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- Creators: Economics Program in CLAS
- Creators: School of Life Sciences
Description
Economists, political philosophers, and others have often characterized social preferences regarding inequality by imagining a hypothetical choice of distributions behind "a veil of ignorance". Recent behavioral economics work has shown that subjects care about equality of outcomes, and are willing to sacrifice, in experimental contexts, some amount of personal gain in order to achieve greater equality. We review some of this literature and then conduct an experiment of our own, comparing subjects' choices in two risky situations, one being a choice for a purely individualized lottery for themselves, and the other a choice among possible distributions to members of a randomly selected group. We find that choosing in the group situation makes subjects significantly more risk averse than when choosing an individual lottery. This supports the hypothesis that an additional preference for equality exists alongside ordinary risk aversion, and that in a hypothetical "veil of ignorance" scenario, such preferences may make subjects significantly more averse to unequal distributions of rewards than can be explained by risk aversion alone.
ContributorsTheisen, Alexander Scott (Co-author) / McMullin, Caitlin (Co-author) / Li, Marilyn (Co-author) / DeSerpa, Allan (Thesis director) / Schlee, Edward (Committee member) / Baldwin, Marjorie (Committee member) / Barrett, The Honors College (Contributor) / Department of Economics (Contributor) / School of Mathematical and Statistical Sciences (Contributor) / Economics Program in CLAS (Contributor) / School of Historical, Philosophical and Religious Studies (Contributor)
Created2014-05
Description
There are two common cognitive distortions present in risky decision-making behavior. The gambler's fallacy is the notion that a random game of chance is potentially biased by previous outcomes, and the near-miss effect is the overestimation of the probability of winning immediately after barely missing a win. This study replicated a portion of the methods of Clark et al. (2014) in an attempt to support the presence of these two fallacies in online simulated risky decision-making tasks. One hundred individuals were recruited and asked to perform one of two classic gambling tasks, either predict the outcome of a dichromatic roulette wheel or spin a simplified, two-reel slot machine. An analysis of color predictions as a function of run length revealed a classic gambler's fallacy effect in the roulette wheel task. A heightened motivation to continue playing after a win, but not a near or full miss, was seen in the slot machine task. How pleased an individual was with the results of the previous round directly affected his or her interest in continuing to play in both experiments. These findings indicate that the gambler's fallacy is present in online decision-making simulations involving risk, but that the near-miss effect is not.
ContributorsCatinchi, Alexis Leigh (Author) / McClure, Samuel (Thesis director) / Glenberg, Arthur (Committee member) / Gatewood, Kira (Committee member) / School of Life Sciences (Contributor) / Department of Psychology (Contributor) / Barrett, The Honors College (Contributor)
Created2017-05
Description
This paper examines the qualitative and quantitative effects of the 2008 financial crisis on the current landscape of the investment banking industry. We begin by reviewing what occurred during the financial crisis, including which banks took TARP money, which banks became bank holding companies, and significant mergers and acquisitions. We then examine the new regulations that were created in reaction to the crisis, including the Dodd-Frank Act. In particular, we focus on the Volcker Rule, which is a section of the act that prohibits proprietary trading and other risky activities at banks. Then we shift into a quantitative analysis of the changes that banks made from the years 2005-2016. To do this, we chose four banks to be representative of the industry: Goldman Sachs, Morgan Stanley, J.P. Morgan, and Bank of America. We then analyze four metrics for each bank: revenue mix, value at risk, tangible common equity ratio, and debt to equity ratio. These provide methods for analyzing how banks have shifted their revenue centers to accommodate new regulations, as well as how these shifts have affected banks' risk levels and leverage. Our data show that all four banks that we observed shifted their revenue centers to flatter revenue areas, such as investment management, wealth management, and consumer banking operations. This was paired with fairly flat investment banking revenues across the board when controlling for overall market changes in the investment banking sector. Additionally, trading-focused banks significantly shifted their operations away from proprietary trading and higher risk activities. These changes resulted in lower value at risk measures for Goldman Sachs and Morgan Stanley with very minor increases for J.P. Morgan and Bank of America, although these two banks had low levels of absolute value at risk when compared to Goldman Sachs and Morgan Stanley. All banks' tangible common equity ratios increased and debt to equity ratios decreased, indicating a safer investment for shareholders and lower leverage. We conclude by offering a forecast of our expectations for the future, particularly in light of a Trump presidency. We expect less regulation going forward and the potential reversal of the Volcker Rule. We believe that these changes would result in more revenue coming from trading and riskier strategies, increasing value at risk, decreasing tangible common equity ratios, and increasing debt to equity ratios. While we do expect less regulation and higher risk, we do not expect these banks to reach pre-crisis levels due to the significant amount of regulations that would be particularly difficult for the Trump administration to reverse.
