American Economic Association Nashville, TN 0002-8282 American Economic Review http://www.aeaweb.org/aer/ 101 3 May 2011 http://www.aeaweb.org/issue.php?journal=AER&volume=101&issue=3 Proceedings Minutes of the Meeting of the Executive Committee: Denver, CO, January 6, 2011 John J.SiegfriedVanderbilt U 677 83 http://www.aeaweb.org/articles.php?doi=10.1257/aer.101.3.677 10.1257/aer.101.3.677 American Economic Association Nashville, TN 0002-8282 American Economic Review http://www.aeaweb.org/aer/ 101 3 May 2011 http://www.aeaweb.org/issue.php?journal=AER&volume=101&issue=3 Proceedings Minutes of the Meeting of the Executive Committee: Chicago, IL, April 23, 2010 John J.SiegfriedVanderbilt U 669 76 http://www.aeaweb.org/articles.php?doi=10.1257/aer.101.3.669 10.1257/aer.101.3.669 American Economic Association Nashville, TN 0002-8282 American Economic Review http://www.aeaweb.org/aer/ 101 3 May 2011 http://www.aeaweb.org/issue.php?journal=AER&volume=101&issue=3 Proceedings Minutes of the Annual Meeting: Denver, CO, January 8, 2011 John J.SiegfriedVanderbilt U 653 54 http://www.aeaweb.org/articles.php?doi=10.1257/aer.101.3.653 10.1257/aer.101.3.653 American Economic Association Nashville, TN 0002-8282 American Economic Review http://www.aeaweb.org/aer/ 101 3 May 2011 http://www.aeaweb.org/issue.php?journal=AER&volume=101&issue=3 Proceedings Report of the Secretary for 2010 John J.SiegfriedVanderbilt U 655 58 http://www.aeaweb.org/articles.php?doi=10.1257/aer.101.3.655 10.1257/aer.101.3.655 American Economic Association Nashville, TN 0002-8282 American Economic Review http://www.aeaweb.org/aer/ 101 3 May 2011 http://www.aeaweb.org/issue.php?journal=AER&volume=101&issue=3 Proceedings Report of the Treasurer John J.SiegfriedVanderbilt U 659 63 http://www.aeaweb.org/articles.php?doi=10.1257/aer.101.3.659 10.1257/aer.101.3.659 American Economic Association Nashville, TN 0002-8282 American Economic Review http://www.aeaweb.org/aer/ 101 3 May 2011 http://www.aeaweb.org/issue.php?journal=AER&volume=101&issue=3 Proceedings American Economic Association Universal Academic Questionnaire Summary Statistics Charles E.ScottLoyola U MD John J.SiegfriedVanderbilt U 664 67 http://www.aeaweb.org/articles.php?doi=10.1257/aer.101.3.664 10.1257/aer.101.3.664 American Economic Association Nashville, TN 0002-8282 American Economic Review http://www.aeaweb.org/aer/ 101 3 May 2011 http://www.aeaweb.org/issue.php?journal=AER&volume=101&issue=3 Papers International Migration and Gender Discrimination among Children Left Behind Francisca M.AntmanU CO 645 49 This paper considers how international migration of the head of household affects the allocation of resources toward boys relative to girls within households remaining in the home country. I address the endogeneity of migration with a differences-in-differences style regression model that compares those households in which migrants have already returned home with those in which migrants are still away. The evidence suggests that while the head of household is away a greater fraction of resources are spent on girls relative to boys, but upon his return, this pattern is reversed. http://www.aeaweb.org/articles.php?doi=10.1257/aer.101.3.645 10.1257/aer.101.3.645 American Economic Association Nashville, TN 0002-8282 American Economic Review http://www.aeaweb.org/aer/ 101 3 May 2011 http://www.aeaweb.org/issue.php?journal=AER&volume=101&issue=3 Papers Have Gender Gaps in Insurance Coverage and Access to Care Narrowed under Health Reform? Findings from Massachusetts Sharon K.LongU MN KarenStockleyUrban Institute ShannaShulmanBlue Cross Blue Shield of MA Foundation, Boston, MA 640 44 Under its health reform legislation, Massachusetts has achieved near universal insurance coverage, along with significant gains in health care access and affordability. This paper examines the impacts of health reform in Massachusetts on differences in coverage, access, and affordability for women and men. We find that both women and men gained under health reform, with the gender gap in insurance coverage narrowed as men's coverage increased relative to that of women. However, the gaps in access and affordability of care have not narrowed--women in Massachusetts continue to report more unmet need for care and problems affording care than men. http://www.aeaweb.org/articles.php?doi=10.1257/aer.101.3.640 10.1257/aer.101.3.640 American Economic Association Nashville, TN 0002-8282 American Economic Review http://www.aeaweb.org/aer/ 101 3 May 2011 http://www.aeaweb.org/issue.php?journal=AER&volume=101&issue=3 Papers Chipping Away at the Glass Ceiling: Gender Spillovers in Corporate Leadership David A.MatsaNorthwestern U Amalia R.MillerU VA and RAND Corporation 635 39 This paper examines the role of women helping women in corporate America. Using a merged panel of directors and executives for large US corporations between 1997 and 2009, we find a positive association between the female share of the board of directors in the previous year and the female share among current top executives. The relationship's timing suggests that causality runs from boards to managers and not the reverse. This pattern of women helping women at the highest levels of firm leadership highlights the continued importance of a demand-side "glass ceiling" in explaining the slow progress of women in business. http://www.aeaweb.org/articles.php?doi=10.1257/aer.101.3.635 10.1257/aer.101.3.635 American Economic Association Nashville, TN 0002-8282 American Economic Review http://www.aeaweb.org/aer/ 101 3 May 2011 http://www.aeaweb.org/issue.php?journal=AER&volume=101&issue=3 Papers Compensating Differentials for Sexual Harassment JoniHerschVanderbilt U 630 34 Workplace sexual harassment is illegal, but many workers report that they have been sexually harassed. Exposure to the risk of sexual harassment may decrease productivity, which would reduce wages. Alternatively, workers may receive a compensating differential for exposure to sexual harassment, which would increase wages. Data on claims of sexual harassment filed with the Equal Employment Opportunity Commission are used to calculate the first measures of sexual harassment risks by industry, age group, and sex. Female workers face far higher sexual harassment risks. On balance, workers receive a compensating wage differential for exposure to the risk of sexual harassment. http://www.aeaweb.org/articles.php?doi=10.1257/aer.101.3.630 10.1257/aer.101.3.630 American Economic Association Nashville, TN 0002-8282 American Economic Review http://www.aeaweb.org/aer/ 101 3 May 2011 http://www.aeaweb.org/issue.php?journal=AER&volume=101&issue=3 Papers Estimating the Willingness to Pay to Avoid Violent Crime: A Dynamic Approach Kelly C.BishopWashington U in St Louis Alvin D.MurphyWashington U in St Louis 625 29 The hedonic model, which has been used extensively in the Environmental, Urban, and Real Estate literatures, allows for the estimation of the implicit prices of housing and neighborhood attributes, as well as households' demand for these non-marketed amenities. A recognized drawback of the existing hedonic literature is that the models assume a myopic decision-maker. In this paper, we estimate a dynamic hedonic model and find that the average household is willing to pay $472 per year for a ten percent reduction in violent crime. In addition, we find that the traditional, myopic model suffers from a 21 percent negative bias. http://www.aeaweb.org/articles.php?doi=10.1257/aer.101.3.625 10.1257/aer.101.3.625 American Economic Association Nashville, TN 0002-8282 American Economic Review http://www.aeaweb.org/aer/ 101 3 May 2011 http://www.aeaweb.org/issue.php?journal=AER&volume=101&issue=3 Papers House Prices and Marital Stability MartinFarnhamU Victoria LucieSchmidtWilliams College PurviSevakHunter College, CUNY 615 19 We investigate the effect of house price changes on divorce using data for 1991-2010 from the Current Population Survey and the Federal Housing Finance Agency. Our findings suggest that changing house prices significantly affect the share of a cohort that is divorced, and that these effects are asymmetric with respect to housing gains versus losses. In addition, we find differential effects for groups that are more likely to be homeowners versus renters. Some of this evidence is consistent with homeowners being locked into their homes--and hence marriages--by increased transactions costs in down markets. http://www.aeaweb.org/articles.php?doi=10.1257/aer.101.3.615 10.1257/aer.101.3.615 American Economic Association Nashville, TN 0002-8282 American Economic Review http://www.aeaweb.org/aer/ 101 3 May 2011 http://www.aeaweb.org/issue.php?journal=AER&volume=101&issue=3 Papers Hazardous Waste Cleanup, Neighborhood Gentrification, and Environmental Justice: Evidence from Restricted Access Census Block Data ShantiGamper-RabindranU Pittsburgh ChristopherTimminsDuke U 620 24 We test for residential sorting and changes in neighborhood characteristics in response to the cleanup of hazardous waste sites using restricted access fine-geographical-resolution block data. We examine changes between 1990 and 2000 in blocks within 5km of sites that are proposed to the National Priority List that fall in a narrow interval of Hazardous Ranking Scores, comparing blocks near sites that were cleaned with those near sites that were not. Cleanup leads to increases in population density and housing unit density; increases in mean household income and shares of college-educated; but also to increases in the shares of minorities. http://www.aeaweb.org/articles.php?doi=10.1257/aer.101.3.620 10.1257/aer.101.3.620 American Economic Association Nashville, TN 0002-8282 American Economic Review http://www.aeaweb.org/aer/ 101 3 May 2011 http://www.aeaweb.org/issue.php?journal=AER&volume=101&issue=3 Papers Owner-Occupied Housing: Life-Cycle Implications for the Household Portfolio MarjorieFlavinU CA, San Diego TakashiYamashitaNova Southeastern U 609 14 The paper constructs a model of optimal portfolio allocation incorporating the role of housing as collateral. Current house value is a state variable in the portfolio decision due to a nonconvex adjustment cost. Holding risk aversion constant, the percentage of the portfolio held in stocks is decreasing in the ratio of house value to net wealth; thus an older household with a lower ratio of house value to net wealth will generally hold more its portfolio in stocks than younger households. Empirical results using the Survey of Consumer Finances confirm the quantitative and statistical significance of the housing state variable. http://www.aeaweb.org/articles.php?doi=10.1257/aer.101.3.609 10.1257/aer.101.3.609 http://www.aeaweb.org/aer/data/may2011/P2011_4593_data.zip American Economic Association Nashville, TN 0002-8282 American Economic Review http://www.aeaweb.org/aer/ 101 3 May 2011 http://www.aeaweb.org/issue.php?journal=AER&volume=101&issue=3 Papers Tracking Intergenerational Progress for Immigrant Groups: The Problem of Ethnic Attrition BrianDuncanU CO, Denver Stephen J.TrejoU TX 603 08 In tracking the later-generation descendants of immigrants, measurement biases can arise from "ethnic attrition" (e.g., US-born individuals who do not self-identify as Mexican despite having ancestors who immigrated from Mexico). We present evidence that such ethnic attrition is sizeable and selective for the third-generation populations of key Hispanic and Asian immigrant groups. In addition, our results suggest that ethnic attrition generates biases that vary across national origin groups in direction as well as magnitude, and that correcting for these biases will raise the socioeconomic standing of the US-born descendants of most Hispanic immigrants relative to their Asian counterparts. http://www.aeaweb.org/articles.php?doi=10.1257/aer.101.3.603 10.1257/aer.101.3.603 American Economic Association Nashville, TN 0002-8282 American Economic Review http://www.aeaweb.org/aer/ 101 3 May 2011 http://www.aeaweb.org/issue.php?journal=AER&volume=101&issue=3 Papers Estimating the Ex Ante Expected Returns to College Andrew J.HusseyU Memphis Omari H.SwintonHoward U 598 602 Rather than estimating the returns to obtaining a college degree, this paper treats the college education decision as an uncertain investment involving varying likelihoods of successful graduation. We predict earnings conditional on both graduating and not graduating from both selective and non-selective institutions, and incorporate estimated individual-specific graduation rates in calculating the ex ante expected returns from college attendance for individuals across the ability distribution. Our results suggest that, especially for lower ability students, ex ante returns may differ substantially from typical estimates of the returns to a college degree, and typical estimates of the selectivity premium may be underestimated. http://www.aeaweb.org/articles.php?doi=10.1257/aer.101.3.598 10.1257/aer.101.3.598 American Economic Association Nashville, TN 0002-8282 American Economic Review http://www.aeaweb.org/aer/ 101 3 May 2011 http://www.aeaweb.org/issue.php?journal=AER&volume=101&issue=3 Papers Does Mestizaje Matter in the US? Economic Stratification of Mexican Immigrants AlbertoDavilaU TX-Pan American Marie T.MoraU TX-Pan American Sue K.StocklyEastern NM U 593 97 Using data from the 2003 New Immigrant Survey, this paper examines whether stratification as reflected by skin shade exists among newly legalized Mexican immigrants in the US. While we do not find evidence that skin color directly related to employment probabilities, complexion appeared to play a role in the likelihood of owning a home, having a bank account, and occupational status. As these outcomes partly reflect immigrants' pre-migration experiences, our findings suggest that the social stratification structure in Mexico might be sustained in the US among Mexican-origin populations. http://www.aeaweb.org/articles.php?doi=10.1257/aer.101.3.593 10.1257/aer.101.3.593 American Economic Association Nashville, TN 0002-8282 American Economic Review http://www.aeaweb.org/aer/ 101 3 May 2011 http://www.aeaweb.org/issue.php?journal=AER&volume=101&issue=3 Papers Applying Fixed Effects to Hierarchical Segregation Models DinaShatnawiNaval Postgraduate School, Monterey, CA RonaldOaxacaU AZ MichaelRansomBrigham Young U 588 92 This paper expands the empirical implementation of hierarchical segregation models to allow for the use of panel methods. We use firm level data collected between 1977 and 1985 from a regional grocery store that faced a title VII class-action lawsuit over gender discrimination much the same as Wal-Mart and Costco. Special problems arise in implementing decompositions in a fixed effects and random effects setting, especially when analyzing wage-level differences. We develop a variation of wage decompositions that takes into consideration an unbalanced design and extends the literature by explicitly formalizing the inclusion of the unobserved heterogeneous effects. http://www.aeaweb.org/articles.php?doi=10.1257/aer.101.3.588 10.1257/aer.101.3.588 American Economic Association Nashville, TN 0002-8282 American Economic Review http://www.aeaweb.org/aer/ 101 3 May 2011 http://www.aeaweb.org/issue.php?journal=AER&volume=101&issue=3 Papers Remittances and Income Smoothing CatalinaAmuedo-DorantesSan Diego State U SusanPozoWestern MI U 582 87 Due to inadequate savings and binding borrowing constraints, income volatility can make households in developing countries particularly susceptible to economic hardship. We examine the role of remittances in either alleviating or increasing household income volatility using Mexican household level data over the 2000 through 2008 period. We correct for reverse causality and endogeneity and find that while income smoothing does not appear to be the main motive for sending remittances in a non-negligible share of households, remittances do indeed smooth household income on average. Other variables surrounding income volatility are also considered and evaluated. http://www.aeaweb.org/articles.php?doi=10.1257/aer.101.3.582 10.1257/aer.101.3.582 http://www.aeaweb.org/aer/data/may2011/P2011_4588_data.zip