Category: Economics

Ben Jones (ECON’92) to Give VCU Business Undergraduate Commencement Address

Ben Jones









Alumnus Ben Jones will give the VCU School of Business Undergraduate Programs Commencement Address in a ceremony at the Siegel Center on Saturday, May 13.

Jones is the chief regulatory relations officer for Wells Fargo and serves in regulatory compliance risk management. His group is responsible for the RCRM enterprise regulatory coordination function and the RCRM Regulatory Resolution Management Office. Before joining Wells Fargo in 2014, Jones served as the head of regulatory affairs for Royal Bank of Scotland Group, Americas, for four years. Prior to that, he was the regulatory relations coordinator for Citigroup Global Compliance for five years. Jones began his career in 1992, when he joined the Federal Reserve Bank of Richmond as a bank examiner, and was formally commissioned in 1997. He worked in a variety of areas, including bank examinations, surveillance and monitoring, and risk and policy, during his more than 14-year tenure with the Federal Reserve Bank.

He is based in San Francisco and earned his bachelor’s degree in economics, summa cum laude, from Virginia Commonwealth University.

For ceremony details, see

Current student and alumnus team up on web portal for doctors

Congratulations to alumnus Fadi Muhsen and current student Umair Awan for their achievements abroad and recognition by The pair created Doxunity, a web portal dedicated to doctors. The portal currently has close to 130 users from the GCC, North African nations, Iran and Lebanon. During their years at VCU Business, the duo paid close attention to the tech and startup spaces, attended events, and even reached out to CEOs for guidance and tips. Muhsen completed a BS in Applied Economics with a concentration in Business and Finance, while Awan is currently pursuing his BS in Information Technology. Read more 

Herrington’s research cited in Fed President’s speech

Research by Christopher M. Herrington, assistant professor of Economics, was cited in a recent speech entitled “Early Childhood Education in the Context of Lifetime Human Capital Investment,” by Jeffery M. Lacker, president of the Federal Reserve Bank of Richmond.

In addressing challenges facing early childhood education, Lacker said, “The challenge of fade-out may be related to the link between parental circumstances and K-12 school quality in the United States. The K-12 system here is heavily dependent on local economic conditions for funding: Property taxes, on average, raise about 36 percent of all revenue needed to run public K-12 schooling.15 Not surprisingly, school districts with higher median incomes raise more revenue locally and, despite attempts by state and federal funding to offset this, tend to spend more on instruction per student. By contrast, in most other developed nations, this link is less strong and local property taxes less important. The Norwegian model of financing, for example, almost completely decouples parental circumstances from the revenue collected within a school district.16

Herrington’s article comparing the U.S. and Norway, “Public Education Financing, Earnings Inequality, and Intergenerational Mobility,” was published in the Review of Economic Dynamics, October 2015, vol. 18, no. 4.

Trio of VCU Business alumni take their tenant-matching startup to Silicon Valley

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From left to right, Brandon Anderson, James Barrett and Chris Stewart.

Two years ago, James BarrettBrandon Anderson and Chris Stewart each took the day off from their respective jobs to meet in Barrett’s Richmond-area garage and discuss their future. That day, Tenant Turner — a website that matches rental property managers with quality tenants — was born.

Almost exactly two years later, the trio of Virginia Commonwealth University School of Business graduates found themselves in Mountain View, California, having been accepted into Silicon Valley’s Y Combinator, one of the world’s best business accelerators, which has helped launch a number of successful companies such as Airbnb, Dropbox and Reddit.

“It’s an honor for Tenant Turner to be selected into the program,” Barrett said. “In addition to the investment, they also provide specialized mentorship and access to the entire YC network, which includes vendors, YC [alumni] and investors. With access to new investors, we hope to be able to raise more money faster the next time we open a fundraising round.”

Since 2005, Y Combinator has funded more than 800 startups valued at more than $30 billion.

Twice a year, YC operates a three-month session in which it invites selected startups to Silicon Valley to get their companies into the best shape possible and refine their investor pitches. At the end of each session, the entrepreneurs present their plans to an audience of specially selected prestigious investors.