ContributorsPatel, Aashay (Co-author) / Goulder, Gregory (Co-author) / Simonson, Mark (Thesis director) / Hertzel, Michael (Committee member) / Department of Finance (Contributor) / Department of Economics (Contributor) / Economics Program in CLAS (Contributor) / Barrett, The Honors College (Contributor)
Created2017-05
Description
Campaign finance regulation has drastically changed since the founding of the Republic. Originally, few laws regulated how much could be contributed to political campaigns and who could make contributions. One by one, Congress passed laws to limit the possibility of corruption, for example by banning the solicitation of federal workers and banning contributions from corporations. As the United States moved into the 20th Century, regulations became more robust with more accountability. The modern structure of campaign finance regulation was established in the 1970's with legislation like the Federal Election Campaign Act and with Supreme Court rulings like in Buckley v. Valeo. Since then, the Court has moved increasingly to strike down campaign finance laws they see as limiting to First Amendment free speech. However, Arizona is one of a handful of states that established a system of publicly financed campaigns at the state-wide and legislative level. Passed in 1998, Proposition 200 attempted to limit the influence of money politics. For my research I hypothesized that a public financing system like the Arizona Citizens Clean Elections Commission (CCEC) would lead to Democrats running with public funds more than Republicans, women running clean more than men, and rural candidates running clean more than urban ones, and that Democrats, women, and rural candidates would win in higher proportions than than if they ran a traditional campaign. After compiling data from the CCEC and the National Institute on Money in State Politics, I found that Democrats do run with public funds in statistically higher proportions than Republicans, but when they do they lose in higher proportions than Democrats who run traditionally. Female candidates only ran at a statistically higher proportion from 2002 to 2008, after which the difference was not statistically significant. For all year ranges women who ran with public money lost in higher proportions than women who ran traditionally. Similarly, rural candidates only ran at a statistically higher proportion from 2002 to 2008. However, they only lost at higher proportions from 2002 to 2008 instead of the whole range like with women and Democratic candidates.
ContributorsMarshall, Austin Tyler (Author) / Herrera, Richard (Thesis director) / Jones, Ruth (Committee member) / Economics Program in CLAS (Contributor) / School of Politics and Global Studies (Contributor) / Barrett, The Honors College (Contributor)
Created2016-12
Description
The Philippines relies on a vast biodiversity of fishes as a staple food, but like many countries around the globe, experiences severe “leakages” of contaminants and pollutants in the environment. In order to better understand the relationship between environmental pollutants and public health, this research project measured the concentration of pollutants in a commonly consumed local fish (Siganus fuscescens), and then evaluated the potential health risks of eating this fish based on estimated average consumer weight and consumption levels. Fish sampled from four different sites located in Negros Oriental, Philippines were analyzed for organic contaminants using gas chromatography and mass spectroscopy. Pollutants quantified included polycyclic aromatic hydrocarbons (PAHs), pesticides, phthalates, and polychlorinated biphenyl (PCBs). Across the four study sites, fishes from Manjuyod showed the highest frequency of detection of different pollutants. However, phthalates and PAHs were found in similar concentrations in all four sites, with fishes from Dumaguete showing the highest level of PCBs compared to the other sampled sites. The U.S. Environmental Protection Agency’s guide for fish contaminants pinpoints several health risks associated with the chronic ingestion of these contaminants. Based on estimated average body weights of Filipino adult men, adult women, and children, and various consumption levels, people who eat the fish at or above the national average consumption level may be at increased risk for chronic health outcomes, such as cancer and/or other adverse effects. Specifically, due to the high concentration of PCBs in Dumaguete, selected populations who eat local fish from this site may be at higher risk than the citizens who eat the fish from other sites at similar consumption rates. These results can help to inform local and national policies on water quality, waste disposal, and fish consumption advisory programs.
ContributorsMolino, Eryka J (Author) / Polidoro, Beth (Thesis director) / Bucol, Lilibeth (Committee member) / School of Life Sciences (Contributor, Contributor) / Barrett, The Honors College (Contributor)
Created2021-05
Description
This paper examines infrastructure spending in a model economy. Infrastructure is subdivided into two types: one that makes future production more efficient, and another that decreases the risk of devastation to the future economy. We call the first type base infrastructure, and the second type risk-reducing infrastructure. Our model assumes that a single representative individual makes all the decisions within a society and optimizes their own total utility over the present and future. We then calibrate an aggregate economic, two-period model to identify the optimal allocation of today’s output into consumption, base infrastructure, and risk-reducing infrastructure. This model finds that many governments can make substantive improvements to the happiness of their citizens by investing significantly more into risk-reducing infrastructure.