http://www.aeaweb.org/aer/data/may2011/P2011_4588_app.pdf American Economic Association Nashville, TN 0002-8282 American Economic Review http://www.aeaweb.org/aer/ 101 3 May 2011 http://www.aeaweb.org/issue.php?journal=AER&volume=101&issue=3 Papers Global Financial Crisis and Africa: Is the Impact Permanent or Transitory? Time Series Evidence from North Africa Hassan Y.AlyOH State U and African Development Bank Mark C.StrazicichAppalachian State U 577 81 We utilize time series tests with structural breaks to test for an adverse impact on economic growth rates in North Africa associated with the recent US financial crisis and global recession. One or two breaks are identified for each country, except for Morocco where no break is found, while breaks coincide with the 2008 financial crisis in only two of the six countries (Libya and Mauritania). These findings suggest that, in general, shocks from the recent financial crisis have only temporary effects on economic growth in these countries. Impulse response functions with breaks confirm these results. We conclude by suggesting explanations for these findings. http://www.aeaweb.org/articles.php?doi=10.1257/aer.101.3.577 10.1257/aer.101.3.577 American Economic Association Nashville, TN 0002-8282 American Economic Review http://www.aeaweb.org/aer/ 101 3 May 2011 http://www.aeaweb.org/issue.php?journal=AER&volume=101&issue=3 Papers The Impact of the Transatlantic Slave Trade on Ethnic Stratification in Africa WarrenWhatleyU MI RobGillezeauU MI 571 76 In the last 15 years, economists and economic historians have argued that Africa has undergone a "reversal of fortune" and that ethnic fragmentation is a significant cause of Africa's underdevelopment. In this article, we join these narratives by arguing that the transatlantic slave trade increased the degree of ethnic heterogeneity in Africa today. Using both correlational and causal instrumental variables analysis, we find an economically and statistically significant positive relationship between slave exports and ethnic heterogeneity. This relationship is robust to changes in the scheme for drawing ethnic boundaries and the choice of observational unit. http://www.aeaweb.org/articles.php?doi=10.1257/aer.101.3.571 10.1257/aer.101.3.571 http://www.aeaweb.org/aer/data/may2011/P2011_4586_app.pdf American Economic Association Nashville, TN 0002-8282 American Economic Review http://www.aeaweb.org/aer/ 101 3 May 2011 http://www.aeaweb.org/issue.php?journal=AER&volume=101&issue=3 Papers Real Wage Index Numbers JohnPencavelStanford U 565 70 Real wage index numbers have been used to measure movements in the standard of living of the typical worker. This paper describes some of these indicators for the United States and England. A new real wage index is proposed that resembles the sliding scale used to adjust wages in certain industries years ago. This new index is applied to US manufacturing industry and it implies a fall in real wages by about 40 percent since 1960. Workers' distributional position in US manufacturing has deteriorated considerably. http://www.aeaweb.org/articles.php?doi=10.1257/aer.101.3.565 10.1257/aer.101.3.565 American Economic Association Nashville, TN 0002-8282 American Economic Review http://www.aeaweb.org/aer/ 101 3 May 2011 http://www.aeaweb.org/issue.php?journal=AER&volume=101&issue=3 Papers The Lerner Index of Monopoly Power: Origins and Uses Kenneth G.ElzingaU VA David E.MillsU VA 558 64 Abba Lerner's paper in the Review of Economic Studies (1934) is the source of what is now referred to as the Lerner Index of monopoly power. The Lerner Index has become the standard measure of monopoly power and one of the most widely cited indexes in the discipline of economics. This paper traces the origins of the index, sets out its strengths and weaknesses, and examines its role in antitrust enforcement. The Index is a better indicator of a firm's price-setting discretion than its ability to sustain monopoly prices. http://www.aeaweb.org/articles.php?doi=10.1257/aer.101.3.558 10.1257/aer.101.3.558 http://www.aeaweb.org/aer/data/may2011/P2011_3478_app.pdf American Economic Association Nashville, TN 0002-8282 American Economic Review http://www.aeaweb.org/aer/ 101 3 May 2011 http://www.aeaweb.org/issue.php?journal=AER&volume=101&issue=3 Papers Origins of the Unemployment Rate: The Lasting Legacy of Measurement without Theory DavidCardU CA, Berkeley 552 57 The modern definition of unemployment emerged in the late 1930s from research conducted at the Works Progress Administration and the Census Bureau. According to this definition, people who are not working but actively searching for work are counted as unemployed. This concept was first used in the Enumerative Check Census, a follow-up sample for the 1937 Census of Unemployment, and continued with the Monthly Report on the Labor Force survey, begun in December 1939 by the Works Progress Administration. A similar definition is now used to measure unemployment around the world. http://www.aeaweb.org/articles.php?doi=10.1257/aer.101.3.552 10.1257/aer.101.3.552 American Economic Association Nashville, TN 0002-8282 American Economic Review http://www.aeaweb.org/aer/ 101 3 May 2011 http://www.aeaweb.org/issue.php?journal=AER&volume=101&issue=3 Papers Flexible Estimation of Treatment Effect Parameters ThomasMaCurdyStanford U XiaohongChenYale U HanHongStanford U 544 51 A variety of identification strategies have a common cell structure, in which the observed heterogeneity of the regression defines a partition of the sample into cells. Typically in the presence of exogenous covariates that define the cell structure, identification assumptions are imposed conditional on each value of the covariate, or cell by cell. Treatment effects across cells are typically heterogeneous. Researchers might be interested in unconditional parameters which are the averaged treatment effects across the cells. Alternatively, treatment effects can be estimated more efficiently if researchers are willing to impose additional parametric and semiparametric structures on the heterogeneous treatment effects across cells. http://www.aeaweb.org/articles.php?doi=10.1257/aer.101.3.544 10.1257/aer.101.3.544 American Economic Association Nashville, TN 0002-8282 American Economic Review http://www.aeaweb.org/aer/ 101 3 May 2011 http://www.aeaweb.org/issue.php?journal=AER&volume=101&issue=3 Papers Oaxaca-Blinder as a Reweighting Estimator PatrickKlineU CA, Berkeley 532 37 The classic regression based estimator of counterfactual means studied by Ronald Oaxaca (1973) and Alan Blinder (1973) is shown to constitute a propensity score reweighting estimator based upon a linear model for the conditional odds of being treated. http://www.aeaweb.org/articles.php?doi=10.1257/aer.101.3.532 10.1257/aer.101.3.532 http://www.aeaweb.org/aer/data/may2011/P2011_3474_data.zip American Economic Association Nashville, TN 0002-8282 American Economic Review http://www.aeaweb.org/aer/ 101 3 May 2011 http://www.aeaweb.org/issue.php?journal=AER&volume=101&issue=3 Papers Robustness to Parametric Assumptions in Missing Data Models Bryan S.GrahamNYU KeisukeHiranoU AZ 538 43 We consider estimation of population averages when data are missing at random. If some cells contain few observations, there can be substantial gains from imposing parametric restrictions on the cell means, but there is also a danger of misspecification. We develop a simple empirical Bayes estimator, which combines parametric and unadjusted estimates of cell means in a data-driven way. We also consider ways to use knowledge of the form of the propensity score to increase robustness. We develop an empirical Bayes extension of a double robust estimator. In a small simulation study, the empirical Bayes estimators perform well. They are similar to fully nonparametric methods and robust to misspecification when cells are moderate to large in size, and when cells are small they maintain the benefits of parametric methods and can have lower sampling variance. http://www.aeaweb.org/articles.php?doi=10.1257/aer.101.3.538 10.1257/aer.101.3.538 American Economic Association Nashville, TN 0002-8282 American Economic Review http://www.aeaweb.org/aer/ 101 3 May 2011 http://www.aeaweb.org/issue.php?journal=AER&volume=101&issue=3 Papers Learn English, Not the Local Language! Ethnic Russians in the Baltic States OttToometTartu U 526 31 This paper analyzes the return to dominant language fluency for ethnic Russians in the Baltic States. We look at male workers using Estonian Labor Force Survey for years 2000-2010 and the 1998 wave of a panel of high-school graduates of 1982. The results indicate that the ethnic Russian men enjoy little income premium on their skills of the dominant language. We identify positive returns only in the low end of the income distribution and in public administration sector. Surprisingly, the returns to English fluency are far larger. These outcomes point toward segregation and discrimination at the upper-end hiring. http://www.aeaweb.org/articles.php?doi=10.1257/aer.101.3.526 10.1257/aer.101.3.526 American Economic Association Nashville, TN 0002-8282 American Economic Review http://www.aeaweb.org/aer/ 101 3 May 2011 http://www.aeaweb.org/issue.php?journal=AER&volume=101&issue=3 Papers Gender Gap in Performance under Competitive Pressure: Admissions to Czech Universities StepanJurajdaCERGE-EI, Prague DanielMunichCERGE-EI, Prague 514 18 Do women perform worse than equally able men in stressful competitive settings? We ask this question for competitions with a high payoff--admissions to tuition-free selective universities. With data on an entire cohort of Czech students graduating from secondary schools and applying to universities, we show that, compared to men of similar general skills and subject-of-study preferences, women perform similarly well when competition is less intense, but perform substantially worse (are less likely to be admitted) when applying to very selective universities. http://www.aeaweb.org/articles.php?doi=10.1257/aer.101.3.514 10.1257/aer.101.3.514 American Economic Association Nashville, TN 0002-8282 American Economic Review http://www.aeaweb.org/aer/ 101 3 May 2011 http://www.aeaweb.org/issue.php?journal=AER&volume=101&issue=3 Papers The Roma/Non-Roma Test Score Gap in Hungary GaborKertesiInstitute of Economics, Hungarian Academy of Sciences GaborKezdiCentral European U, Budapest and IEHAS 519 25 This paper documents and decomposes the test score gap between Roma and non-Roma 8th graders in Hungary in 2006. Our data connect national standardized test scores to an individual panel survey with detailed data on ethnicity and family background. The test score gap is approximately one standard deviation for both reading and mathematics, which is similar to the gap between African-American and White students of the same age group in the US in the 1980s. After accounting for on health, parenting, school fixed effects and family background, the gap disappears in reading and drops to 0.15 standard deviation in mathematics. http://www.aeaweb.org/articles.php?doi=10.1257/aer.101.3.519 10.1257/aer.101.3.519 http://www.aeaweb.org/aer/data/may2011/P2011_3472_app.pdf American Economic Association Nashville, TN 0002-8282 American Economic Review http://www.aeaweb.org/aer/ 101 3 May 2011 http://www.aeaweb.org/issue.php?journal=AER&volume=101&issue=3 Papers Social Preferences and Fairness Norms as Informal Institutions: Experimental Evidence PamelaJakielaWashington U in St Louis 509 13 We conduct a series of dictator games in which the status of the dictator relative to other players varies across treatments. Experiments are conducted in a conventional university lab and in villages in rural Kenya. We find that status is an important determinant of dictator game giving, but the relative importance of earned and unearned status differs across cultures. http://www.aeaweb.org/articles.php?doi=10.1257/aer.101.3.509 10.1257/aer.101.3.509 http://www.aeaweb.org/aer/data/may2011/P2011_3470_app.pdf American Economic Association Nashville, TN 0002-8282 American Economic Review http://www.aeaweb.org/aer/ 101 3 May 2011 http://www.aeaweb.org/issue.php?journal=AER&volume=101&issue=3 Papers The Weight of History on European Cultural Integration: A Gravity Approach PaulineGrosjeanU San Francisco 504 08 The cultural gravity model proposed in this paper uses micro-level survey data of 21,000 households to estimate the contribution to cultural heterogeneity of a long history of division between the Ottoman, Habsburg, Russian or Prussian Empires since the year 1300 in 21 European countries. By exploiting the variation in the duration of integration of localities in different empires, this paper sheds light on the influence of political integration on cultural integration and on the rate of cultural change. History matters and cultural values change very slowly: long lasting effects on social trust comes after 400 years of common imperial rule. http://www.aeaweb.org/articles.php?doi=10.1257/aer.101.3.504 10.1257/aer.101.3.504 American Economic Association Nashville, TN 0002-8282 American Economic Review http://www.aeaweb.org/aer/ 101 3 May 2011 http://www.aeaweb.org/issue.php?journal=AER&volume=101&issue=3 Papers Fertility and the Plough AlbertoAlesinaHarvard U PaolaGiulianoUCLA NathanNunnHarvard U 499 503 This paper provides evidence that the form of agriculture traditionally practiced--intensive plough agriculture versus shifting hoe agriculture--affected historic norms and preferences about fertility, and that these norms persist, affecting observed fertility around the world today. http://www.aeaweb.org/articles.php?doi=10.1257/aer.101.3.499 10.1257/aer.101.3.499 American Economic Association Nashville, TN 0002-8282 American Economic Review http://www.aeaweb.org/aer/ 101 3 May 2011 http://www.aeaweb.org/issue.php?journal=AER&volume=101&issue=3 Papers Which Dimensions of Culture Matter for Long-Run Growth? YuriyGorodnichenkoU CA, Berkeley GerardRolandU CA, Berkeley 492 98 We present empirical evidence that, among a variety of cultural dimensions, the individualism-collectivism dimension, based on Hofstede's (2001) data, is the most important and robustly significant effect of culture on long run growth. Other dimensions that have a significant effect, albeit less robust, are generally strongly correlated with individualism and convey similar information. We found no significant or robust effect on growth from cultural dimensions that are independent from the individualism-collectivism cleavage. http://www.aeaweb.org/articles.php?doi=10.1257/aer.101.3.492 10.1257/aer.101.3.492 American Economic Association Nashville, TN 0002-8282 American Economic Review http://www.aeaweb.org/aer/ 101 3 May 2011 http://www.aeaweb.org/issue.php?journal=AER&volume=101&issue=3 Papers A Labor Supply Elasticity Accord? LarsLjungqvistStockholm School of Economics Thomas J.SargentNYU 487 91 A dispute about the size of the aggregate labor supply elasticity has been fortified by a contentious aggregation theory used by real business cycle theorists. The replacement of that aggregation theory with one more congenial to microeconomic observations opens possibilities for an accord about the aggregate labor supply elasticity. The new aggregation theory drops features to which empirical microeconomists objected and replaces them with life-cycle choices. Whether the new aggregation theory ultimately indicates a small or large macro labor supply elasticity will depend on how shocks and government institutions interact to put workers at interior solutions for career length. http://www.aeaweb.org/articles.php?doi=10.1257/aer.101.3.487 10.1257/aer.101.3.487 American Economic Association Nashville, TN 0002-8282 American Economic Review http://www.aeaweb.org/aer/ 101 3 May 2011 http://www.aeaweb.org/issue.php?journal=AER&volume=101&issue=3 Papers Labor Supply and the Extensive Margin RichardBlundellU College London and IFS, London AntoineBozioU College London and IFS, London GuyLaroqueU College London and IFS, London 482 86 In this paper we propose a systematic way of examining the importance of the extensive and the intensive margins of