Tenant Turner met with about two dozen investors, some of whom have already committed to invest. Perhaps more valuable than the monetary investments is access to an elite network of mentors and YC alumni.

“There’s really no better place to be for a new company trying to get jump-started,” Stewart said. “It’s somewhat surreal to be going through that process. The advice is direct, useful and comes from people who have been there before. … YC is also amazing from the perspective of the network effect. Hundreds of companies have gone through YC and even as a current batch company, you feel the sense of camaraderie and know that even in the future there’s an amazing network you can tap into.”

While most startups spend several weeks preparing their application for YC, the process for Tenant Turner was more of a whirlwind. After making a quick pitch to the Rise of the Rest investment group when it came through Richmond this spring, the trio was encouraged to apply to the YC.

“Joining for us was a really quick process,” Stewart said. “Thousands of companies apply for every batch — nearly 7,000 for this summer — and only 106 were accepted. We were a late application, as it really wasn’t on our radar, but it was suggested we apply. So we did, and were flown out to have a second interview in person a few weeks later. We found out maybe an hour or two later that we were accepted and that effectively the program began the next day.

Screen Shot 2015-08-28 at 12.10.30 PM“We very quickly needed to … simply restart our lives 3,000 miles away from home. It’s been a challenging experience, mostly being away from our families and our home, but one we’re determined to make worthwhile,” Stewart said.

Making the experience easier is the comfort the partners have with one another. More than a decade ago, high school friends Anderson and Barrett both studied information systems at VCU, where Stewart tutored them in Java. They became friends outside of school, years later serving as groomsmen in each other’s weddings.

“A lot of our bond was created during our time together at VCU,” Barrett said. “Our long friendship and the respect that we have for each other has made this journey incredibly enjoyable.”

Similarities abound between the three. Each knew at relatively early ages that they wanted to go into business for themselves. Anderson, in particular, seemed destined for an entrepreneurship career.

“At a young age I had a talent for drawing, which I used to draw logos of fictitious companies I pretended I had,” he said. “I created ‘business cards’ and wrote company newsletters. I made and sold friendship bracelets at day care. And I regret to admit there was a period of time in fifth grade where I carried not a backpack but a briefcase.”

Their shared interests endured well past their school days. After graduating from VCU, each alumnus owned rental properties, an experience that often proved frustrating.

“There are plenty of sites to list a rental like Craigslist and Zillow but no tools that truly solved our No. 1 problem: finding quality tenants quickly,” Barrett said. They all experienced the pain involved in going from a tenant moving out to another moving in, Stewart said, adding that everything that needs to happen in between can be very time consuming. With careers, families and children, taking time away to focus on turning over a property was inconvenient. With their software backgrounds and experience in the tech industry, they knew they could create a better process. That conviction led to the creation of Tenant Turner.

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“We shared a passion for the problem and had the complementary skills to build the leasing software of our dreams,” Barrett said.

Tenant Turner adds rentals to its site and then resubmits them to dozens of rental websites, pre-qualifying all tenant leads online or by phone before scheduling showings for the best prospects. Before Tenant Turner, Barrett said, property owners and managers would have to input listings into multiple sites, field all of the phone calls and emails, and track showings in a spreadsheet. With Tenant Turner, they now have one central hub for all of their leasing activity.

“We’re in growth mode right now and expect to raise more money, hire more employees and acquire more customers,” he said. “Our mission is to make happier, more confident renters, owners and property managers by improving the leasing experience. We’re off to a good start but have so much we can do to live that mission.”

With 43 million rental properties in the United States alone, Anderson said, there is plenty of opportunity for growth.


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VCU selected for state’s new VITAL initiative

Monday, July 20, 2015

The Virginia Commonwealth University School of Business is a member of the Virginia International Trade Alliance, a new initiative announced by Gov. Terry McAuliffe last week.

Under the management of the Virginia Economic Development Partnership,  VITAL will strengthen the commonwealth’s nationally recognized international trade program through formal partnerships with public universities such as VCU, industry associations and the Virginia Chamber of Commerce to expand international sales.

