cultural leader and the dynamics of assimilation abstract this paper studies the population dynamics of cultural traits in a model of intergenerational cultural transmission with a perfectly forward looking cultural leader we show that there exists a threshold size in terms of population above which the cultural leader becomes active we also show that a policy affecting some key parameters such as the cost of providing the religious good has a different impact in the short run and in the long run due to over reactions or under reactions of the different cultural groups finally we study the cultural competition between two forward looking cultural leaders with opposite objectives we show that the steady state cultural equilibrium depends on the time preference structure of the two leaders

optimal tax theory the journey from the negative income tax to the earned income tax credit what lessons do we learn from optimal tax theory for the design of income redistribution programs i modify a standard model of optimal nonlinear income taxation with discrete types to consider differences in both earning ability and the disutility of effort this gives a role for workfare in the optimal tax policy the existence of screening mechanisms can play a role in explaining nonparticipation in cash and in kind redistribution programs including progresa oportunidades lifeline telephone subsidies and the special supplemental nutrition program for women infants and children wic stigma can increase efficiency of a redistribution program by discouraging participation by individuals near the eligibility thresholds the family assistance program proposed in the early 1970s lacked adequate stigma for nonworkers which contributed to a lack of political support in contrast the current earned income tax credit eitc provides greater benefits to workers than to nonworkers thus the eitc does not require any stigma to screen out individuals who do not work from obtaining benefits reasons for separate income support programs for nonworkers and for workers are discussed

peer pressure and partnerships partnerships and profit sharing are often claimed to motivate workers by giving them a share of the pie but in organizations of any significant size the free rider effects would seem to choke off

sacrifice and stigma reducing free riding in cults communes and other collectives this paper presents an economic analysis of religious behavior that accounts for the continuing success of groups with strange requirements and seemingly inefficient prohibitions the analysis does not presuppose any special motives for religious activity rather religion is modeled as a club good that displays positive returns to participatory crowding the analysis demonstrates that efficient religions with perfectly rational members may benefit from stigma self sacrifice and bizarre behavioral restrictions the model also addresses sacrifice in nonreligious social clubs fraternities communes political parties work groups and families

social insurance commitment and the origin of law interest bans in early christianity abstract despite the historical importance of ideology based economically inhibitive laws we know little about the economic factors underlying their origin this paper accounts for the historical emergence of one such law the christian ban on taking interest a doctrine that shaped the evolution of numerous financial contracts and related organizational forms a game theoretic analysis and historical evidence suggest that the church s commitment to providing social insurance for its poorest constituents encouraged risky borrowing which the church attempted to limit by banning interest the analysis highlights the applicability of the rational choice framework to seemingly irrational actions and laws the role of nonmonetary sanctions in circumventing commitment problems and the importance of economic forces vis a vis ideology

how does peer pressure affect educational investments when effort is observable to peers students may try to avoid social penalties by conforming to prevailing norms to test this hypothesis we first consider a natural experiment that introduced a performance leaderboard into computer based high school courses the result was a 24 percent performance decline the decline appears to be driven by a desire to avoid the leaderboard top performing students prior to the change those most at risk of appearing on the leaderboard had a 40 percent performance decline while poor performing students improved slightly we next consider a field experiment that offered students complimentary access to an online sat preparatory course sign up forms differed randomly across students only in whether they said the decision would be kept private from classmates in nonhonors classes sign up was 11 percentage points lower when decisions were public rather than private honors class sign up was unaffected for students taking honors and nonhonors classes the response depended on which peers they were with at the time of the offer and thus to whom their decision would be revealed when offered the course in a nonhonors class where peer sign up rates are low they were 15 percentage points less likely to sign up if the decision was public but when offered the course in an honors class where peer sign up rates are high they were 8 percentage points more likely to sign up if the decision was public thus students are highly responsive to their peers are the prevailing norm when they make decisions

peer effects in the demand for housing quality abstract using detailed data on friendship networks within neighborhoods we investigate the importance of social interactions in one s own residential neighborhood in the demand for housing quality we find evidence consistent with the presence of peer effects especially for households living in urban areas our findings are in line with the prediction of a model where conformity preferences underlie economic outcomes that involve interactions with peers

