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Blaze of Distrust: The Impact of Wildfires on Social Capital and Governance in Brazilian Amazonia
by Feishi “Alicia” Gong
Abstract
The 2019 wildfire crisis in Brazilian Amazonia not only captured global headlines but also deeply influenced public sentiment towards environmental and political challenges within the country. Trust, a pivotal element of social capital, plays a vital role in shaping a nation’s progress and the well-being of its citizens. This study employs detailed satellite data on wildfire occurrences and survey data reflecting Brazilian public opinion to investigate the nature of fire activity in Brazilian Amazonia, treating it as indicative of organized criminal behavior. Further, it delves into the ramifications of wildfires on the institutional and interpersonal trust of Brazilians. Our findings reveal that wildfires exert a considerable detrimental impact on the trust that local residents place in institutions and each other. These insights underscore the urgency of enhancing environmental protection measures and wildfire management strategies. By doing so, Brazil can bolster its social capital and empower local governments to rebuild and maintain public trust effectively.
Professor Michelle Connolly, Faculty Advisor
JEL Codes: H70, Q23, Q51
Do Green Stocks Get You the Green? Differential Impacts of S&P 500 ESG Index Labels on Firm Stock Prices
by Heera Rajavel
Abstract
On January 28, 2019, the S&P Dow Jones Indices launched the ESG S&P 500 Index, aiming to create a sustainable index fund with a similar risk/return profile to the S&P 500 Index. This study assesses the causal mechanisms behind the performance of the S&P 500 ESG Index by running two difference-in-differences estimations using a panel data set of 698 companies. The first difference-in-differences estimation compares the stock prices of companies on the S&P 500 ESG Index to the stock prices of companies S&P 500 Index, determining if companies on the S&P 500 ESG Index received an “ESG label” price premium. Results show that in the short-term and the long-term, companies on the S&P ESG 500 Index experienced statistically significant negative stock price growth relative to companies only on the general S&P 500 Index; the “ESG label” appears to slow stock growth for companies on the S&P 500 ESG Index by $48.24 in the short-term and $65.29 in the long-term. The second difference-in-differences estimation compares the stock prices of companies on the S&P 500 ESG Index to the stock prices of companies with similar ESG qualifications that are not on an S&P Index, determining if companies in the S&P 500 ESG Index received an “S&P label” price premium. These results found that in both the short and the long run, companies on the S&P 500 ESG Index faced statistically significant positive stock price growth relative to companies with similar ESG qualifications; the “S&P label” seems to increase stock price growth for companies on the S&P 500 ESG Index by $2.19 in the short-term and $7.63 in the long term.
Professor Lawrence Kreicher, Faculty Advisor
Professor Michelle Connolly, Faculty Advisor
JEL Codes: G2, G23, Q56
Fact or Fluff: Does Wording Used by Gene Editing Companies Affect Investor Behaviors?
by Thomas Freireich
Abstract
The writing style a startup uses to portray itself has an impact on investors’ perceptions of them, subsequently affecting their venture capital decisions. This funding is particularly important given the prominence of venture capital as a primary financial source for growing early-stage biotechnology companies. Currently, due to recent scientific advances, many of these startup companies are utilizing novel gene editing based approaches to cure a variety of previously untreated diseases. For the sake of those affected, it is essential that this sector of the biotechnology industry is managed properly early on so that developed treatments can eventually reach FDA approval. This paper is in part inspired by recent happenings revolving around the fraudulent biotech startup, Theranos. Elizabeth Holmes, Theranos’ founder, was renowned for making comments lauding the company’s product. It seemed to many that investors were lulled by the idea of what Holmes made Theranos to be, invested in the company based on false verbal promises instead of the reality of the scientific product. Occurrences like the demise of Theranos are detrimental to both investors and competing companies in need of venture funds in order to develop their treatments. Thus, this paper explores the impact of word-usage and writing style on venture capital investment in various gene editing based startups,hoping to elucidate whether investors are being swayed by word choice.
Professor Michelle Connolly, Faculty Advisor
JEL Codes: M1, M13, O3, O32
Free University? An Investigation of Australia’s 1974 Free Higher Education Policy and Its Impact on Enrollment, Degree Completion, Later-Life Occupational Status, and Income
by Yaxuan “Annie” Cui
Abstract
To what extent has the free higher education policy of 1974 impacted Australian students’ decisions of university enrollment, degree completion, and later-life human capital development? In this paper, I analyze the impact of the policy from both national descriptive statistics and individual-level enrollment and degree completion decisions using the Australian Household Income and Labour Dynamics Survey. I find that the policy has significantly increased the likelihood of female enrollment in higher education, low-income students’ likelihood of diploma degree completion, and is positively associated with later-life occupational status. However, this study does not find a clear relationship between the policy, bachelor’s degree attainment, and later-life disposable income. Policymakers need to carefully consider the efficiency and efficacy of broad-based tuition policy instruments when imagining bridges to achieve universal access to higher education.
Professor Robert Garlick, Faculty Advisor
Professor Michelle Connolly, Faculty Advisor
Professor Peter Arcidiacono, Faculty Advisor
JEL Codes: I2, I22; I23; I26
The Sub-proportionality of Subjective Probability Weighting in Poker
by William Clark
Abstract
This study uses Texas Hold’em poker to investigate decision making under uncertainty and the concept of probability weighting, where individuals may overvalue or undervalue uncertain outcomes. I conduct an experiment to assess Cumulative Prospect Theory’s relevance to subjective probabilities in poker by simplifying the game to compare complex and simple gamble evaluations. The research aims to understand how risk preferences and probability estimation without complete information are influenced by individuals’ poker experience and framing effects. We find that deviations from what theory predicts in the subjective-probability Poker frame can be explained well by the framing effects made in the decision maker’s editing phase. By examining the difference in the predictive power of decision making models in explicit vs subjective probability gambles, the study seeks to improve comprehension of cognitive processes in navigating uncertainty.
