Real-world economics

Use AEA materials to illustrate concepts in economics

The used car market is a useful example of the lemons problem, but after a while, it can get old. There must be other ways of discussing asymmetric information – ways that illustrate the concept while sparking conversation and grounding the idea in a real world example. The AEA's Research Highlight series can help. These short articles talk about recent papers, their findings, and how they relate to the world around us. Many focus on a central concept and can supplement more traditional classroom readings. The Journal of Economic Perspectives (JEP) also has accessible material that relates to everyday economics.


Adverse selection
  • How health insurance markets work (and fail)  | article
  • Why do people give to charity?  | article
Asymmetric information
  • Giving Pakistani parents more information about their children’s schools changed the educational landscape | article
  • What health choices do doctors make, and why are they different than most people’s medical decisions? | article
Behavioral economics
  • There are many reasons why people ignore information, but they are hard for economists to empirically tell apart  | article
  • Many cartel members undercut the other members without retribution. How? | article
  • The NCAA might be a cartel | article
  • How many cartels exist and how important is competition policy to reining them in? | article
  • Contracts are relationships, and trust is important | article
  • Contracts may be able to prevent sovereign debt defaults | article
Comparative advantage
  • Is water a source of comparative advantage? | article
  • Economists are studying culture more and more | article
  • The economics of anti-Semitism | article
  • Can a school-based program have a meaningful impact on gender inequality? | article
  • How do shared goals among different social groups impact prejudice? | article
  • Penny Goldberg discusses how legal gender discrimination affects women’s economic opportunities around the globe. | article
  • How does religious intensity affect development? | article
Deadweight loss
  • Gift exchanges tend to create deadweight loss | article
  • England’s 17th century window tax meant 150 years of deadweight loss | article
Discount rate
  • What should we do about climate change?  | article
  • Electric cars export pollution to other states | article
  • Why spam email has externality issues | article
  • Why local officials in China began to clean up rivers | article
  • How much does it cost to reduce one ton of carbon dioxide? | article
Federal Reserve
  • The downside of central bank transparency | article
  • A history of the Fed’s role in preventing crises | article
Financial crisis
  • What does growing bank interconnectedness mean for future crises? | article
  • How investors viewed systemic risk in 2008 | article
  • US policymakers faced limits when responding to the 2008 financial crisis | article
  • How a modern-day run on a UK bank happened | article
Game theory
  • A history of game theory and where it might be headed | article
Human capital
  • Impatience contributes to lower educational attainment and earnings | article
  • How increasing human capital can help China’s economy | article
  • Do parents skew their children’s birth dates for tax purposes? | article
  • Citizenship could disincentivize immigrants from pursuing illegal work. | article
  • Confused taxpayers may be responding to incentives that don’t exist. | article
  • How can you motivate yourself to go to the gym? | article
  • Why local officials in China began to clean up rivers. | article
  • A program designed to improve learning incentivized cheating. | article
  • Could the "interim-payment" model solve the key flaws with research contests? | article
  • China’s reported inflation might be too stable to believe. | article
  • The rise of warehouse stores may explain why consumption inequality has not tracked an expanding income gap. | article
  • Florian Hoffman discusses how income disparities have grown in the US and Europe over the last 40 years. | article
  • Are poor countries catching up with rich countries? | article
Market failures
  • Consumers do not always buy energy-efficient products, even when they would save money  | article
  • Market-based reforms from 1999 to 2012 significantly decreased the costs of producing electricity in the United States.  | article
Market concentration
  • Is consolidation among marketing networks driving down online advertising sales?  | article
  • Should the United States be worried about its growing monopolies? | article
  • When sports leagues have monopoly power, cities end up paying for stadiums | article
  • The oligopolistic smartphone market isn't producing enough phones for consumers. | article
  • How do the firms of today match up with the firms of yesterday? | article
  • The AEA interviews Naomi Lamoreaux about the history of Americans' response to dominant companies. | article
  • Growing demand for hotels led to fewer, bigger firms in the 70s—but the business didn’t become any less cutthroat. | article
Moral hazard
  • Patients don’t seem to care about how much their hospital visit costs | article
Opportunity cost
  • How citizenship changes the opportunity cost of crime | article
Phillips Curve
  • Understanding the 1960s debate on inflation and unemployment can shed light on today's economy  | article
Public good
  • Sample public good classroom game | article
Randomized controlled trial
  • Scaling up RCTs to policy is a difficult but necessary goal for economists  | article
Resource curse
  • The 2000s commodity boom spurred Africa’s economy, but at what cost? | article
Risk aversion
  • Why don’t investors invest more in stocks? | article
  • After a flood, the probability of another is low. Still, people buy more insurance | article
  • Why do restaurants with the best inspection reports keep their results a secret?  | article
Social capital
  • How the printing press may have bolstered social capital | article
  • Can household specialization explain the gender gap? | article
  • Specialization has made online crime more productive | article
State building
  • Could the success of a national team be enough to unite a divided nation? | article
  • The Democratic Republic of Congo shows how city chiefs can help low-capacity governments collect more taxes. | article
  • A more nuanced understanding of diversity can help explain why some nations are better at fostering a common identity. | article
  • Should people receive subsidies to buy energy efficient light bulbs? | article
Supply and demand
  • When illegal goods become legitimate, everything changes | article
  • Scandinavian countries have high taxes but maintain economic growth. How? | article
  • England’s 17th century window tax meant 150 years of deadweight loss | article
  • A tax spike on companies after layoffs is discouraging them from rehiring when business turns around. | article
  • A threat paired with insights from behavioral economics can help ensure companies pay their taxes. | article
  • Technology leads to more job turnover, which might make people happier | article
  • To what extent can technological disruption lead to civil unrest? | article
  • Trade policy contributed to South Korea’s spectacular economic growth | article
  • Britain’s protectionism in the 1930s may offer insights for policymakers today | article
  • Which companies are successful at selling abroad? | article
  • Why do special economic zones exist? | article
  • What would ending NAFTA and Brexit do to car industries around the world? | article
  • Comprehensive survey of the uncertainty literature | article
  • How valuable are long-run predictions? | article
  • The US housing boom may have disguised a deeper decline in manufacturing | article
  • Has the natural rate of unemployment increased since the recession? | article
  • Unemployment insurance helped stabilize the housing market during the Great Recession | article
  • How does part-time work respond to economic swings? | article