food beliefs and food supply chains the impact of religion and religiosity in israel abstract this paper demonstrates that religion and religiosity affect norms which affect food consumption patterns and production heterogeneity and asymmetric information lead to multiple certification channels as well as multiple supply chains major supply chains may address multiple constituencies that are secular or less religious technological change affects norms and thus the food system we obtain these results by analyzing the food systems for meat products in israel where there are three religions jews muslims and christians and people assign themselves three levels of religiosity secular conservative and orthodox israel has multiple kosher and halal certifiers and several specialized supermarket chains for orthodox groups its main supermarket chains serve secular and some conservative segments the immigration of secular jews from russia led to the proliferation of non kosher supply chains and products and increased consumption of pork new technologies and higher incomes led to emergence of fast food chains serving orthodox jews that had previously tended to eat at home

printing and protestants an empirical test of the role of printing in the reformation the causes of the protestant reformation have long been debated this paper seeks to revive and econometrically test the theory that the spread of the reformation is linked to the spread of the printing press i test this theory by analyzing data on the spread of the press and the reformation at the city level an econometric analysis that instruments for omitted variable bias with a city s distance from mainz the birthplace of printing suggests that cities with at least one printing press by 1500 were at minimum 29 percentage points more likely to be protestant by 1600

sect subsidy and sacrifice an economist s view of ultra orthodox jews israeli ultra orthodox men study full time in yeshiva until age 40 on average why do fathers with families in poverty choose yeshiva over work draft deferments subsidize yeshiva attendance yet attendance typically continues long after exemption fertility rates are high tfr 7 6 and rising a social interaction approach explains these anomalies yeshiva attendance signals commitment to the community which provides mutual insurance to members prohibitions strengthen communities by effectively taxing real wages inducing high fertility historically the incursion of markets into traditional communities produces ultra orthodoxy subsidies induce dramatic reductions in labor supply and unparalleled increases in fertility illustrating extreme responses social groups may have to interventions

prohibition of riba and gharar a signaling and screening explanation abstract the emergence of islamic banks ibs with sharia boards that restrict the set of permissible products and enforce prohibition of riba and gharar raises basic questions about how ib clients benefit when choosing from a restricted menu of possibly higher cost cash flows norms that restrict choice sets or impose otherwise harsh requirements would seem to act as a barrier to religious identification by raising costs for ib clients contrary to this intuition our model demonstrates that premium costs associated with restrictions on the set of financing options considered to be sharia compliant provide a signaling and screening technology that benefits ib clients who are highly pious by revealing what would otherwise remain private information about the intensity of religious piety this signaling technology simultaneously provides a screening service that enables high piety types to separate themselves and concentrate both social and commercial interactions with others who are similarly pious iannaccone 1992 demonstrates a rationale for harsh norms as a mechanism for reducing free riding in the supply of club goods in contrast our model shows that piety can be signaled by the act of choosing to become an ib client and bearing the costs of its restricted choice set and premium pricing for otherwise identical cash flows signaling and screening provide a new rationalization for prohibition of riba and gharar as a stable institution signaling piety is especially valuable in environments where piety is uncertain and otherwise difficult for others to observe the model predicts that ibs sharia compliance criteria will tend to be stricter and ib premiums larger in places where the proportion of highly pious muslims is small

who trusts others community and individual determinants of social capital in a low income country this study presents new evidence on individual and community specific determinants of social trust using data from 96 villages in bangladesh we find perceived institutional trust to be positively correlated with stated inter personal trust at the same time there is significant social distance among various faith groups in our data both hindus and muslims trust their coreligionists more than they trust those from other religions moreover hindus trust christians buddhists and ngo workers more than muslims and are not distrustful of the wider society trust towards non muslims is negatively correlated with islamic school attendance among muslim respondents while religiosity tends not to play any role compared to religion the effects of institutional trust and local economic development are modest these findings are robust to control for a range of individual and community level correlates and enumerator fixed effects

endogenous peer effects local aggregate or local average a b s t r a c t we develop a unified model embedding different behavioral mechanisms of social interac tions and design a statistical model selection test to differentiate between them in empirical applications this framework is applied to study peer effects in education effort in study ing and sport activities for adolescents in the united states we find that for education students tend to conform to the social norm of their friends while for sport activities both the social multiplier and the social norm effect matter

crime and social interactions the high variance of crime rates across time and space is one of the oldest puzzles in the social sciences this variance appears too high to be explained by changes in the exogenous costs and benefits of crime we present a model where social interactions create enough covariance across individuals to explain the high cross city variance of crime rates this model provides an index of social interactions which suggests that the amount of social interactions is highest in petty crimes moderate in more serious crimes and almost negligible in murder and rape

gifts as economic signals and social symbols gift giving has often puzzled economists especially because efficient gifts like cash or giving exactly what a person asks for seem crass or inappropriate it is shown in a formal game theoretic model that gifts serve as signals of a person s intentions about future investment in a relationship and inefficient gifts can be better signals other explanations for the inefficiency of gift giving are advanced and some stylized facts about gift giving practices are described many of which are consistent with the signaling view of gifts

