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RSF Review

Choosing Not to Choose

June 24, 2014

A new working paper by noted behavioral economics scholar Cass Sunstein, titled “Choosing Not to Choose,” is available for download from the Russell Sage Foundation. The abstract states:

Choice can be an extraordinary benefit or an immense burden. In some contexts, people choose not to choose, or would do so if they were asked. For example, many people prefer not to make choices about their health or retirement plans; they want to delegate those choices to a private or public institution that they trust (and may well be willing to pay a considerable amount for such delegations). This point suggests that however well-accepted, the line between active choosing and paternalism is often illusory. When private or public institutions override people’s desire not to choose, and insist on active choosing, they may well be behaving paternalistically, through a form of choice-requiring paternalism. Active choosing can be seen as a form of libertarian paternalism, and a frequently attractive one, if people are permitted to opt out of choosing in favor of a default (and in that sense not to choose); it is a form of nonlibertarian paternalism insofar as people are required to choose. For both ordinary people and private or public institutions, the ultimate judgment in favor of active choosing, or in favor of choosing not to choose, depends largely on the costs of decisions and the costs of errors.

Wealth Levels, Wealth Inequality, and the Great Recession

June 23, 2014

In a new Recession Brief for the Recession Trends initiative, Fabian T. Pfeffer (University of Michigan), RSF president Sheldon Danziger, and Robert F. Schoeni (University of Michigan) explore the extent to which the Great Recession altered the level and distribution of American families’ wealth, looking at the period between 2007 and 2013. While the Recession had a major impact on the net worth of families across the socioeconomic spectrum, it disproportionately affected households at the bottom of the wealth distribution. These households lost the largest share of their total wealth. As a result, wealth inequality in the US has been significantly exacerbated since the onset of the Recession. As of the end of 2013, the authors note that there have been few signs of significant recovery from the downturn.

Neighborhood Segregation and the Concentration of Poverty

June 17, 2014

A new book from the Foundation, Choosing Homes, Choosing Schools (2014), examines the complex relationships between schools, neighborhood social networks, and larger patterns of inequality in order to offer new perspectives on the way that residential segregation continues to affect access to education.

In his chapter, “Segregation, Neighborhoods, and Schools,” public policy scholar Paul Jargowsky (Rutgers University-Camden) traces shifts in residential segregation over the last four decades, along both class and racial lines. He assesses the extent to which race drives class segregation, and vice versa, and finds that though a small amount of racial segregation is due to poverty status—and a larger amount of segregation by class is due to race—both largely work independently of each other to shape residential segregation.

Noted Behavioral Economics Scholar Cass R. Sunstein to Join RSF as Summer 2014 Visiting Scholar

June 9, 2014

Cass R. Sunstein, the Robert Walmsley University Professor and Felix Frankfurter Professor of Law at Harvard Law School, will join the Russell Sage Foundation as a Visiting Scholar for Summer 2014, starting on Monday, June 9.

Sunstein is a member of the Foundation’s Behavioral Economics Roundtable, an initiative that gathers prominent scholars in the field to support and promote new research in behavioral economics. With RSF trustee Richard H. Thaler, he co-authored the 2009 book Nudge: Improving Decisions About Health, Wealth, and Happiness, a New York Times bestseller that examines the way that people make decisions and shows how sensible “choice architecture” can successfully nudge people toward the best ones.

Sunstein served as Administrator of the White House Office of Information and Regulatory Affairs from 2009 to 2012. His other books include, most recently, Conspiracy Theories and Other Dangerous Ideas and Why Nudge?: The Politics of Libertarian Paternalism (2014).

During his time in residence at the Foundation, Sunstein will work on his next book manuscript, titled Choosing Not to Choose.

RSF Authors to Discuss Poverty in the U.S. at Upcoming Conference

June 4, 2014

A June 19 summit on America’s poverty crisis, organized by the Hamilton Project at Brookings, will bring together leading scholars, policymakers, practitioners, and business and labor leaders for a series of discussions on strategies for combating poverty. Former president Bill Clinton will deliver remarks on the opening day of the summit. Included among the featured speakers are several contributors to the Russell Sage Foundation’s Legacies of the War on Poverty, a 2013 release that analyzed the remarkable and enduring policy successes of the War on Poverty.

At the conference, Harry Holzer (Georgetown University) will participate in a roundtable discussion on new approaches to building skills within the U.S. labor force. Holzer’s chapter in Legacies of the War on Poverty examines changing trends in employment and training policy for low-income individuals since the War on Poverty was launched. Bridget Terry Long (Harvard Graduate School of Education), whose contribution to Legacies traces the evolution of higher education policies, will discuss strategies for addressing the academic barriers to higher education.

New Working Paper Explores Low-Income Families’ Use of Social Safety Net Programs During the Great Recession

June 3, 2014

In a new working paper for the Great Recession Initiative, Robert A. Moffitt of Johns Hopkins University explores the extent to which families that participate in the Supplemental Nutrition Assistance Program (SNAP)—or food stamps—also receive benefits from other federal aid programs, such as Supplemental Security Income (SSI) or Social Security Disability Insurance (SSDI). As he finds, in 2008, 76 percent of families receiving SNAP also participated in at least one other major benefit, excluding Medicaid. However, over half of these only received one other benefit and only a very small fraction received more than two others.

As Moffitt explains, analyzing SNAP families’ participation in additional social safety net programs is crucial for understanding the other needs of SNAP households—such as whether these households tend to include family members with disabilities—or if overall, they simply have such low income that they require additional support for other expenses such as housing and medical care. Noting that policy analysts and scholars have long expressed concerns that the receipt of multiple programs may have negative effects on work incentives, Moffitt also investigates whether multiple-program participation by SNAP families deters household members from seeking employment.