“As we continue to recruit new businesses to the commonwealth, we also need to help our existing businesses export their goods and services,” McAuliffe said during the announcement. “International trade is a key part of my plan to create private sector jobs and build a new Virginia economy that is less reliant on the federal government. This new VITAL initiative demonstrates the commonwealth’s commitment to helping existing Virginia businesses succeed in the international marketplace, making our economy even stronger.”

As VITAL partners, VCU and other state universities will identify companies with international business as a corporate strategy and conduct international research to position these companies for global expansion.

Screen Shot 2015-07-23 at 3.15.10 PMExpanding international partnerships is a strategic focus for VCU, and we welcome the opportunity to build on the knowledge and connections we have developed, both internationally and across Virginia, to make VITAL a success.

 Over the past two years, representatives from the VCU School of Business have worked with VEDP and Maurice Jones, secretary of commerce and trade for Virginia, to conceptualize and develop VITAL, said Van R. Wood, Ph.D., Philip Morris Chair in International Business and professor of marketing.

“VITAL, through the faculty-led, student-driven research projects that will analyze world market opportunities for participating Virginia businesses, will not only expand the state’s international scope, enrich participating companies’ revenue streams and grow the state’s tax base, but will also develop the next generation of savvy global business managers  — the students working on VITAL projects — that are so vitally needed today and in the future as globalization continues to gain depth and breadth,” Wood said. “VCU welcomes the opportunity to be a founding member of this truly unique alliance and the significant projects that it portends.”

Alliance goals include growing Virginia exports by $1.6 billion, creating 14,000 trade-supported jobs in five years and increasing the number of companies enrolled in VEDP’s international trade programs.

For more information, visit

Economics professor Leslie Stratton weighs in on 12-month jobs report


Tuesday, Jan. 20, 2015The U.S. Department of Labor’s jobs report for December and 2014 as a whole revealed continued economic growth and signaled that employers plan to continue hiring. Will a wage increase follow?

Leslie Stratton, Ph.D., professor of economics in the VCU School of Business, discusses the latest report and what it means for workers.

What’s important about the jobs report? Can we expect more of the same? What does the report say about the state of the economy?

Overall the jobs report was very good news. The unemployment rate went down for the month and clearly fell significantly over the course of the year. Some of the decrease in the unemployment rate in December is the result of a decrease in the number of individuals in the labor force — which may mean that some of the unemployed quit looking (left the labor force). However, over the year as a whole, the labor force participation rate was quite stable, declining by 0.3 percentage points over the year and remaining flat from March through December. By comparison, in 2013 the labor force participation rate fell by 0.9 percentage points, raising more serious concerns about the nature of the decline in the unemployment rate in 2013.

Long-term unemployment is still high at 2.8 million but that is down by 1.1 million from last year. The fraction of unemployed who have been unemployed long term — more than 26 weeks — is still high at an average of 33.4 percent for the year, but that average was 37.6 percent in 2013 and 43.8 percent in 2011. In 2006 and 2007 the average was 17.6 percent and in 2000 it was 11.4 percent, so there is still room for improvement but the drop is substantial and significant. Of course it would be nice to know how these 1.1 million left the ranks of the unemployed — did they give up or retire or find a job? That information is not readily available. Interestingly, labor force participation rates for those 55 and over have been increasing, not decreasing, over time.

The information from the survey of employers more or less confirms these findings — employment is up. Not surprisingly, employment in health care and professional services rose, but so did employment in manufacturing — more so over 2014 than in 2013 — and construction. Public sector employment rose for the first time since 2008, though federal employment is still falling.

Average weekly hours are also rising, which should bode well for future hiring. Employers first tend to increase hours worked, and only after they see a persistent increase in demand hire more workers.

Can we expect wages to increase next?

The news on wages is not as good. Point estimates show wages fell in December but the change from October to December was still positive. Private sector production workers saw wage increases in December. However, as the labor market tightens, wages should rise. There was an article in the Money section of the Richmond Times-Dispatch this week about a trucking company in Chesterfield that has had to turn away business and increase wages significantly in order to hold on to and hire more workers. Another news article reported that Aetna insurance was raising worker wages. Increased demand for products will necessitate increased hiring and if the pool of unemployed and underemployed workers continues to shrink, wages will have to rise to attract more people into the labor force.