labor supply in order to explain the overall movements in total hours of work over time. We show how informative bounds can be developed on each of these margins. We apply this analysis to the evolution of hours of work in the US, the UK, and France and show that both the extensive and intensive margins matter in explaining changes in total hours. http://www.aeaweb.org/articles.php?doi=10.1257/aer.101.3.482 10.1257/aer.101.3.482 http://www.aeaweb.org/aer/data/may2011/P2011_3465_app.pdf American Economic Association Nashville, TN 0002-8282 American Economic Review http://www.aeaweb.org/aer/ 101 3 May 2011 http://www.aeaweb.org/issue.php?journal=AER&volume=101&issue=3 Papers Interpreting Labor Supply Regressions in a Model of Full- and Part-Time Work YongsungChangU Rochester and Yonsei U Sun-BinKimYonsei U KyoohoKwonU Rochester RichardRogersonPrinceton U 476 81 We construct a family model of labor supply that features adjustment along both the intensive and extensive margin. Intensive margin adjsutment is restricted to two values: full-time work and part-time work. Using simulated data from the steady state of the calibrated model, we examine whether standard labor supply regressions can uncover the true value of the intertemporal elasticity of labor supply parameter. We find positive estimated elasticities that are larger for women and that are highly significant, but they bear virtually no relationship to the underlying preference parameters. http://www.aeaweb.org/articles.php?doi=10.1257/aer.101.3.476 10.1257/aer.101.3.476 American Economic Association Nashville, TN 0002-8282 American Economic Review http://www.aeaweb.org/aer/ 101 3 May 2011 http://www.aeaweb.org/issue.php?journal=AER&volume=101&issue=3 Papers Are Micro and Macro Labor Supply Elasticities Consistent? A Review of Evidence on the Intensive and Extensive Margins RajChettyHarvard U AdamGurenHarvard U DayManoliUCLA and RAND Corporation, Santa Monica, CA AndreaWeberU Mannheim 471 75 We evaluate whether state-of-the-art macro models featuring indivisible labor are consistent with modern quasi-experimental micro evidence by synthesizing evidence on both the intensive and extensive margins. We find that micro estimates are consistent with macro estimates of the steady-state (Hicksian) elasticities relevant for cross-country comparisons on both the extensive and intensive margins. However, micro estimates of intertemporal substitution (Frisch) elasticities are an order of magnitude smaller than the values needed to explain business cycle fluctuations in aggregate hours by preferences. The key puzzle to be resolved is why micro and macro estimates of the Frisch extensive margin elasticity are so different. http://www.aeaweb.org/articles.php?doi=10.1257/aer.101.3.471 10.1257/aer.101.3.471 http://www.aeaweb.org/aer/data/may2011/P2011_3463_app.pdf American Economic Association Nashville, TN 0002-8282 American Economic Review http://www.aeaweb.org/aer/ 101 3 May 2011 http://www.aeaweb.org/issue.php?journal=AER&volume=101&issue=3 Papers Negative Returns to Seniority and Job Mobility across the Program Quality Distribution: Are Top Public PhD-Granting Programs Different? Michael J.HilmerSan Diego State U Christiana E.HilmerSan Diego State U 466 70 We analyze a unique data set containing annual salary and detailed job and publication histories for a sample of 1,009 faculty members drawn from 53 public Ph.D.-granting economics departments. Empirical results suggest that all else equal: (1) statistically significant negative returns to seniority exist within lower-ranked but not top 15 programs; (2) more frequent movers observe statistically higher annual salaries in lower-ranked but not top 15 programs; and (3) for each level of seniority, faculty in top 15 programs are more likely to move at any point in the career than faculty in lower-ranked programs. http://www.aeaweb.org/articles.php?doi=10.1257/aer.101.3.466 10.1257/aer.101.3.466 American Economic Association Nashville, TN 0002-8282 American Economic Review http://www.aeaweb.org/aer/ 101 3 May 2011 http://www.aeaweb.org/issue.php?journal=AER&volume=101&issue=3 Papers Teacher Mobility Responses to Wage Changes: Evidence from a Quasi-natural Experiment TorbergFalchNorwegian U Science and Technology 460 65 This paper utilizes a Norwegian experiment with exogenous wage changes to study teachers' turnover decisions. Within a completely centralized wage setting system, teachers in schools with a high degree of teacher vacancies in the past got a wage premium of about 10 percent during the period 1993-94 to 2002-03. The empirical strategy exploits that several schools switched status during the empirical period. In a fixed effects framework, I find that the wage premium reduces the probability of voluntary quits by six percentage points, which implies a short run labor supply elasticity of about 1 1/4 . http://www.aeaweb.org/articles.php?doi=10.1257/aer.101.3.460 10.1257/aer.101.3.460 American Economic Association Nashville, TN 0002-8282 American Economic Review http://www.aeaweb.org/aer/ 101 3 May 2011 http://www.aeaweb.org/issue.php?journal=AER&volume=101&issue=3 Papers Monopsony, Mobility, and Sex Differences in Pay: Missouri School Teachers Michael R.RansomBrigham Young U Val E.LambsonBrigham Young U 454 59 We examine the sex differences in the pay of school teachers in Missouri. In Missouri school districts, pay is determined by a salary schedule that maps teaching experience and education level of an individual to a salary level. In spite of this apparently mechanical rule for determining pay, female teachers earn less than male teachers, after controlling for experience and education. We explore how such a difference could arise from differential job mobility and find some evidence to support this idea. However, within district differences in pay are a more important source of differences in pay between men and women. http://www.aeaweb.org/articles.php?doi=10.1257/aer.101.3.454 10.1257/aer.101.3.454 http://www.aeaweb.org/aer/data/may2011/P2011_3460_app.pdf American Economic Association Nashville, TN 0002-8282 American Economic Review http://www.aeaweb.org/aer/ 101 3 May 2011 http://www.aeaweb.org/issue.php?journal=AER&volume=101&issue=3 Papers Water Quality Violations and Avoidance Behavior: Evidence from Bottled Water Consumption Joshua GraffZivinU CA, San Diego MatthewNeidellColumbia U WolframSchlenkerColumbia U 448 53 We examine the impact of poor water quality on avoidance behavior by estimating the change in bottled water purchases in response to drinking water violations. Using data from a national grocery chain matched with water quality violations, we find an increase in bottled water sales of 22 percent from violations due to microorganisms and 17 percent from violations due to elements and chemicals. Back-of-the envelope calculations yield costs of avoidance behavior at roughly $60 million for all nationwide violations in 2005, which likely reflects a significant understatement of the total willingness to pay to eliminate violations. http://www.aeaweb.org/articles.php?doi=10.1257/aer.101.3.448 10.1257/aer.101.3.448 American Economic Association Nashville, TN 0002-8282 American Economic Review http://www.aeaweb.org/aer/ 101 3 May 2011 http://www.aeaweb.org/issue.php?journal=AER&volume=101&issue=3 Papers Environmental Regulation and Labor Reallocation: Evidence from the Clean Air Act W. ReedWalkerColumbia U 442 47 This paper uses newly available data on plant level regulatory status linked to the Census Longitudinal Business Database to measure the impact of changes in county level environmental regulations on plant and sector employment levels. Estimates from a variety of specifications suggest a strong connection between changes in environmental regulatory stringency and both employment growth and levels in the affected sectors. The preferred estimates suggest that changes in county level regulatory status due to the 1990 Clean Air Act Amendments reduced the size of the regulated sector by as much as 15 percent in the 10 years following the changes. http://www.aeaweb.org/articles.php?doi=10.1257/aer.101.3.442 10.1257/aer.101.3.442 http://www.aeaweb.org/aer/data/may2011/P2011_3458_app.pdf American Economic Association Nashville, TN 0002-8282 American Economic Review http://www.aeaweb.org/aer/ 101 3 May 2011 http://www.aeaweb.org/issue.php?journal=AER&volume=101&issue=3 Papers Superfund Cleanups and Infant Health JanetCurrieColumbia U MichaelGreenstoneMIT EnricoMorettiU CA, Berkeley 435 41 We are the first to examine the effect of Superfund cleanups on infant health rather than focusing on proximity to a site. We study singleton births to mothers residing within 5km of a Superfund site between 1989-2003 in five large states. Our "difference in differences" approach compares birth outcomes before and after a site clean-up for mothers who live within 2,000 meters of the site and those who live between 2,000-5,000 meters of a site. We find that proximity to a Superfund site before cleanup is associated with a 20 to 25% increase in the risk of congenital anomalies. http://www.aeaweb.org/articles.php?doi=10.1257/aer.101.3.435 10.1257/aer.101.3.435 American Economic Association Nashville, TN 0002-8282 American Economic Review http://www.aeaweb.org/aer/ 101 3 May 2011 http://www.aeaweb.org/issue.php?journal=AER&volume=101&issue=3 Papers The Financial Education Fallacy Lauren E.WillisLoyola Law School, Los Angeles 429 34 Research to date does not demonstrate a causal chain from financial education to welfare-enhancing financial behavior, in part due to biases, heuristics, and emotional influences on decisions. Yet the search for effective financial education continues. But it is time to ask whether giving every person effective financial education would make us better off. Two reasons it might not are discussed here. First, the time, expense, and invasion of privacy required would be enormous. Second, such a world would entail a decrease in individual autonomy. Alternative tools could potentially increase household financial welfare and security at lower social and individual expense. http://www.aeaweb.org/articles.php?doi=10.1257/aer.101.3.429 10.1257/aer.101.3.429 American Economic Association Nashville, TN 0002-8282 American Economic Review http://www.aeaweb.org/aer/ 101 3 May 2011 http://www.aeaweb.org/issue.php?journal=AER&volume=101&issue=3 Papers Helping Consumers Know Themselves EmirKamenicaU Chicago SendhilMullainathanHarvard U RichardThalerU Chicago 417 22 Firms sometimes know more about a consumer's expected usage than the consumer herself. We explore the consequences of this reversal in the information asymmetry. We analyze the consequences of making consumers more informed about themselves. While making consumers more informed decreases their expenditure conditional on a given set of prices, equilibrium prices may increase, offsetting the direct benefit of information. We discuss theoretical and practical issues surrounding so-called RECAP regulation that would require firms to provide each consumer with information about her own usage of the firm's product. http://www.aeaweb.org/articles.php?doi=10.1257/aer.101.3.417 10.1257/aer.101.3.417 American Economic Association Nashville, TN 0002-8282 American Economic Review http://www.aeaweb.org/aer/ 101 3 May 2011 http://www.aeaweb.org/issue.php?journal=AER&volume=101&issue=3 Papers The Limits of Transparency: Pitfalls and Potential of Disclosing Conflicts of Interest GeorgeLoewensteinCarnegie Mellon U Daylian M.CainYale U SunitaSahDuke U 423 28 We review evidence from our published and ongoing research that disclosing conflicts of interest has unintended consequences, helping conflicted advisors and harming their advisees: With disclosure, advisors feel comfortable giving more biased advice, but advisees do not properly adjust for this and generally fail to sufficiently discount biased advice. Disclosure also increases pressure on advisees to comply with advice; following disclosure, advisees feel more uncomfortable in turning down advice (e.g., it signals distrust of the advisor's motives). Finally, we examine the effectiveness of policy interventions aimed at reducing these unintended consequences and discuss how to realize potential benefits of disclosure. http://www.aeaweb.org/articles.php?doi=10.1257/aer.101.3.423 10.1257/aer.101.3.423 American Economic Association Nashville, TN 0002-8282 American Economic Review http://www.aeaweb.org/aer/ 101 3 May 2011 http://www.aeaweb.org/issue.php?journal=AER&volume=101&issue=3 Papers Leverage and the Financial Accelerator in a Liquidity Trap KarelMertensCornell U Morten O.RavnU College London 413 16 We show that the financial accelerator may be very large in a liquidity trap. We study a sticky price model with real estate and a financial friction specified as a collateral constraint. Expectations can lead the economy to a self-fulfilling liquidity trap equilibrium where the lower bound on the nominal interest rate binds. We model these equilibria as stochastic sunspots. As in the Great Depression, a liquidity trap entails house price depreciation and potentially large output losses. Higher leverage implies much larger output losses but at the same time rules out the existence of short-lived liquidity traps. http://www.aeaweb.org/articles.php?doi=10.1257/aer.101.3.413 10.1257/aer.101.3.413 American Economic Association Nashville, TN 0002-8282 American Economic Review http://www.aeaweb.org/aer/ 101 3 May 2011 http://www.aeaweb.org/issue.php?journal=AER&volume=101&issue=3 Papers Regulating Asset Price Risk PhilippeBacchettaU Lausanne CedricTilleGraduate Institute, Geneva Ericvan WincoopU VA 410 12 There has been a long debate about whether speculators are stabilizing or not. We consider a model where speculators have a stabilizing role in normal times, but may also provoke large risk panics. The very feature that makes arbitrageurs liquidity providers in normal times, namely their tolerance of risk, enables a large increase in asset price risk during a financial panic. We show that a policy that discourages balance sheet risk reduces the magnitude of financial panics, as well as asset price risk in both normal and panic states. http://www.aeaweb.org/articles.php?doi=10.1257/aer.101.3.410 10.1257/aer.101.3.410 American Economic Association Nashville, TN 0002-8282 American Economic Review http://www.aeaweb.org/aer/ 101 3 May 2011 http://www.aeaweb.org/issue.php?journal=AER&volume=101&issue=3 Papers Disasterization: A Simple Way to Fix the Asset Pricing Properties of Macroeconomic Models XavierGabaixNYU 406 09 A central difficulty in economics is to create a model with both good business cycle properties and asset pricing properties. I show how to solve this difficulty by a simple portable modeling device: the "disasterization" of models. Take an economy with good business cycle properties and create a new, "disasterized" economy, which is essentially identical to the original one except that disasters can destroy part of the capital stock and productivity. In such a disasterized economy, asset prices exhibit high and volatile risk premia, but macro variables remain unchanged. Perturbations of this benchmark allow for feedback from finance to macro. http://www.aeaweb.org/articles.php?doi=10.1257/aer.101.3.406 10.1257/aer.101.3.406 American Economic Association Nashville, TN 0002-8282 American Economic Review http://www.aeaweb.org/aer/ 101 3 May 2011 http://www.aeaweb.org/issue.php?journal=AER&volume=101&issue=3 Papers Market Sentiment: A Tragedy of the Commons Tarek A.HassanU Chicago Thomas M.MertensNYU 402 05 We present a model in which investors decide whether or to what degree they want to allow their behavior to be influenced by "market sentiment." Investors who choose to insulate their decisions from market sentiment earn higher expected returns, but incur a small mental cost. We show that if information is moderately dispersed across investors, even a very small mental cost may result in a significant amount of sentiment in equilibrium: Individuals who choose to be swayed by sentiment increase uncertainty about the future and make it less costly for