Emily Corwin reported on economics for the StateImpact New Hampshire blog until the project merged with the New Hampshire Public Radio site in July 2013. She is now NHPR’s Seacoast Reporter. You can follow her on Twitter at @emilycorwin, and find her stories on NHPR.org.
In a new working paper from the National Bureau of Economic Research, economists Robert Davidson, Aiyesha Dey and Abbie J. Smith have drawn some intriguing conclusions about the relationship between a record of legal infractions like parking tickets, ownership of luxury goods like expensive cars, and the probability of corporate fraud and inaccurate financial reporting.
Minor Legal Infractions
The researchers found that CEOs and CFOs with prior legal infractions — especially traffic violations — have a “relatively high propensity to perpetrate fraud.” That means that CEOs with a record of legal infractions are more likely to be named in cases of corporate fraud than their more law-abiding counterparts.
Ownership of Luxury Goods
CEOs were defined as “unfrugal” if they owned a car valued above $75,000; a boat over 25 feet long; or a primary home worth two times the cost of most homes in zipcodes within 10 miles of the corporate headquarters/an additional home worth two times the cost of most homes in that metropolitan area.
CEOs who owned one or more of those luxury goods were not more likely to personally perpetrate fraud, but ran firms with a higher risk of firm-wide fraud and material reporting errors. One question that begs is: if they knew then what we know now, could Tyco have prevented the whole Kozlowski fiasco?
The economists finished their report posing an interesting question: “Are the prior legal infractions and ownership of luxury goods by politicians related to their stewardship of taxpayers’ money?” Now that would make a super-duper StateImpact story!
Last week the House and Senate failed to agree even to create a commission to make recommendations regarding pension reform. As I set out to write this piece, I found the different plans and their costs and benefits pretty confusing. Before I could get myth-busting, I needed to learn the basics. I thought I’d lay them out here, with a few personal anecdotes.
Heart Industry
For much of his adult life, my Grandpa Tom — who would be 95 were he alive today — worked as an glass engineer for Fletcher Terry, a glass cutter manufacturing company still in operation in central Connecticut. Part of his employment benefits included a pension, which he and my grandmother lived on after he retired. His pension was of the “defined benefit plan” sort, which means that a part of his wages were invested, along with all of Fletcher Terry’s other employees’ wages, in a fund that would pay a guaranteed pension upon retirement. My mother doesn’t remember her father or mother ever worrying about their retirement income. As far as they were concerned, the money was already in the bank.
Today, few people working in the private sector can imagine that kind of stability. Along with Fletcher Terry, most employers have switched to the “defined contribution plan” sort of retirement plan, which requires employees to put a part of their salary into an individual 401(k), then matches a certain amount of that contribution. This kind of plan can be good for savvy investors, who can reap the returns from savvy investments — but a misinformed investor or bad market could leave a retiree with little or nothing.
These days, the people who enjoy the stability of defined benefit plans are state and municipal employees. But that is changing, too. The 50 states collectively have between $700 billion and $1 trillion in unfunded pension liabilities. New Hampshire’s share of that is $4.2 billion. Everybody seems to agree that something has to change. But for now in New Hampshire, nothing is changing at all. Last week the House and Senate failed to agree even to create a commission to make recommendations regarding pension reform.
Last week, a State Senate bill that initially sought to replace New Hampshire’s defined benefit (DB for short — think pension) plan with a defined contribution plan (DC for short — think 401(k)) dissolved into a stalemate. The Senate and House were not even able to form a commission to make recommendations addressing the state’s $4.2 billion in unfunded liability. There seems to be an inability to agree on the facts. We mined a few sources, especially a report from the National Institute On Retirement Security (NIRS), to try to find some clarity.
People assume DC plans are cheaper than DB plans for employers, and therefore for taxpayers — when it comes to public pensions. But that’s not actually true. Economists agree that defined benefit plans are more efficient than defined contribution plans. There are three reasons.
When an employer pools all of their employees’ investments and risks in a single pension fund, they can spread risk over the long term, saving in the good years and spending that in the bad years.
The pooled investments also prevent over- and under-saving, which is what happens with DC plans because individuals can’t predict when they will die.