ContributorsFink, Justin (Co-author) / Fuller, John "Jack" (Co-author) / Prescott, Edward (Thesis director) / Millington, Matthew (Committee member) / School of Mathematical and Statistical Sciences (Contributor, Contributor) / Economics Program in CLAS (Contributor) / Barrett, The Honors College (Contributor)
Created2021-05
Description
Terrestrial crude oil spills compromise a soil’s ability to provide ecosystem services by inhibiting plant life and threatening groundwater integrity. Ozone gas, a powerful oxidant, shows promise to aid in soil recovery by degrading petroleum hydrocarbons into more bioavailable and biodegradable chemicals. However, previous research has shown that ozone can change the soil pH and create harmful organic compounds.
The research objective was to determine the short-term ecological toxicity of ozonation byproducts on seed germination of three distinct plant types (radish, lettuce, and grass) compared to untreated and uncontaminated soils. We hypothesize that the reduction of heavy hydrocarbon contamination in soil by ozone application will provide more suitable habitat for the germinating seeds. The effect of ozone treatment on seed germination and seedling quality was measured using ASTM standards for early seedling growth in conjunction with a gradient of potting soil amendments. Ozonation parameters were measured using established methods and include total petroleum hydrocarbons (TPH), dissolved organic carbon (DOC), and pH.
This study demonstrated the TPH levels fall up to 22% with ozonation, suggesting TPH removal is related to the amount of ozone delivered as opposed to the type of crude oil present. The DOC values increase comparably across crude oil types as the ozonation dose increases (from a background level of 0.25 g to 6.2 g/kg dry soil at the highest ozone level), suggesting that DOC production is directly related to the amount of ozone, not crude oil type. While ozonation reduced the mass of heavy hydrocarbons in the soil, it increased the amount of ozonation byproducts in the soil. For the three types of seeds used in the study, these changes in concentrations of TPH and DOC affected the species differently; however, no seed type showed improved germination after ozone treatment. Thus, ozone treatment by itself had a negative impact on germination potential.
Future research should focus on the effects of post-ozonation, long-term bioremediation on eco-toxicity. By helping define the eco-toxicity of ozonation techniques, this research can improve upon previously established ozone techniques for petroleum remediation and provide economic and environmental benefits when used for soil treatment.
The research objective was to determine the short-term ecological toxicity of ozonation byproducts on seed germination of three distinct plant types (radish, lettuce, and grass) compared to untreated and uncontaminated soils. We hypothesize that the reduction of heavy hydrocarbon contamination in soil by ozone application will provide more suitable habitat for the germinating seeds. The effect of ozone treatment on seed germination and seedling quality was measured using ASTM standards for early seedling growth in conjunction with a gradient of potting soil amendments. Ozonation parameters were measured using established methods and include total petroleum hydrocarbons (TPH), dissolved organic carbon (DOC), and pH.
This study demonstrated the TPH levels fall up to 22% with ozonation, suggesting TPH removal is related to the amount of ozone delivered as opposed to the type of crude oil present. The DOC values increase comparably across crude oil types as the ozonation dose increases (from a background level of 0.25 g to 6.2 g/kg dry soil at the highest ozone level), suggesting that DOC production is directly related to the amount of ozone, not crude oil type. While ozonation reduced the mass of heavy hydrocarbons in the soil, it increased the amount of ozonation byproducts in the soil. For the three types of seeds used in the study, these changes in concentrations of TPH and DOC affected the species differently; however, no seed type showed improved germination after ozone treatment. Thus, ozone treatment by itself had a negative impact on germination potential.
Future research should focus on the effects of post-ozonation, long-term bioremediation on eco-toxicity. By helping define the eco-toxicity of ozonation techniques, this research can improve upon previously established ozone techniques for petroleum remediation and provide economic and environmental benefits when used for soil treatment.
ContributorsJanuszewski, Brielle (Author) / Rittmann, Bruce (Thesis director) / Yavuz, Burcu (Committee member) / Civil, Environmental and Sustainable Eng Program (Contributor) / School of International Letters and Cultures (Contributor) / School of Politics and Global Studies (Contributor, Contributor) / School of Life Sciences (Contributor) / Barrett, The Honors College (Contributor)
Created2020-05