Data Source

How to fix racial bias in policing

by on November 19, 2017 at 2:54 am in Data Source, Law | Permalink

We estimate the degree to which individual police officers practice racial discrimination. Traffic police regularly discount the charged speed on drivers’ tickets to avoid a discrete jump in the fine schedule. This behavior leads to an excess mass in the distribution of charged speeds just below the jump. Using a bunching estimation design and data from the Florida Highway Patrol, we show that minorities are less likely to receive this break than white drivers. We disaggregate to the individual police officer level and find significant heterogeneity across officers in their degree of discrimination, with 40% of officers explaining the entirety of the aggregate discrimination. Our measure of discrimination is easy to calculate and can be used by police departments as part of an early warning system. Using a simple personnel policy that reassigns officers across locations based on their lenience, departments can effectively reduce the aggregate disparity in treatment.

While 40% is a high number, overall I find that reassuring. That is from the job market paper of Felipe Goncalves, of Princeton University.

Here is a recent paper by Stephen Bond and Jing Xing:

We present new empirical evidence that sector-level capital–output ratios are strongly influenced by corporate tax incentives, as summarised by the tax component of a standard user cost of capital measure. We use sectoral panel data for the USA, Japan, Australia and eleven EU countries over the period 1982–2007. Our panel combines internationally consistent data on capital stocks, value-added and relative prices from the EU KLEMS database with corporate tax measures from the Oxford University Centre for Business Taxation. Our results for equipment investment are particularly robust, and strikingly consistent with the basic economic theory of corporate investment.

Via Henry Curr.  Here is a piece by Fuest, Piechl, and Siegloch, forthcoming in the American Economic Review:

This paper estimates the incidence of corporate taxes on wages using a 20-year panel of German municipalities. Administrative linked employer-employee data allows estimating heterogeneous worker and firrm effects. We set up a general theoretical framework showing that corporate taxes can have a negative effect on wages in various labor market models. Using an event study design, we test the predictions of the theory. Our results indicate that workers bear about 40% of the total tax burden. Empirically, we confirm the importance of both labor market institutions and profit shifting possibilities for the incidence of corporate taxes on wages.

Via Dina D. Pomeranz.  I’ve been reading in this area on and off since the 1980s, and I really don’t think these are phony results.

Gifts of the Immigrants, Woes of the Natives: Lessons from the Age of Mass Migration (2017). JOB MARKET PAPER
Abstract: In this paper, I show that political opposition to immigration can arise even when immigrants bring significant economic prosperity to receiving areas. I exploit exogenous variation in European immigration to US cities between 1910 and 1930 induced by World War I and the Immigration Acts of the 1920s, and instrument immigrants’ location decision relying on pre-existing settlement patterns. Immigration increased natives’ employment and occupational standing, and fostered industrial production and capital utilization. However, it lowered tax rates, public spending, and the pro-immigration party’s (i.e., Democrats) vote share. The inflow of immigrants was also associated with the election of more conservative representatives, and with rising support for anti-immigration legislation. I provide evidence that political backlash was increasing in the cultural distance between immigrants and natives, suggesting that diversity might be economically beneficial but politically hard to manage.

That is from Marco Tabellini, job market candidate at MIT.

…sons crowd out human capital acquisition by daughters.  If all daughters of self-employed men experienced the “sisters-only” level of transmission, the overall gender gap in self-employment would be reduced by nearly 20 percent.

That is from Elizabeth Mishkin, on the job market from Harvard.

While we are on related topics:

I establish that women in U.S. counties with heavier casualties were more active in starting new businesses after the war [WWII] ended and this difference persists to this day. I also find that single women were more likely to start new businesses than war widows. Evidence in favor of the marriage market channel suggests that reducing opportunity cost is more effective in encouraging women to start new businesses than merely providing financial subsidies.

That is from Patrick Luo, also on the job market from Harvard.

Anti-Piketty:

Have passive rentiers replaced the working rich at the top of the U.S. income distribution? Using administrative data linking 10 million firms to their owners, this paper shows that private business owners who actively manage their firms are key for top income inequality. Private business income accounts for most of the rise of top incomes since 2000 and the majority of top earners receive private business income—most of which accrues to active owner-managers of mid-market firms in relatively skill-intensive and unconcentrated industries. Profit falls substantially after premature owner deaths. Top-owned firms are twice as profitable per worker as other firms despite similar risk, and rising profitability without rising scale explains most of their profit growth. Together, these facts indicate that the working rich remain central to rising top incomes in the twenty-first century.

That is from a new paper by Matthew Smith, Danny Yagan, Owen Zidar, and Eric Zwick, via the excellent Kevin Lewis.