News that wages have not risen much may be a bit discouraging for workers, but is good news for firms in at least two ways. First, it means that firm costs are not rising as rapidly as they might and, second, it suggests that the Fed will not act as quickly to increase interest rates — the cost of borrowing money.

Rising wages could serve as an advance indicator of rising prices and hence inflation. With the unemployment rate approaching Fed target levels, the Fed is under increasing pressure to tighten the money supply to keep inflation at bay. In the face of stable wages, the Fed can maintain its current policy. However monetary policy takes a long time to affect price levels so the Fed will not want to delay action till after prices start rising.

What is the outlook for 2015 and beyond?

The key concern for 2015 is probably how the rest of the world is doing. There have been several headlines about how the U.S. will pull the rest of the world along, but honestly that is not possible long term. We need company. What happens in Europe and China and South America will affect how well our economy does in 2015.


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Thinking and Networking like ‘Freaks’ at 2014 Real Estate Trends Conference

Dubner offered conference guests advice on how to better digest business media
Stephen Dubner offered conference guests advice on how to better digest business media

It’s business alumnus Matt Ball’s second time at the VCU Real Estate Trends Conference. After last year’s iteration of the perennial conference which attracts real estate agents, brokers, analysts and experts, Ball said he found himself experiencing the conference in a different way this year.

“Getting to come here and network with people, that’s how a lot of people in the real estate program get jobs,” Ball said.

He found a job last year as a commercial real estate appraiser for Valbridge Property Advisors . The conference now holds a new value to Ball. This year, he said, he would enjoy the event as a patron wanting to learn more about the market he now works in professionally.

“I’m not coming here networking looking for a job, I’m handing out cards and making business connections. It’s sort of the same thing, but it’s totally different,” Ball said. “It feels great.”

Visiting this year’s 2014 Real Estate Trends Conference was Real Estate Research Corporation president and CEO Kenneth Riggs, Realogy Holding Corp. CEO Richard Smith and Freakonomics author and media personality Stephen Dubner.

Realogy Holdings Corp and CEO Smith own up to 28 percent of the American housing market
Realogy Holdings Corp. and CEO Smith own up to 28 percent of the current American housing market

Attempting to keep the event fresh, conference organizers opted to hold the first two sessions as discussions instead of the panel forum that’s been most common in previous years.

Offering an economic overview and discussion on housing trends during the two sessions, Economics department chair Dr. Carol Scotese and School of Business dean Ed Grier facilitated conversations between invited speakers, themselves and event guest.

You can read more about those discussions and Dubner’s keynote speech here.

Rho Epsilon president and Kornblau Real Estate program ambassador Steven Lindsay said this year’s event came together in a much faster fashion than usual. Despite last minute pressure building for organizers leading up to the event, Lindsay said the conference seemed to be better than previous years.

“The speakers seemed to resonate with the crowd and we got a lot of questions out of them,” Lindsay said about conference speakers.

For younger Rho Epsilon students, Lindsay said he was proud of his colleagues for effectively networking at the event. This year, the student honor society invited mentors to help students meet and speak with members of the business community in attendance.

McGuireWoods partner Gloria Freye has been involved as an event sponsor for nearly eight years. Working in the legal commercial and residential real estate field, Freye has been a partner at McGuireWoods for over 20 years. The Trends Conference, she said, provides one of the region’s best opportunities to interact with VCU, The Kornblau Institute and eager students.

Patrons were invited to e-mail questions in during the two sessions which would then be asked by Dean Grier
Patrons were invited to e-mail questions in during the two sessions which would then be asked by Dean Grier

“The funds that we raise support scholarships and programs for the students,” Freye said. “It also helps establish a huge network for those students to get to know the real estate professionals in the area and what their businesses are and see all the ways you can use an education in real estate and develop as a professional. It’s pretty diverse.”

At the conclusion of the 2014 trends conference, guests were given note-cards and t-shirts asking patrons to mark their calendars for next year. The 2015 Real Estate Trends Conference will be held on Oct. 22, 2015 at The Greater Richmond Convention Center.

