First Study Examines the Neuronal Basis for Equity Theory

The first neuroimaging study designed to examine how the brain responds to the distribution of income in different situations has been completed by Cappelen et al. (2014). As such, it’s the first study to examine the neuronal basis for equity theory.


The present paper reports results from, to our knowledge, the first study designed to examine the neuronal responses to income inequality in situations in which individuals have made different contributions in terms of work effort. We conducted an experiment that included a prescanning phase in which the participants earned money by working, and a neuronal scanning phase in which we examined how the brain responded when the participants evaluated different distributions of their earnings. We provide causal evidence for the relative contribution of work effort being crucial for understanding the hemodynamic response in the brain to inequality. We found a significant hemodynamic response in the striatum to deviations from the distribution of income that was proportional to work effort, but found no effect of deviations from the equal distribution of income. We also observed a striking correlation between the hemodynamic response in the striatum and the self-reported evaluation of the income distributions. Our results provide, to our knowledge, the first set of neuronal evidence for equity theory and suggest that people distinguish between fair and unfair inequalities.


Cappelen, Alexander W. et al. (2014). Equity theory and fair inequality: A neuroeconomic study. Proceedings of the National Academy of Sciences.

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Public Trust Has Dwindled With Rise in Income Inequality

Is it possible that trust in others and confidence in societal institutions are at their lowest point in over three decades and this lack of trust is related to growing income inequality? Analyses of national survey data reveal a possible connection. The findings are forthcoming in Psychological Science, a journal of the Association for Psychological Science.

“Compared to Americans in the 1970s-2000s, Americans in the last few years are less likely to say they can trust others, and are less likely to believe that institutions such as government, the press, religious organizations, schools, and large corporations are ‘doing a good job,’” explains psychological scientist and lead researcher Jean M. Twenge of San Diego State University.

Twenge and colleagues W. Keith Campbell and Nathan Carter, both of the University of Georgia, found that as income inequality and poverty rose, public trust declined, indicating that socioeconomic factors may play an important role in driving this downward trend in public trust:

“With the rich getting richer and the poor getting poorer, people trust each other less,” says Twenge. “There’s a growing perception that other people are cheating or taking advantage to get ahead, as evidenced, for example, by the ideas around ‘the 1%’ in the Occupy protests.”

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Social Security Benefits to Increase by 1.7 Percent

Via Social Security Administration

The latest COLA is 1.7 percent for Social Security benefits and SSI payments. Social Security benefits will increase by 1.7 percent beginning with the December 2014 benefits, which are payable in January 2015. Federal SSI payment levels will also increase by 1.7 percent effective for payments made for January 2015. Because the normal SSI payment date is the first of the month and January 1 is a holiday, the SSI payments for January are always made at the end of the previous December.

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On the Ebola Crisis, a Vaccine, and NIH Purchasing Power

On the Ebola crisis: NIH purchasing power is down 23 percent from what it was a decade ago, and its budget has remained almost static . Scientists at NIH say they would be a lot closer to a vaccine if not for cuts and government shutdowns.

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Finishing Degrees and Finding Jobs: The Flow of Foreign IT Workers

Via National Bureau of Economic Research Digest

John Bound, Murat Demirci, Gaurav Khanna, and Sarah Turner examine the role that U.S. higher education and immigration policy play in the doubling of foreign-born Information Technology workers between 1993 and 2010. They find that foreign-born workers who obtain a degree from a U.S. college or university are particularly likely to remain in the country. Continue reading–>

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Another Perspective on “Out of Control Spending in Public Higher Education:” Spending per Student has Remained Constant

Via MarketWatch

“Contrary to what you’ve heard, spending isn’t out of control in public colleges. Spending per student has barely changed, in inflation-adjusted terms, since the late 1980s. We spent $11,100 per student in 1987, and we spent $11,100 per student in 2012.”

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Evidence of Scott Walker’s Failed Jobs Record

Two graphs from Crooks and Liars  depict Scott Walker’s failed jobs record in Wisconsin. They are self explanatory.

Walkers job growth record

Walkers job growth record vs Doyle

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Study: More Equitable Societies are Associated with Higher Rates of Growth

Carter Price and Heather Boushey summarize their findings on the adverse effects of inequality on economic growth in Economist’s View:

In this paper, we review the recent empirical economic literature that specifically examines the effect inequality has on economic growth, wellbeing, or stability. This newly available research looks across developing and advanced countries and within the United States. Most research shows that, in the long term, inequality is negatively related to economic growth and that countries with less disparity and a larger middle class boast stronger and more stable growth. Some studies do suggest that in the short run, inequality may spur growth before hindering it over the longer term, but overall there is growing evidence that, in the long run, more equitable societies are associated with higher rates of growth.

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Study: Inequality Reduces Income Growth for the Poor, but Helps Growth for the Rich

Does inequality have differential impacts on income growth for the rich and poor. Some argue that trickle-down economics (aka supply-side economics) raises all boats. A new study by van der Weide & Milanovic (2014) finds “it is mostly top inequality that is holding back growth at the bottom.”


The paper assesses the impact of overall inequality, as well as inequality among the poor and among the rich, on the growth rates along various percentiles of the income distribution. The analysis uses micro-census data from U.S. states covering the period from 1960 to 2010. The paper finds evidence that high levels of inequality reduce the income growth of the poor and, if anything, help the growth of the rich. When inequality is deconstructed into bottom and top inequality, the analysis finds that it is mostly top inequality that is holding back growth at the bottom.


van der Weide, Roy & Milanovic, Branko. (2014) . “Inequality is bad for growth of the poor (but not for that of the rich). ” Policy Research Working Paper Series 6963. The World Bank.

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Rich Americans Giving Less to Charitable Organizations while Middle-Class Giving More

An analysis of IRS data by the Chronicle of Philanthropy shows  rich Americans donating less to charity the while middle-class is giving more.

Americans earning at least $200,000 a year cut their charitable donations by 4.6% between 2006 and 2012. Meanwhile, middle-class taxpayers earning less than $100,000 annually bumped up giving to good causes by 4.5% during the same six-year span that encompassed the height of the economic recession

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