Religion, social class, and entrepreneurial choice

Fascinating

While considerable concern has emerged about the links between religion and economic growth, little is actually known about how religion and social class impact the decision making of individuals. Using institutional theory and social dominance theory, this paper examines the influence of religion and social class on individuals' occupational choices. Based on a large-scale database from India, this paper finds that while some religions are relatively conducive to self-employment, some others have a negative impact on self-employment choices. Furthermore, individuals belonging to social classes that are lower in the social hierarchy are less likely to be self-employed. The role of both religion and social class in influencing the likelihood of choosing self-employment suggests an important link between religion, social class, and occupational decision-making.

Highlights

• We examine the role of religion and social class on occupational choice.

• We find that religions like Islam and Jainism are more favorable for self-employment.

• We find that Hindus are less likely to be self-employed compared to others.

• Individuals belonging to social classes lower in the social hierarchy are least likely to be self-employed.

The following regression models are estimated to link occupational choice with religion and social class:

equation(1)

Y=α+β₁*Religion+β₂*Education+β₃*Demographics+β₄*Wealth+β₅*Location+β₆*Industry+ε₁Y=α+β1*Religion+β2*Education+β3*Demographics+β4*Wealth+β5*Location+β6*Industry+ε1

equation(2)

Y=c+δ1*SocialClass+δ2*Education+δ3*Demographics+δ4*Wealth+δ5*Location+δ6*Industry+ε2

Let me quote the operative paragraph in here

While India is rich in diverse religions, some of them, such as Islam and Jainism, are more conducive to self-employment. The institutional profile associated with Islam strongly supports entrepreneurial activity. For example, Islamic banking models, based on the Koranic principles of risk sharing (Khan, 1996), may encourage even risk-averse Muslims to become self-employed. In Jainism, principles of self-reliance and benevolence to business (Caillat, 1987) give rise to an institutional profile that is conducive to self-employment. By contrast, Hinduism inhibits self-employment by shaping an institutional profile that is not conducive to self-employment choices. The normative pressures on Hindus to choose occupations based on the caste of their birth (Hutton, 1946), and the cognitive beliefs that do not support proactively changing thestatus quo ( Singer, 1966 and Tripathi, 1992) may discourage self-employment in Hinduism.

Although Christianity is associated with an institutional profile that is conducive to self-employment, it does not have a positive effect on self-employment in the Indian context. This result may be attributed to the large number of individuals from the Hindu backward classes converting to Christianity (Henderson, 2002). Thus, the estimated effect of the Christian religion in India shows the mixed effects of prior learning and new beliefs particularly with regard to the normative and cognitive dimensions of the two religions. The estimated effects of Buddhism and Sikhism show that the followers of these two religions are not different from Hindus when it comes to their self-employment choices. These results are attributable to the close relationship that Buddhism and Sikhism have with Hinduism. The founders of both the religions were Hindus and, Buddhism, in particular, shares many of the Hindu values and beliefs (

Maybe as public policy, the Indian government may want the Hindus to convert to Jainism. Or Islam. But as the example of Christianity shows, this will not work as despite conversions to another religion, they are still not being self employed.

Curious, eh?

Quite an interesting list – oldest banks in the world

this was quite an interesting list to see and read. HSBC appears on number 10. I quote:

HSBC Trinkaus originally known as HSBC Trinkaus & Burkhardt AG operates as a general financial company in Dusseldorf, Gremany.  It is also one of the members of HSBC Group and was established in 1785. HSBC Trinkaus has its operations in various sectors for instance private, commercial and asset management and investment banking. A majority stake in Trinkaus & Burkhardt was acquired by the UK-based Midland Bank in 1980, but five years later, Trinkaus & Burkhardt converted to a partnership limited by shares and was listed on the stock exchange. In 1992 HSBC acquired Midlanbank along with its stake.

HSBC also has its own museum and it is an amazing place to visit. You can see old ledgers. You can see World War 1 staff registers where, in fading ink, you can see bank workers and managers leave to join the armed forces and how their entries were closed off due to death on the front. You can see manifests of young men going off to man bank counters across the world, sea trunks full of clothes. You can see thin flimsy’s requesting instructions. Seeing photographs of workers sitting on bales of Chinese silk on the docks of San Francisco from early last century which we funded. Not a history of big men but of people like me and me.

Which Short-Selling Regulation is the Least Damaging to Market Efficiency? Evidence from Europe

An interesting article. I am very jaundiced towards the European Politicians and assorted people who drive their economic future. its a mess, to put it bluntly.

I quote the abstract:

Exploiting cross-sectional and time-series variations in European regulations during the July 2008–June 2009 period, we show that: 1) Prohibition on covered short selling raises bid-ask spread and reduces trading volume, 2) Prohibition on naked short selling raises both volatility and bid-ask spread, 3) Disclosure requirements raise volatility and reduce trading volume, and 4) No regulation is effective against price decline. Overall, all short-sale regulations harm market efficiency. However, naked short-selling prohibition is the only regulation that leaves volumes unchanged while addressing the failure to deliver. Therefore, we argue that this is the least damaging to market efficiency.

