their climate need, proxied by the carbon emissions. By estimating non-spatial and spatial econometric models, which take intoacc ount the spatial scope of the Cohesion Policy, we do not confirm a statistically significant positive relationship between climate need proxied by carbon emissions in 2013 and the EU funds to a low-carbon economy in the programming period 2014–20. Our results, therefore, suggest that the EU funds with the low-carbon thematic objective have not been primarily spent in the regions with the highest carbon emissions prior to the examined programming period, calling for increasing awareness and necessary technical assistance for the beneficiaries, along the place-based strategies in the implementation of the Cohesion Policy in the next programming periods.

The impact of Republican CEO ideology and political alignment on R&D spending and business performance

Based on a sample of firms in the S&P 1500 index covering the years 1993 to 2016, we find that firms with Republican CEOs spend less on R&D compared to their Democratic counterparts. However, Republican CEOs ratchet up their R&D spending when a Republican is in the Oval Office. Furthermore, we find that R&D spending is negatively related to return on assets (ROA), which is indicative of the risky nature of R&D spending, but R&D is positively related to Tobin Q, a longer‐term performance measure. As a consequence, when Republican CEOs manage under a Republican president, the effect of accelerated R&D spending is to send ROA lower, owing to the short‐term negative effect of R&D spending. Additionally, due to overspending on R&D by Republican CEOs under a Republican president, the generally positive effect of R&D on Tobin Q is weakened. It seems social capital has its dark side as it can mislead CEOs to make opportunistic but unwise R&D spending decisions. Overall, Republican CEOs, relative to Democratic CEOs, have higher short‐term performance (ROA), and lower long‐term performance (Tobin Q) owing to reduced R&D spending. Our results have research, managerial, and policy implications.

What Politicians Do Not Know Can Hurt You: The Effects of Information on Politicians’ Spending Decisions

Do well-informed politicians make more effective spending decisions? In experiments with 70% of all elected politicians in Malawi ($ N=460 $), we tested the effects of information on public spending. Specifically, we randomly provided information about school needs, foreign aid, and voting patterns prior to officials making real decisions about the allocation of spending. We show that these information interventions reduced inequalities in spending: treatment group politicians were more likely to spend in schools neglected by donors and in schools with greater need. Some information treatment effects were strongest in remote and less populated communities. These results suggest that information gaps partially explain inequalities in spending allocation and imply social welfare benefits from improving politicians’ access to information about community needs.