Can Marginal Rates of Substitution Be Inferred from Happiness Data? Evidence from Residency Choices

By Daniel J. Benjamin, Ori Heffetz, Miles S. Kimball, and Alex Rees-Jones

American Economic Review, November 2014

We survey 561 students from U.S. medical schools shortly after they submit choice rankings over residencies to the National Resident Matching Program. We elicit (a) these choice rankings, (b) anticipated subjective well-being (SWB) rankings, and (c) expec...

The Control Premium: A Preference for Payoff Autonomy

By David Owens, Zachary Grossman, and Ryan Fackler

American Economic Journal: Microeconomics, November 2014

We document individuals' willingness to pay to control their own payoff. Experiment participants choose whether to bet on themselves or on a partner answering a quiz question correctly. Given participants' beliefs, which we elicit separately, expected-mo...

Gasoline Taxes and Consumer Behavior

By Shanjun Li, Joshua Linn, and Erich Muehlegger

American Economic Journal: Economic Policy, November 2014

Gasoline taxes can be employed to correct externalities from automobile use and to raise government revenue. Our understanding of the optimal gasoline tax and the efficacy of existing taxes is largely based on empirical analysis of consumer responses to g...

A Test for the Rational Ignorance Hypothesis: Evidence from a Natural Experiment in Brazil

By Fernanda Leite Lopez de Leon and Renata Rizzi

American Economic Journal: Economic Policy, November 2014

This paper tests the rational ignorance hypothesis by Downs (1957). This theory predicts that people do not acquire costly information to educate their votes. We provide new estimates for the effect of voting participation by exploring the Brazilian du...

Present Bias and Collective Dynamic Choice in the Lab

By Matthew O. Jackson and Leeat Yariv

American Economic Review, December 2014

We study collective decisions by time-discounting individuals choosing a common consumption stream. We show that with any heterogeneity in time preferences, utilitarian aggregation necessitates a present bias. In lab experiments three quarters of "soci...

Consumption and Debt Response to Unanticipated Income Shocks: Evidence from a Natural Experiment in Singapore

By Sumit Agarwal and Wenlan Qian

American Economic Review, December 2014

This paper uses a unique panel dataset of consumer financial transactions to study how consumers respond to an exogenous unanticipated income shock. Consumption rose significantly after the fiscal policy announcement: during the ten subsequent months, for...

Cellular Service Demand: Biased Beliefs, Learning, and Bill Shock

By Michael D. Grubb and Matthew Osborne

American Economic Review, January 2015

Following FCC pressure to end bill shock, cellular carriers now alert customers when they exceed usage allowances. We estimate a model of plan choice, usage, and learning using a 2002-2004 panel of cellular bills. Accounting for firm price adjustment, we ...

How Do Voters Respond to Information? Evidence from a Randomized Campaign

By Chad Kendall, Tommaso Nannicini, and Francesco Trebbi

American Economic Review, January 2015

In a large-scale controlled trial in collaboration with the reelection campaign of an Italian incumbent mayor, we administered (randomized) messages about the candidate's valence or ideology. Informational treatments affected both actual votes in the prec...

Inflation Expectations and Readiness to Spend: Cross-Sectional Evidence

By Rüdiger Bachmann, Tim O. Berg, and Eric R. Sims

American Economic Journal: Economic Policy, February 2015

There have been suggestions for monetary policy to engineer higher inflation expectations to stimulate spending. We examine the relationship between expected inflation and spending attitudes using the microdata from the Michigan Survey of Consumers. The i...

The Impact of Including, Adding, and Subtracting a Tax on Demand

By Naomi E. Feldman and Bradley J. Ruffle

American Economic Journal: Economic Policy, February 2015

We test the equivalence of tax-inclusive, tax-exclusive and tax-rebate prices through a series of experiments differing only in their handling of the tax. Subjects receive a cash budget and decide how much to keep and how much to spend on various attracti...

Would People Behave Differently If They Better Understood Social Security? Evidence from a Field Experiment

By Jeffrey B. Liebman and Erzo F. P. Luttmer

American Economic Journal: Economic Policy, February 2015

This paper presents the results of a randomized field experiment that provided information about key Social Security features to older workers. The experiment was designed to examine whether it is possible to affect individual behavior using a relatively ...

New Estimates of the Value of a Statistical Life Using Air Bag Regulations as a Quasi-experiment

By Chris Rohlfs, Ryan Sullivan, and Thomas Kniesner

American Economic Journal: Economic Policy, February 2015

Due to federal regulations, automobile air bag availability was a model-specific discontinuous function of model year for used vehicles in the 1990s and early 2000s. We use the discontinuities and the gradual increase in the supply of air bags to trace ou...

Price Subsidies, Diagnostic Tests, and Targeting of Malaria Treatment: Evidence from a Randomized Controlled Trial

By Jessica Cohen, Pascaline Dupas, and Simone Schaner

American Economic Review, February 2015

Both under- and over-treatment of communicable diseases are public bads. But efforts to decrease one run the risk of increasing the other. Using rich experimental data on household treatment- seeking behavior in Kenya, we study the implications of this...

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

By Olivier Coibion, Yuriy Gorodnichenko, and Gee Hee Hong

American Economic Review, March 2015

We study the cyclical properties of sales, regular price changes, and average prices paid by consumers ("effective" prices) using data on prices and quantities sold for numerous retailers across many US metropolitan areas. Inflation in the effective price...

Demographic Patterns and Household Saving in China

By Chadwick C. Curtis, Steven Lugauer, and Nelson C. Mark

American Economic Journal: Macroeconomics, April 2015

This paper studies how demographic variation affects the aggregate household saving rate. We focus on China because it is experiencing an historic demographic transition and has had a massive increase in household saving. We conduct a quantitative investi...

Consumption Volatility, Marketization, and Expenditure in an Emerging Market Economy

By Daniel L. Hicks

American Economic Journal: Macroeconomics, April 2015

In response to income fluctuations, households smooth consumption by substituting between market expenditure and time inputs. This paper provides evidence of this substitution in the context of food consumption over transitory and permanent income fluctua...

Loss Aversion and Consumption Choice: Theory and Experimental Evidence

By Heiko Karle, Georg Kirchsteiger, and Martin Peitz

American Economic Journal: Microeconomics, May 2015

We analyze a consumer-choice model with price uncertainty, loss aversion, and expectation-based reference points. The implications of this model are tested in an experiment in which participants have to make a consumption choice between two sandwiches. Pa...

Open Skies: Estimating Travelers' Benefits from Free Trade in Airline Services

By Clifford Winston and Jia Yan

American Economic Journal: Economic Policy, May 2015

The United States has negotiated bilateral open skies agreements to deregulate airline competition on US international routes, but little is known about their effects on travelers' welfare and the gains from the US negotiating agreements with more countri...

Messaging and the Mandate: The Impact of Consumer Experience on Health Insurance Enrollment through Exchanges

By Natalie Cox, Benjamin Handel, Jonathan Kolstad, and Neale Mahoney

American Economic Review, May 2015

The ability of web-based retailers to learn about and provide targeted consumer experiences is touted as an important distinction from traditional retailers. In principal, web-based insurance exchanges could benefit from these advantages. Using data from ...

Measuring Consumer Valuation of Limited Provider Networks

By Keith Marzilli Ericson and Amanda Starc

American Economic Review, May 2015

We measure the breadth of insurance networks in the Massachusetts health insurance exchange. Using our measures, we estimate consumer willingness-to-pay for broad and narrow networks. We find that consumers have a wide range of plans available with dramat...