others to be swayed by sentiment as well. http://www.aeaweb.org/articles.php?doi=10.1257/aer.101.3.402 10.1257/aer.101.3.402 American Economic Association Nashville, TN 0002-8282 American Economic Review http://www.aeaweb.org/aer/ 101 3 May 2011 http://www.aeaweb.org/issue.php?journal=AER&volume=101&issue=3 Papers The Risky Steady State NicolasCoeurdacierSciences Po, Paris HeleneReyLondon Business School PabloWinantParis School of Economics 398 401 We propose a simple quantitative method to linearize around the risky steady state of a small open economy. Unlike when the deterministic steady state is used, the net foreign asset position is well defined. We allow for stochastic income and stochastic interest rate. http://www.aeaweb.org/articles.php?doi=10.1257/aer.101.3.398 10.1257/aer.101.3.398 American Economic Association Nashville, TN 0002-8282 American Economic Review http://www.aeaweb.org/aer/ 101 3 May 2011 http://www.aeaweb.org/issue.php?journal=AER&volume=101&issue=3 Papers Are Drugs Substitutes or Complements for Intensive (and Expensive) Medical Treatment YutingZhangU Pittsburgh Joseph P.NewhouseHarvard U KatherineBaickerHarvard U 393 97 Little is known about the relationship between variation in drug and non-drug medical treatment and how areas may substitute one type of care for the other. Using pharmacy and medical claims data for Medicare beneficiaries, we examine whether areas with more drug use have lower non-drug medical costs and how the quality of prescribing and primary care are associated with medical costs. We find that areas with higher drug spending do not have lower non-drug medical spending; however, poorer-quality prescribing and primary care are associated with higher medical spending in general and inpatient spending in particular. http://www.aeaweb.org/articles.php?doi=10.1257/aer.101.3.393 10.1257/aer.101.3.393 American Economic Association Nashville, TN 0002-8282 American Economic Review http://www.aeaweb.org/aer/ 101 3 May 2011 http://www.aeaweb.org/issue.php?journal=AER&volume=101&issue=3 Papers The Medium-Term Impact of Medicare Part D on Pharmaceutical Prices Mark G.DugganU MD FionaScott MortonYale U 387 92 Medicare Part D began coverage of prescription drugs in 2006. Using data from the first year of the program we found that Part D reduced pharmaceutical prices for Medicare recipients, with these effects driven by enrollees previously without drug coverage. In this paper we extend our analysis through 2009, the fourth year of the program, to investigate whether plans continued to extract price concessions in return for favorable formulary placement, or if consumer inertia or other factors caused prices to bounce back after their initial decline. We find price declines persisted through at least the third year of the program. http://www.aeaweb.org/articles.php?doi=10.1257/aer.101.3.387 10.1257/aer.101.3.387 American Economic Association Nashville, TN 0002-8282 American Economic Review http://www.aeaweb.org/aer/ 101 3 May 2011 http://www.aeaweb.org/issue.php?journal=AER&volume=101&issue=3 Papers Part D Formulary and Benefit Design as a Risk-Steering Mechanism Dana P.GoldmanLeonard D. Schaeffer Center for Health Policy and Economics, U Southern CA Geoffrey F.JoyceU Southern CA William B.VogtU GA 382 86 Medicare Part D relies upon drug plan competition. Plans have enormous scope to design benefits and to set premiums, but they may not charge differential premiums based on risk. We use the formulary and benefit design of all Medicare prescription drug plans and pharmacy claims data to construct a simulation model of out-of-pocket drug spending. We use this simulation model to examine individual incentives in Medicare Part D for adverse selection. We find that high drug users have much stronger incentives to enroll in generous plans than do low users, thus there is significant scope for adverse selection. http://www.aeaweb.org/articles.php?doi=10.1257/aer.101.3.382 10.1257/aer.101.3.382 American Economic Association Nashville, TN 0002-8282 American Economic Review http://www.aeaweb.org/aer/ 101 3 May 2011 http://www.aeaweb.org/issue.php?journal=AER&volume=101&issue=3 Papers Heterogeneity in Choice Inconsistencies among the Elderly: Evidence from Prescription Drug Plan Choice JasonAbaluckMIT JonathanGruberMIT 377 81 This paper investigates the degree to which choice inconsistencies documented in the context of Medicare Part D plan choice vary across consumers and geographic regions. Our main finding is that there is surprisingly little variation: regardless of age, gender, predicted drug expenditures or the predictability of drug demand consumers underweight out of pocket costs relative to premiums and fail to consider the individualized consequences of plan characteristics; as a result, they frequently choose plans which are dominated in the sense that an alternative plan provides better risk protection at a lower cost. We find limited evidence that the sickest individuals had more difficulty with plan choice, and we document that much of the variation in potential cost savings across states comes from variation in choice sets, not variation in consumers ability to choose. http://www.aeaweb.org/articles.php?doi=10.1257/aer.101.3.377 10.1257/aer.101.3.377 American Economic Association Nashville, TN 0002-8282 American Economic Review http://www.aeaweb.org/aer/ 101 3 May 2011 http://www.aeaweb.org/issue.php?journal=AER&volume=101&issue=3 Papers Land and Racial Wealth Inequality Melinda C.MillerEconomic Growth Center, Yale U 371 76 Could racial wealth inequality have been reduced if freed slaves had been granted land following the Civil War? This paper exploits a plausibly exogenous variation in policies of the Cherokee Nation and southern United States to identify the impact of free land on the size of the racial wealth gap. Using data on land, livestock, and home ownership, I find evidence that former slaves who had access to free land were absolutely wealthier and experienced lower levels of racial wealth inequality in 1880 than former slaves who did not. Furthermore, their children continued to experience these advantages in 1900. http://www.aeaweb.org/articles.php?doi=10.1257/aer.101.3.371 10.1257/aer.101.3.371 American Economic Association Nashville, TN 0002-8282 American Economic Review http://www.aeaweb.org/aer/ 101 3 May 2011 http://www.aeaweb.org/issue.php?journal=AER&volume=101&issue=3 Papers The New Deal, Race, and Home Ownership in the 1920s and 1930s Trevor M.KollmannU AZ Price V.FishbackU AZ 366 70 Many federal government housing policies began during the New Deal of the 1930s. Many claim that minorities benefited less from these policies than whites. We estimate the relationships between policies in the 1920s and 1930s and black and white home ownership in farm and nonfarm settings using a pseudo-panel of repeated cross-sections of households in 1920, 1930, and 1940 matched with policy measures in 460 state economic areas. The policies examined include FHA mortgage insurance, HOLC loan refinancing, state mortgage moratoria, farm loan programs, public housing, public works and relief, and payments to farmers to take land out of production. http://www.aeaweb.org/articles.php?doi=10.1257/aer.101.3.366 10.1257/aer.101.3.366 http://www.aeaweb.org/aer/data/may2011/P2011_3443_app.pdf American Economic Association Nashville, TN 0002-8282 American Economic Review http://www.aeaweb.org/aer/ 101 3 May 2011 http://www.aeaweb.org/issue.php?journal=AER&volume=101&issue=3 Papers Covenants without Courts: Enforcing Residential Segregation with Legally Unenforceable Agreements Richard R. W.BrooksYale U 360 65 Racial restrictive covenants are private agreements prohibiting sale, rental, use or occupancy of properties by persons of designated races, ethnicities, nationalities and religions. Widely acknowledged for facilitating residential segregation, the Supreme Court ruled covenants unenforceable in 1948. Yet they remained legal to write and reference, allowing realtors, banks, insurers, title companies and government agencies to continue to rely on unenforceable covenants in their decisions and policies. Beyond legal enforceability, covenants were essentially signals that coordinated the behavior of a variety of private individual and institutional actors--signals that remained effective without the courts. Evidence is presented to support this claim. http://www.aeaweb.org/articles.php?doi=10.1257/aer.101.3.360 10.1257/aer.101.3.360 American Economic Association Nashville, TN 0002-8282 American Economic Review http://www.aeaweb.org/aer/ 101 3 May 2011 http://www.aeaweb.org/issue.php?journal=AER&volume=101&issue=3 Papers Race and Home Ownership from the End of the Civil War to the Present William J.CollinsVanderbilt U Robert A.MargoBoston U 355 59 We present new estimates of home ownership for black and white households from 1870 to 2007. Black ownership increased by 46 percentage points, whereas white ownership increased by 20 points. Remarkably, 25 of the 26 point narrowing occurred between 1870 and 1910. Part of this early convergence is accounted for by falling white ownership due to movement out of agriculture, but most is accounted for by post-emancipation gains among blacks. After 1910, white and black households increased ownership, but the racial gap barely changed. We discuss the influence of residential segregation, public policy, and permanent income on the ownership gap. http://www.aeaweb.org/articles.php?doi=10.1257/aer.101.3.355 10.1257/aer.101.3.355 http://www.aeaweb.org/aer/data/may2011/P2011_3441_app.pdf American Economic Association Nashville, TN 0002-8282 American Economic Review http://www.aeaweb.org/aer/ 101 3 May 2011 http://www.aeaweb.org/issue.php?journal=AER&volume=101&issue=3 Papers The War at Home: Effects of Vietnam-Era Military Service on Postwar Household Stability DaltonConleyNYU JenniferHeerwigNYU 350 54 Prior researchers have deployed the Vietnam-era draft lottery as an instrument to estimate causal effects of military service on health and earnings. However, household and residential outcomes may be more sensitive to the psychological effects of military service. Using 2SLS analyses of the 2000 Census and the 2005 American Community Survey, we find mixed results for residential stability, housing tenure, and extended family residence. While in the ACS white veterans are less mobile, veteran status has no effect on homeownership. Veteran status reduces extended family living for whites in the Census but increases it for ACS veterans of "other" races. http://www.aeaweb.org/articles.php?doi=10.1257/aer.101.3.350 10.1257/aer.101.3.350 American Economic Association Nashville, TN 0002-8282 American Economic Review http://www.aeaweb.org/aer/ 101 3 May 2011 http://www.aeaweb.org/issue.php?journal=AER&volume=101&issue=3 Papers Long-Run Mortality Effects of Vietnam-Era Army Service: Evidence from Australia's Conscription Lotteries PeterSiminskiU Wollongong SimonVilleU Wollongong 345 49 We estimate the effect of Vietnam-era Army service on mortality, exploiting Australia's conscription lotteries for identification. We utilize population data on deaths during 1994-2007 and military personnel records. The estimates are identified by over 51,000 compliers induced to enlist in the Army. We find no statistically significant effects on mortality overall, nor for any cause of death. The estimated relative risk (RR) of death associated with Army service is 1.03 (95% CI: 0.92, 1.19). On the assumption that Army service affected mortality only for those who served in Vietnam, the estimated RR is 1.06 (95% CI: 0.81, 1.51). http://www.aeaweb.org/articles.php?doi=10.1257/aer.101.3.345 10.1257/aer.101.3.345 American Economic Association Nashville, TN 0002-8282 American Economic Review http://www.aeaweb.org/aer/ 101 3 May 2011 http://www.aeaweb.org/issue.php?journal=AER&volume=101&issue=3 Papers Battle Scars? The Puzzling Decline in Employment and Rise in Disability Receipt among Vietnam Era Veterans David H.AutorMIT Mark G.DugganU MD David S.LyleUS Military Academy, West Point 339 44 Using Current Population Survey and US Army administrative data, we document that between 2000 and 2010, the employment rate of Vietnam era veterans fell markedly relative to non-veterans of the same cohorts while simultaneously their enrollment increased steeply in the Veterans Disability Compensation (DC) program, which provides healthcare and transfer payments to veterans with service-connected disabilities. Thirty percent of Vietnam era Army veterans enrolled in DC in 2006 received benefits for Post-Traumatic Stress Disorder, with median annual payments of $25,500. The declining employment and rising transfer payments to Vietnam era veterans underscore the long-term private and public costs of wartime service, potentially stemming from both adverse health consequences and policies that have expanded benefits eligibility. http://www.aeaweb.org/articles.php?doi=10.1257/aer.101.3.339 10.1257/aer.101.3.339 American Economic Association Nashville, TN 0002-8282 American Economic Review http://www.aeaweb.org/aer/ 101 3 May 2011 http://www.aeaweb.org/issue.php?journal=AER&volume=101&issue=3 Papers Long-Term Consequences of Vietnam-Era Conscription: New Estimates Using Social Security Data Joshua D.AngristMIT Stacey H.ChenAcademia Sinica JaeSongUS Social Security Administration 334 38 We use the draft lottery to construct instrumental variables (IV) estimates of the impact of Vietnam-era military service on veterans' Social Security (SSA) earnings through 2007. We also use SSA data to construct IV estimates for employment (as measured by an indicator for positive earnings) and disability status (as measured by an indicator for social security disability program application). New findings for recent years show surprisingly rapid convergence in veteran and nonveteran earnings: by the early 1990s, there was no longer a substantial Vietnam-era conscription penalty. The IV estimates also show no effect on employment or disability rates. http://www.aeaweb.org/articles.php?doi=10.1257/aer.101.3.334 10.1257/aer.101.3.334 American Economic Association Nashville, TN 0002-8282 American Economic Review http://www.aeaweb.org/aer/ 101 3 May 2011 http://www.aeaweb.org/issue.php?journal=AER&volume=101&issue=3 Papers Using Artefactual Field Experiments to Learn about the Incentives for Sustainable Forest Use in Developing Economies MaartenVoorsWageningen U ErwinBulteWageningen U AndreasKontoleonU Cambridge John A.ListU Chicago TyTurleyU Chicago 329 33 We implement a public goods game and a social intervention modeled after a public goods game in rural Sierra Leone near the Gola Forest Reserve. We also collect demographic, economic and forest conservation data on households in the area. We use this data to assess the mapping of social preferences from the artefactual field experiment (AFE) into real world behavior. We find evidence of heterogeneity in shifting factors between the AFE, the field experiment, and conservation outcomes. We also find evidence that social controls like war violence and witchcraft may explain some of this correlation. http://www.aeaweb.org/articles.php?doi=10.1257/aer.101.3.329 10.1257/aer.101.3.329 American Economic Association Nashville, TN 0002-8282 American Economic Review http://www.aeaweb.org/aer/ 101 3 May 2011 http://www.aeaweb.org/issue.php?journal=AER&volume=101&issue=3 Papers Can Tailored Communications Motivate Environmental Volunteers? A Natural Field Experiment OmarAl-UbaydliGeorge Mason U MinLeeKenneth and Anne Griffin Foundation, Chicago, IL 323 28 Volunteering is a significant component of economic activity, especially for environmental organizations. Environmental organizations that rely on volunteers communicate with them using a variety of media, such as newsletters. This is a field experiment investigating whether tailoring the content of these communications to the stated motivations of a volunteer has a positive effect on the number of hours he/she volunteers. For the non-profit in our study, we find that such tailoring has an effect only for volunteers motivated primarily by career concerns. We also find this to be robust