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Source: Federal Reserve Bank of Chicago
Resulting in 9 citations.
1. Agarwal, Sumit
Mazumder, Bhashkar
Cognitive Abilities and Household Financial Decision Making
FRB of Chicago Working Paper No. 2010-16, Federal Reserve Bank of Chicago, March 28, 2011.
Also: http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1651312
Cohort(s): NLSY79
Publisher: Federal Reserve Bank of Chicago
Keyword(s): Armed Services Vocational Aptitude Battery (ASVAB); Behavior; Cognitive Ability; Credit/Credit Constraint; Debt/Borrowing; Financial Literacy; Financial Market Participation; Health and Retirement Study (HRS); Household Income

Permission to reprint the abstract has not been received from the publisher.

We analyze the effects of cognitive abilities on two examples of consumer financial decisions where suboptimal behavior is well defined. The first example refers to consumers who transfer the entire balance from an existing credit card account to a new account, but use the new card for convenience transactions, resulting in higher interest charges. The second example refers to consumers who face higher APRs because they inaccurately estimate their property value on a home equity loan or line of credit application. We match individuals from the US military for whom we have detailed test scores from the Armed Services Vocational Aptitude Battery test (ASVAB), to administrative datasets of retail credit from a large financial institution. We show that our matched samples are reasonably representative of the universes from which they are drawn. We find that consumers with higher overall composite test scores, and specifically those with higher math scores, are substantially less likely to make a financial mistake later in life. These mistakes are generally not associated with the non-mathematical component scores. We also conduct some complementary analyses using two other data sources. We use the National Longitudinal Survey of Youth (NLSY) to show that higher ASVAB math scores are associated with lower subjective discount rates. Finally, we use the Health and Retirement Survey (HRS) to demonstrate that particular forms of cognitive ability matter for specific types of suboptimal behavior. We find that the mathematical component of the test is what matters most for financial decision making and financial wealth. In contrast, non-mathematical aptitudes appear to matter for non-financial forms of suboptimal behavior (e.g. failure to take medicine). The HRS results also demonstrate the large ramifications of low math ability on long-term economic success.
Bibliography Citation
Agarwal, Sumit and Bhashkar Mazumder. "Cognitive Abilities and Household Financial Decision Making." FRB of Chicago Working Paper No. 2010-16, Federal Reserve Bank of Chicago, March 28, 2011.
2. Anderson, Patricia M.
Butcher, Kristin F.
Reading, Writing, and Raisinets: Are School Finances Contributing to Children's Obesity?
Working Paper 2004-16, Federal Reserve Bank of Chicago, October 2004.
Also: http://chicagofed.org/publications/workingpapers/wp2004_16.pdf
Cohort(s): NLSY97
Publisher: Federal Reserve Bank of Chicago
Keyword(s): Body Mass Index (BMI); Endogeneity; Nutritional Status/Nutrition/Consumption Behaviors; School Characteristics/Rating/Safety; Weight

Permission to reprint the abstract has not been received from the publisher.

The proportion of adolescents in the United States who are obese has nearly tripled over the last two decades. At the same time, schools, often citing financial pressures, have given students greater access to "junk" foods and soda pop, using proceeds from these sales to fund school programs. We examine whether schools under financial pressure are more likely to adopt potentially unhealthful food policies. Next, we examine whether students' Body Mass Index (BMI) is higher in counties where a greater proportion of schools are predicted to allow these food policies. Because the financial pressure variables that predict school food policies are unlikely to affect BMI directly, this two step estimation strategy addresses the potential endogeneity of school food policies. We find that a 10 percentage point increase in the proportion of schools in a county that allow students access to junk food leads to about a one percent increase in students' BMI, on average. However, this average effect is entirely driven by adolescents who have an overweight parent, for whom the effect of such food policies is much larger (2.2%). This suggests that those adolescents who have a genetic or family susceptibility to obesity are most affected by the school food environment. A rough calculation suggests that the increase in availability of junk foods in schools can account for about one-fifth of the increase in average BMI among adolescents over the last decade.
Bibliography Citation
Anderson, Patricia M. and Kristin F. Butcher. "Reading, Writing, and Raisinets: Are School Finances Contributing to Children's Obesity?" Working Paper 2004-16, Federal Reserve Bank of Chicago, October 2004.
3. Anderson, Patricia M.
Butcher, Kristin F.
Levine, Phillip B.
Economic Perspectives on Childhood Obesity
Economic Perspectives 27,3 (Fall 2003):30-49.
Also: http://ideas.repec.org/a/fip/fedhep/y2003iqiiip30-48nv.27no.3.html
Cohort(s): Children of the NLSY79, NLSY79
Publisher: Federal Reserve Bank of Chicago
Keyword(s): Body Mass Index (BMI); Child Health; Health/Health Status/SF-12 Scale; Height, Height-Weight Ratios; Maternal Employment; Motherhood; Obesity; Weight

