Social scientists often estimate models from correlational data, where the independent variable has not been exogenously manipulated; they also make implicit or explicit causal claims based on these models. When can these claims be made? We answer this question by first discussing design and estimation conditions under which model estimates can be interpreted, using the randomized experiment as the gold standard. We show how endogeneity – which includes omitted variables, omitted selection, simultaneity, common-method variance, and measurement error – renders estimates causally uninterpretable. Second, we present methods that allow researchers to test causal claims in situations where randomization is not possible or when causal interpretation could be confounded; these methods include fixed-effects panel, sample selection, instrumental variable, regression discontinuity, and difference-in-differences models. Third, we take stock of the methodological rigor with which causal claims are being made in a social sciences discipline by reviewing a representative sample of 110 articles on leadership published in the previous 10 years in top-tier journals. Our key finding is that researchers fail to address at least 66% and up to 90% of design and estimation conditions that make causal claims invalid. We conclude by offering 10 suggestions on how to improve non-experimental research.

On making causal claims : A review and recommendations

(2008). Introduction to Variance Estimation. Journal of the American Statistical Association: Vol. 103, No. 483, pp. 1324-1325.

Introduction to Variance Estimation

This chapter presents the budget estimates and program justifications for the Department of Housing and Urban Development (HUD). HUD’s core mission is to promote adequate and affordable housing, economic opportunity and a suitable living environment free from discrimination. The 2001 Budget for HUD reflects the successful implementation of a multiyear comprehensive reform effort which has helped restore the effectiveness and financial integrity of the Department’s critical affordable housing and economic development initiatives. Building on the success of these reforms, Congress and the Administration have provided significant increases in key HUD programs over the past two years. The 2001 Budget will continue these historic successes by providing the Department with the tools to fulfill its fundamental strategic goals: increasing the availability of decent, safe and affordable housing in American communities (including the enhancement of homeownership opportunities, especially for minorities and first-time homebuyers, the transformation of public housing and the expansion of housing assistance to alleviate severe housing needs); ensuring equal housing opportunity; promoting self-sufficiency and asset development of families and individuals (including moving homeless families to self-sufficiency through locally-developed continuum of care strategies and contributing to the success of welfare-to-work efforts); and improving community quality of life and economic vitality through locally-driven initiatives and programs. The 2001 budget provides increases for two successful block grant programs which serve HUD’s fundamental affordable housing and economic development missions—the Community Development Block Grant (CDBG) and the HOME Investment Partnerships programs. These programs provide states and localities with formula funding pursuant to locally-developed consolidated plans for a wide variety of activities which benefit low and moderate-income families. The Community Development Loan Guarantee program (under Section 108 of the Housing and Community Development Act of 1974) will be continued with level funding and a slightly increased loan guarantee limitation. The Economic Development Initiative will also be maintained. Grants for Urban Empowerment Zones will continue support for ten-year plans to provide new job opportunities and community revitalization in 15 urban areas. The Rural Housing and Economic Development program will be continued at an increased level. HUD’s Homeless Assistance programs will be funded at an increased level to enable communities to continue their development and implementation of comprehensive coordinated continuum of care systems to address the needs of homeless people and families. This funding includes 18,000 