Using smartphone-tracking data and precinct-level voting, we show that politically divided families shortened Thanksgiving dinners by 20-30 minutes following the divisive 2016 election. This decline survives comparisons with 2015 and extensive demographic and spatial controls, and more than doubles in media markets with heavy political advertising. These effects appear asymmetric: while Democratic voters traveled less in 2016, political differences shortened Thanksgiving dinners more among Republican voters, especially where political advertising was heaviest. Partisan polarization may degrade close family ties with large aggregate implications; we estimate 27 million person-hours of cross-partisan Thanksgiving discourse were lost in 2016 to ad-fueled partisan effects.

That is from a new paper by M. Keith Chen and Ryne Rohla, via the excellent Kevin Lewis.

Using all French court decisions from 2002–2014 with 6 million decisions, we estimate significant impact on sentence lengths, but mainly for those defendants present at trial—equivalent to 3.5 days reduction. The average sentence length is 95 days. Focusing on the three-month threshold (the median sentence length), defendants are 1.6% less likely to be sentenced above this threshold on their birthday. Including controls for gender, crime, age, and nationality, the effect is 1.1% and remains statistically significant at the 5% level. Disaggregating the components of the sentence length reveals the impact is greatest on probation sentences–defined as the prison sentence people get in case of violation of their probation. Notably, individuals with drug offenses—but not violent offenses—benefit from this judicial leniency. They are 5% less likely to have sentences above three-months if sentenced on their birthday and appearing at trial.

For the United States, the birthday effect shows up only for the “days” component of the sentence, not for the “months” component.

That is all from a paper by Daniel L. Chen and Arnaud Philippe, via Robert Dur.

There is a new NBER working paper on these topics, by Anna Chorniy, Janet Currie, and Lyudmyla Sonchak, here is the abstract:

In the U.S., nearly 11% of school-age children have been diagnosed with ADHD, and approximately 10% of children suffer from asthma. In the last decade, the number of children diagnosed with these conditions has inexplicably been on the rise. This paper proposes a novel explanation of this trend. First, the increase is concentrated in the Medicaid caseload nationwide. Second, nearly 80% of states transitioned their Medicaid programs from fee-for-service (FFS) reimbursement to managed care (MMC) by 2016. Using Medicaid claims from South Carolina, we show that this change contributed to the increase in asthma and ADHD caseloads. Empirically, we rely on exogenous variation in MMC enrollment due a change in the “default” Medicaid plan from FFS or MMC, and an increase in the availability of MMC. We find that the transition from FFS to MMC explains most of the rise in the number of Medicaid children being treated for ADHD and asthma. These results can be explained by the incentives created by the risk adjustment and quality control systems in MMC.

The economics of medical diagnoses remain a drastically understudied area.

Here is a new and very important paper by Yuyu Chen and David Y. Yang (and note how they named the link):

Media censorship is a hallmark of authoritarian regimes. We conduct a field experiment in China to examine whether providing access to an uncensored Internet leads citizens to acquire politically sensitive information, and whether they are affected by the information. We track subjects’ media consumption, beliefs regarding the media, economic beliefs, political attitudes, and behaviors over 18 months. We find 4 main results: (i) free access alone does not induce subjects to acquire politically sensitive information; (ii) temporary encouragement leads to a persistent increase in acquisition, indicating that demand is not permanently low; (iii) acquisition brings broad, substantial, and persistent changes to knowledge, beliefs, attitudes, and intended behaviors; and (iv) social transmission of information is statistically significant but small in magnitude. We calibrate a simple model to show that, due to the low demand for, and moderate social transmission of, uncensored information, China’s censorship apparatus may remain robust for a large number of citizens receiving unencouraged access to an uncensored Internet.

Those results are fully consistent with my own anecdotal observations.

That is part of the title of a new paper by Sharat Ganapati, here is the abstract:

American industries have grown more concentrated over the last few decades, driven primarily by the growth of the very largest firms. Classical economics implies that this should lead to hikes in prices, reduction in output, and decreases in consumer welfare. I investigate forty years of data from 1972-2012 using publicly available market shares and price indices for both the manufacturing and non-manufacturing sectors and find mixed evidence. Manufacturing concentration increases are indeed correlated with slightly higher prices, but not lower output. However concentration increases are correlated with increases in productivity, offsetting a large portion of the price increase. In contrast, non-manufacturing concentration increases over the last twenty years are not correlated with observable price changes, but are correlated with increases in output.

In other words, the output restrictions are not there.  The amazing thing is that, over the last few years, I have seen a few dozen journalists and also economists handle this question, without ever asking much less trying to answer this question (Noah Smith being an exception).