How Genetics Can Enrich the Way We Study Social Inequality

May 22, 2014

This feature is part of a new RSF blog series, Work in Progress, which highlights some of the ongoing research of our current class of Visiting Scholars.

Visiting Scholar Dalton Conley is well acquainted with working across disciplines: He currently holds multiple appointments at NYU, including in the Sociology Department, the School of Medicine, and the Wagner School of Public Service. In his time in residence at the Russell Sage Foundation, he is examining the impact of genetics on socioeconomic attainment. Using genetic markers—genes or DNA sequences that can be used to identify particular inherited characteristics—in nationally representative data sets, Conley will attempt to construct genetic risk scores and use them to deepen our understanding of the relationship between genetic endowment and socioeconomic status.

In a new interview with the Foundation, Conley discussed the history of merging genetics with the social sciences, and offered ways of using new genetics data to enrich the way we form policies to address social inequality.

Q. Your research examines the intersection of biology and the social sciences, and in particular, tries to understand how molecular genetics can help explain social stratification. Due to historical misuses of science to justify social inequality (as with the eugenics movement in the nineteenth century or, more recently, Herrnstein and Murray's The Bell Curve) this has been such a controversial area that many social scientists now steer clear of biological explanations altogether. How do you reconcile this fraught history with your own work, and what's new about your research?

Mass Deportations and Latino Voters

May 20, 2014

With the Foundation’s support, political scientists Alex Street and Chris Zepeda-Millán, in collaboration with Michael Jones-Correa, conducted an online survey of more than 1200 second generation Latinos to test whether socialization experiences are shaped by the responses of parents, children, and other political actors to the unique situation of U.S. citizens with undocumented parents. Among other consequences, they explore the effects of knowledge of deportations among second generation Latinos, especially on the evaluations of Democratic and Republican parties.

They “find that when young Latino citizens become aware of the Obama administration’s deportation policies, they view the Democratic Party as significantly less welcoming. Given that partisan attachments formed by young adulthood tend to persist through voters’ lives, this suggests that current deportation policies have the potential to alienate Latino voters from the Democratic Party for decades.”

Private Equity at Work: New Book Examines Private Equity’s Role in the U.S. Economy & Labor Market

May 15, 2014

As private equity's largest buyout in history enters bankruptcy proceedings and the SEC investigates questionable industry practices, the Russell Sage Foundation announces the publication of Private Equity at Work: When Wall Street Manages Main Street. This book is the first comprehensive examination of the private equity industry and its effect on the U.S. economy. Co-authored by economist Eileen Appelbaum of the Center for Economic and Policy Research and professor Rosemary Batt of Cornell University, Private Equity at Work explores the history, economic performance, and positive and negative consequences of private equity leveraged buyouts.

The book offers a new, original analysis of how private equity firms are affecting jobs and the sustainability of companies in a slow economic recovery. It also draws on extensive research to explain how the private equity business model creates incentives for excessive use of debt, putting healthy companies and their workers at risk. While demonstrating the constructive effects that some private equity firms have had, the book's research debunks commonly held myths about the industry and provides a nuanced analysis of private equity's contribution to economic inequality and unemployment. It also offers critical insights into policies that improve transparency, increase accountability and curb the negative effects of private equity.

Fairness and Punishment Across Human Societies

May 6, 2014

Experimenting with Social Norms, edited by Jean Ensminger and Joseph Henrich, compiles and synthesizes a rich combination of experimental and ethnographic findings from an international team of anthropologists and economists aimed at investigating the tensions between cooperation and self-interest across diverse human societies. How do societies manage to solve problems collectively, enticing individuals to forego their own narrow short-term economic interests in a way that benefits the whole group, and fosters mutually beneficial exchange? And furthermore, how does the decision to subordinate one’s self-interests for the larger group—or what Ensminger and Henrich call prosocial behavior—vary among different societies based on locally acquired social norms and motivations?

Using experimental economics games, this team examined levels of fairness, cooperation, and norms for punishing those who violate expectations of equality across a diverse swath of societies, from hunter-gatherers in Tanzania to a small town in rural Missouri. The researchers employed the following games to assess each group’s level of prosociality:

Dictator Game
Two players from the same community, interacting anonymously, are given a sum of money equivalent to one day’s wages to split. Player 1, assigned to be the “dictator,” decides how to allocate the money between the two players. Both players receive the actual amounts of money that Player 1 “dictates.” In Europe and the U.S. a fifty-fifty split is considered a “fair” outcome.

Ultimatum Game
This version of the dictator game adds an ultimatum: Though Player 1 decides how to allocate the money, Player 2 may reject the offer—in which case, neither party receives anything. The behavior of Player 1 in this scenario has elements of both fairness and strategy, while the behavior of Player 2 in this game captures the price that people are willing to pay to punish Player 1 for what they perceive to be an unfair offer. The willingness to punish an anonymous partner for unfairness, at a personal monetary cost, can be interpreted as prosocial behavior because this punishment may alter Player 1’s future interactions with other group members.

Third-Party Punishment Game
In this experiment, two people play the Dictator Game with the addition of a third anonymous player— endowed with an amount of money equivalent to half the amount given to the first two players—who has the option of using any part of his or her money to punish Player 1 for making an unfair offer to Player 2. Unlike the Ultimatum Game, in the Third-Party Punishment Game, the person paying a price to do the punishing is not the injured party.