to the volunteers being aware that the tailoring is occurring. http://www.aeaweb.org/articles.php?doi=10.1257/aer.101.3.323 10.1257/aer.101.3.323 American Economic Association Nashville, TN 0002-8282 American Economic Review http://www.aeaweb.org/aer/ 101 3 May 2011 http://www.aeaweb.org/issue.php?journal=AER&volume=101&issue=3 Papers The Persistence of Treatment Effects with Norm-Based Policy Instruments: Evidence from a Randomized Environmental Policy Experiment Paul J.FerraroGA State U Juan JoseMirandaGA State U Michael K.PriceU TN 318 22 Policymakers increasingly use norm-based messages to promote conservation efforts. Despite the apparent success of such strategies, empirical analyses have thus far focused exclusively on short-run effects. From a policy perspective, however, whether and how such strategies influence behavior in the long-run is of equal interest. We partner with a metropolitan water utility to implement a natural field experiment examining the effect of such messages on longer-run patterns of water use. Empirical results are striking. While appeals to pro-social preferences affect short-run patterns of water use, only messages augmented with social comparisons have a lasting impact on water demand. http://www.aeaweb.org/articles.php?doi=10.1257/aer.101.3.318 10.1257/aer.101.3.318 American Economic Association Nashville, TN 0002-8282 American Economic Review http://www.aeaweb.org/aer/ 101 3 May 2011 http://www.aeaweb.org/issue.php?journal=AER&volume=101&issue=3 Papers Does Market Experience Eliminate Market Anomalies? The Case of Exogenous Market Experience John A.ListU Chicago 313 17 A vibrant literature has emerged that suggests willingness to pay and willingness to accept measures of value are quite different for inexperienced consumers but that value differences erode with market experience. One potential shortcoming of this literature is that market experience is endogenous. This study presents a framed field experiment that exogenously induces market experience. Empirical findings support the premise that market experience, alone, can eliminate an important market anomaly http://www.aeaweb.org/articles.php?doi=10.1257/aer.101.3.313 10.1257/aer.101.3.313 American Economic Association Nashville, TN 0002-8282 American Economic Review http://www.aeaweb.org/aer/ 101 3 May 2011 http://www.aeaweb.org/issue.php?journal=AER&volume=101&issue=3 Papers Vertical Linkages and the Collapse of Global Trade RudolfsBemsIMF Robert C.JohnsonDartmouth College Kei-MuYiFederal Reserve Bank of Minneapolis 308 12 A common view is that cross-border vertical linkages played a key role in the 2008-2009 collapse of global trade. This paper presents two accounting results from a global input-output framework that shed light on this channel. We feed in observed changes in final demand and find that trade in final goods fell by twice as much as trade in intermediate goods. Nevertheless, intermediate goods account for more than two-fifths of the trade collapse. We also find that vertical specialization trade fell 13 percent, while value-added trade fell by 10 percent, because declines in demand were largest in highly vertically-specialized sectors. http://www.aeaweb.org/articles.php?doi=10.1257/aer.101.3.308 10.1257/aer.101.3.308 http://www.aeaweb.org/aer/data/may2011/P2011_3432_app.pdf American Economic Association Nashville, TN 0002-8282 American Economic Review http://www.aeaweb.org/aer/ 101 3 May 2011 http://www.aeaweb.org/issue.php?journal=AER&volume=101&issue=3 Papers US Trade and Inventory Dynamics GeorgeAlessandriaFederal Reserve Bank of Philadelphia Joseph P.KaboskiU Notre Dame VirgiliuMidriganNYU 303 07 We examine the source of the large fall and rebound in US trade in the recent recession. While trade fell and rebounded more than expenditures or production of traded goods, we find that relative to the magnitude of the downturn, these trade fluctuations were in line with those in previous business cycle fluctuations. We argue that the high volatility of trade is attributed to more severe inventory management considerations of firms involved in international trade. We present empirical evidence for autos as well as at the aggregate level that the adjustment of inventory holdings help explain these fluctuations in trade. http://www.aeaweb.org/articles.php?doi=10.1257/aer.101.3.303 10.1257/aer.101.3.303 http://www.aeaweb.org/aer/data/may2011/P2011_3431_data.zip http://www.aeaweb.org/aer/data/may2011/P2011_3431_app.pdf American Economic Association Nashville, TN 0002-8282 American Economic Review http://www.aeaweb.org/aer/ 101 3 May 2011 http://www.aeaweb.org/issue.php?journal=AER&volume=101&issue=3 Papers Trade Finance and the Great Trade Collapse JaeBinAhnColumbia U MaryAmitiFederal Reserve Bank of New York David E.WeinsteinColumbia U 298 302 Economic models that do not incorporate financial frictions only explain about 70 to 80 percent of the decline in world trade that occurred in the 2008-2009 crisis. We review evidence that shows financial factors also contributed to the great trade collapse and uncover two new stylized facts in support of it. First, we show that the prices of manufactured exports rose relative to domestic prices during the crisis. Second, we show that US seaborne exports and imports, which are likely to be more sensitive to trade finance problems, saw their prices rise relative to goods shipped by air or land. http://www.aeaweb.org/articles.php?doi=10.1257/aer.101.3.298 10.1257/aer.101.3.298 http://www.aeaweb.org/aer/data/may2011/P2011_3430_data.zip American Economic Association Nashville, TN 0002-8282 American Economic Review http://www.aeaweb.org/aer/ 101 3 May 2011 http://www.aeaweb.org/issue.php?journal=AER&volume=101&issue=3 Papers Predicting and Preventing Shootings among At-Risk Youth DanaChandlerMIT Steven D.LevittU Chicago John A.ListU Chicago 288 92 Each year, more than 250 students in the Chicago Public Schools (CPS) are shot. The authors of this paper worked with the leadership of CPS to build a predictive model of shootings that helped determine which students would be included in a highly targeted and resource intensive mentorship program. This paper describes our predictive model and offers a preliminary evaluation of the mentoring intervention performed by Youth Advocate Programs, Inc. (YAP). We find little evidence that the intervention reduces school misconducts or improves educational outcomes. The scale of intervention was too small to generate meaningful findings on shootings. http://www.aeaweb.org/articles.php?doi=10.1257/aer.101.3.288 10.1257/aer.101.3.288 http://www.aeaweb.org/aer/data/may2011/P2011_3428_app.pdf American Economic Association Nashville, TN 0002-8282 American Economic Review http://www.aeaweb.org/aer/ 101 3 May 2011 http://www.aeaweb.org/issue.php?journal=AER&volume=101&issue=3 Papers The "Collapse in Quality" Hypothesis Andrei A.LevchenkoU MI Logan T.LewisU MI Linda L.TesarU MI 293 97 This paper evaluates the hypothesis that during the 2008-2009 collapse in international trade, imports of higher quality goods experienced larger reductions compared to low-quality imports, using data on US imports disaggregated by HS-10 product category and source country. We find little, if any, robust econometric evidence in support of this hypothesis. http://www.aeaweb.org/articles.php?doi=10.1257/aer.101.3.293 10.1257/aer.101.3.293 http://www.aeaweb.org/aer/data/may2011/P2011_3429_app.pdf American Economic Association Nashville, TN 0002-8282 American Economic Review http://www.aeaweb.org/aer/ 101 3 May 2011 http://www.aeaweb.org/issue.php?journal=AER&volume=101&issue=3 Papers Trust in Public Institutions over the Business Cycle BetseyStevensonU PA JustinWolfersU PA and CESifo, Munich 281 87 We document that trust in public institutions--and particularly trust in banks, business and government--has declined over recent years. US time series evidence suggests that this partly reflects the pro-cyclical nature of trust in institutions. Cross-country comparisons reveal a clear legacy of the Great Recession, and those countries whose unemployment grew the most suffered the biggest loss in confidence in institutions, particularly in trust in government and the financial sector. Finally, analysis of several repeated cross-sections of confidence within US states yields similar qualitative patterns, but much smaller magnitudes in response to state-specific shocks. http://www.aeaweb.org/articles.php?doi=10.1257/aer.101.3.281 10.1257/aer.101.3.281 American Economic Association Nashville, TN 0002-8282 American Economic Review http://www.aeaweb.org/aer/ 101 3 May 2011 http://www.aeaweb.org/issue.php?journal=AER&volume=101&issue=3 Papers Optimal Proof Burdens, Deterrence, and the Chilling of Desirable Behavior LouisKaplowHarvard U 277 80 The optimal stringency of the burden of proof is characterized in a model in which relaxing the proof burden enhances deterrence but also chills desirable behavior. The result are strikingly different from those in prior work that uses a simpler model in which individuals only choose whether to commit a harmful act (so only deterrence is at stake). Moreover, the qualitative differences between the optimal rule and the familiar preponderance of the evidence rule--and related rules that look to Bayesian posteriors--are great, much more so than revealed by prior work. http://www.aeaweb.org/articles.php?doi=10.1257/aer.101.3.277 10.1257/aer.101.3.277 American Economic Association Nashville, TN 0002-8282 American Economic Review http://www.aeaweb.org/aer/ 101 3 May 2011 http://www.aeaweb.org/issue.php?journal=AER&volume=101&issue=3 Papers Corrective Taxation versus Liability StevenShavellHarvard U 273 76 Taxation and liability are compared as means of controlling harmful externalities, with a view toward explaining why the use of liability predominates over taxation. Taxation suffers from a disadvantage in the analysis: because taxes do not reflect all the variables affecting expected harm, inefficiency results, whereas efficiency under liability requires only assessment of actual harm. However, liability also suffers from a disadvantage: incentives are diluted because injurers escape suit. Joint use of taxation and liability is examined, and it is shown that liability should be employed fully, with taxation taking up the slack due to escape from suit. http://www.aeaweb.org/articles.php?doi=10.1257/aer.101.3.273 10.1257/aer.101.3.273 http://www.aeaweb.org/aer/data/may2011/P2011_3425_app.pdf American Economic Association Nashville, TN 0002-8282 American Economic Review http://www.aeaweb.org/aer/ 101 3 May 2011 http://www.aeaweb.org/issue.php?journal=AER&volume=101&issue=3 Papers The Effect of Allowing Pollution Offsets with Imperfect Enforcement HilarySigmanRutgers U Howard F.ChangU PA 268 72 Public policies for pollution control, including climate change policies, sometimes allow polluters in one sector subject to an emissions cap to offset excessive emissions with pollution abatement in another sector. The government may find it more costly to verify offset claims than to verify compliance with emissions caps. Concerns about such enforcement difficulties may lead regulators to restrict the use of offsets. We demonstrate that allowing offsets may increase pollution abatement and reduce illegal pollution, even if the government has a fixed enforcement budget. We explore circumstances that may make allowing pollution offsets an attractive option when enforcement is costly. http://www.aeaweb.org/articles.php?doi=10.1257/aer.101.3.268 10.1257/aer.101.3.268 American Economic Association Nashville, TN 0002-8282 American Economic Review http://www.aeaweb.org/aer/ 101 3 May 2011 http://www.aeaweb.org/issue.php?journal=AER&volume=101&issue=3 Papers Vertical Targeting and Leakage in Carbon Policy James B.BushnellIA State U Erin T.MansurDartmouth College 263 67 This paper examines the intersection between two aspects of climate policy design. The first is the point of regulation: should it be placed on pollution sources, carbon-rich inputs, or consumers? The second aspect concerns the external effects of a local climate policy. Leakage occurs when partial regulation results in an increase in emissions in unregulated parts of the economy. Our model demonstrates how directly regulating polluters can increase foreign emissions while indirect regulation (either upstream or downstream of the pollution source) will decrease foreign emissions. The net effect on combined domestic and foreign emissions will depend on market elasticities. http://www.aeaweb.org/articles.php?doi=10.1257/aer.101.3.263 10.1257/aer.101.3.263 http://www.aeaweb.org/aer/data/may2011/P2011_3423_app.pdf American Economic Association Nashville, TN 0002-8282 American Economic Review http://www.aeaweb.org/aer/ 101 3 May 2011 http://www.aeaweb.org/issue.php?journal=AER&volume=101&issue=3 Papers The Role of Trade and Competitiveness Measures in US Climate Policy CarolynFischerResources for the Future, Washington, DC Alan K.FoxUS International Trade Commission 258 62 We review the proposed measures for addressing competitiveness and carbon leakage concerns in recent US climate policy legislation. For eligible energy-intensive, trade-exposed sectors, output-based rebates would initially dampen cost increases; later, border adjustments would ensure that imports face comparable cost burdens. Both measures can in theory enhance the economic efficiency of carbon reduction efforts, but both pose some interesting economic and practical trade-offs. This paper discusses our recent research into the welfare and carbon leakage effects of using output-based allocation and trade measures in conjunction with climate policies. http://www.aeaweb.org/articles.php?doi=10.1257/aer.101.3.258 10.1257/aer.101.3.258 American Economic Association Nashville, TN 0002-8282 American Economic Review http://www.aeaweb.org/aer/ 101 3 May 2011 http://www.aeaweb.org/issue.php?journal=AER&volume=101&issue=3 Papers Challenges from State-Federal Interactions in US Climate Change Policy Lawrence H.GoulderStanford U Robert N.StavinsHarvard U 253 57 With a focus on two sorts of regulation--renewable electricity and clean energy standards, and automobile fuel-economy standards--we analyze problematic interactions that arise when state policies are nested within the domain of Federal policy. Here state efforts may fail to reduce greenhouse gas emissions nationally, and may compromise cost-effectiveness. Difficulties from overlapping regulations are avoidable through price- (as opposed to quantity-) based Federal policy. We identify some potentially positive interactions between state and Federal policies, and identify rationales for state action when Federal and state policies do not overlap. http://www.aeaweb.org/articles.php?doi=10.1257/aer.101.3.253 10.1257/aer.101.3.253 American Economic Association Nashville, TN 0002-8282 American Economic Review http://www.aeaweb.org/aer/ 101 3 May 2011 http://www.aeaweb.org/issue.php?journal=AER&volume=101&issue=3 Papers Measuring the Benefits of Greater Spatial Granularity in Short-Term Pricing in Wholesale Electricity Markets Frank A.WolakStanford U 247 52 Hourly generation unit-level output levels, detailed information on the technological characteristics of generation units, and daily delivered natural gas prices to all generation units for the California wholesale electricity market before and after the implementation of locational marginal pricing are used to measure the impact of introducing greater spatial granularity in short-term energy pricing. The average hourly number of generation unit starts increases, but both the total hourly energy consumed and total hourly operating costs for all natural gas-fired generation units fall by more than 2 percent after the implementation of locational marginal pricing. http://www.aeaweb.org/articles.php?doi=10.1257/aer.101.3.247 10.1257/aer.101.3.247 American Economic Association Nashville, TN 0002-8282 American Economic Review http://www.aeaweb.org/aer/ 101 3 May 2011 http://www.aeaweb.org/issue.php?journal=AER&volume=101&issue=3 Papers Financial Regulatory Reform: Challenges Ahead Randall S.KrosznerU