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Signaling Status: The Impact of Relative Income on Household Consumption and Financial Decisions

October 25, 2014 Comments off

Signaling Status: The Impact of Relative Income on Household Consumption and Financial Decisions (PDF)
Source: Federal Reserve Board

This paper investigates the importance of status in household consumption and financial decisions using household data from the Survey of Consumer Finances (SCF) linked to neighborhood data in the American Community Survey (ACS). We find evidence that a household’s income rank–its position in the income distribution relative to its close neighbors–is positively associated with its expenditures on high status cars, its level of indebtedness, as well as the riskiness of the household’s portfolio. More aggregate county-level evidence based on a dataset of every new car sold in each county in the United States since 2002 also suggests that the signaling motive might be important. These results indicate that greater income heterogeneity might have large consequences for household consumption and portfolio decisions.

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New From the GAO

October 24, 2014 Comments off

New GAO Report
Source: Government Accountability Office

Managing for Results: Selected Agencies Need To Take Additional Efforts to Improve Customer Service. GAO-15-84, October 24.
http://www.gao.gov/products/GAO-15-84
Highlights – http://www.gao.gov/assets/670/666651.pdf
Podcast – http://www.gao.gov/multimedia/podcasts/666613

Wastebook 2014: What Washington doesn’t want you to read.

October 24, 2014 Comments off

Wastebook 2014: What Washington doesn’t want you to read.
Source: U.S. Senator Tom Coburn (R-OK)

Gambling monkeys, dancing zombies and mountain lions on treadmills are just a few projects exposed in Wastebook 2014 – highlighting $25 billion in Washington’s worst spending of the year.

Wastebook 2014 — the report Washington doesn’t want you to read —reveals the 100 most outlandish government expenditures this year, costing taxpayers billions of dollars.

Examples of wasteful spending highlighted in “Wastebook 2014” include:

  • Coast guard party patrols – $100,000
  • Watching grass grow – $10,000
  • State department tweets @ terrorists – $3 million
  • Swedish massages for rabbits – $387,000
  • Paid vacations for bureaucrats gone wild – $20 million
  • Mountain lions on a treadmill – $856,000
  • Synchronized swimming for sea monkeys – $50,000
  • Pentagon to destroy $16 billion in unused ammunition — $1 billion
  • Scientists hope monkey gambling unlocks secrets of free will –$171,000
  • Rich and famous rent out their luxury pads tax free – $10 million
  • Studying “hangry” spouses stabbing voodoo dolls – $331,000
  • Promoting U.S. culture around the globe with nose flutists – $90 million

Federal School Finance Reform: Moving Toward Title I Funding Following the Child

October 24, 2014 Comments off

Federal School Finance Reform: Moving Toward Title I Funding Following the Child
Source: Reason Foundation

The Elementary and Secondary Education Act (ESEA) was signed into law in 1965 as part of President Lyndon Johnson’s “war on poverty.” The Act was designed to help disadvantaged students meet challenging state academic standards. Originally authorized in 1970, the ESEA has been reauthorized routinely through the early 2000s. The last authorization of ESEA came in the form of the No Child Left Behind Act of 2001 (NCLB), which expired in 2007.

While Congress has not reauthorized the ESEA since the expiration of NCLB, most ESEA programs still receive appropriations. As it is currently written in federal statutes, the ESEA contains eight titles each directing federal funding toward different initiatives, all of which aim to improve education for disadvantaged students. At the crux of the ESEA is the Title I program, as it is the most far-reaching and heavily funded. Where other titles under the ESEA outline grants to states for specific initiatives—like teacher training, school choice, English language instruction or state assessments—Title I grants go toward any and all students who qualify as low-income.

The Title I program has fallen under scrutiny in the last decade. A common complaint is that stipulations in the legislation do not address funding inequities between Title I and non-Title I schools.

The Impact of Piketty’s Wealth Tax on the Poor, the Rich, and the Middle Class

October 24, 2014 Comments off

The Impact of Piketty’s Wealth Tax on the Poor, the Rich, and the Middle Class
Source: Tax Foundation

In his bestseller Capital in the Twenty-First Century, Thomas Piketty recommends a wealth tax as a remedy to inequality. The basic version of Piketty’s wealth tax would impose a tax rate of 1 percent on net worth of $1.3 million and $6.5 million and 2 percent on net worth above $6.5 million. Piketty contemplates additional tax brackets, including a bracket of 0.5 percent starting at about $260,000.

We used the Tax Foundation’s Taxes and Growth (TAG) model, augmented with wealth data from the University of Michigan’s Panel Study of Income Dynamics, to estimate how the U.S. economy would respond to Piketty’s wealth taxes.

Ebola Virus Disease: Information for U.S. Healthcare Workers

October 24, 2014 Comments off

Ebola Virus Disease: Information for U.S. Healthcare Workers
Source: U.S. Department of Health and Human Services, Health Resources and Services Administration

National Call on Preparing Nurses to Safely Care for Patient with Ebola recording and transcript, plus information from the CDC, curated by CDC experts.

Compensation for U.S. Corporate Directors Increased 6%, Towers Watson 2014 Analysis Finds

October 24, 2014 Comments off

Compensation for U.S. Corporate Directors Increased 6%, Towers Watson 2014 Analysis Finds
Source: Towers Watson

Total pay for outside directors at the nation’s largest corporations increased by 6% in 2013, fueled by higher stock-based compensation, according to a new analysis by global professional services company Towers Watson (NYSE, NASDAQ: TW). The study also found that cash compensation remained flat for the first time since 2007, when proxy disclosure rules were enacted requiring companies to report actual values received by directors in summary compensation tables.

According to Towers Watson’s annual analysis of director compensation at Fortune 500 companies, median total direct compensation for directors climbed 6% last year, to nearly $240,000, up from $227,000 in 2012. The increase is double the 3% increase in director total compensation in 2012. Total compensation includes cash pay, and annual or recurring stock awards. The analysis found that the median value of cash compensation remained flat last year at $100,000, while compensation from annual and recurring stock awards increased 4%, to $130,500, the largest increase since 2011. More than half (56%) of directors’ pay in 2013 was delivered through stock compensation, up slightly from 55% in 2012.

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