Professor Philipp Sadowski, Faculty Advisor
Professor Grace Kim, Faculty Advisor
JEL Codes: C91, D80, D91
The Press and Peace, Examining Iraq War Coverage in Newspapers using BERT LLMs
by Jakobe Bussey
Abstract
This study utilizes state-of-the-art BERT (Bidirectional Encoder Representations from Transformers) models to perform sentiment analysis on Wall Street Journal and New York Times articles about the Iraq War published between 2002 and 2012 and further categorize them using advanced unsupervised machine learning techniques. By utilizing statistical analysis and quartic regression models, this paper concludes that the two newspapers report on the Iraq War differently, with both exhibiting a predominantly negative-neutral tone overall. Additionally, the analysis reveals significant fluctuations in negativity from both outlets over time as the war progresses. Furthermore, this study examines the objectivity of reporting between editorial and non-editorial articles, finding that non-editorials tend to report more objectively, and the neutrality of editorials remains relatively constant while the objectivity of non-editorials fluctuates in response to war events. Finally, the paper investigates variations in sentiment across different topics, uncovering substantial variations in positive, neutral, and negative sentiments across topics and their evolution over time.
Professor Peter Arcidiacono, Faculty Advisor
JEL Codes: L8, L82, H56
A Two-Stage Analysis Considering Gun Theft & Overall Crime: Evidence from Child Access Prevention Laws
by Ronan Brew
Abstract
Child Access Prevention Laws (CAP) came to prominence in the early 1990s in the wake of the highest recorded rate of overall and adolescent firearm deaths seen in the United States at that time, placing mandatory firearm storage requirements on adults living in a home with children. While the primary – and perhaps sole – intention behind these policies are to prevent adolescent gun death, I contend CAP laws have the added function of reducing the rate of firearms stolen from homes due to the legal incentives against improper firearm storage. In the first of a two-stage analysis, CAP laws are proven to substantially reduce the rate of household firearm theft based on the ascending stringency of different CAP law storage requirements. The scope of the study is then widened in the second stage of analysis, where I demonstrate the overall impact illicitly-obtained firearms have on predicting increased firearm homicides.
Professor John DeSimone, Faculty Advisor
JEL Codes: C23, K00, K42
Beyond the But-For World: Weak-necessity causal reasoning for model-based counterfactuals in law and economics
by Lilia Qian
Abstract
Under current standards for scientific evidence defined under Daubert, antitrust models are frequently excluded from legal consideration, but not always for reasons that make them genuinely unreliable. This paper clarifies why antitrust models face difficulties when subjected to methodological scrutiny: the employment of model-based counterfactual arguments under an epistemically defective ‘but-for’ structure of causation. Assessing the relevance and reliability of an antitrust model is a matter of assessing the validity and applicability of the causal claim it makes, not the degree to which the modeling methodology is considered scientific. A more flexible causal framework, the weak-necessity structure of causation, is suggested as a means of developing and evaluating model-based counterfactuals. This framework allows for modeling of overdetermined-causation situations, or situations in which the outcome of interest can be attributed to two or more causes. Since antitrust cases typically involve overdetermined causation, the weak-necessity framework allows them to be modeled in a more precise and intuitive way.
Professor Kevin Hoover, Faculty Advisor
JEL Codes: B41, K21, L41, L44
Effects of Neighborhoods on Children’s Educational Outcomes in Indonesia
by Audrey Liu
Abstract
There is considerable observed geographic variable in outcomes across space. Neighborhood effects attempt to explain to what extent the place in which an individual grows up impacts their future outcomes. This paper focuses on neighborhood effects on children in Indonesia where there is a large disparity in public and private amenities between different regions. The aim of this paper is to analyze whether and to what extent neighborhoods impact a child’s education outcomes and whether there exists a critical age where intervention is most crucial. By restricting my dataset to movers and taking advantage of variation within a family in terms of exposure to different neighborhoods, I find evidence that the duration of time an individual spends in a given neighborhoods impacts their outcomes. I also find evidence of a critical age that produces better outcomes, implying that the age at which a child moves matters as well.
Professor Erica Field, Faculty Advisor
Professor Michelle Connolly, Faculty Advisor
JEL Codes: I25; H4; H75
Code on file
Airline Non-Price Competition Between FSC and LCC Carriers: Varying Airline Optimization Strategies
by Lucas Johnson
Abstract
The goal of this paper is to extend the discourse surrounding certain topics in terms of airline optimization which is defined in this paper as the ability of an airline to efficiently transport goods and passengers as well as accrue revenue from its airplanes relative to its total capacity to transport goods and accrue revenue. Previous literature deals heavily with the differences between LCC and FSC carriers as well as the importance of both customer satisfaction and operational efficiency for the ability of an airline to compete. The analysis of this paper is in the form of a panel-regression performed on a dataset obtained from the T1 Airline Summary Statistics form maintained by the Bureau of Transportation Statistics. This data demonstrates the relationship between dependent variables represented by certain metrics of airline success, revenue passengers enplaned, revenue passenger miles and revenue ton miles, with independent variables that reflect optimization in terms of both payload and passenger transport. These variables are influenced by factors such as certain measures of timeliness competition defined in this analysis as ramp inefficiency and departure efficiency.
Professor Grace Kim, Faculty Advisor
JEL Codes: L93; D22; R4; L13