This is the idiocy behind the governments and economics people who try to ban short selling. The evidence that banning short selling introduces inefficiencies into the market is clear and incontrovertible. Where they aren't banned, the markets work better, absorb information faster and generally are good eggs. This exacerbates the insider outsider issue. If the idea behind the European Regulators and Politicians was to improve their markets, then this failed miserably. Spreads become wider. Trade volumes reduce. not good.

Economic Freedom and the Stability of Stock Prices: A Cross-Country Analysis

A common sense result but a valuable one indeed. I quote the highlights and abstracts from this paper.

• ADR volatility is inversely related to the economic freedom of the home country.

• ADR volatility is decreasing in home-country, property-right protection.
• ADR volatility is decreasing in the level of home country free trade agreements.
• ADR volatility is increasing in the level of regulation in the home country.

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This paper investigates the link between economic freedom and the price stability of individual securities in a unique setting. Using a sample of 327 American Depositary Receipts (ADRs), we find an inverse relation between the economic freedom of a ADRs’ home country and the price volatility of the ADR. This negative correlation is driven primarily by certain components of economic freedom, such as property right protection, the soundness of the money, and the level of free trade in the home country. Further, we find evidence that less regulation and less government control of markets in the home country leads to more stable ADR prices.

If one wants to find out what the broader public and market thinks about your country and the changes its going through, just look at the volatility of your ADRs. A simple way of judging how stable and future proof people think your country is going to be. ADR’s are a way of you and your country’s firms to raise international funds, its a positive cycle, improve your economic freedom, property rights, free trade and regulation and watch the price and risk of your international fund raising efforts improve.

Look before you leap: Why politicians may have a point to be hesitant about the gains from trade

this was a good point to be made. Speaking as an economist, I am always in favour of trade liberalisation. Same with being a banker. Anything that facilitates trade is something that I love because that helps my clients. But politicians are different and I quote the highlights from this paper.

• economists focus on overall welfare, politicians on the income distribution.

• market liberalization increases welfare and changes the income distribution.

• politicians implement distortionary policies to mitigate the distributional effects.

• with inaccurate information, ambiguous net welfare effects may result.

• politicians may have a point when being hesitant about market liberalization.

the abstract:

Economists emphasize the welfare gains of unrestricted trade, but politicians worry about the income distribution effects of increased competition. We show that the welfare gains of a trade shock become ambiguous if inaccurate information hinders optimal income redistribution with distortionary policy instruments. To be sure about the net welfare outcome of a compensated trade shock, the government must know the size of the trade shock and the corresponding size of the policy instrument that is needed to generate a balanced budget. If this is not the case, politicians may have a point when being hesitant about the gains from trade.

So when making arguments about free trade and trade liberalisation, one has to ensure that economists are speaking the same language..I believe that one of the reasons why the WTO deals are so difficult to achieve (besides needing the approval of all the 190 odd countries) is that the WTO is mainly run by economists while the decision makers are mainly politicians who will need to ratify the deal back home. And they are talking different language.

Loopholes Undermine Donation: An Experiment Motivated by an Organ Donation Priority Loophole in Israel

Organ donation is a curious beast and I have spoken about it before on this blog (see here, here). So it was of interest that I found this article. I quote the abstract:

Giving registered organ donors priority on organ waiting lists, as has been implemented in Israel and Singapore, provides an incentive for registration and has the potential to increase the pool of deceased donor organs. However, the implementation of a priority rule might allow for loopholes—as is the case in Israel—in which an individual can register to receive priority but avoid ever being in a position to donate organs. We experimentally investigate how such a loophole affects donation and find that the majority of subjects use the loophole when available. The existence of a loophole completely eliminates the increase in donation generated by the priority rule. When information about loophole use is made public, subjects respond to others’ use of the loophole by withholding donation such that the priority system with a loophole generates fewer donations than an allocation system without priority.

Its usually bloody moronic religious reasons why people don't like doing this. I quote this time from Judaism

While the Israeli legislation mitigated this particular type of gaming, it introduced a different loophole in the organ allocation system. One of the reported motivations for implementing the priority allocation legislation in Israel was widespread concern over free riding by ultraorthodox religious groups. These groups generally do not recognize brain death (i.e. when the brain ceases to function) as a valid form of death and consequently oppose providing deceased donor organs.⁵ Members of these religious groups do not oppose receiving organs, however, even those recovered from brain dead donors. It has been argued that this group of explicit free riders—those who will accept organs but not provide them—is a major factor for the historically low rates of organ donation in Israel (Lavee et al. 2010, Lavee and Brock 2012). The priority allocation system was meant to minimize this free riding by rewarding registered donors and giving free riders lower priority on waiting lists.