Permission to reprint the abstract has not been received from the publisher.

Discusses the reason of the interest on obesity in an economic perspective in the U.S. Changes in rates of obesity in the U.S.; Examination in the children's lives; Relationship of maternal employment on the obesity of children. "...We use NLSY data to examine whether mothers who work more hours...are more likely to have obese children."

First, we discuss why trends in obesity, and childhood obesity in particular, are of interest from an economic perspective....Next, we document changes in obesity over time in the United States for adults and children....Third, we discuss changes in children's lives over the last three decades that may be causally related to weight gain. In particular, we examine the increase in mothers working outside the home. It may be that mothers who work outside the home may not have time to prepare nutritious low-calorie meals and supervise their children's outdoor, calorie-expending play. We use National Longitudinal Survey of Youth (NLSY) data to examine whether mothers who work more hours per week, on average, or more weeks over their children's lives are more likely to have obese children. The data contain information on many socioeconomic characteristics of families and multiple observations over time on all of a mother's children. This allows us to control for many observable and unobservable differences between mothers who work and mothers who do not that might be correlated with children's weight. For example, we can examine whether siblings' obesity status differs depending on whether their mother worked more during one sibling's life than the other's. This holds constant all of the (fixed) family characteristics that might be correlated both with children's weight and mothers' labor supply.

Bibliography Citation
Anderson, Patricia M., Kristin F. Butcher and Phillip B. Levine. "Economic Perspectives on Childhood Obesity." Economic Perspectives 27,3 (Fall 2003):30-49.
4. Barrow, Lisa
Rouse, Cecilia Elena
Do Returns to Schooling Differ by Race and Ethnicity?
Working Paper No. WP-2005-02, Federal Reserve Bank of Chicago, February 2005.
Also: http://www.chicagofed.org/publications/workingpapers/wp2005_02.pdf
Cohort(s): NLSY79, Young Men, Young Women
Publisher: Federal Reserve Bank of Chicago
Keyword(s): Education, Adult; Educational Returns; Ethnic Differences; Racial Differences; Schooling

Permission to reprint the abstract has not been received from the publisher.

Using data from the U.S. Decennial Census and the National Longitudinal Surveys, we find little evidence of differences in the return to schooling across racial and ethnic groups, even with attempts to control for ability and measurement error biases. While our point estimates are relatively similar across racial and ethnic groups, our conclusion is driven in part by relatively large standard errors. That said, we find no evidence that returns to schooling are lower for African Americans or Hispanics than for non-minorities. As a result, policies that increase education among the lowskilled have a good possibility of increasing economic well-being and reducing inequality. More generally, our analysis suggests further research is needed to better understand the nature of measurement error and ability bias across subgroups in order to fully understand potential heterogeneity in the return to schooling across the population.
Bibliography Citation
Barrow, Lisa and Cecilia Elena Rouse. "Do Returns to Schooling Differ by Race and Ethnicity?" Working Paper No. WP-2005-02, Federal Reserve Bank of Chicago, February 2005.
5. Levine, David I.
Mazumder, Bhashkar
Choosing the Right Parents: Changes in the Intergenerational Transmission of Inequality Between 1980 and the Early 1990s
Working Paper No. 2002-08, Federal Reserve Bank of Chicago, June 2002.
Also: http://www.chicagofed.org/publications/workingpapers/papers/wp2002-08.pdf
Cohort(s): NLSY79, Young Men
Publisher: Federal Reserve Bank of Chicago
Keyword(s): Earnings; Family Income; General Social Survey (GSS); Human Capital; Intergenerational Patterns/Transmission; Panel Study of Income Dynamics (PSID)

Permission to reprint the abstract has not been received from the publisher.