the fear of exclusion individual effort when group formation is endogenous to secure their membership in a popular group individuals may contribute more to the group s local public good than they would if group formation were exogenous those in the most unpopular group do not have this incentive to contribute this may result in substantial differences in individual effort level between groups our model thus provides one explanation for the existence of group specific behavioral norms a principal will prefer exogenous or endogenous group formation depending on whether he prefers high or low levels of the local public good we analyze two stylized examples social interaction in schools and multiple task teamwork

understanding the development of fundamentalism we use economic theory to examine the intensity of fundamentalist sects in which leaders work to enhance their followers observance level we model three stylized situations under which fundamentalist groups function examining the intensity of observance in each we find that under reasonable conditions rivalry among fundamentalists makes them more extreme

innovative entry profit hidden beneath the zero the traditional models of free entry zero profit monopolistic competition equilibrium do not of course exclude the possibility that positive profits might still be made by intra marginal firms if the market is non uniform or that collusive actions plus barriers to further entry can almost always be used to convert a zero profit non cooperative equilibrium into a structure which is profitable for all existing firms this paper is concerned with situations giving rise to a local nash equilibrium no firm can improve by a marginal move which are zero profit across all firms but yet in which it is possible for a new firm to enter and make profits at least in the short run without collusive action entry in such situations will be referred to as innovative entry since it involves potential entrants looking behind the zero profit situation actually existing to a possible different structure in which profits are possible or in which a larger number of firms can be accommodated without losses this can be contrasted with passive entry in which firms simply enter industries where actual profits are positive and do not enter those in which actual profits are nonpositive we shall restrict ourselves to discussion of uniform cases in which all firms make identical profits at equilibrium so as to avoid any difficulty associated with the term zero profit the general context will be that of monopolistic competition in which product differentiation takes place by variation in the specifications combinations of characteristics of the goods produced the potential variations are considered as points in a space of characteristics with dimensionality determined by the number of characteristics actually relevant to consumer choice among the products the market structure arising within this context when there is free entry no collusive behavior frictionless change and complete information has been termed perfect monopolistic competition by the author and discussed fully at least for the case of two characteristics in lancaster 5 within this structure it will be shown that innovative entry is possible even when there is passive entry equilibrium because actual profits of all firms are zero in at least two cases

watta satta bride exchange and women s welfare in rural pakistan in a setting where husbands wield considerable coercive power forms of marriage should adapt to protect the interests of women and their families the authors study the pervasive marriage custom of watta satta in rural pakistan a bride exchange between families coupled with a mutual threat of retaliation they show that watta satta may be a mechanism to coordinate the actions of two sets of in laws each of whom wish to restrain their sons in law but who only have the ability to restrain their sons the authors empirical results support this view the likelihood of marital inefficiency as measured by estrangement domestic abuse and wife s mental health is significantly lower in watta satta arrangements as compared with conventional marriages but only after properly accounting for selection

emergent extremism in a multi agent model of religious clubs i introduction religious extremism is as old as religion itself but the tendency to promote militancy and terrorism from within extremist religions appears to be much more common now than in times past juergensmeyer 2001 stern 2003 wiktorowicz 2005 1 today s terrorists routinely frame their objectives in religious terms and organize their activities within religious movements this shift is not due to increased militancy within religion as a whole not even within the stricter subset of religious groups commonly labeled sectarian or fundamentalist bromley and melton 2002 marty and appleby 1995 rather groups with militant objectives are increasingly leveraging the latent potential for violence within extremist religion krueger and maleckova 2003 and krueger 2007 have shown that contrary to popular hypotheses regarding the salience of poverty and education it is instead institutional conditions such as civil liberties that contribute to the origination of terrorists within a country religious extremism has been shown to be a potentially powerful input into the production of terrorism berman 2004 2 and the origination of terrorists has been empirically connected to civil liberties we seek to complete the triangle and connect religious extremism to social conditions in an extension of existing theory and test the predictions of the model in an empirical context with an eye toward civil liberties this paper extends previous models of religious clubs to better account for observed patterns of extremism across different settings and test policies most likely to reduce the appeal of extremism economists at first blush should have trouble explaining the survival of groups that demand large sacrifices from their members successful religious groups however routinely impose all sorts of apparently unproductive costs on their members iannaccone 1992 introduced a formal model of religious clubs within which apparently irrational sacrifice and stigma enhances the individual and collective utility his model demonstrated the feasibility of extremist groups but does less to explain the relative prevalence of extremism across time and place further the original model allows for only corner solutions and as such the viability of extreme groups is indistinguishable from the viability of the more moderate groups they must compete with for members in the religious marketplace in section ii we revisit analyze and extend the club model of religion we push the analysis of the original model exploring sacrifice substitutability of club and private goods and their relationships to member commitment and the viability of extremist groups in this preliminary analysis we illustrate not only the potential insights of the club theory of religion into the strength and viability of extremist groups but also the limitations inherent to the representative agent model we proceed by extending the model in a multi agent ma computational framework this framework permits us to analyze the distributions of agents and clubs that make up a religious economy the computational nature of the model is critical because it allows for sufficient heterogeneity of agents and clubs and given this heterogeneity agent decision making absent closed form solutions via nash equilibria extremists groups emerge as just one segment the high cost tail of a distribution of religious clubs that range across the full spectrum of potential group imposed sacrifice and stigma extremism is identifiable and comparable in the model because it exists within a full spectrum of clubs by varying the parameters of the model that control the distribution of secular wages across agents and the degree of substitutability between religious and secular commodities we can better explain where and when religious extremism is most popular its strength relative to more moderate groups and which economic policies reduce its prevalence