Nevertheless, the implementation of the Israeli priority legislation created a loophole that may allow this type of free riding to continue. The Israeli donor card gives a registrant the option to check a box requesting that a clergyman be consulted before organ donation occurs (see Figure 1).⁶ An individual who wants priority but does not want to be a donor could check that box with the implicit or explicit understanding that his clergyman would refuse donation if the supposed “donor” were to die and be in a position to have his organs recovered.

Ridiculous and because of these loopholes, the rate of organ donation is seriously low in Israel.

Thinking ahead

So Diya has now recently turned 10 and now she is going to move into the next phase of her education :)

I am starting off with her financial education like I did with Kannu, my target is for her to start operating her own stock brokerage account by the time she is 13 years of age and hopefully she will get sufficient money put aside for funding her own education for some time at least. We sorted our Kannu’s educational expenses this way :)

Career choices change dramatically when you are young. She previously wanted to be a doctor but then she said that it requires too long hours and she wouldn't have fun. So she wants to be an illustrator / graphic designer at the moment with second option to be a scientist. We have had some long conversations on this and she asked me to send her a list of universities which may be appropriate for her. I've got a monster at home..:) Here’s what I sent her.

 

Diya

As you requested, here are the top universities which offer undergraduate bachelor degree courses in graphic design, computer aided design, illustration. Etc. they all are in the top so doesn’t really matter which is number 1.

· Massachusetts Institute of Technology: http://web.mit.edu/

· Royal College of Art: (this only offers postgraduate courses, sweetheart, so you will have to wait) http://www.rca.ac.uk/

· Stanford University : http://www.stanford.edu/

· Oxford University: http://www.ox.ac.uk/

· University College London: http://www.ucl.ac.uk/

· Cambridge University: http://www.cam.ac.uk/

· Harvard University: http://www.harvard.edu/

We have some time before you enter but its good to start looking at the courses and read up on them, so that you can decide if or when you want to do these courses or something else J

And here is the web address for Caltech

http://www.caltech.edu/

if you wanted to do a PhD in Physics, again those universities above will allow you to do a bachelor and master’s degree J

and don’t worry about money, sweetheart, we will take care of it J

love

Baba

How Many Pears Would a Pear Packer Pack if a Pear Packer Could Pack Pears at Quasi-Exogenously Varying Piece Rates?

heh, I just loved the subject. The abstract is here

We examine labor supply using a unique dataset collected from a large pear-packing factory. Pear packers face both expected and unexpected shocks to their wages, and we use this to evaluate different models of inter-temporal labor supply. We find strong evidence for reference-dependent preferences, but only mixed support for models of rational-expectations-based targets.

Bit esoteric but is interesting to read the article…

how to pick small cap shares

Kannu

Here's an excellent overview of how to pick small company shares. And the best part is that this applies for large companies as well. But if you want, you can always invest in funds which invest in small caps. All the elements in here are what you will do in your own business, look after the details, check the board and management, look for a good track record, don’t invest in something that you don’t understand etc. etc. Very nice and basic information that so many people don’t follow, son. If you want to become a banker, then this is also very useful information. And the reason why this is so straightforward and popular is that this is common sense.

You can print this off and keep it as a checklist when evaluating companies, absolutely worthwhile

Love

baba

How to pick small-cap shares

By John Lee

Small-cap shares tend to outperform the broader market significantly over longer periods, even allowing for their greater volatility, and have turned in particularly notable performances since the worst of the financial crisis passed.

They are less well covered by analysts and the media, so the chances of finding an undervalued nugget are high for those prepared to do the legwork. In addition, small-caps can grow faster from a lower base than their larger rivals.

John Lee was one of Britain’s first “Isa millionaires”, and made much of his fortune (now over £3m) via judicious investment in smaller company shares. His book How to Make a Million – Slowly, is published by Pearson Education next week.

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Women Around the World Are Being Stoned to Death. Do You Know the Facts?

the world's law codes are full of stupidities and idiocies. Mostly arising from the religious underpinning of most modern law systems. But thankfully most modern law systems have removed crap like this. But when people say laws are religiously mandated is when all kinds of alarm bells go off. 

Morons. 

Women Around the World Are Being Stoned to Death. Do You Know the Facts?
http://www.policymic.com/articles/68431/women-around-the-world-are-being-stoned-to-death-do-you-know-the-facts

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Stoning still happens today. There are 15 countries in which stoning is either practiced or authorized by law, even if it has never been practiced. In Iran, Mauritania, Nigeria (in one-third of the country's states), Pakistan, Qatar, Saudi Arabia, Somalia, Sudan, the United Arab Emirates, and Yemen, stoning is a legal punishment. However, out of these countries, only in Iran, Pakistan and Somalia have stonings actually occurred, and all instances in Pakistan have occurred outside the legal system.

By comparison, three of the remaining five countries (Afghanistan, Iraq, and Mali) do not condone stoning in national legislation, but sentences and executions have been carried out by non-state actors. In the Aceh region of Indonesia and Malaysia, stoning is sanctioned regionally but banned nationally.