Chicago Philip E.StrahanBoston College 242 46 Today's financial system is dominated by markets with institutions connected by short-term financing, securitization, derivatives, and other means. Yet regulations have focused on depositories, leaving regulators unprepared for the 2008 crisis. We suggest two key principles for regulatory reform. First, some changes in the financial system came as institutions lowered the burden of regulations through "regulatory arbitrage." Reform needs to avoid driving businesses "into the shadows," where risks may accumulate and sow seeds of future crises. Second, reform ought to improve transparency to reduce uncertainty and inter-linkages between players. We evaluate some of Dodd-Frank Act in light of these principles. http://www.aeaweb.org/articles.php?doi=10.1257/aer.101.3.242 10.1257/aer.101.3.242 American Economic Association Nashville, TN 0002-8282 American Economic Review http://www.aeaweb.org/aer/ 101 3 May 2011 http://www.aeaweb.org/issue.php?journal=AER&volume=101&issue=3 Papers Comparing the Costs of Intermittent and Dispatchable Electricity Generating Technologies Paul L.JoskowAlfred P. Sloan Foundation, New York, NY 238 41 Economic evaluations of alternative electric generating technologies typically rely on comparisons between their expected "levelized cost" per MWh supplied. I demonstrate that this metric is inappropriate for comparing intermittent generating technologies like wind and solar with dispatchable generating technologies like nuclear, gas combined cycle, and coal. It overvalues intermittent generating technologies compared to dispatchable base load generating technologies. It also likely overvalues wind generating technologies compared to solar generating technologies. Integrating differences in production profiles, the associated variations in wholesale market prices of electricity, and life-cycle costs associated with different generating technologies is necessary to provide meaningful comparisons between them. http://www.aeaweb.org/articles.php?doi=10.1257/aer.101.3.238 10.1257/aer.101.3.238 American Economic Association Nashville, TN 0002-8282 American Economic Review http://www.aeaweb.org/aer/ 101 3 May 2011 http://www.aeaweb.org/issue.php?journal=AER&volume=101&issue=3 Papers Why Can't US Airlines Make Money? SeverinBorensteinU CA, Berkeley 233 37 US airlines have lost nearly $60 billion ($2009) in domestic markets since the 1978 deregulation, most of it in the last decade. The dismal financial record challenges the economics of deregulation. I examine some of the common explanations among industry participants and researchers--including high taxes and fuel costs, weak demand, and competition from lower-cost airlines. Major drivers seem to be the demand downturn after 9/11--demand remains much weaker today than in 2000--and the large cost differential between legacy and low-cost carriers, which has persisted even as the price differential between them has greatly declined. http://www.aeaweb.org/articles.php?doi=10.1257/aer.101.3.233 10.1257/aer.101.3.233 American Economic Association Nashville, TN 0002-8282 American Economic Review http://www.aeaweb.org/aer/ 101 3 May 2011 http://www.aeaweb.org/issue.php?journal=AER&volume=101&issue=3 Papers Optimal Learning Patterns for Creativity Generation in a Field Jonathan S.FeinsteinYale U 227 32 I present a model of optimal learning for creativity generation in a field. The field is defined as a knowledge structure. A creative contribution is based on combining two previously unconnected elements, generating a new element. Individuals may possess private information/intuition about new combinations. Individuals contribute the maximum creative contribution they are able to produce based on the set of elements they have learned. In equilibrium individuals learn different elements, with some degree of overlap, effectively pursuing distinct creative interests. The model illustrates a general approach for analyzing the creative development of fields and, in a broader sense, cultural innovation. http://www.aeaweb.org/articles.php?doi=10.1257/aer.101.3.227 10.1257/aer.101.3.227 American Economic Association Nashville, TN 0002-8282 American Economic Review http://www.aeaweb.org/aer/ 101 3 May 2011 http://www.aeaweb.org/issue.php?journal=AER&volume=101&issue=3 Papers Art and Money William N.GoetzmannYale U LucRenneboogCentER, Tilburg U ChristopheSpaenjersCentER, Tilburg U 222 26 This paper investigates the impact of equity markets and top incomes on art prices. Using a newly constructed art market index, we demonstrate that equity market returns have had a significant impact on the price level in the art market over the last two centuries. We also find evidence that an increase in income inequality may lead to higher prices for art. Finally, the results of Johansen's cointegration tests strongly suggest the existence of a long-run relation between top incomes and art prices. http://www.aeaweb.org/articles.php?doi=10.1257/aer.101.3.222 10.1257/aer.101.3.222 American Economic Association Nashville, TN 0002-8282 American Economic Review http://www.aeaweb.org/aer/ 101 3 May 2011 http://www.aeaweb.org/issue.php?journal=AER&volume=101&issue=3 Papers Sale Rates and Price Movements in Art Auctions OrleyAshenfelterPrinceton U KathrynGraddyBrandeis U 212 16 This paper examines the relationship between sale rates and price shocks in art auctions. Using data on contemporary and impressionist art, we show that while sale rates appear to have little relationship to current prices, there exists a strong negative relationship of sale rates to unexpected price shocks, which is reminiscent of a Phillips curve. We estimate an empirical model that suggests that the reserve price is set on average at about 70% of the low estimate. http://www.aeaweb.org/articles.php?doi=10.1257/aer.101.3.212 10.1257/aer.101.3.212 American Economic Association Nashville, TN 0002-8282 American Economic Review http://www.aeaweb.org/aer/ 101 3 May 2011 http://www.aeaweb.org/issue.php?journal=AER&volume=101&issue=3 Papers Rock and Roll Bands, (In)complete Contracts, and Creativity CedricCeulemansECARES, Free U Brussels VictorGinsburghECARES, Free U Brussels and CORE, Catholic U Louvain PatrickLegrosECARES, Free U Brussels 217 21 Members of a rock and roll band are endowed with different amounts of creativity. They match, compose songs, and share credit. The presence of more creative members increases the probability of success, but those more creative members may also claim a larger share of the pie. In our theoretical model, the nature of matching as well as the covariation between the probability of success and the allocation of credit among individual members are a function of the completeness of contracting. The data show that rock bands tend to enter into incomplete contracts and positive assortative matching. http://www.aeaweb.org/articles.php?doi=10.1257/aer.101.3.217 10.1257/aer.101.3.217 American Economic Association Nashville, TN 0002-8282 American Economic Review http://www.aeaweb.org/aer/ 101 3 May 2011 http://www.aeaweb.org/issue.php?journal=AER&volume=101&issue=3 Papers Quality Adjustment for Health Care Spending on Chronic Disease: Evidence from Diabetes Treatment, 1999-2009 Karen N.EgglestonShorenstein Asia-Pacific Research Center, Stanford U Nilay D.ShahMayo Clinic Steven A.SmithMayo Clinic Ernst R.BerndtMIT Joseph P.NewhouseHarvard U 206 11 Although US health care expenditures reached 17.6 percent of GDP in 2009, quality measurement in this important service sector remains limited. Studying quality changes associated with 11 years of health care for patients with diabetes, we find that the value of reduced mortality and avoided treatment spending, net of the increase in annual spending, was $9,094 for the average patient. These results suggest that the unit cost of diabetes treatment, adjusting for the value of health outcomes, has been roughly constant. Since input prices have not been declining, our results are consistent with productivity improvement in health care. http://www.aeaweb.org/articles.php?doi=10.1257/aer.101.3.206 10.1257/aer.101.3.206 American Economic Association Nashville, TN 0002-8282 American Economic Review http://www.aeaweb.org/aer/ 101 3 May 2011 http://www.aeaweb.org/issue.php?journal=AER&volume=101&issue=3 Papers Does Quality Adjustment Matter for Technologically Stable Products? An Application to the CPI for Food John S.GreenleesBureau of Labor Statistics, US Department of Labor RobertMcClellandUS Congressional Budget Office 200 205 Most indexes in the Consumer Price Index (CPI) use a form of the "matched-model" approach. It is frequently assumed that this approach accurately reflects inflation for items that have no major trend in quality. In this paper we investigate that hypothesis using CPI data for retail food items. We find that CPI analysts may be correct on average when they decide that new and replacement items are similar in quality. We also find, however, that when sample items are replaced by items of significantly different quality the CPI imputation procedures may underestimate price change and overstate quality change. http://www.aeaweb.org/articles.php?doi=10.1257/aer.101.3.200 10.1257/aer.101.3.200 American Economic Association Nashville, TN 0002-8282 American Economic Review http://www.aeaweb.org/aer/ 101 3 May 2011 http://www.aeaweb.org/issue.php?journal=AER&volume=101&issue=3 Papers A Bright Idea for Measuring Economic Growth VernonHendersonBrown U AdamStoreygardBrown U David N.WeilBrown U 194 99 The quantity of human-generated light visible from outer space reflects variation in both population density and income per capita. In this paper we explore the usefulness of the change in visible light as a measure of GDP growth. We discuss the data, and then present a statistical framework that uses lights growth to augment existing income growth measures, assuming that measurement errors in the two series are uncorrelated. For some countries with very poor income measurement, we significantly revise estimates of growth. Our technique also produces growth estimates for cities or regions where no other data are available. http://www.aeaweb.org/articles.php?doi=10.1257/aer.101.3.194 10.1257/aer.101.3.194 American Economic Association Nashville, TN 0002-8282 American Economic Review http://www.aeaweb.org/aer/ 101 3 May 2011 http://www.aeaweb.org/issue.php?journal=AER&volume=101&issue=3 Papers Completion Rates and Time-to-Degree in Economics PhD Programs (with comments by David Colander, N. Gregory Mankiw, Melissa P. McInerney, James M. Poterba) Wendy A.StockMT State U John J.SiegfriedVanderbilt U T. AldrichFineganVanderbilt U 176 88 This paper describes the progress, eight years after matriculating, of 586 individuals who entered one of 27 economics Ph.D. programs in fall 2002. By October 2010, 59 percent of the fall 2002 entering cohort had earned a Ph.D. in economics at the university where they initially matriculated, 37 percent had dropped out, and 4 percent were still writing their dissertations.We examine student outcomes by Ph.D. program tier and investigate factors associated with completion and time to degree. We document and describe the rise in median time to degree from 5.0 to 5.6 years during the period 1996-2010. http://www.aeaweb.org/articles.php?doi=10.1257/aer.101.3.176 10.1257/aer.101.3.176 American Economic Association Nashville, TN 0002-8282 American Economic Review http://www.aeaweb.org/aer/ 101 3 May 2011 http://www.aeaweb.org/issue.php?journal=AER&volume=101&issue=3 Papers Economists as Worldly Philosophers Robert J.ShillerCowles Foundation for Research in Economics, Yale U Virginia M.ShillerChild Study Center, Yale U 171 75 While leading figures in the early history of economics conceived of it as inseparable from philosophy and other humanities, there has been movement, especially in recent decades, towards its becoming an essentially technical field with narrowly specialized areas of inquiry. Certainly, specialization has allowed for great progress in economic science. However, recent events surrounding the financial crisis support the arguments of some that economics needs to develop forums for interdisciplinary interaction and to aspire to broader vision. http://www.aeaweb.org/articles.php?doi=10.1257/aer.101.3.171 10.1257/aer.101.3.171 American Economic Association Nashville, TN 0002-8282 American Economic Review http://www.aeaweb.org/aer/ 101 3 May 2011 http://www.aeaweb.org/issue.php?journal=AER&volume=101&issue=3 Papers Economics: A Moral Inquiry with Religious Origins Benjamin M.FriedmanHarvard U 166 70 In contrast to the standard interpretation of the origins of economics out of the secular European Enlightenment of the 18th century, the transition in thinking that we rightly identify with Adam Smith and his contemporaries and followers, which gave us economics as we now know it, was powerfully influenced by then-controversial changes in religious belief in the English-speaking Protestant world in which they lived: in particular, key aspects of the movement away from orthodox Calvinism. Further, those at-the-outset influences of religious thinking not only fostered the subsequent spread of Smithian thinking, especially in America, but shaped the course of its reception. The ultimate result was a variety of fundamental resonances between economic thinking and religious thinking that continue to influence our public discussion of economic issues, and our public debate over economic policy, today. http://www.aeaweb.org/articles.php?doi=10.1257/aer.101.3.166 10.1257/aer.101.3.166 American Economic Association Nashville, TN 0002-8282 American Economic Review http://www.aeaweb.org/aer/ 101 3 May 2011 http://www.aeaweb.org/issue.php?journal=AER&volume=101&issue=3 Papers Markets and Morality JagdishBhagwatiCouncil on Foreign Relations 162 65 The paper addresses two issues. First, economics has evolved both as a positive science and, from moral philosophy, also as a normative discipline. Advancing the public good requires that public policy walk on both these legs. Second, the criticism has been forcefully made that markets undermine morality. This contention is refuted in several ways. http://www.aeaweb.org/articles.php?doi=10.1257/aer.101.3.162 10.1257/aer.101.3.162 American Economic Association Nashville, TN 0002-8282 American Economic Review http://www.aeaweb.org/aer/ 101 3 May 2011 http://www.aeaweb.org/issue.php?journal=AER&volume=101&issue=3 Papers The Restoration of Welfare Economics Anthony B.AtkinsonNuffield College, U Oxford 157 61 This paper argues that welfare economics should be restored to a prominent place on the agenda of economists, and should occupy a central role in the teaching of economics. Economists should provide justification for the ethical criteria underlying welfare statements, and these criteria require constant re-evaluation in the light of developments in economic analysis and in moral philosophy. Economists need to be more explicit about the relation between welfare criteria and the objectives of governments, policy-makers and individual citizens. Moreover, such a restoration of welfare economics should be accompanied by consideration of the adoption of an ethical code for the economics profession. http://www.aeaweb.org/articles.php?doi=10.1257/aer.101.3.157 10.1257/aer.101.3.157 American Economic Association Nashville, TN 0002-8282 American Economic Review http://www.aeaweb.org/aer/ 101 3 May 2011 http://www.aeaweb.org/issue.php?journal=AER&volume=101&issue=3 Papers What Is the Value of Terroir? RobinCrossOR State U Andrew J.PlantingaOR State U Robert N.StavinsHarvard U 152 56 We examine the value of terroir--the set of special characteristics of a location that impart unique qualities to the wine produced. We conduct a hedonic analysis of vineyard sales in the Willamette Valley of Oregon to ascertain whether site attributes--such as slope, aspect, elevation, and soil types—or designated appellations are more important determinants of price. We find that prices are strongly determined by appellation designations, but not by specific site attributes. These results indicate that the concept of terroir