hatred and profits under the hood of the ku klux klan in this article we analyze the 1920s ku klux klan those who joined it and its social and political impact by combining a wide range of archival data sources with data from the 1920 and 1930 u s censuses we find that individuals who joined the klan in some cities were more educated and more likely to hold professional jobs than the typical american surprisingly we find little evidence that the klan had an effect on black or foreign born residential mobility or vote totals rather than a terrorist organization the 1920s klan is best described as social organization with a very successful multilevel marketing structure fueled by an army of highly incentivized sales agents selling hatred religious intolerance and fraternity in a time and place where there was tremendous demand jel codes d71 d72 r23 n32 copyright 2012 oxford university press

monitoring motivation and management the determinants of opportunistic behavior in a field experiment economic models of incentives in employment relationships are based on a specific theory of motivation employees are rational cheaters who anticipate the consequences of their actions and shirk when the marginal benefits exceed costs we investigate the rational cheater model by observing how experimentally induced variation in monitoring of telephone call center employees influences opportunism a significant fraction of employees behave as the rational cheater model predicts a substantial proportion of employees however do not respond to manipulations in the monitoring rate this heterogeneity is related to variation in employee assessments of their general treatment by the employer jel d2 j2 l2 l8 m12

the invisible hand plays dice multiple equilibria in sects markets religious participation is much more widespread in the united states than in europe while europeans tend to view sects more suspiciously than americans we propose an explanation for these patterns without assuming differences in preferences or market fundamentals we study a religious market where both demand and supply of spiritual services are endogenous such markets may have multiple equilibria further equilibria with more sects result in higher welfare and lower membership costs as secular societies tend to host on average more demanding sects

cross national differences in the rise in earnings inequality market and institutional factors this paper uses data from the luxembourg income study to explore the role of differences in supply shifts in explaining cross national differences in the rise in earnings inequality changes in returns to age and education are estimated for eight countries using a common specification of earnings functions across years and countries we find that the small overall increase in earnings inequality in many countries reflects large but offsetting changes in returns to skill and changes in inequality within age education cells furthermore these differences in returns to skill can largely be explained by differences in supply shifts

mass migration to israel and natives employment transitions this study examines how mass migration from the former soviet union to israel affected natives probability of moving from employment to non employment and vice versa using 1989 99 data from the israeli labor force survey the authors find that the share of immigrants in labor market cells defined by occupation industry district of residence schooling and experience was generally positively associated with natives probability of moving from employment to non employment however when the analysis controls for the endogenous sorting of immigrants across cells this effect is substantially reduced for men and disappears or is even reversed for women the authors conclude that immigrants tended to cluster in labor market cells with high turnover rates and that immigration did not increase natives likelihood of exiting employment they also find no discernible effects of immigration on natives transitions between labor market cells or on the probability of their moving from non employment to employment

economics and identity this paper considers how identity a person s sense of self affects economic outcomes we incorporate the psychology and sociology of identity into an economic model of behavior in the utility function we propose identity is associated with different social categories and how people in these categories should behave we then construct a simple game theoretic model showing how identity can affect individual interactions the paper adapts these models to gender discrimination in the workplace the economics of poverty and social exclusion and the household division of labor in each case the inclusion of identity substantively changes conclusions of previous economic analysis