There is a new paper on that topic by Bert Van Landeghem at Sheffield, here are the main results:

A large number of empirical studies have investigated the link between social status and happiness, yet in observational data identification challenges remain severe. This study exploits the fact that in India people are assigned a caste from birth. Two identical surveys of household heads (each with N=1000) in rural Punjab and Andhra Pradesh show an increasing pattern in economic welfare across the hierarchy of castes. This illustrates that at least in rural regions, one’s caste is still an important determinant for opportunities in life. Subsequently, we find that the castes at the top are clearly more satisfied than the lower and middle castes. This result, which is in line with predictions of all major social comparison theories, is robust across the two case studies. The pattern across low and middle castes, however, is less clear, reflecting the complex theoretical relationship between being of middle rank on the one hand, and behaviour, aspirations and well-being on the other hand. In the Punjab sample, we even find a significant U-shape, the middle castes being the least happy. Interestingly, these patterns resemble those found for Olympic Medalists (first documented by Medvec et al. 1995).

I am looking forward to my conversation with Sujatha Gidla.

We use a machine learning algorithm to identify potential social capital measures that best predict neighborhood-level variation in labor market networks. We find evidence suggesting that smaller and less centralized schools, and schools with fewer poor students, foster social capital that builds labor market networks, as does a larger Republican vote share. The presence of establishments in a number of non-profit oriented industries are identified as predictive of strong labor market networks, likely because they either provide public goods or facilitate social contacts. These industries include, for example, churches and other religious institutions, schools, country clubs, and amateur or recreational sports teams or clubs.

That is from a new NBER working paper by Brian J. Asquith, Judith K. Hellerstein, Mark J. Kutzbach, and David Neumark.

Replication is critical for scientific progress and integrity but incentives for replication have been low. It’s good news, therefore, that a new journal will be devoted solely to replication research:

The International Journal for Re-Views in Empirical Economics (IREE) is the first journal dedicated to the publication of replication studies based on economic micro-data. Furthermore, IREE publishes synthesizing reviews, micro-data sets and descriptions thereof, and articles dealing with replication methods and the development of standards for replications.

As yet, authors of replication studies, data sets and descriptions had a hard time gaining recognition for their work by citable publications and incentives for conducting these important kinds of work were immensely reduced….IREE provides the platform to authors to be given credit for serious empirical research in economics.

The publication of replication studies often depends on their result….replications usually need to reject the original study to get published whereas a scientific impact is denied for replications confirming original findings. This induces a severe publication bias….Therefore, IREE publishes research independent of the result of the study. The selection of published articles is based on technical and formal criteria but not with regards to the qualitative and quantitative results.

Deaton, Wooldridge, and Easterlin are all involved.

Hat tip: David Roodman on twitter.

Addendum: Also check out the the inaugural Empirical Legal Studies Replication Conference which will publish papers, independent of result, in an edition of the International Review of Law and Economics.

Already, there are 14,000 one-story cinder block Dollar Generals in the U.S.—outnumbering by a few hundred the coffee chain’s domestic footprint. Fold in the second-biggest dollar chain, Dollar Tree, and the number of stores, 27,465, exceeds the 22,375 outlets of CVS, Rite Aid, and Walgreens combined.

Here is the full Bloomberg piece, by Mya Frazier.  One point here is that “retail concentration,” which we do observe in the data, is unlikely to lead to very high prices.  A subtler point is that the dollar store sector itself is somewhat concentrated.  But that is yet another way of seeing why concentration indices can be misleading: “They’ve taken over a big chunk of the nation’s dollar stores!” isn’t exactly a recipe for sustained high prices, if anything the contrary.  Yet another point is that we may be rather deliberately moving to an uglier but cheaper world.

That is a new and important piece by Zachary Mabel and Tolani A. Britton, here is the abstract:

Research on college dropout has largely addressed early exit from school, even though a large share of students who do not earn degrees leave after their second year. In this paper, we offer new evidence on the scope of college late departure. Using administrative data from Florida and Ohio, we conduct an event history analysis of the dropout process as a function of credit attainment. Our results indicate that late departure is widespread, particularly at two- and open-admission four-year institutions. We estimate that 14 percent of all entrants to college and one-third of all dropouts completed at least three-quarters of the credits that are typically required to graduate before leaving without a degree. Our results also indicate that the probability of departure spikes as students near the finish line. Amidst considerable policy attention towards improving student outcomes in college, our findings point to promising new avenues for intervention to increase postsecondary attainment.

Here are ungated copies of the paper. I take these numbers as implicit evidence for an “acculturation” theory of education, where close to the end of the process some people decide they don’t want to join the “people with a college degree community.”

For the pointer I thank the excellent Kevin Lewis.