matters economically, but that the reality of terroir--as proxied by locational attributes--is not significant. http://www.aeaweb.org/articles.php?doi=10.1257/aer.101.3.152 10.1257/aer.101.3.152 American Economic Association Nashville, TN 0002-8282 American Economic Review http://www.aeaweb.org/aer/ 101 3 May 2011 http://www.aeaweb.org/issue.php?journal=AER&volume=101&issue=3 Papers Isolating the Symbolic Implications of Employee Mobility: Price Increases after Hiring Winemakers from Prominent Wineries Peter W.RobertsEmory U MuktiKhaireHarvard U Christopher I.RiderEmory U 147 51 Because wines are aged for several years before they are released, newly hired winemakers arrive as wines made by their predecessors enter the market. An analysis of winemaker hiring events reveals that wines released right after a new winemaker's arrival from a prominent competitor are priced significantly higher than corresponding wines released in the preceding year. However, the wines released before and after the hiring event are indistinguishable in terms of quality. These findings isolate a "purely symbolic" effect of employee mobility, which affirm sociological accounts of markets--under conditions of uncertainty, inter-organizational affiliations condition producers' returns to quality demonstrations. http://www.aeaweb.org/articles.php?doi=10.1257/aer.101.3.147 10.1257/aer.101.3.147 American Economic Association Nashville, TN 0002-8282 American Economic Review http://www.aeaweb.org/aer/ 101 3 May 2011 http://www.aeaweb.org/issue.php?journal=AER&volume=101&issue=3 Papers Climate, Grapevine Phenology, Wine Production, and Prices: Pauillac (1800-2009) Jean-MichelChevetINRA, Villenave-d'Ornon SebastienLecocqINRA, Ivry-sur-Seine MichaelVisserCREST and ERMES, Paris 142 46 This paper analyzes 19th and 20th century data from a well-known chateau in Bordeaux. The dataset includes information on weather conditions, starting dates of three phenological stages of grapevine, prices, and yields. We discuss how these variables have evolved over the last two centuries. We also study to what extent the impact of climate on yields and prices has changed over time. Our regression analysis suggests that the effect of temperature on yields has become weaker since the 19th century. The influence on prices has, on the contrary, become stronger. http://www.aeaweb.org/articles.php?doi=10.1257/aer.101.3.142 10.1257/aer.101.3.142 http://www.aeaweb.org/aer/data/may2011/P2011_2261_app.pdf American Economic Association Nashville, TN 0002-8282 American Economic Review http://www.aeaweb.org/aer/ 101 3 May 2011 http://www.aeaweb.org/issue.php?journal=AER&volume=101&issue=3 Papers Wine Retail Price Dispersion in the United States: Searching for Expensive Wines? David A.JaegerCenter for Macroeconomic Research, U Cologne and Graduate Center, CUNY KarlStorchmannNYU 136 41 Similar to other markets in which deviations from Jevons' "law of one price" is the norm rather than the exception, the retail wine market in the United States is characterized by large price dispersions. Drawing on a large sample of retail prices from wine-searcher.com we find an average per-wine coefficient of variation of 23 percent. Some of this is due to differential market conditions, especially state regulations. Our evidence suggests that dispersion also depends positively on price levels, after controlling for consumer, market, and state heterogeneity. http://www.aeaweb.org/articles.php?doi=10.1257/aer.101.3.136 10.1257/aer.101.3.136 American Economic Association Nashville, TN 0002-8282 American Economic Review http://www.aeaweb.org/aer/ 101 3 May 2011 http://www.aeaweb.org/issue.php?journal=AER&volume=101&issue=3 Papers Credit Ratings and the Evolution of the Mortgage-Backed Securities Market JieHeU GA JunQianBoston College Philip E.StrahanBoston College 131 35 We compare the structure and performance of private (non-GSE) mortgage-backed securities sold by large issuers vs. those sold by small issuers over the period 2000-2006. Securities sold by large issuers have less subordination--a greater fraction of the deal receiving AAA rating--than those sold by small issuers. Prices for AAA-rated and non-AAA rated tranches sold by large issuers fell more when the market turned down than those sold by small issuers, and this difference was concentrated among tranches issued between 2004 and 2006. These results suggest that rating agencies grant favorable ratings to large issuers, especially during market booms. http://www.aeaweb.org/articles.php?doi=10.1257/aer.101.3.131 10.1257/aer.101.3.131 American Economic Association Nashville, TN 0002-8282 American Economic Review http://www.aeaweb.org/aer/ 101 3 May 2011 http://www.aeaweb.org/issue.php?journal=AER&volume=101&issue=3 Papers Did Credit Rating Agencies Make Unbiased Assumptions on CDOs? John M.GriffinU TX Dragon YongjunTangU Hong Kong 125 30 We compare key CDO assumptions from two departments within the same rating agency but with different financial incentives. Assumptions made by the ratings division are more favorable than those by the surveillance department. The differences are not explained by collateral switching during the ramp-up period, a long time gap between reports, nor the collapse of the CDO market in 2007 Additionally, CDOs rated with more favorable assumptions by the ratings group were more likely to be subsequently downgraded. As the useful signals from the surveillance group were seemingly ignored, these findings suggest rating agencies bias towards high ratings. http://www.aeaweb.org/articles.php?doi=10.1257/aer.101.3.125 10.1257/aer.101.3.125 http://www.aeaweb.org/aer/data/may2011/P2011_2034_app.pdf American Economic Association Nashville, TN 0002-8282 American Economic Review http://www.aeaweb.org/aer/ 101 3 May 2011 http://www.aeaweb.org/issue.php?journal=AER&volume=101&issue=3 Papers Credit Ratings Accuracy and Analyst Incentives HeskiBar-IsaacNYU JoelShapiroU Oxford 120 24 The financial crisis has brought a new focus on the accuracy of credit rating agencies (CRAs). In this paper, we highlight the incentives of analysts at the CRAs to provide accurate ratings. We construct a model in which analysts initially work at a CRA and can then either remain or move to a bank. The CRA uses incentive contracts to motivate analysts, but does not capture the benefits if the analyst moves. We find that rating agency accuracy increases with CRA monitoring, bank profitability (a positive "revolving door" effect), and can be non-monotonic in the probability of an analyst leaving. http://www.aeaweb.org/articles.php?doi=10.1257/aer.101.3.120 10.1257/aer.101.3.120 American Economic Association Nashville, TN 0002-8282 American Economic Review http://www.aeaweb.org/aer/ 101 3 May 2011 http://www.aeaweb.org/issue.php?journal=AER&volume=101&issue=3 Papers Forecasting Gasoline Prices Using Consumer Surveys Soren T.AndersonMI State U RyanKelloggU MI James M.SalleeU Chicago Richard T.CurtinInstitute for Social Research, U MI 110 14 This paper analyzes the predictive power of a new data set of consumer gasoline price forecasts taken from the Michigan Survey of Consumers (MSC). MSC data generally perform as well as a no-change forecast in predicting future gasoline prices, and they substantially out-perform the no-change forecast during the recent economic crisis, during which time they track futures market prices. Finally, the cross-respondent dispersion of the MSC forecasts increases substantially during the economic crisis, paralleling the large increase in price volatility at this time. http://www.aeaweb.org/articles.php?doi=10.1257/aer.101.3.110 10.1257/aer.101.3.110 American Economic Association Nashville, TN 0002-8282 American Economic Review http://www.aeaweb.org/aer/ 101 3 May 2011 http://www.aeaweb.org/issue.php?journal=AER&volume=101&issue=3 Papers Credit Ratings and Security Prices in the Subprime MBS Market AdamAshcraftFederal Reserve Bank of New York PaulGoldsmith-PinkhamHarvard U PeterHullFederal Reserve Bank of New York JamesVickeryFederal Reserve Bank of New York 115 19 We present and discuss preliminary evidence suggesting that credit ratings significantly influenced prices for subprime mortgage-backed securities issued in the period leading up to the recent financial crisis. Ratings are closely correlated with prices even controlling for a rich set of security- and loan-level controls. This incremental variation in ratings has much less predictive power for security defaults, however, based on findings to date from our ongoing research, suggesting prices were excessively sensitive to ratings relative to their informational content. http://www.aeaweb.org/articles.php?doi=10.1257/aer.101.3.115 10.1257/aer.101.3.115 American Economic Association Nashville, TN 0002-8282 American Economic Review http://www.aeaweb.org/aer/ 101 3 May 2011 http://www.aeaweb.org/issue.php?journal=AER&volume=101&issue=3 Papers Fuel Economy, Car Class Mix, and Safety Mark R.JacobsenU CA, San Diego 105 09 Fuel economy standards change the composition of the vehicle fleet, potentially influencing accident fatality risks. I estimate the direction and magnitude of this impact, introducing a correction for selection on driver behavior. A policy application using my new estimates shows that the present distinction between light trucks and cars in fuel economy rules has very negative consequences for overall safety: Each MPG increment to the standard results in an additional 150 fatalities per year in expectation. My correction for selection is pivotal in this finding. I then demonstrate a simple alternative regulation that can produce near-zero changes in accident fatalities. http://www.aeaweb.org/articles.php?doi=10.1257/aer.101.3.105 10.1257/aer.101.3.105 American Economic Association Nashville, TN 0002-8282 American Economic Review http://www.aeaweb.org/aer/ 101 3 May 2011 http://www.aeaweb.org/issue.php?journal=AER&volume=101&issue=3 Papers Consumers' Perceptions and Misperceptions of Energy Costs HuntAllcottMIT and NYU 98 104 This paper presents three initial stylized facts from the Vehicle Ownership and Alternatives Survey (VOAS), a nationally representative survey that elicits consumers' beliefs about gasoline prices and the relative energy costs of autos with different fuel economy ratings. First, American consumers devote little attention to fuel costs when purchasing autos. Second, consistent with a cognitive bias called "MPG Illusion," consumers underestimate the fuel cost differences between low-MPG vehicles and overestimate the differences between high-MPG vehicles. Third, Americans' mean and median expected future gas prices were above current prices and predictions of the futures market at the time of the survey. Although it is often argued that misperceived energy costs justify policies to encourage the sale of energy efficient durable goods, these results show that misperceptions and expectations that differ from market information could either increase or decrease energy efficiency. http://www.aeaweb.org/articles.php?doi=10.1257/aer.101.3.98 10.1257/aer.101.3.98 American Economic Association Nashville, TN 0002-8282 American Economic Review http://www.aeaweb.org/aer/ 101 3 May 2011 http://www.aeaweb.org/issue.php?journal=AER&volume=101&issue=3 Papers Is an Automaker's Road to Bankruptcy Paved with Customers' Beliefs? AliHortacsuU Chicago GregorMatvosU Chicago ChaeheeShinU Chicago ChadSyversonU Chicago SriramVenkataramanEmory U 93 97 We explore the role the feedback loop between firms' financial health and consumers' demand for their products plays in the auto market. We construct a simple model of an automaker making pricing and debt service (continuation) decisions while recognizing that consumers are sensitive to whether it stays in business. We show that multiple equilibria can exist in such a model, and calibrate it to match stylized facts surrounding GM's recent bankruptcy. The results suggest that while the impact of financial distress on demand substantially reduced GM's profit, bank-run-like multiple equilibria do not appear likely in this market. http://www.aeaweb.org/articles.php?doi=10.1257/aer.101.3.93 10.1257/aer.101.3.93 http://www.aeaweb.org/aer/data/may2011/P2011_1628_app.pdf American Economic Association Nashville, TN 0002-8282 American Economic Review http://www.aeaweb.org/aer/ 101 3 May 2011 http://www.aeaweb.org/issue.php?journal=AER&volume=101&issue=3 Papers Electricity Consumption and Durable Housing: Understanding Cohort Effects Dora L.CostaUCLA Matthew E.KahnInstitute of the Environment and Sustainability, UCLA 88 92 We find that households living in California homes built in the 1960s and 1970s had high electricity consumption in 2000 relative to houses of more recent vintages because the price of electricity at the time of home construction was low. Homes built in the early 1990s had lower electricity consumption than homes of earlier vintages because the price of electricity was higher. The elasticity of the price of electricity at the time of construction was -0.22. As homes built between 1960 and 1989 become a smaller share of the housing stock, average household electricity purchases will fall. http://www.aeaweb.org/articles.php?doi=10.1257/aer.101.3.88 10.1257/aer.101.3.88 http://www.aeaweb.org/aer/data/may2011/P2011_1614_data.zip American Economic Association Nashville, TN 0002-8282 American Economic Review http://www.aeaweb.org/aer/ 101 3 May 2011 http://www.aeaweb.org/issue.php?journal=AER&volume=101&issue=3 Papers Do Residential Customers Respond to Hourly Prices? Evidence from a Dynamic Pricing Experiment Frank A.WolakStanford U 83 87 This paper uses the results of a dynamic pricing experiment for households in the District of Columbia to determine whether the reduction in demand associated with an hourly price signal is economically different from the demand reduction associated with an equivalent price signal that is four times longer in duration. For both regular and all-electric customers, the percentage demand reduction associated with a given percentage increase in the hourly price is approximately equal to the percentage demand reduction associated with the same percentage price increase of a much longer duration. http://www.aeaweb.org/articles.php?doi=10.1257/aer.101.3.83 10.1257/aer.101.3.83 American Economic Association Nashville, TN 0002-8282 American Economic Review http://www.aeaweb.org/aer/ 101 3 May 2011 http://www.aeaweb.org/issue.php?journal=AER&volume=101&issue=3 Papers The Diffusion of Energy Efficiency in Building NilsKokMaastricht U MarquiseMcGrawU CA, Berkeley John M.QuigleyU CA, Berkeley 77 82 We analyze the diffusion of buildings certified for energy efficiency across US property markets. Using a panel of 48 metropolitan areas (MSAs) observed over the last 15 years, we model the geographic patterns and dynamics of building certification, relating industry composition, changes in economic conditions, characteristics of the local commercial property market, and the presence of human capital, to the cross-sectional variation in energy-efficient building technologies and the diffusion of those technologies over time. Understanding the determinants and the rate at which energy-efficient building practices diffuse is important for designing policies to affect resource consumption in the built environment. http://www.aeaweb.org/articles.php?doi=10.1257/aer.101.3.77 10.1257/aer.101.3.77 http://www.aeaweb.org/aer/data/may2011/P2011_1612_app.pdf American Economic Association Nashville, TN 0002-8282 American Economic Review http://www.aeaweb.org/aer/ 101 3 May 2011 http://www.aeaweb.org/issue.php?journal=AER&volume=101&issue=3 Papers The Environmental Consequences of Global Reuse ThomasKinnamanBucknell U Hide-FumiYokooNational Institute for Environmental Studies, Tsukuba 71 76 This paper summarizes a two-country model that solves for optimal tax rates to achieve efficiency in an economy with international trade in used consumer electronics. If only the developed nation can tax the disposal of e-waste, then the global Pareto Optimum can be obtained by either imposing an import tariff on used consumer electronics or subsidizing the return of