social norms savings behavior and growth we argue that many goods and decisions are not allocated or made through markets we interpret an agent s status as a ranking device that determines how well he or she fares in the nonmarket sector the existence of a nonmarket sector can endogenously generate a concern for relative position in for example the income distribution so that higher income implies higher status moreover it can naturally yield multiple equilibria it is thus possible to explain differences in growth rates across countries without recourse to differences in underlying preferences technologies or endowments different social organizations lead to different reduced form preferences which lead to different growth rates

tourist preferences for rural house stays evidence from discrete choice modelling in spain abstract although the appeal of rural houses for tourists lies mainly in the natural surroundings and their intrinsic rural characteristics there are other factors which are also important such as their size type of building quality of equipment services and activities offered to evaluate the tourists preferences for these potential or effective attributes a stated preference experiment was conducted in the northwest area of the region of murcia and the data are analysed using discrete choice modelling methodology consistent specifications for multinomial logit and mixed logit models that consider variations in tastes within tourists preferences are found the results could be of use to promoters and owners of rural houses when planning marketing and promotional campaigns or when taking effective investment decisions

the limits of equality insights from the israeli kibbutz what limits the capacity of society to redistribute what determines the structure of compensation in organizations striving for income equality this paper addresses these questions by investigating the economic and sociological forces underlying the persistence of the israeli kibbutzim communities based on the principle of income equality to do this i exploit newly assembled data on kibbutzim and a financial crisis in the late 1980s that affected them differentially the main findings are that 1 productive individuals are the most likely to exit and a kibbutz s wealth serves as a lock in device that increases the value of staying 2 higher wealth reduces exit and supports a high degree of income equality and 3 ideology facilitates income equality using a simple model i show that these findings are consistent with a view of the kibbutz as providing optimal insurance when members have the option of leaving more generally these findings contribute to an understanding of how mobility limits redistribution and to an understanding of the determinants of the sharing rule in other types of organizations such as professional partnerships cooperatives and labor managed firms

luther and suleyman this paper emphasizes that the evolution of religious institutions in europe was influenced by the expansionary threat posed by the ottoman empire between the mid 15th century and the early 17th century various historical accounts have suggested that the ottomans rise helped the protestant reform movement as well as its various offshoots such as zwinglianism anabaptism and calvinism survive their infancy and mature utilizing a comprehensive dataset on violent conflicts for the period between 1451 and 1650 i find strong empirical support for the idea that ottoman military engagements in continental europe lowered the number and extent of violent conflicts among and within the european states ottomans influence in europe extended to the feud between the protestant reformers and the catholic establishment during the time between the birth of lutheranism and the end of the thirty years war the likelihood and timing of military engagements between the protestant reformers and the counter reformation forces depended negatively and statistically significantly on ottomans military activities in europe

the governance institutions of a drug trafficking organization how do drug trafficking organizations organize drug trafficking organizations continue to operate effectively despite incentives for members to defect pressure from damaged communities and government interdiction efforts this paper identifies the problem of defection in this context and applies insights from the literatures on club goods and extralegal governance institutions to explain the puzzling organization and activities of one of mexico s most dangerous drug trafficking organizations la familia michoacana the group uses a reward and punishment scheme to prevent defection from members and to elicit cooperation from the community and government

the role of freedom growth and religion in the taste for revolution a fundamental question about the determinants of civil conflict is the relative importance of political freedoms versus economic development this paper takes a new approach to provide an answer by using micro data based on surveys of revolutionary tastes of 130 000 people living in 61 nations between 1981 and 1997 controlling for personal characteristics country and year fixed effects more freedom and economic growth both reduce revolutionary support losing one level of freedom equivalent to a shift from the us to turkey increases support for revolt by 4 percentage points to reduce support by the same amount requires adding 14 percentage points onto the gdp growth rate being muslim in a free country has no effect on the probability of supporting revolt compared to a non religious person however being muslim in a country that is not free increases it by 13 percentage points being christian in a free country decreases the chance of supporting revolt by 4 percentage points compared to a non religious person and in a not free country by 1 percentage point

do religious proscriptions matter evidence from a theory based test a large literature shows that religious participation is associated with various behaviors and outcomes but researchers lack an accepted instrument for religion and have struggled to establish whether these associations are causal using the canonical economic model of religiosity i develop an empirical test to investigate the importance of religious participation in particular religious proscriptions and rules on determining behavior the test relies on exogenous variation in the cost of secular activities rather than an instrument for religious participation several empirical applications of this test are conducted the results indicate a strong role for religious proscriptions in determining behavior