This paper uses the National Longitudinal Surveys (NLS), the Panel Study of Income Dynamics (PSID), and the General Social Survey (GSS) to measure the elasticity of family income on men's adult earnings in 1980 and the early 1990s. The study finds a large and statistically significant increase in the importance of family income over time when comparing cohorts in the NLS, a dataset that has not been previously used for this purpose. We also find a large but statistically insignificant increase when using the GSS. The PSID, however, shows a large but statistically insignificant decline in this parameter. The results imply that changes in the effect of family income did not operate through the channel of human capital. Results suggest that the rate of inheritability of income may have increased in recent decades, but this evidence is not yet definitive. Researchers, therefore, should exercise caution when generalizing about trends over time when using small samples from just one dataset such as the PSID.
Bibliography Citation
Levine, David I. and Bhashkar Mazumder. "Choosing the Right Parents: Changes in the Intergenerational Transmission of Inequality Between 1980 and the Early 1990s." Working Paper No. 2002-08, Federal Reserve Bank of Chicago, June 2002.
6. Lusardi, Annamaria
Cossa, Ricardo
Krupka, Erin L.
Savings of Young Parents
WP-2000-23, Federal Reserve Bank of Chicago, December 2000.
Also: http://www.chicagofed.org/webpages/publications/working_papers/2000/wp_23.cfm
Cohort(s): NLSY97
Publisher: Federal Reserve Bank of Chicago
Keyword(s): Educational Attainment; Household Income; Life Cycle Research; Panel Study of Income Dynamics (PSID); Parenthood; Retirement; Savings; Teenagers

Permission to reprint the abstract has not been received from the publisher.

In this paper, we examine household savings using data from the National Longitudinal Survey, Cohort 1997 (NLSY97). This data set provides detailed information about assets and liabilities of parents with teen-age children and allows researchers to examine patterns of accumulation at early stages of the life cycle. In our empirical work, we have first to deal with several problems in measuring wealth. While many respondents report owning assets and liabilities, they often do not report their values. This problem is severe, in particular among financial assets. It is also difficult to devise an appropriate measure of accumulation when examining young parents, since assets and liabilities display different degrees of liquidity. To get around the non-response problem, we impute the missing values for assets and liabilities. This allows us to calculate household wealth for the whole sample. We examine household wealth holdings by considering several measures of accumulation: total (non-pension) net worth, financial net worth, and retirement savings. We study their distribution across different demographic groups and show that many households, in particular those headed by young parents (younger than 35), minorities, and individuals with low educational attainment, display very little accumulation. Many have no financial assets and their total net worth is also low. Housing equity is the main asset in many household portfolios and often the only asset families own. Overall, there is much heterogeneity in wealth holdings not only across but also within demographic groups. This suggests that many factors are at play in shaping the wealth accumulation of parents with young children.
Bibliography Citation
Lusardi, Annamaria, Ricardo Cossa and Erin L. Krupka. "Savings of Young Parents." WP-2000-23, Federal Reserve Bank of Chicago, December 2000.
7. Mazumder, Bhashkar
Sibling Similarities, Differences and Economic Inequality
Working Paper No. 2004-13, Federal Reserve Bank of Chicago, August 2004.
Also: http://www.chicagofed.org/publications/workingpapers/wp2004_13.pdf
Cohort(s): NLSY79
Publisher: Federal Reserve Bank of Chicago
Keyword(s): Brothers; Earnings; Intergenerational Patterns/Transmission; Mobility; Siblings

Permission to reprint the abstract has not been received from the publisher.