rental assistance vouchers designed to provide affordable permanent housing for formerly homeless individuals and families in order to provide a stable living environment, a critical necessity for maintaining access to needed services and providing access to employment opportunities. HUD’s Continuum of Care approach recently received the prestigious 1999 Innovations in Government award from the Harvard University’s John F. Kennedy School of Government and the Ford Foundation. The 2001 Budget maintains the Federal commitment to replacing distressed and obsolete public housing with attractive, mixed-income communities and creating new economic opportunities for residents. Consistent with this commitment and with a special focus on replacing projects that have been determined to be non-viable, the HOPE VI program will receive a significant increase from last year’s enacted level. The 2001 Budget provides $3,192 million for the Public Housing Operating Fund, which helps to maintain good quality housing, and provides a slight increase for the Public Housing Capital Fund, which helps modernize and improve the housing stock. The 2001 budget includes 120,000 incremental vouchers that will help address the severe housing needs of low-income households. These vouchers are necessary to address the continued increase in the number of families nationwide which have worst case needs for housing assistance, including extremely-low income families currently paying more than half their income for rent or living in severely inadequate living conditions. The Administration reaffirms its long-held commitment to renew all expiring Section 8 contracts, to protect residents from displacement by substantially increasing funding for Section 8 renewals, to provide Section 8 tenant-based assistance for displaced families, and for the replacement of affordable housing due to opt-outs from the project-based Section 8 program. The Administration also continues its support for the Department’s successful Housing for Persons With HIV/AIDS program (HOPWA) by providing increased funding to prevent thousands of persons with HIV/AIDS from becoming homeless. This increase is necessary to continue to provide stable housing and services in existing local programs and fund new jurisdictions as they become eligible for formula funding due to the continued increase in the number of AIDS cases. Building on last year’s successful adoption of the Housing Security Plan for Older Americans, the Housing for the Elderly program (under Section 202 of the Housing Act of 1959) will receive a substantial increase, including an increase in capital funding to convert existing housing to assisted living with services and an increase for construction of new affordable assisted living. The Housing for Persons with Disabilities (under Section 811 of the National Affordable Housing Act of 1990) will receive additional funding. In support of the Administration’s strong commitment to increase homeownership opportunities, the 2001 budget includes major support to help lowand moderate-income American families become homebuyers. The budget will increase the Federal Housing Administration’s (FHA) maximum mortgage loan limits, allowing Single Family insurance to cover loans up to the same level as the Fannie Mae and Freddie Mac (GSEs) limits. (Currently FHA can insure home mortgages only up to 87 percent of the GSE limits in high cost areas and only up to 48 percent in low-cost areas, including approximately 2,200 rural counties throughout the Nation). In addition, the budget authorizes FHA to develop new adjustable rate mortgage products. These provisions will provide much-needed assistance to first-time homebuyers, minorities, and other underserved populations. Increased funding for the Fair Housing Assistance and Fair Housing Initiatives programs (FHAP and FHIP) will strengthen the ability of public and private fair housing groups, and partnerships between them, to enforce the laws protecting all Americans against illegal housing discrimination. In order to ensure the effective implementation of its programs, the Department’s Office of Policy Development and Research (PD&R) will be provided with a budget increase. These additional funds are necessary to ensure timely provision of data, research and analysis of national housing and economic conditions, and to measure the performance of pro-