– Article by Chris Suarez, student journalist

Economics professors conduct research about philanthropy and the “dictator game”


The dictator games

VCU economists awarded grant to study how “dictator” behavior can affect philanthropy

Wednesday, Oct. 29, 2014

Suppose that someone trustworthy gave you $20, paired you with an anonymous person, and then said, “You have three choices: You can give all $20 to this other person (who doesn’t know you exist), you can share some of it and keep some for yourself, or you can keep it all for yourself. It’s up to you.”

What do you think most people in this situation would do? More importantly, what do you think motivates their decisions?

Called a “dictator game,” because one player has all the power while the other is merely a passive “recipient,” this abstract and seemingly improbable scenario has long been used by economists to study the behaviors and preferences of decision-makers in a controlled setting.

And because it mirrors the power differential between philanthropists and charities, the dictator game is at the heart of research on philanthropy being conducted by three economists in the Virginia Commonwealth University School of Business.

To test the external validity of this research — that is, whether their lab results are reflected in naturally occurring environments — professors Edward Millner, Ph.D., and Laura Razzolini, Ph.D., and associate professor Oleg Korenok, Ph.D., have received a $17,500 Small Grant from the Science of Philanthropy Initiative, based at the University of Chicago and itself funded by a grant from The John Templeton Foundation.

The best way to understand what Millner, Razzolini and Korenok are doing today is to work your way up to it.

Start with someone else’s research: Years ago, a study compared matched donations, in which you give a dollar and another benefactor matches it, with subsidized donations, in which you give a dollar and another benefactor returns 50 cents to you. The results of that study showed that matched giving was greater than subsidized giving, which got Millner thinking about the dictator game and the question of whether matching and subsidies are equivalent in the dictator’s mind.

In particular, Millner was fascinated by what seemed like an odd result. In testing scenarios when the initial amounts, or “endowments,” held by the dictator and the recipient were equal, 25 percent of dictators behaved in ways that made the distribution unequal — to their apparent disadvantage. This suggested, and was consistent with, something economists call “warm-glow giving,” the positive emotional feeling people get from helping others, which Millner says he always thought was “hooey.”

“So then we conducted an experiment that tested if warm glow organizes the data well, and the answer is yes,” Millner said. “I’m a believer now. Warm glow works; it’s out there.”

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At this point, Millner and Razzolini began thinking about how to design the range of choices so that dictators, i.e., philanthropists, would give more. And it was the academic work of others that helped them do this.

Two similar studies began with a game in which the dictator was given $10 and told she could pass up to $5 to a recipient who had $5 already. The study then widened the dictator’s choices by allowing her to take the recipient’s $5. In the end, the average contribution fell when the option to take was available.

Many consider this result to be unexplainable and to violate the fundamental principles of economics, Millner said.

“We looked at it and said, ‘No, it really doesn’t,’” he recalled. “If warm glow matters … and the dictator views the payoff space not by what he or she can give but by the range of payoff possibilities that exist, then the taking option expands those payoff possibilities and it’s going to shift what the optimal behavior is. And if not taking is viewed as giving, then shifting that payoff space in favor of the dictator should reduce the payoff to the recipient.”

Millner, Razzolini and Korenok then tried to determine for themselves if not taking is the same as giving, thinking that, if it is, warm glow (also known as “impure altruism”) must explain the results. Their research produced a paper titled “Taking, Giving, and Impure Altruism in Dictator Games,” which was published in the September 2014 issue of the journal Experimental Economics.

What they found made things even more interesting: not taking is not the same as giving. Essentially, people take less than they give. In the context of the game, the recipient fared much better when the dictator was taking than when he was giving.

This result compelled Millner and Razzolini to wonder how their research might transfer to, and be useful in, the naturally occurring environments outside of their laboratories. Could a charity frame a donation as though you’ve already given the money and, thereby, put you in the position of having to take rather than give? Could this framing increase donations to a charity?


With the help of the Small Grant they have received from the Science of Philanthropy Initiative, Millner, Razzolini and Korenok hope to answer these questions by pursuing their research in three ways.

First, they will conduct new laboratory experiments that involve real charities rather than simulated, individual recipients. This testing will verify whether the move from person-to-person to person-to-charity makes any difference in the lab.

