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: “Bias in Cable News: Real Effects and Polarization”
Authors: Gregory J. Martin, Ali Yurukoglu
What they found: Watching Fox News makes people more likely to vote Republican in presidential elections. Watching MSNBC makes them more likely to vote Democratic.
Why it matters: The cable news channels Fox News and MSNBC are widely seen as being slanted to the right and left of the political spectrum, respectively. Their popularity has led many commentators to decry the polarizing effect of the “echo chamber”; if people only watch news they agree with, the argument goes, they will become more hardened and perhaps more extreme in their views. But that’s only the case if watching Fox and MSNBC actually affects viewers’ opinions, rather than merely reflecting them. In this paper, the authors use ever-changing cable channel lineups to study the impact of watching the two news networks. They find that watching four additional minutes of Fox News per week increased a viewer’s likelihood of voting Republican in a presidential race by 0.9 percentage points. Watching the same amount of MSNBC made someone 0.7 percentage points more likely to vote Democratic.
Key quote: “We find that cable news does increase polarization among the viewing public. Furthermore, the increase in polarization depends critically on the existence of both a persuasive effect and a taste for like-minded news. We estimate that removing Fox News from cable television during the 2000 election cycle would have reduced the average county’s Republican vote share by 1.6 percentage points.”
Data they used: Various data sets including Nielsen data on channel lineups by ZIP code; the National Annenberg Election Survey and the Cooperative Congressional Election Study: Mediamark and Simmons survey data on television viewing habits; and county-level presidential election vote-share data compiled by Congressional Quarterly.
Title: “How Much Energy Do Building Energy Codes Really Save? Evidence from California”
Author: Arik Levinson
What he found: Building codes mandating energy efficiency don’t reduce electricity use.
Why it matters: In 1978, California enacted the country’s first statewide building code aimed at improving energy efficiency. At the time, the state projected the rules would reduce the energy “used in the typical building by 80 percent.” More than three decades later, homes in California use more electricity on average than when the law was passed. But homes are also larger and are in hotter parts of the state, among other changes. The real question is how California’s energy use compares to what it would have been if the law had never been passed. In this paper, Levinson tries to answer it using three approaches. First, he uses detailed building-level information to see whether more recently built homes are more efficient than similar older homes. Second, he uses monthly temperature data to see whether newer buildings use less energy on air conditioning than older ones. Finally, he compares California’s energy use to that of other states. All three approaches find that homes built since the energy codes took effect use just as much energy as those built before. That could be because owners of older homes have increased their energy efficiency, or because residents of more efficient homes are more likely to keep the lights on and the air conditioner running.
Key quote: “The stakes involved are far higher than whether or not a local ordinance works as promised. Energy-efficiency policies like California’s have become the centerpiece of U.S. climate policy. … The United States is putting much of its climate effort into this one policy.”
Data he used: The Residential Appliance Saturation Study, a study of more than 20,000 California households in 2003 and 2009, and the Residential Energy Consumption Survey, a national survey conducted by the Department of Energy.
Title: “How financially literate are women? An overview and new insights”
Authors: Tabea Bucher-Koenen, Annamaria Lusardi, Rob Alessie, Maarten van Rooij
What they found: Women around the world are significantly less financially literate than men and less confident in their knowledge of money. This is true even for young women, who are more educated on average and more likely to work than men their age.
Why it matters: Past studies have found that people who don’t understand saving and investment are less likely to make smart financial decisions. Yet surveys routinely find that many people have low levels of financial literacy. In this paper, the authors find that problem is particularly widespread among women. Using surveys from the United States, Germany and the Netherlands, they find that women are less likely to answer financial literacy questions correctly and more likely to answer “do not know” to the questions. They also tend to give themselves lower scores when asked to assess their own financial literacy. The authors argue this is of concern because women tend to live longer than men, meaning they have longer retirements and are more likely to be widowed; they are also more likely to have intermittent work histories. That means they have an even greater need for smart financial planning.
Key quote: “Particularly worrisome is that financial illiteracy is more widespread among single women and widows, who do not have a partner or spouse to consult when making financial decisions. Moreover, the gender gap in financial literacy is still present among the young. A low level of financial knowledge may have serious consequences because of the increasing individual responsibility for retirement security. … The evidence suggests that it is particularly difficult for women to obtain independent, high-quality advice. Therefore, enhancing the financial knowledge of women and equipping them with the tools to make sound financial decisions should be a top priority for policymakers.”
Data they used: The 2009 National Financial Capability Study for the United States; De Nederlandsche Bank Household Panel for the Netherlands; and SAVE, a panel survey of German households, for Germany.
Title: “Are the World’s Poorest Being Left Behind?”
Author: Martin Ravallion
What he found: Efforts to reduce global poverty have significantly reduced the number of people living in abject poverty but have done little to raise the living standards of the world’s poorest residents.
Why it matters: International anti-poverty efforts often focus on reducing the number of people living in poverty. By that measure, these efforts have made significant progress over the past 30 years: Far fewer people are living in poverty (defined as living on less than $1.25 a day) and in extreme poverty (less than $0.87 a day). But in this paper, Martin Ravallion argues that this “counting approach” isn’t the only way to measure progress against poverty. Another would be to look at how poor the poorest people in a country are, a level Ravallion dubs the “consumption floor.” Measuring the floor directly is difficult, but Ravallion estimates that it has risen little over the past 30 years.
Key quote: “However, there has been very little absolute gain for the poorest. … The modest rise in the mean consumption of the poor has come with rising inequality … leaving room for only a small gain in the level of living of the poorest. The bulk of the developing world’s progress against poverty has been in reducing the number of people living close to the consumption floor, rather than raising the level of that floor. Growth in mean consumption has been far more effective in reducing the incidence of poverty than raising the consumption floor. In this sense, it can be said that the poorest have indeed been left behind.”
Data he used: Data from the World Bank’s PovcalNet website.