The Department of Housing and Urban Development

Financial literacy: A systematic review and bibliometric analysis

චත්තාරික සමය හා බැඳි සාම්ප්රධායික පසන් ගායන ශෛලිය පිළිබඳ අධ්යයනයක් (Unpublished doctoral dissertation)

The increasing pervasiveness of high-cost alternative financial services (AFS) has captured the attention of policymakers, consumer educators, and financial counselors. Using data from the 2009 to 2012 waves of the National Financial Capability Study (NFCS), this article investigates AFS borrowing behaviors through the lens of a boundedly rational choice framework, with an emphasis on overconfidence. Through repeated testing of isolated samples of individuals with characteristics that make them less likely to objectively need such products, the roles of actual (objective) and perceived (subjective) financial knowledge in the decision-making process are explored. Consistent results indicate that individuals with lower objective financial knowledge and those that are overconfident in their self-assessed knowledge level are significantly more likely to utilize AFS instruments. These results suggest that a significant portion of AFS users may select these products without conducting adequate search, resulting in less than optimal financial decisions holding all else equal. ********** The decision to borrow on the part of a household involves a series of complex considerations related to current available resources, expected income, perceived need, and costs of borrowing. Individuals must be equipped with adequate understanding of financial markets and the relevant instruments and options available to assess borrowing decisions effectively. The growth of high-cost debt instruments, including payday loans, rent-to-own (RTO) financing, pawn shops, title loans, and refund anticipation loans, has raised significant questions with regard to consumer understanding of these alternative financial services (AFS). According to the Federal Deposit Insurance Corporation (FDIC 2009), estimating the actual size of this industry is difficult due to the variety of services that may be classified as AFS and the very nature of the sector, as there are many different providers and many are privately held. Conservative estimates from 2009 suggest an overall industry size in excess of $320 billion USD, with evidence that the industry has grown since that time (FDIC 2009, 2012). Roughly a quarter of Americans reported use of at least one AFS loan in 2011, indicating that this is no longer a niche industry (FDIC 2012). In the United States, policy approaches have ranged from those that emphasize disclosure of information to those that restrict access or product types. In the case of AFS, each state has adopted its own policy, resulting in a broad range of regulations and considerable variation from one state to the next. Many of the states have enforced restrictions based on loan rates and amounts that can be borrowed within a given time frame. Only a few states have engaged in an outright ban of certain AFS options, placing greater importance on the structure of available disclosures. The growing concern about the impact of alternative sources of liquidity on consumer well-being has also encouraged the search for solutions at the federal level. The federal policies regarding AFS in the past had been limited to enforcement of existing law and consumer education; however, some more authoritarian regulations have recently been implemented. For example, through the 2007 amendments to defense budget authorization bills, military families received some protection against "predatory" payday lending. This federal law enacted first-of-its-kind interest rate limits on payday loans to military service members and their relatives (36% APR). Moreover, the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 created the Consumer Financial Protection Bureau (CFPB) and authorized the new agency to regulate lending services and restrict unfair, deceptive, or abusive practices. Our article establishes a current picture of the AFS industry, noting that a growing percentage of individuals report utilization of these instruments between 2009 and 2012. …

Bounded Rationality and Use of Alternative Financial Services

This study investigates the role of financial knowledge in various short-term and long-term financial behaviors among Millennials in the United States. Results from the 2015 National Financial Capability Study (NFCS) indicate that Millennials have lower levels of objective financial knowledge and similar levels of perceived financial knowledge as compared to all households. Consistent multivariate results find financial knowledge to be positively associated with performing positive short-term and long-term financial behaviors. Results are found to be robust across different measurements of financial knowledge and behavior, and the issue of the potential for reverse causality is specifically addressed. This study provides a comprehensive financial profile of Millennials with important insight for policymakers as well as financial practitioners.

Financial Knowledge and Short-Term and Long-Term Financial Behaviors of Millennials in the United States

This study investigates how psychological characteristics influence saving behavior within a sample of 1,380 U.S. preretirees aged 50–70 from the Health and Retirement Study (HRS). Using the 3M Model of Motivation and Personality as a theoretical basis, structural equation model results revealed that financial self‐efficacy (FSE) directly explains saving behavior and is central to understanding the link between other psychological characteristics and the saving behavior of older adults. Through higher FSE, increased positive affect and reduced negative affect indirectly supported saving behavior. Moreover, the results revealed personality traits indirectly explained saving behavior. Conscientiousness and extroversion indirectly supported saving behavior; whereas openness to experience and neuroticism indirectly undermined saving behavior. This study connects broad personality traits with saving behavior, which provides information about how older adults' psychological composition is related to their saving practices.

Personality and Saving Behavior Among Older Adults

This study investigated the association between positive psychological attributes and retirement satisfaction using a sample of 5,146 retired individuals from the 2006 and 2008 waves of the Health and Retirement Study (HRS). Utilizing Seligman’s (2012) well-being theory, positive psychological attributes, as represented by the acronym PERMA, were measured by dispositional optimism (Positive emotion), reading the newspaper daily and having a hobby (Engagement), family support (Positive relationships), purpose in life and religiosity (Meaning), and perceived mastery (Accomplishment). Significant evidence was found supporting the association between positive psychological attributes and retirement satisfaction. Specifically, results of the ordinal logistic model revealed that, holding all else constant, dispositional optimism, family support, purpose in life, and perceived mastery were each positively associated with retirement satisfaction. Relevant implications for financial planners, counselors and educators include learning and developing optimism, cultivating family relationships, fostering purpose in life, discovering accomplishment during retirement, and structuring a phased transition to retirement.

