Monday, November 19, 2012

Southern Economic Meetings Rundown

Just got back from the Southern Economic Association Meetings. New Orleans was fun and the presentations were informative but I'm happy to be home. When I was growing up I remember Dad had an affinity for top-5 or top-10 lists, I guess he passed it on to me. Below are my top-5 papers from the conference along with their abstract and a couple sentence comment.

Title: "Educations Gambling Problem: Earmarked Lottery Revenues, Government Spending, and Charitable Donations"

Abstract: I examine the impact that lotteries introduced to support education have on overall funding for education, accounting for both government expenditures and private charitable donations. State government education expenditures do not significantly increase when an education lottery is introduced. However, the fact that states claim to use lottery revenues for education may have a negative impact on charitable contributions to education related causes. This in turn would imply that total support for education  decreases with the introduction of a lottery. Empirically, I examine the impact of the introduction of education lotteries introduced between 1989 to 2008. Using both donor-level survey data and nonprofit tax returns, I demonstrate that donations to education-related organizations fall with the introduction of a lottery. This result seems to be driven by donors’ response to the new (often highly publicized) government revenue source rather than by a decrease in nonprofit fundraising efforts.

Comment: Donors lower contributions in response to *perceived* increases in government spending on education and this perception hinges critically on the kind of advertising. This is an interesting result. At this point the data is too aggregated (I think) but it would be interesting to know who is decreasing their private donations and whether this would be true under a different distribution mechanism for lottery money. Since most lottery participants are lower income the lottery money could primarily be used to finance programs for low income schools.

Also I should mention, the whole session this paper was on was fantastic with interesting research presented by Sarah Helms and Jeremy Thornton.

Title: Birth, Death, and Public Good Provision

Abstract: None

Comment: This takes a standard voluntary contributions mechanism and asks what happens when some members of the group "die" and new members are "born". Don't worry, nobody was harmed in this experiment! But, it is an interesting twist on a standard game because the "young" inject their optimism into a situation that is fraught with bitterness.

Panel on "Biblical Foundations of Economic Freedom and Market Exchange". So it was not a paper; however, the panel provided a lot of questions to sort through. Chief among those questions was how to talk to people who are process rather than results oriented. In economics we talk about outcomes usually not processes so we have a difficult time even having a conversation with theologians and others because something that has a good process does not often obtain good outcomes. There are no concrete papers associated with the session (at least I couldn't find links) but I'm sure we will be talking about it soon.

Title: The 17th Amendment, Senator Ideology, and the Growth of Government"

Abstract: None

Comments: There are some big questions in economics. For example, what can explain the growth in the size of government. One rule that might explain some of that growth is the 17th amendment. The popular election of Senators rather than the appointment by the state legislature. Popular election meant that Senators were not instructed by their state legislatures about how to properly represent the state but acted like free agents accountable mainly to the voters who were less informed about their actions. The paper was still in preliminary stages.

Panel on "How Should We Discuss Markets vis a vis Morality . . . " had a really long title but was an absolutely crucial discussion to have. The authors discussed different variations on how people act in moral capacities whether they are in voluntary or government settings. There was some discussion that reflected the "Biblical Foundations . . ." panel where good intentions sometimes seem to mean more to people than good outcomes. The trouble is in the communication with other people to help them understand economics. All good arguments rest on three points: logic, credibility, and emotional appeal. We have a difficult time with emotional appeal ---I think part of this is that voluntary associations are not the primary provider of many charitable services so people have a growing feeling we need the market to support charitable activities.

The final thought I will close with was a thought from Dwight Lee on the panel just mentioned (paraphrase): Market failure is treated as endemic of the market system. On the other hand, government failure is treated not as an endemic failure of the system but a failure of not doing a good enough job.

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