Reminders and Recidivism: Using Administrative Data to Characterize Nonfilers and Conduct EITC Outreach

By John Guyton, Pat Langetieg, Day Manoli, Mark Payne, Brenda Schafer, and Michael Sebastiani

American Economic Review, May 2017

This project uses third-party information reporting and population-level administrative tax data to identify the population of nonfilers. This population consists of individuals who do not file a tax return despite having income reported by third parties ...

Simultaneous Search and Efficiency of Entry and Search Intensity

By Pieter A. Gautier and Christian L. Holzner

American Economic Journal: Microeconomics, August 2017

We consider a model where firms open vacancies and post and commit to a wage mechanism. Search is costly and workers simultaneously apply to multiple jobs. Firms can be connected to multiple workers and workers to multiple firms. We use a new method to de...

Partner Choice, Investment in Children, and the Marital College Premium

By Pierre-André Chiappori, Bernard Salanié, and Yoram Weiss

American Economic Review, August 2017

We construct a model of household decision-making in which agents consume a private and a public good, interpreted as children's welfare. Children's utility depends on their human capital, which depends on the time their parents spend with them and on the...

Multi-category Competition and Market Power: A Model of Supermarket Pricing

By Øyvind Thomassen, Howard Smith, Stephan Seiler, and Pasquale Schiraldi

American Economic Review, August 2017

In many competitive settings, consumers buy multiple product categories, and some prefer to use a single firm, generating complementary cross-category price effects. To study pricing in supermarkets, an organizational form where these effects are internal...

Dishonesty and Selection into Public Service: Evidence from India

By Rema Hanna and Shing-Yi Wang

American Economic Journal: Economic Policy, August 2017

Students in India who cheat on a simple laboratory task are more likely to prefer public sector jobs. This paper shows that cheating on this task predicts corrupt behavior by civil servants, implying that it is a meaningful predictor of future corruption....

Why Don't Households Smooth Consumption? Evidence from a $25 Million Experiment

By Jonathan A. Parker

American Economic Journal: Macroeconomics, October 2017

This paper evaluates theoretical explanations for the propensity of households to increase spending in response to the arrival of predictable, lump-sum payments, using households in the Nielsen Consumer Panel who received $25 million in randomly distribut...

How Important Are Sectoral Shocks?

By Enghin Atalay

American Economic Journal: Macroeconomics, October 2017

I quantify the contribution of sectoral shocks to business cycle fluctuations in aggregate output. I develop and estimate a multi-industry general equilibrium model in which each industry employs the material and capital goods produced by other sectors. U...

The Cyclicality of Sales, Regular, and Effective Prices: Business Cycle and Policy Implications: Comment

By Etienne Gagnon, David López-Salido, and Jason Sockin

American Economic Review, October 2017

Coibion, Gorodnichenko, and Hong (2015) argue that the CPI underestimates the deceleration in consumer prices during economic downturns because the index fails to account for the reallocation of consumer spending from high-price to low-price stores. We sh...

Consumption Responses to Temporary Tax Incentives: Evidence from State Sales Tax Holidays

By Sumit Agarwal, Nathan Marwell, and Leslie McGranahan

American Economic Journal: Economic Policy, November 2017

States offer sales tax holidays (STHs) temporarily exempting items like clothes, shoes, and school supplies from the state sales tax. Spending response to these temporary tax changes are investigated using two datasets: the Diary portion of the Consumer E...

Power to Choose? An Analysis of Consumer Inertia in the Residential Electricity Market

By Ali Hortaçsu, Seyed Ali Madanizadeh, and Steven L. Puller

American Economic Journal: Economic Policy, November 2017

Many jurisdictions around the world have deregulated utilities and opened retail markets to competition. However, inertial decision making can diminish consumer benefits of retail competition. Using household-level data from the Texas residential electric...

Consumers' Response to State Energy Efficient Appliance Rebate Programs

By Sébastien Houde and Joseph E. Aldy

American Economic Journal: Economic Policy, November 2017

Through an evaluation of the 2009 Recovery Act's State Energy Efficient Appliance Rebate Program, this paper examines consumers' response to energy efficiency rebates. The analysis shows that 70 percent of consumers claiming a rebate were inframarginal an...

The Consumption Effects of the 2007–2008 Financial Crisis: Evidence from Households in Denmark

By Thais Lærkholm Jensen and Niels Johannesen

American Economic Review, November 2017

Did the financial crisis in 2007–2008 spread from distressed banks to households through a contraction of the credit supply? We study this question with a dataset that contains observations on all accounts in Danish banks as well as comprehensive ...

Housing Wealth and Consumption: Evidence from Geographically-Linked Microdata

By Aditya Aladangady

American Economic Review, November 2017

Rising home values also raise the cost of living, offsetting their impact on consumption. However, additional home equity collateral can loosen borrowing constraints, increasing spending for households that value their current endowment of housing highl...

The Distributional Consequences of Large Devaluations

By Javier Cravino and Andrei A. Levchenko

American Economic Review, November 2017

We study the impact of large exchange rate devaluations on the cost of living at different points on the income distribution. Poor households spend relatively more on tradeable product categories and consume lower-priced varieties within categories. Cha...

Interest Rate Pass-Through: Mortgage Rates, Household Consumption, and Voluntary Deleveraging

By Marco Di Maggio, Amir Kermani, Benjamin J. Keys, Tomasz Piskorski, Rodney Ramcharan, Amit Seru, and Vincent Yao

American Economic Review, November 2017

Exploiting variation in the timing of resets of adjustable-rate mortgages (ARMs), we find that a sizable decline in mortgage payments (up to 50 percent) induces a significant increase in car purchases (up to 35 percent). This effect is attenuated by vol...

Demand for Alcohol Consumption in Russia and Its Implication for Mortality

By Evgeny Yakovlev

American Economic Journal: Applied Economics, January 2018

Alcohol abuse is widely blamed for the very high rate of male mortality in Russia. I estimate a structural model of the demand for alcohol that incorporates two features of alcohol consumption, peer effects and habits. I use a kink in the policy regime of...

Lying Aversion and the Size of the Lie

By Uri Gneezy, Agne Kajackaite, and Joel Sobel

American Economic Review, February 2018

This paper studies lying. An agent randomly picks a number from a known distribution. She can then report any number and receive a monetary payoff based only on her report. The paper presents a model of lying costs that generates hypotheses regarding beha...

Risk and Return in Village Economies

By Krislert Samphantharak and Robert M. Townsend

American Economic Journal: Microeconomics, February 2018

This paper provides a theory-based empirical framework for understanding the risk and return on productive capital assets and their allocation across activities in an economy characterized by idiosyncratic and aggregate risk and thin formal markets for re...

Revealed Preference with Limited Consideration

By Thomas Demuynck and Christian Seel

American Economic Journal: Microeconomics, February 2018

We derive revealed preference tests for models where individuals use consideration sets to simplify their consumption problem. Our basic test provides necessary and sufficient conditions for consistency of observed choices with the existence of considerat...

Frictions or Mental Gaps: What's Behind the Information We (Don't) Use and When Do We Care?

By Benjamin Handel and Joshua Schwartzstein

Journal of Economic Perspectives, Winter 2018

Consumers suffer significant losses from not acting on available information. These losses stem from frictions such as search costs, switching costs, and rational inattention, as well as what we call mental gaps resulting from wrong priors/worldviews, o...