Positive Psychological Attributes and Retirement Satisfaction

This article demonstrates that researchers who treat data collected via complex sampling procedures as if they were collected via simple random sample (SRS) may draw improper inferences when estimating regression models. Using complex sample data from the 2004 panel of the Survey of Income and Program Participation (SIPP) two models--one ordinary least squares (OLS) regression and one logistic regression--were estimated using three methods: SRS with and without population weights, Taylor series linearization, and Fay's Balanced Repeated Replication (BRR). The results of the alternative models demonstrate that depending on the variables of interest, authors who fail to incorporate sample design information or fail to consider the effects of weighting may draw improper inferences from their regression models. Reasons why researchers continue to neglect complex sample-based variance are proposed and discussed, and example SAS and Stata code is offered to encourage adoption by the consumer research community. ********** Nearly all publicly available survey data are collected via complex sampling methods such as stratification, oversampling, and multiframe samples, where respondents have an unequal probability of selection. The use of complex sampling methods allows for the collection of data from populations of interest in an efficient and cost-effective manner. However, many commonly utilized statistical packages default to the assumption that data were collected through a simple random sample (SRS). Adhering to this default assumption when analyzing data collected via complex sampling methods typically increases the probability of a Type I error (Kish 1965, 2004; Wolter 1985), although Type II errors may also occur (Davem et al. 2007). Nielsen et al. (2009) demonstrated how neglecting to incorporate complex sample design information results in substantially smaller standard errors and an increased risk of Type I errors. That demonstration was motivated by a review of 51 articles in the 2000-2007 issues of the Journal of Consumer Affairs, Journal of Financial Counseling and Planning, and the Journal of Family and Economic Issues that used data from the Consumer Expenditure Survey (CE), Current Population Survey (CPS), Survey of Consumer Finances (SCF), and the Survey of Income and Program Participation (SIPP) that revealed that few indicated whether standard errors accounted for sample design. Our review of the 2008-2013 issues of the same journals revealed that this practice continues: four (Coleman-Jensen 2011; Rhine and Greene 2013; Sanders and Porterfield 2010; Tamborini, lams, and Reznik 2012) of the 27 articles that used the CE, CPS, SCF, or SIPP indicated that the analyses accounted for the given survey's complex sample design. (1) The analysis by Nielsen et al. (2009) focused on the standard errors associated with weighted descriptive estimates of population parameters. Of course, weighting descriptive statistics is standard practice. However, nearly all articles evaluated in both reviews progressed from weighted estimates of the population to one or more unweighted multivariate models. The decision to weight, or not weight, a multivariate model has long been debated (Deaton 1997; Lee and Forthofer 2006; Pfefferman 1993; Scott and Wild 2002). However, the near-uniform practice of estimating unweighted regression models revealed in the review of papers is noteworthy given that CE, CPS, SCF, and SIPP samples are all derived from over-sampling, stratification, multistage, and other complex sample selection strategies that render an unweighted sample dissimilar from the population of interest. When modeled without weights, subpopulations selected via complex sample selection methods may exert unequal influence, resulting in regression coefficients that usually do not accurately represent the population of interest (Deaton 1997; Lee and Forthofer 2006; Pfefferman 1993). Deaton (1997) indicates that weights are necessary for models seeking to estimate population regression coefficients. …

Martin C. Seay

Papers

Bounded Rationality and Use of Alternative Financial Services

Financial Knowledge and Short-Term and Long-Term Financial Behaviors of Millennials in the United States

Personality and Saving Behavior Among Older Adults

Positive Psychological Attributes and Retirement Satisfaction

Complex Samples and Regression-Based Inference: Considerations for Consumer Researchers