Earnings, Disposable Income, and Consumption of Allowed and Rejected Disability Insurance Applicants

By Andreas Ravndal Kostøl and Magne Mogstad

American Economic Review, May 2015

Two key questions in thinking about the size and growth of the disability insurance program are to what extent it discourages work, and how valuable the insurance is to individuals and families. These questions motivate our paper. We begin by describing t...

Limited Attention and the Residential Energy Efficiency Gap

By Karen Palmer and Margaret Walls

American Economic Review, May 2015

Inattention may be an important contributor to the energy efficiency gap and may be particularly acute in residential buildings where many different features will determine a home's energy use. Energy audits can provide information on how to reduce energy...

Individual Time Preferences and Energy Efficiency

By Richard G. Newell and Juha Siikamäki

American Economic Review, May 2015

We examine the role of individual discount rates in energy efficiency decisions using evidence from an extensive survey of US homeowners to elicit preferences for energy efficiency and cash flows over time. We find considerable heterogeneity in individual...

Are the Non-monetary Costs of Energy Efficiency Investments Large? Understanding Low Take-Up of a Free Energy Efficiency Program

By Meredith Fowlie, Michael Greenstone, and Catherine Wolfram

American Economic Review, May 2015

We document very low take-up of an energy efficiency program that is widely believed to be privately beneficial. Program participants receive a substantial home "weatherization" retrofit; all installation and equipment costs are covered by the program. Le...

Moving Up the Energy Ladder: The Effect of an Increase in Economic Well-Being on the Fuel Consumption Choices of the Poor in India

By Rema Hanna and Paulina Oliva

American Economic Review, May 2015

Rising household wealth may potentially impact both total fuel consumption and fuel-type composition, resulting in significant health and environmental implications. Using data from a field experiment in India, we explore the effects of a transfer program...

Understanding Ethnic Identity in Africa: Evidence from the Implicit Association Test (IAT)

By Sara Lowes, Nathan Nunn, James A. Robinson, and Jonathan Weigel

American Economic Review, May 2015

We use a variant of the Implicit Association Test (IAT) to examine individuals' implicit attitudes towards various ethnic groups. Using a population from the Democratic Republic of Congo, we find that the IAT measures show evidence of an implicit bias ...

More Money, More Problems? Can High Pay Be Coercive and Repugnant?

By Sandro Ambuehl, Muriel Niederle, and Alvin E. Roth

American Economic Review, May 2015

IRBs can disallow high incentives they deem coercive. A vignette study on MTurk concerning participation in medical trials shows that a substantial minority of subjects concurs. They think high incentives cause more regret, and that more people would be b...

Sacred Values? The Effect of Information on Attitudes toward Payments for Human Organs

By Julio J. Elias, Nicola Lacetera, and Mario Macis

American Economic Review, May 2015

Are attitudes about morally controversial (and often prohibited) market transactions affected by information about their costs and benefits? We address this question for the case of payments for human organs. We find in a survey experiment with US residen...

Deciding When to Quit: Reference-Dependence over Slot Machine Outcomes

By Jaimie W. Lien and Jie Zheng

American Economic Review, May 2015

We conduct tests for reference dependent loss aversion using slot machine gamblers' decisions on when to quit playing for a visit to a casino. Evidence for a lagged status-quo reference point is found in the aggregate, while endogenously determined refere...

Loss Aversion in Post-Sale Purchases of Consumer Products and Their Substitutes

By Debajyoti Ray, Matthew Shum, and Colin F. Camerer

American Economic Review, May 2015

This paper considers the measurement of consumer loss aversion in product markets. We introduce a test based on a "substitution effect," focusing on how the end of a sale affects sales not of the good itself, but a substitute good. Such an effect cannot b...

Standing United or Falling Divided? High Stakes Bargaining in a TV Game Show

By Dennie van Dolder, Martijn J. van den Assem, Colin F. Camerer, and Richard H. Thaler

American Economic Review, May 2015

We examine high stakes three-person bargaining in a game show where contestants bargain over a large money amount that is split into three unequal shares. We find that individual behavior and outcomes are strongly influenced by equity concerns: those who ...

The Composition Effect of Consumption around Retirement: Evidence from Singapore

By Sumit Agarwal, Jessica Pan, and Wenlan Qian

American Economic Review, May 2015

It is well established that consumption is "hump" shaped over an individual's lifecycle, peaking in middle age and then declining in the years that follow. Prior research has documented that consumption declines at retirement, which is inconsistent with t...

Machine Learning Methods for Demand Estimation

By Patrick Bajari, Denis Nekipelov, Stephen P. Ryan, and Miaoyu Yang

American Economic Review, May 2015

We survey and apply several techniques from the statistical and computer science literature to the problem of demand estimation. To improve out-of-sample prediction accuracy, we propose a method of combining the underlying models via linear regression. Ou...

Post-Selection and Post-Regularization Inference in Linear Models with Many Controls and Instruments

By Victor Chernozhukov, Christian Hansen, and Martin Spindler

American Economic Review, May 2015

We consider estimation of and inference about coefficients on endogenous variables in a linear instrumental variables model where the number of instruments and exogenous control variables are each allowed to be larger than the sample size. We work within ...

What High-Achieving Low-Income Students Know about College

By Caroline M. Hoxby and Sarah Turner

American Economic Review, May 2015

Previous work demonstrates that low-income higher achievers fail to apply to selective colleges despite their being admitted at high rates and receiving financial aid so generous that they pay less than at non-selective schools. The Expanding College Oppo...

The Rise of Fringe Competitors in the Wake of an Emerging Middle Class: An Empirical Analysis

By Alon Eizenberg and Alberto Salvo

American Economic Journal: Applied Economics, July 2015

The "emerging middle class" is a force of economic importance in many consumer markets around the globe. A striking phenomenon in some of these markets is the growth of "generic," low-price brands. This paper examines these phenomena in Brazil's large sof...

The Effect of Product Demand on Inequality: Evidence from the United States and the United Kingdom

By Marco Leonardi

American Economic Journal: Applied Economics, July 2015

Using Consumer Expenditure Survey data this paper shows that more educated workers demand more high-skill-intensive services and, to a lesser extent, more very low-skill-intensive services (such as personal services). Additional evidence at the Metropolit...

What Makes Them Click: Empirical Analysis of Consumer Demand for Search Advertising

By Przemyslaw Jeziorski and Ilya Segal

American Economic Journal: Microeconomics, August 2015

We study users' responses to sponsored-search advertising using consumer-level data from Microsoft Live. We document that users click ads in a nonsequential order and that the click through rates depend on the identity of competing ads. We estimate a dyna...

Cyber-Shilling in Automobile Auctions: Evidence from a Field Experiment

By David Grether, David Porter, and Matthew Shum

American Economic Journal: Microeconomics, August 2015

We run a large field experiment with an online company specializing in selling used automobiles via ascending auctions. We manipulate experimentally the "price grid," or the possible amounts that bidders can bid above the current standing price. Using two...

Taxpayer Search for Information: Implications for Rational Attention

By Jeffrey L. Hoopes, Daniel H. Reck, and Joel Slemrod

American Economic Journal: Economic Policy, August 2015

We examine data on capital-gains-tax-related information search to determine when and how taxpayers acquire information. We find seasonal increases in information search around tax deadlines, suggesting that taxpayers seek information to comply with tax l...