Second, they have partnered with PlanG, a Richmond-based company that facilitates and organizes individual philanthropy, to conduct a field experiment, funded in part by the Small Grant. In this experiment, PlanG’s website will, on a random basis, present users with differently framed options. In addition to the usual method of entering a desired donation, the site will show some users a suggested amount from which they must subtract to arrive at a preferred amount.

As Razzolini points out, she and Millner are not the first to introduce a suggested donation; the novelty of their approach is to force the user to decide to take something away. Millner and Razzolini hypothesize that this “taking” mechanism will generate greater contributions to charities than the “giving” one.

Finally, with a second experiment in the lab, Millner and Razzolini will try to answer a subtler question: Given the demonstrated difference between taking and giving, what is the strength of individual aversion to taking? How much will a dictator give up so that he doesn’t have to take?

“Our results are showing that taking aversion is prevalent and strong,” Millner said. “This is important for the philanthropy because, if I have this taking frame and someone doesn’t like it, they don’t have to play the game.”

The trick is finding a way to maximize taking aversion without turning people off. It is the sweet spot that the field experiment aims to define.

 “Do more people opt out of the taking frame than the giving frame?” Millner asked. “If they continue, do they in fact contribute more in the taking frame than the giving frame? What’s the net impact?”

The idea for this experiment began with a lucky meeting. Millner wanted a speaker for his MBA class, and that speaker ended up being one of PlanG’s founders, Melina Davis-Martin, a former VCU MBA student. Their conversations led to a collaboration that Millner embraces as a form of community engagement.

“I’m an academic person,” Millner explained, “so just determining whether or not warm glow exists in the lab I find to be an intellectually stimulating exercise. … [But] this is a new dimension. It’s really fun to do something that’s an extension of what I’m already doing and that takes it a step further. And with the university’s big push for community engagement, I’m happy to be able to do that in a way that dovetails with my own intellectual interests.”

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Why I Give – Erica Billingslea

Erica Billingslea

Erica Billingslea ’13 is a Virginia Commonwealth University School of Business alumna who earned her master’s degree in Economics. After graduating, Erica put her degree to work landing a position as an Investment Analyst for the Virginia Retirement System (VRS).

In the fall of 2013 and notably in her first year out of VCU, Erica made a pledge to the School of Business Annual Fund. She used installment giving to spread out her gift over several quarters enabling her to make a larger gift.


Why did you give?

I loved my time at VCU. It also just feels good to give back. I know that my education was made possible through the generosity of the alumni who came before me. So it’s important for me to give back and pay it forward so the incoming class can benefit like I did.

What experiences at VCU helped inspire your philanthropy?

I think the difference between undergraduate and graduate is that with my graduate degree, I knew what I wanted to do in my career. Both Darlene Ward in Career Services and economics professor Dr. Ed Millner were helping me achieve my goals for my education and career path. We laid out a plan for what I wanted to do with my degree and they offered to make connections to help me get there. I was able to land internships at firms that didn’t normally accept interns, which led to a natural transition to the VRS after graduation.

I also participated in the Ram to Ram mentoring program and I’m still in contact with my mentor even after graduating. I think that’s a wonderful program and great resource, but not enough students take advantage of it.

Both of these experiences helped to build and strengthen my connection to the school, and to know that I had individuals at the school who were committed to me and advancing my career.

What advice do you have for current students or other recent graduates?

The faculty are there for you, and they’re willing to go to bat for you. Take advantage of all of the resources that VCU and the School of Business have to offer. Know what you want, go for what you want, and engage others to help when needed.

And most importantly, give back! Installment giving is a painless way to give.


Read about previously featured friends and alumni:

Trish and Jon Hill

John Chilton on the Scottish independence outcome


Professor discusses betting markets vs. polls in predicting Scottish independence outcome

Tuesday, Sept. 23, 2014

After the historic Scottish independence vote on Sept. 18, the United Kingdom remains united, but many issues and questions remain. Before the vote, nationalists in favor of independence were certain they would win, while unionists against it were fearful they could lose. So what happened?