I use improved statistical approaches and much larger samples than previous studies to provide more robust estimates of the correlation in economic outcomes among siblings. A key finding is that more than half the variance in log wages among men is due to differences in family and community background. Slightly smaller estimates in the 0.45 to 0.5 range are found for earnings and family income. For women, the sibling correlation in family income is the same as that found for men. I estimate that the sibling correlation in years of schooling and AFQT test scores is higher than 0.6. In contrast, estimates for a variety of other non-economic outcomes (including physical attributes) are in the 0.2 to 0.4 range. Family and community influences are particularly important for those who start at the bottom of the income distribution. An analysis of the variance in outcomes within families, by quartiles of parent income provides a new set of facts that should inform theoretical models of family resource allocation. I also find that a large portion of the sibling correlation in some economic outcomes can be explained by observable characteristics.
Bibliography Citation
Mazumder, Bhashkar. "Sibling Similarities, Differences and Economic Inequality." Working Paper No. 2004-13, Federal Reserve Bank of Chicago, August 2004.
8. Mazumder, Bhashkar
Levine, David I.
Growing Importance of Family and Community: An Analysis of Changes in the Sibling Correlation in Earnings
Working Paper No. 2003-24, Federal Reserve Bank of Chicago, November 2003.
Also: http://papers.ssrn.com/sol3/papers.cfm?abstract_id=483023
Cohort(s): NLSY79, Young Men
Publisher: Federal Reserve Bank of Chicago
Keyword(s): Brothers; Data Quality/Consistency; Earnings; High School Dropouts; Income; Intergenerational Patterns/Transmission; Mobility; Panel Study of Income Dynamics (PSID); Siblings

Permission to reprint the abstract has not been received from the publisher.

This study presents evidence that the correlation in brothers' earnings has risen in recent decades. We use two distinct cohorts of young men from the National Longitudinal Surveys and estimate that the correlation in earnings between brothers rose from 0.26 to 0.45. This suggests that family and community influences shared by siblings have become increasingly important in determining economic outcomes. We find that neither the correlation in years of schooling nor the rising return to schooling accounts for this increase. We also argue that the PSID is not an appropriate dataset for analyzing changes over time because of its sampling design, small sample of siblings, and high attrition rate.
Bibliography Citation
Mazumder, Bhashkar and David I. Levine. "Growing Importance of Family and Community: An Analysis of Changes in the Sibling Correlation in Earnings." Working Paper No. 2003-24, Federal Reserve Bank of Chicago, November 2003.
9. Rissman, Ellen R.
Self-employment as an Alternative to Unemployment
Working Paper 2003-34, Federal Reserve Bank of Chicago, 2003.
Also: http://www.chicagofed.org/publications/workingpapers/papers/wp2003-34.pdf
Cohort(s): NLSY79
Publisher: Federal Reserve Bank of Chicago
Keyword(s): Benefits, Insurance; Income Level; Job Search; Modeling, Fixed Effects; Modeling, Random Effects; Racial Differences; Re-employment; Self-Employed Workers

Permission to reprint the abstract has not been received from the publisher.

Data from the NLSY show that more than a quarter of all younger men experience some period of self-employment. Many of them return to wage work. This paper analyzes a simple model of job search and self-employment where self-employment provides an alternative source of income for unemployed workers. Self-employment is distinct from wage sector employment in two important respects. First, self-employment is a low-income, low-variation alternative to wage work. Second, once a worker enters self-employment, he loses eligibility to receive unemployment insurance benefits—-at least until he returns to wage sector employment. The model suggests that flows into self-employment are countercyclical and flows out of self-employment are procyclical. Data from the NLSY for males at least 21 years of age are used to investigate how demographic and economic variables influence the decision to become self-employed. Fixed effects and random effects logit results indicate that young men are more likely to be self-employed when their wage work opportunities are more limited. Specifically, higher local unemployment rates lead workers to self-select into self-employment, as does past unemployment experience. The process is different for Whites and Nonwhites with education being irrelevant for White self-employed workers. In contrast, for Nonwhites higher education reduces the probability of entering self-employment.
Bibliography Citation
Rissman, Ellen R. "Self-employment as an Alternative to Unemployment." Working Paper 2003-34, Federal Reserve Bank of Chicago, 2003.