Lotteries, Pot, and Happiness: More Reporting from CELS
posted by Dave Hoffman
Some more notes from the wonderfully exciting CELS III, or, as I’ve decided to name it, CELS: The Rise of the Quants. There were tons of good panels, so here are just a few idiosyncratic highlights.
1. Paige Marta Skiba presented The Ticket to Easy Street? The Financial Consequences of Winning the Lottery, co-authored with Mark L. Hoekstra and Scott Hankins. Interesting paper, with an odd methodological problem. The concept was to measure the bankruptcy filing rates of winners of the Florida lottery, dividing individuals into big- and small- ticket wins. The dataset of lottery winnings appeared complete, and the the authors had a great idea: test the intuition that sometimes winning a big pot of money results in bad financial decision making – acquiring expensive new habits, houses, and family members – and thus an increased risk of bankruptcy. As Bob Frank said in his comments on the paper, it is the kind of project that would have scoffed at only a decade or two ago at Chicago. (And maybe today, over at ToTM.) The authors presented a confirming result: an increase in filings in the high-lottery-win group, and a steady-rate in the low-win group. Cool!
But there was a weird problem with the data. Even before the lottery happened, the groups weren’t identical – individuals who would later win big had lower bankruptcy rates than the penny-ante folks. How is this possible? Is there cheating in the Florida lottery system? Are high-winners somehow smarter players, i.e., do they play random numbers instead of common, “lucky”, digits? Or, more likely, is there something wrong with the filing data?
2. Robert MacCoun presented Do Citizens Know Whether Their State Has Decriminalized Marijuana? A Test of the Perceptual Assumption in Deterrence Theory, co-authored with Rosalie Liccardo Pacula, Jamie F. Chriqui, Katherine M. Harris, and Peter H. Reuter. Using a huge dataset based on a national survey, MacCoun found that citizens in states that have legalized marijuana largely are unaware of that fact (when compared to citizens in non-legalized states). The exception seems to be that frequent users of the drug are slightly more likely to know the (non)consequences of their behavior. As one commentator said, this kind of data doesn’t make clear if de-criminalization doesn’t matter, or if it has been implemented badly. Sort of like the death penalty debate. Except much calmer
3. Betsey Stevenson presented the already famous paper that she co-authored with Justin Wolfers, Economic Growth and Subjective Well-Being: Reassessing the Easterlin Paradox . What struck me about the presentation was how Betsey presented an incredibly rich, complex, set of statistical findings clearly, with easy-to-read charts and intuitive graphic displays. Tufte would (does?) approve. Bob Frank again offered comments, in which he argued that individuals are likely to trade off status for cash, thus making data correlating happiness with wealth more noisy than we’d otherwise predict.
I was the moderator on the panel, and had been given strict instructions to make sure that no one ran over some tight time limits. Bob Frank properly ignored my increasingly frantic time signals, pointing out both the importance of the topic and the centrality of status even in moderator-discussant relationships. After the talk, I went up to Bob, introduced myself, and mentioned that he had been the topic of conversation on the blog, perhaps once or twice. I even said that I was pretty sure that if he googled himself, some of Frank’s posts would likely be high on the list. Turns out, I was completely wrong. Which leads me to wonder: Frank, does google hate us now, or are you just not posting about Bob Frank enough?
Anyway, it was a fun conference. And the incidental benefit is that it helped me satisfy my Solove-imposed blogging quota for the week! Thank god. I thought I might have to say something interesting about Sarah Palin, which would be hard, because Orin has already written the definitive, must-read, reason-to-visit-the-VC-again-despite-your-vows-to-the-contrary, blog post on that topic.