DB plans have lower management fees because of what economists call “economies of scale.” Like buying anything in bulk, it’s cheaper to manage all of the money at once, rather than managing hundreds or thousands of individual investments.
Because of all of these factors, DB plans provide the same benefit for 46% less than the DC plan provides. Check out NIRS’s Figure 1. Continue Reading →
Since about 1970, more and more women have been moving into previously male-dominated jobs. This — not so surprising. What is surprising, for me at least, is the fact that the rate of gender desegregation has slowed. Between 1970 and around 1990, women were moving into historically mens’ jobs at a pretty fast clip. But from 1990 on, things have slowed down. Don’t get me wrong — the workforce is still integrating. It’s just not integrating as quickly as it was two decades ago.
“It is difficult to predict whether or when a more robust decrease in segregation will resume,” the authors write. For that to happen, they say, women would need to move into fields that haven’t yet been integrated — like blue-collar jobs, and science, technology, engineering and mathematics (STEM) fields. Alternatively, men could move into predominantly female occupations, but the writers consider this less likely, as female-dominated occupations generally pay less. Although the recession seems to have increased gender desegregation some, it does not appear to be significant in the long run.
The authors’ conclusion is this:
“With respect to the STEM fields, enhancing the performance of girls and young women in mathematics is a reasonable target of policy. How to do so remains an active area of inquiry, but it is encouraging that, although a gender gap in math scores on high school math achievement tests and the SATs remains, it has declined as the high school course work of young men and women has grown more similar.”
So the answer, most likely, lies in education. If you want your daughter to be an engineer, by golly get her into math and science.
After POLICOM Corporation’s research came out yesterday ranking Concord, New Hampshire as the strongest micropolitan economy in the country (check out yesterday’s post on this if you haven’t yet), I decided to get some reactions downtown. Setting up shop at The Works Bakery Cafe, I posed the question below. What do you think? Leave us comment!
Concord was just ranked the number one micropolitan economy in the country. Does it feel that way to you?
Per Gill-Foster, DJ and Construction Worker
“I knew I was in the right place. I felt it! …but seriously, strongest economy? That definitely seems off-base. It’s really hard to make a sale on anything here.”
Mike Ames, Laconia Small Businessman
“Certainly it’s more thriving than where I live in Laconia. It’s a mess up there. There were empty storefronts in Concord, too, but everything is better than it was a few years ago.”
Marjorie Waters, Meals On Wheels Delivery-Person
“I’m surprised! Although I think nonprofits like Leadership Concord have made a thriving downtown, by training leaders who invest in the community.”
Stephen Johnson, Concord Resident and Tufts University Student
“I always assumed it’s not the most vibrant economy, because everything closes at 8pm. It becomes like an abandoned ghost town. But I do recognize we have a lot of small businesses. I think True Brew is the best coffee anywhere I’ve been, even in Boston, and South Korea.”
Overall, New Hampshire did very well in the Policom rankings. Of the 366 metropolitan areas listed, Southern New Hampshire is included in the Boston-Cambridge-Quincy area, which ranked 38th, and Manchester-Nashua was not far beind at 40th.
Out of 576 micropolitan areas, Concord came in first, Lebanon came in at eighth, Laconia ranked 35th, Claremont was 45th, Keene 51st and Berlin came in at 274th.
POLICOM defines a micropolitan area as a contained economy consisting of a county or counties with a city of between 10,000 and 50,000 people. Washington, D.C. came in first for metropolitan areas — or cities with more than 50,000 people. StateImpact NH is based in Concord, and our first response was “really?!”
The answer POLICOM’s president Bill Fruth gave me was a hesitant “yes.” It turns out Concord and a few other New England counties are anomalous, in that they have very high populations spread out in the micropolitan region, surrounding a smaller city, like Concord. Once you take that into account, Concord may not truly stack up as number one.
How do other New Hampshire towns compare? Take a look at Policom’s report, which was released earlier today. How would you rank your town’s economy? Leave us a comment right here.
Although Naturopathic Doctors (NDs) undergo virtually the same training as medical doctors, their services have not been covered by insurance companies in the state of New Hampshire.