e-waste for disposal in the developed country. The global Pareto Optimum can also be obtained by reducing the disposal tax in the developed country to a level below the external marginal cost of disposal should no other policy option be available. http://www.aeaweb.org/articles.php?doi=10.1257/aer.101.3.71 10.1257/aer.101.3.71 American Economic Association Nashville, TN 0002-8282 American Economic Review http://www.aeaweb.org/aer/ 101 3 May 2011 http://www.aeaweb.org/issue.php?journal=AER&volume=101&issue=3 Papers Promoting Recycling: Private Values, Social Norms, and Economic Incentives W. KipViscusiVanderbilt U JoelHuberDuke U JasonBellDuke U 65 70 Evidence from a nationally representative sample of households illuminates the determinants of recycling behavior for plastic water bottles. Private values of the environment are influential in promoting recycling, as are personal norms for pro-environmental behavior. However, social norms with respect to the assessment of the household's recycling behaviors by others have little independent effect. Particularly influential are policies that create economic incentives to promote recycling either through state recycling laws that reduce the time and inconvenience costs of recycling or through bottle deposits. Effective policies can have a discontinuous effect at the individual level, transforming non-recyclers into avid recyclers. http://www.aeaweb.org/articles.php?doi=10.1257/aer.101.3.65 10.1257/aer.101.3.65 http://www.aeaweb.org/aer/data/may2011/P2011_1445_data.zip American Economic Association Nashville, TN 0002-8282 American Economic Review http://www.aeaweb.org/aer/ 101 3 May 2011 http://www.aeaweb.org/issue.php?journal=AER&volume=101&issue=3 Papers The Effect of Bottle Laws on Income: New Empirical Results BevinAshenmillerOccidental College 60 64 Eleven US states have "bottle laws," deposit-refund programs that combine a consumption tax with a recycling rebate. When states set the bottle deposit low enough it becomes a tax on high wage earners, for whom the opportunity cost of their time prevents them from returning containers for their deposit. However, this bottle deposit will still be high enough that harvesting recyclables provides employment for low wage earners. Using individual data on observed cash recycling behavior, this paper shows that an unintended consequence of bottle laws is that they have the potential to increase the incomes of very low wage workers. http://www.aeaweb.org/articles.php?doi=10.1257/aer.101.3.60 10.1257/aer.101.3.60 American Economic Association Nashville, TN 0002-8282 American Economic Review http://www.aeaweb.org/aer/ 101 3 May 2011 http://www.aeaweb.org/issue.php?journal=AER&volume=101&issue=3 Papers Challenges in Merger Simulation Analysis Christopher R.KnittelMIT KonstantinosMetaxoglouBates White LLC, Washington, DC 56 59 In this paper, we share our experience with merger simulations using a Random Coefficient Logit model on the demand side and assuming a static Bertrand game on the supply side. Drawing largely from our work in Knittel and Metaxoglou (2008), we show that different demand estimates obtained from different combinations of optimization algorithms and starting values lead to substantial differences in post-merger market outcomes using metrics such as industry profits, and change in consumer welfare and prices. http://www.aeaweb.org/articles.php?doi=10.1257/aer.101.3.56 10.1257/aer.101.3.56 American Economic Association Nashville, TN 0002-8282 American Economic Review http://www.aeaweb.org/aer/ 101 3 May 2011 http://www.aeaweb.org/issue.php?journal=AER&volume=101&issue=3 Papers More Evidence on the Performance of Merger Simulations Matthew C.WeinbergBryn Mawr College 51 55 Merger simulations are commonly used to simulate the effects of potential mergers. Despite the large resources devoted to merger review, little evidence exists on the accuracy of these methods. This paper uses the acquisition of Tambrands by Proctor and Gamble to provide evidence on the efficacy of merger simulation. Two simple demand systems are estimated under several identification assumptions and combined with a static model of price competition. Simulations predict small price effects of about 1 percent for the merging firms' brands, while direct estimates indicate the merger raised prices by 5-8 percent. http://www.aeaweb.org/articles.php?doi=10.1257/aer.101.3.51 10.1257/aer.101.3.51 American Economic Association Nashville, TN 0002-8282 American Economic Review http://www.aeaweb.org/aer/ 101 3 May 2011 http://www.aeaweb.org/issue.php?journal=AER&volume=101&issue=3 Papers Does Concentration Matter? Measurement of Petroleum Merger Price Effects DanielHoskenFTC LouisSilviaFTC ChristopherTaylorFTC 45 50 We have estimated the price effects of two changes in market structure resulting from two changes in the ownership of gasoline refineries in the San Francisco Bay area: Tosco's purchase of Unocal's Rodeo refinery in April 1997 and UDS's purchase of Tosco's Avon refinery in August 2000. These events provide a relatively unique opportunity to test a price concentration relationship. If market concentration is related to price, then we should observe prices increase and then decrease by a similar amount following these transactions. We do not find evidence of a consistent price concentration relationship. http://www.aeaweb.org/articles.php?doi=10.1257/aer.101.3.45 10.1257/aer.101.3.45 American Economic Association Nashville, TN 0002-8282 American Economic Review http://www.aeaweb.org/aer/ 101 3 May 2011 http://www.aeaweb.org/issue.php?journal=AER&volume=101&issue=3 Papers Crash and Wait? The Impact of the Great Recession on the Retirement Plans of Older Americans BrookeHelppie McFallU MI 40 44 This study uses data from pre- and post-crash surveys from the Cognitive Economics study to examine the impact of recent stock and labor market wealth losses on the planned retirement ages of older Americans. Regression estimates imply that the average wealth loss between July 2008 and May/June 2009 is associated with an increase in planned retirement age of approximately 2.5 months. Furthermore, pessimism about future stock market returns is found to amplify the impact of wealth losses on retirement timing. http://www.aeaweb.org/articles.php?doi=10.1257/aer.101.3.40 10.1257/aer.101.3.40 http://www.aeaweb.org/aer/data/may2011/P2011_1412_data.zip http://www.aeaweb.org/aer/data/may2011/P2011_1412_app.pdf American Economic Association Nashville, TN 0002-8282 American Economic Review http://www.aeaweb.org/aer/ 101 3 May 2011 http://www.aeaweb.org/issue.php?journal=AER&volume=101&issue=3 Papers Time to Retire? The Effect of State Fiscal Policies on Retirement Decisions TamiGurley-CalvezWV U BrianHillSalisbury U 35 39 Our research addresses the importance of state fiscal policies on the probability of retirement using a panel of individual tax return data. Results indicate that a one percentage point increase in the income or sales tax rate reduces the probability of retirement by about 8.7 percent. The evidence suggests that state spending might also affect retirement decisions but magnitudes are inconclusive. In general, the results suggest that the income effect dominates; that is, higher tax rates at the state-level reduce disposable income and decrease the probability of retiring. Results are similar in models examining single and married filers separately. http://www.aeaweb.org/articles.php?doi=10.1257/aer.101.3.35 10.1257/aer.101.3.35 American Economic Association Nashville, TN 0002-8282 American Economic Review http://www.aeaweb.org/aer/ 101 3 May 2011 http://www.aeaweb.org/issue.php?journal=AER&volume=101&issue=3 Papers What Explains Changes in Retirement Plans during the Great Recession? Gopi ShahGodaStanford Institute for Economic Policy Research, Stanford U John B.ShovenStanford U Sita NatarajSlavovOccidental College 29 34 We examine changes in subjective probabilities regarding retirement between the 2006 and 2008 waves of the Health and Retirement Study. Using a first-difference approach to eliminate individual heterogeneity, we find that the steep drop in asset prices in 2008 increased the reported probability of working at age 62 during the Great Recession. Increasing unemployment at least partly attenuated this effect, but subjective probabilities of working did not respond to changes in housing markets. Older workers' probabilities of working were more sensitive to fluctuations in the stock market, but less responsive to changes in labor market conditions. http://www.aeaweb.org/articles.php?doi=10.1257/aer.101.3.29 10.1257/aer.101.3.29 American Economic Association Nashville, TN 0002-8282 American Economic Review http://www.aeaweb.org/aer/ 101 3 May 2011 http://www.aeaweb.org/issue.php?journal=AER&volume=101&issue=3 Papers Recessions, Retirement, and Social Security Courtney C.CoileWellesley College Phillip B.LevineWellesley College 23 28 This paper examines how labor market fluctuations around the time of retirement affect the labor force status and Social Security receipt of individuals ages 55 to 69 and the income of retirees in their 70s, using data from the March Current Population Survey, Census, and American Community Surveys. We find that workers are more likely to leave the labor force, to collect Social Security earlier, and to have lower Social Security income when they face a recession near retirement. The impact is greatest for the less-educated, who are more susceptible to job loss and rely more heavily on Social Security. http://www.aeaweb.org/articles.php?doi=10.1257/aer.101.3.23 10.1257/aer.101.3.23 American Economic Association Nashville, TN 0002-8282 American Economic Review http://www.aeaweb.org/aer/ 101 3 May 2011 http://www.aeaweb.org/issue.php?journal=AER&volume=101&issue=3 Papers Inequality at Birth: Some Causes and Consequences JanetCurrieColumbia U and IZA, Bonn 1 22 http://www.aeaweb.org/articles.php?doi=10.1257/aer.101.3.1 10.1257/aer.101.3.1 American Economic Association Nashville, TN 0002-8282 American Economic Review http://www.aeaweb.org/aer/ 101 3 May 2011 http://www.aeaweb.org/issue.php?journal=AER&volume=101&issue=3 Journal Article Editors' Introduction William R.JohnsonU VA SamanthaBennettAEA Publications Office xi xii http://www.aeaweb.org/articles.php?doi=10.1257/aer.101.3.xi 10.1257/aer.101.3.xi American Economic Association Nashville, TN 0002-8282 American Economic Review http://www.aeaweb.org/aer/ 101 3 May 2011 http://www.aeaweb.org/issue.php?journal=AER&volume=101&issue=3 Journal Article Front Matter i ix http://www.aeaweb.org/articles.php?doi=10.1257/aer.101.3.i 10.1257/aer.101.3.i American Economic Association Nashville, TN 0002-8282 American Economic Review http://www.aeaweb.org/aer/ 101 3 May 2011 http://www.aeaweb.org/issue.php?journal=AER&volume=101&issue=3 Journal Article Foreword Orley C.AshenfelterPrinceton U x x http://www.aeaweb.org/articles.php?doi=10.1257/aer.101.3.x 10.1257/aer.101.3.x American Economic Association Nashville, TN 0002-8282 American Economic Review http://www.aeaweb.org/aer/ 101 3 May 2011 http://www.aeaweb.org/issue.php?journal=AER&volume=101&issue=3 Proceedings Report of the Editor: American Economic Review (with Appendix by Philip J. Glandon) Robert A.MoffittJohns Hopkins U 684 93 http://www.aeaweb.org/articles.php?doi=10.1257/aer.101.3.684 10.1257/aer.101.3.684 American Economic Association Nashville, TN 0002-8282 American Economic Review http://www.aeaweb.org/aer/ 101 3 May 2011 http://www.aeaweb.org/issue.php?journal=AER&volume=101&issue=3 Proceedings Report of the Editor: Journal of Economic Literature JanetCurrieColumbia U 700 702 http://www.aeaweb.org/articles.php?doi=10.1257/aer.101.3.700 10.1257/aer.101.3.700 American Economic Association Nashville, TN 0002-8282 American Economic Review http://www.aeaweb.org/aer/ 101 3 May 2011 http://www.aeaweb.org/issue.php?journal=AER&volume=101&issue=3 Proceedings Report of the Editor: Journal of Economic Perspectives DavidAutorMIT 703 05 http://www.aeaweb.org/articles.php?doi=10.1257/aer.101.3.703 10.1257/aer.101.3.703 American Economic Association Nashville, TN 0002-8282 American Economic Review http://www.aeaweb.org/aer/ 101 3 May 2011 http://www.aeaweb.org/issue.php?journal=AER&volume=101&issue=3 Proceedings Report of the Editor: American Economic Journal: Applied Economics EstherDufloMIT 706 09 http://www.aeaweb.org/articles.php?doi=10.1257/aer.101.3.706 10.1257/aer.101.3.706 American Economic Association Nashville, TN 0002-8282 American Economic Review http://www.aeaweb.org/aer/ 101 3 May 2011 http://www.aeaweb.org/issue.php?journal=AER&volume=101&issue=3 Proceedings Report of the Editor: American Economic Journal: Economic Policy Alan J.AuerbachU CA, Berkeley 710 12 http://www.aeaweb.org/articles.php?doi=10.1257/aer.101.3.710 10.1257/aer.101.3.710 American Economic Association Nashville, TN 0002-8282 American Economic Review http://www.aeaweb.org/aer/ 101 3 May 2011 http://www.aeaweb.org/issue.php?journal=AER&volume=101&issue=3 Proceedings Report of the Editor: American Economic Journal: Macroeconomics Steven J.DavisU Chicago 713 17 http://www.aeaweb.org/articles.php?doi=10.1257/aer.101.3.713 10.1257/aer.101.3.713 American Economic Association Nashville, TN 0002-8282 American Economic Review http://www.aeaweb.org/aer/ 101 3 May 2011 http://www.aeaweb.org/issue.php?journal=AER&volume=101&issue=3 Proceedings Report of the Editor: American Economic Journal: Microeconomics AndrewPostlewaiteU PA 718 20 http://www.aeaweb.org/articles.php?doi=10.1257/aer.101.3.718 10.1257/aer.101.3.718 American Economic Association Nashville, TN 0002-8282 American Economic Review http://www.aeaweb.org/aer/ 101 3 May 2011 http://www.aeaweb.org/issue.php?journal=AER&volume=101&issue=3 Proceedings Report of the Director: Job Openings for Economists John J.SiegfriedVanderbilt U 721 23 http://www.aeaweb.org/articles.php?doi=10.1257/aer.101.3.721 10.1257/aer.101.3.721 American Economic Association Nashville, TN 0002-8282 American Economic Review http://www.aeaweb.org/aer/ 101 3 May 2011 http://www.aeaweb.org/issue.php?journal=AER&volume=101&issue=3 Proceedings Report of the Committee on Economic Education for 2010 MichaelWattsPurdue U 724 30 http://www.aeaweb.org/articles.php?doi=10.1257/aer.101.3.724 10.1257/aer.101.3.724 American Economic Association Nashville, TN 0002-8282 American Economic Review http://www.aeaweb.org/aer/ 101 3 May 2011 http://www.aeaweb.org/issue.php?journal=AER&volume=101&issue=3 Proceedings Report of the Committee on the Status of Women in the Economics Profession 2010 Barbara M.FraumeniU Southern ME 731 36 http://www.aeaweb.org/articles.php?doi=10.1257/aer.101.3.731 10.1257/aer.101.3.731 American Economic Association Nashville, TN 0002-8282 American Economic Review http://www.aeaweb.org/aer/ 101 3 May 2011 http://www.aeaweb.org/issue.php?journal=AER&volume=101&issue=3 Proceedings Committee on the Status of Minority Groups in the Economics Profession: Report of Committee Activities for the 2010 Calendar Year NginaChitejiSkidmore College 737 38 http://www.aeaweb.org/articles.php?doi=10.1257/aer.101.3.737 10.1257/aer.101.3.737 American Economic Association Nashville, TN 0002-8282 American Economic Review http://www.aeaweb.org/aer/ 101 3 May 2011 http://www.aeaweb.org/issue.php?journal=AER&volume=101&issue=3 Proceedings American Economic Association Committee on Statistics (AEAStat): Annual Report--2010 Matthew D.ShapiroU MI 739 40 http://www.aeaweb.org/articles.php?doi=10.1257/aer.101.3.739 10.1257/aer.101.3.739 American Economic Association Nashville, TN 0002-8282 American Economic Review http://www.aeaweb.org/aer/ 101 3 May 2011 http://www.aeaweb.org/issue.php?journal=AER&volume=101&issue=3 Proceedings Committee on Government Relations Katharine G.AbrahamU MD 741 43 http://www.aeaweb.org/articles.php?doi=10.1257/aer.101.3.741 10.1257/aer.101.3.741 American Economic Association Nashville, TN 0002-8282 American Economic Review http://www.aeaweb.org/aer/ 101 3 May 2011 http://www.aeaweb.org/issue.php?journal=AER&volume=101&issue=3 Proceedings Report of Ad Hoc Committee on the Job Market 744 46 http://www.aeaweb.org/articles.php?doi=10.1257/aer.101.3.744 10.1257/aer.101.3.744