Every Monday, the National Bureau of Economic Research, a nonprofit organization made up of some of North America’s most respected economists, releases its latest batch of working papers. The papers aren’t peer-reviewed, so their conclusions are preliminary (and occasionally flat-out wrong). But they offer an early peek into some of the research that will shape economic thinking in the years ahead. Here are a few of this week’s most interesting papers:
Title: “Religion and Innovation”
Authors: Roland Bénabou, Davide Ticchi, Andrea Vindigni
What they found: People who are religious have less favorable views of science and technology and are less willing to accept new ideas and technologies; the greater the religiosity of a state or country, the less innovative it was, as measured in patents per capita.
Why it matters: Economists have found conflicting evidence regarding the effects of religion on economic growth. On the one hand, religious people have been shown to be more trusting and trustworthy (e.g., they’re less likely to take a bribe), leading to a baseline level of cooperation that allows the economy to operate more smoothly. But religion’s effect on innovation seems to cut the other way: Religious individuals tend to be less supportive of new technologies — and innovation is the primary driver of long-term economic growth.
In an earlier 2013 paper, these authors studied the rate of innovation (in patents per capita) across U.S. states and foreign countries, while controlling for income and other variables. Uniformly, places that were more religious were less innovative. In this paper, the authors study the relationship between religiosity and innovation at the individual level. Specifically, the researchers examine people’s attitudes toward science and technology, or their openness to new ideas, versus how important they say religion is in their lives and how often they attend church. Like the earlier study, this one controlled for several possible confounding demographic variables — income, education, age, and so on. The researchers sliced the data 52 different ways and across the board, religiosity was very negatively associated with pro-innovation attitudes.
Key quote: “Historically, religion often played an important role in the spread of general literacy and education, though this is no longer true after the mid-19th century. Since more educated individuals generally tend, as we showed earlier, to be more open to new ideas, change, risk, etc., this might be seen as an offsetting factor to the direct negative relationship between religiosity and innovativeness — albeit a self-limiting one, since religiosity itself declines with education.”
Data they used: World Values Survey.
Title: “Ask Your Doctor? Direct-to-Consumer Advertising of Pharmaceuticals”
Authors: Michael Sinkinson, Amanda Starc
What they found: TV advertisements for a pharmaceutical drug company’s products can cut into competitors’ business while simultaneously boosting sales for the company’s other drugs.
Why it matters: The economic benefits of advertising are questionable. By providing prospective customers with more information, advertising could in theory improve market efficiency and lead to positive spillover effects, like greater sales of other products. Or advertising might just be an arms race between rivals — with each side egged into spending more out of fear that a competitor will steal its business. This paper shows that both scenarios are real. Specifically, in the market of direct-to-consumer TV ads for statins (a type of anti-cholesterol drug), a 10 percent increase in the number of a firm’s ads results in a 0.76 percent increase in the company’s revenue, while its rival sees a 0.55 percent decline in revenue. But advertising is not a zero-sum game, so there is a positive spillover effect, too: A 10 percent increase in ads also boosts sales of a company’s unadvertised products by 0.23 percent.
Key quote: “Our simulations highlight the role of advertising competition, shedding light on strategic interaction between firms. … The simulations highlight the potential for an advertising ban to reduce wasteful advertising spending. While sales of unadvertised drugs fall by nearly 5%, the savings from eliminating television advertising are substantial. Our results help quantify the tradeoffs that policy makers may face when regulating pharmaceutical firms.”
Data they used: Drug sales and usage data from Truven Medstat; advertising data from Kantar Media.
Title: “The Effect of Community Traumatic Events on Student Achievement: Evidence from the Beltway Sniper Attacks”
Authors: Seth Gershenson, Erdal Tekin
What they found: The “Beltway Sniper” attacks — random shootings carried out in the Washington, D.C., metropolitan area over three weeks in October 2002 — reduced student achievement in Virginia public schools within 5 miles of an attack; the effects were concentrated in schools with a higher proportion of minority and poor students.
Why it matters: Researchers have long studied the effects of chronic community violence on children’s academic success. But while crime has declined nationwide, the frequency of community traumatic events — mass shootings, terrorist attacks, natural disasters, and so on — is on the rise. A study by the FBI showed the frequency of “active shooter” incidents is up from 6.4 incidents per year between 2000 and 2006 to 16.4 incidents per year between 2007 and 2013. The authors of this study examined the effect of the 2002 Beltway Sniper shootings on student achievement in Virginia. They compared math and reading proficiency rates before and after the shootings, both for students in schools near a shooting and for those in schools farther away. The shootings had a major negative effect: Fifth-graders’ reading proficiency scores declined 4 percent and their math scores went down 8 percent; the disruptive effect was comparable to having 10 snow days. The effects were more severe in relatively poorer schools, and in those closer to where the shootings happened.
Key quote: “More generally, these findings suggest that local and state education systems might respond to community traumatic events by providing additional resources, support, and guidance to affected schools and communities. … Moreover, targeted support would be justified, given that disadvantaged schools and communities appear to bear a disproportionate burden of the harmful effects. There are also implications for proactive policies designed to eliminate or minimize the proclivity of manmade community traumatic events, as doing so in an efficient manner requires equating the marginal cost and marginal benefit of such efforts.”
Data they used: School-level proficiency rates from the Virginia Department of Education.