Two and a half years ago, ND Bert Mathieson was frustrated by what struck him as “discrimination flat out.” He got a sponsor for a bill that would change N.H. law. HB351 would require insurers in the state to reimburse naturopathic doctors, who emphasize illness prevention and lifestyle guidance rather than pharmaceutical or surgical procedures in their practice. Mathieson’s initial success — getting a sponsor — came after another ND’s failed attempt to work directly with insurance agencies 12 years ago, and 12 successive years of discontent among New Hampshire’s tight-knit Naturopathic community.
Today, naturopathy looks appealing to politicians for two reasons. First, states like New Hampshire are struggling with a shortage of primary care doctors — a service NDs are certified to perform. Second, about 75% of health care spending nation-wide goes to treating chronic diseases, particularly those caused by diet and stress, such as obesity, heart disease and diabetes. According to Laurilee Schoenbeck, an ND who led efforts to pass a similar bill in VT, these are the very diseases naturapaths excel at treating and preventing. Continue Reading →
This week at the State House, Senate and House members agreed on a version of a bill that will require some insurance plans to cover visits to naturopathic doctors. Before we get to the economic impacts of the bill, we wanted to know: what is it exactly that naturopathic Drs. do?
In New Hampshire, naturopathic doctors:
Are educated in 4-year programs which cover the same biomedical and clinical sciences coursework as traditional MD programs.
Conduct standard physical examinations (heart, lung, GI, neurological etc)
Prescribe certain medications including antibiotics, vaccinations and hormones (thyroid, insulin and sex hormones)
Do pap smears, wet preps, breast and prostate exams
Order standard lab tests and diagnostic imaging (routine blood work, x-rays, ultrasounds, mammograms etc)
Administer vaccinations (usually alternative schedules) and basic phlebotomy services
According to NH Association of Naturopathic Physicians,
Naturopathic Medicine is a unique and distinct system of health care that emphasizes the use of prevention and natural therapeutics. The doctors who practice naturopathic medicine, called naturopathic doctors (NDs), are trained to serve as primary care general practitioners who are experts in the prevention, diagnosis, management, and treatment of both acute and chronic health conditions.
That’s all you need to know for now — stay tuned tomorrow for all the details on HB351.
Memorial Day weekend is the unofficial start to summer — for New Hampshire’s Division of Travel and Tourism Development, at least. The DTTD just launched a television marketing campaign in Boston and New York featuring happy kids running in the woods and playing on the beach. This year, the tourism office predicts that visitors will spend $86 million in New Hampshire this weekend — an increase of five percent from last year.
Of course, the Director of the Institute for New Hampshire Studies at Plymouth state, Mark Okrant, made sure I understood that, really, Memorial Day is a spring holiday. So while the tourism industry’s performance this weekend will be a good indicator of how people are feeling about gas prices and the economy in general, it doesn’t really predict tourists’ behavior in the upcoming months.
Photographer Rick Libbey, who goes by “the moose man,” will be setting up shop in Meredith, NH this weekend at the 21st annual Memorial Day Weekend Craft Festival, where he has spent Memorial Day weekend for the last 5 years. Rick is banking on the same customers that the DTTD is targeting with their television ads in Boston and NYC. “I’m seeing that they’re spending,” Rick told me. After the recession hit, Rick restructured his business to keep prices down. He says that helped his business thrive despite the downturn. “When people see a nice piece of art at an aggressive bargain price, they’re gonna get it.”
His mantra is “think smart, play smart, and by all means have a smile on your face.”
“Wealthy people don’t just have better toys; they have better nutrition and better medical care, more free time and more meaningful labor—more of just about every ingredient in the recipe for a happy life. And yet, they aren’t that much happier than those who have less. If money can buy happiness, then why doesn’t it?” Ask the authors of a 2011 research dialogue in the Journal Of Consumer Psychology.
Their answer? Because we’re spending our money all wrong.
The three authors — leading researchers on money and happiness — put together a list of takeaways from recent studies, condensed below by Rozanne Larsen of Harvard University’s Shorenstein Center.
Eight Ways To Spend Your Money And Get Happy Doing It: Continue Reading →
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