John Chilton, professor of economics in the Virginia Commonwealth University School of Business, has an interesting take. His research interests include voting, pre-election polls and election betting markets. He notes that the betting markets outperformed the Scottish polls perhaps because people do not always respond truthfully to pre-election polls. Also, he says, promises made by U.K. Prime Minister David Cameron may have shifted many votes from “Yes” to “No.”

Chilton recently discussed his take on the vote.

Why were the nationalists so confident that they would win? Did that notion have any validity at one point?

I don’t know. I can speculate. It’s common for insiders to a campaign to express more confidence than the evidence they have in hand would suggest. You want to convey the message that you will win if only your supporters turn out to vote. It’s cheap talk, but to not overtly express confidence is to reveal you believe you’re sure to lose.

Can you explain how betting markets work and how they differ from polls?

Pre-election polls provide a snapshot of voters’ intentions, asking, “If the election was today would you vote and how would you vote?” These polls may be an accurate reflection of current intentions, but intentions can change. That’s part of their appeal, giving political races a feel of a horse race. In betting markets, players want to use all information available to forecast the outcome they are betting on. Whenever the current betting odds are out of line with forecasts the smart money moves in and as it does so the odds come into line with the forecast. Polls are information that goes into making a forecast, but not the only piece of information. Bettors may be incorporating future economic conditions that transpire before the election and may affect how people vote. In the Scottish case, the bettors would have had good reason to anticipate Prime Minister Cameron would make concessions if it appeared secession had a chance.

Another example relevant to Scotland are “shy Torys.” The journalist and election forecaster Nate Silver suggested “shy Torys” could be why the polls were so different from the outcome. Scotland is heavily Labour and so Torys may be reluctant to reveal themselves to a pollster. Poll results aren’t adjusted for this possibility, but that correction can and will be reflected in betting markets. The same effect is seen in the U.S. where it appears some white voters are shy to reveal they will not vote for an African-American candidate.

What did the betting markets predict in this specific case?

The economist Justin Wolfers took a look. He reports the market for betting on who would win gave “No” an 80 percent chance of winning. In the market for winning margin, a four-point win for “No” was most likely. Eighty percent isn’t an expression of certainty, but the markets clearly outperformed the polls that were saying it was neck-and-neck and the margin would be very close.

Why do people not respond honestly to anonymous polls?

First, you never know if it is anonymous. The caller may be from a campaign and you may believe what you say will be revealed. Second, people may feel ashamed that their view is looked down upon and that shame is present even when stated anonymously. Third, voters may use polls to decide how to vote — for example, to determine whether the election is close and they should turn out on Election Day. In that case, you may be happy to mislead the pollster, and the public.

Finally, in the Scottish case, voters may have replied to pollsters with their heart and voted with their head. You could say they were of two minds, which is not an act of dishonesty, simply part of the human condition.

You’ve mentioned that Prime Minister Cameron’s last-minute promises to give Scotland greater freedom may have swayed many people to vote “No.” Why do you think the “Yes” voters may have achieved their aims even though the vote for independence failed?

It is a mistake to think the desire for independence was due solely to “Braveheart” or North Sea oil. Scotland is a Labour stronghold. The majority of Scots prefer a more liberal government than the Conservatives in power. It’s underappreciated that the status quo in the UK is that the government is more highly centralized than in other developed countries. As a consequence, if a majority in a region like Scotland holds preferences about the size and role of government at odds with the U.K. majority, that creates a desire for local autonomy. The Scots want to see greater income redistribution and a reversal of decisions made by Conservative governments going back at least as far as Thatcher to shrink the welfare state and privatize state industry. The devolution of powers promised by Cameron would allow Scots to take steps in that direction.

What would you like to add?

A major post-election survey of the Scottish vote for independence reveals the electorate wasn’t convinced either side knew how independence would work out. There was great uncertainty. Many voters appeared to have concluded that taking a risk on “Yes” wasn’t worth it, especially once Cameron made concessions. There’s evidence that in the finance literature that women make better and more cautious investment decisions. A majority of men and women voted “No,” but the women’s “No” vote was stronger. The post-election survey also shows the likely targets of greater taxation voted “No.” And older voters who voted “No” were particularly concerned with how independence would affect the National Health Service and other programs that benefit older voters.

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