The Smart Money is in Cash? Financial Literacy and Liquid Savings Among U.S. Families

Most financial advisors recommend storing three to six months of expenses in liquid assets in case of an emergency. Yet we estimate that more than half of U.S. families do not have at least three months of their non-discretionary expenses in liquid savings. We find that financial literacy is strongly predictive of having three months of liquid savings, controlling for income, income variability, and even parental resources. We also find that financial literacy predicts liquid savings across the income distribution. These results indicate that accumulation of an emergency fund is not simply a function of income. Finally, financial literacy is predictive of liquid savings even among high illiquid wealth households. This suggests that the phenomenon of "wealthy hand-to-mouth" families may reflect financial mistakes rather than portfolio optimization. Our paper highlights the importance of financial knowledge in explaining families' preparedness to deal with unexpected expenses or disruption in their income.

Data-Driven Methods for Balancing Fairness and Efficiency in Ride-Pooling

Rideshare and ride-pooling platforms use artificial intelligence-based matching algorithms to pair riders and drivers. However, these platforms can induce unfairness either through an unequal income distribution or disparate treatment of riders. We investigate two methods to reduce forms of inequality in ride-pooling platforms: by incorporating fairness constraints into the objective function and redistributing income to drivers who deserve more. To test these out, we use New York City taxi data to evaluate their performance on both the rider and driver side. For the first method, we find that optimizing for driver fairness out-performs state-of-the-art models in terms of the number of riders serviced, showing that optimizing for fairness can assist profitability in certain circumstances. For the second method, we explore income redistribution as a method to combat income inequality by having drivers keep an $r$ fraction of their income, and contribute the rest to a redistribution pool. For certain values of $r$, most drivers earn near their Shapley value, while still incentivizing drivers to maximize income, thereby avoiding the free-rider problem and reducing income variability. While the first method is useful because it improves both rider and driver-side fairness, the second method is useful because it improves fairness without affecting profitability, and both methods can be combined to improve rider and driver-side fairness.

Family Income Level, Variability, and Trend as Predictors of Child Achievement and Behavior

Recent decades have seen increases in the variability of family income, tepid income growth rates for all but the richest families, and widening income inequality. These trends are concerning for child well-being, given the importance of income to parental investments and parenting practices. Growing evidence suggests that a high level of change is disruptive to family processes and that chronic stress affects physiology as well as psychology. This study used the Panel Study of Income Dynamics Child Development Supplement to estimate associations between three dimensions of childhood income dynamics—level, variability, and trend—and child achievement and behavior. After income level was controlled for, income variability during childhood was not associated with child achievement or behavior, but an increasing five-year trend in income-to-needs was modestly beneficial to behavior measures. Subgroup analysis suggests some adverse effects of income variability and trend on reading and behavior for non-White children but no clear patterns by child's age or family income or wealth levels.

Seasonal Migration from Beed District of Maharashtra: A Livelihood Struggle of Dalit and Adivasi Households

Due to the scarcity of water, frequent crop failure and low returns from cultivation, agriculture in the state of Maharashtra is in a distressed condition. With a semi-arid topography, below average rainfall and limited irrigation infrastructure, Beed—a predominantly rural district—subsists through rainfed agriculture and wage employment. Every year, during dry season (November to May), villages in the district are face with severe seasonal unemployment. To tide over the lean season, thousands of small and marginal peasant households migrate to other districts of the state, and even outside the state, to work in sugar factories and brick kilns. The social experience and consequences of migration are far from uniform, but shaped by class, caste and gender. Drawing connections between seasonal migration and rural crisis, our narrative show how seasonal migration compensates for the lack of employment opportunities and reduces seasonal income variability of the poor households in Beed district. At the same time, this article also explains how seasonal migration traps these households in the vicious cycle of economic and social backwardness.

Analisis Struktur Aktiva, Kepemilikan Manajerial, dan Variabilitas Pendapatan Pada Struktur Modal Perusahaan Manufaktur

The purpose of this study was to determine the effect of asset structure, managerial ownership, and income variability on the company's capital structure (DER). This research was conducted at manufacturing companies listed on the Indonesia Stock Exchange (BEI) for the 2017- 2019 period. The population in this study were 181 companies, using the purposive sampling method the research sample was obtained as many as 46 manufacturing companies. The data analysis technique used in this research is panel data regression analysis technique with Eviews version 11 as a tool. Based on the research results, it is found that the asset structure has no effect on the capital structure. Managerial ownership has a positive and significant effect on capital structure. Income variability has a negative and significant effect on capital structure. Keywords: Asset Structure; Managerial Ownership; Income Variability; Capital Structure.

INVESTIGATING INCOME SMOOTHING: EMPIRICAL EVIDENCE FROM SERBIAN’S HOTEL COMPANIES

The flexibility in accounting standards and principles, lead to incentives for managers to show a good picture of the companies. It is logical and rational for managers to attempt to smooth income by using certain accounting devices to reduce the companies’ income fluctuation over time to improve relations with creditors, investors, and employees. Income smoothing enables companies to stabilize earnings and thereby increase earnings predictability. For detecting income smoothing through examining the financial statements Eckel’s (1981) approach (income variability approach) has been the most popular and most used one. In this research study, we use a selection criterion between smoothers and non-smoothers hotel companies based on the income smoothing. This study aims to classify Serbian hotel companies during the period 2016-2019 as smoothing and non-smoothing hotel companies. The method used to determine the presence or absence of income smoothing and the company value results is based on the coefficient of variation model proposed by Eckel (1981). According to the coefficient of variation method, the more the income smoothing (IS) index tends to zero, the more smoothed out the company’s earnings are. This study examines the presence of artificial income smoothing in 22 Serbian hotel companies. A binomial test is used to test the hypothesis. As a result of research, there are no significant statistical indicators of income smoothing practices in Serbian hotel companies during the period 2016-2019.

Does Crop Diversification Involve a Trade-Off Between Technical Efficiency and Income Stability for Rural Farmers? Evidence from Zambia

Crop diversification is a climate-smart agricultural technique which helps to improve resilience for farmers in the face of volatile weather due to climate change. Previous research on its effects on technical efficiency has shown mixed results. Despite burgeoning literature on the subject, an important research question that remains uninvestigated is: does crop diversification involve a compromise between technical efficiency and resilience (income stability) for rural farmers? Using nationally representative rural household survey data from Zambia, this study empirically answers this research question. We employ the Data Envelopment Approach (DEA) for efficiency and a two- step least-squares approach for income variability. Our results show evidence that crop diversification significantly improves income stability but significantly reduces technical efficiency. The paper provides useful implications for policies that promote crop diversification in Zambia and other countries.