Up in Smoke: The Influence of Household Behavior on the Long-Run Impact of Improved Cooking Stoves

By Rema Hanna, Esther Duflo, and Michael Greenstone

American Economic Journal: Economic Policy, February 2016

Laboratory studies suggest that improved cooking stoves can reduce indoor air pollution, improve health, and decrease greenhouse gas emissions in developing countries. We provide evidence, from a large-scale randomized trial in India, on the benefits of a...

Consumption Inequality and Family Labor Supply

By Richard Blundell, Luigi Pistaferri, and Itay Saporta-Eksten

American Economic Review, February 2016

We examine the link between wage and consumption inequality using a life-cycle model incorporating consumption and family labor supply decisions. We derive analytical expressions for the dynamics of consumption, hours, and earnings of two earners in the p...

Taxpayer Confusion: Evidence from the Child Tax Credit

By Naomi E. Feldman, Peter Katuščák, and Laura Kawano

American Economic Review, March 2016

We develop an empirical test for whether households understand or misperceive their marginal tax rate. Our identifying variation comes from the loss of the Child Tax Credit when a child turns 17. Using this age discontinuity, we find that despite this ...

The Caloric Costs of Culture: Evidence from Indian Migrants

By David Atkin

American Economic Review, April 2016

Anthropologists have documented substantial and persistent differences in food preferences across social groups. My paper asks whether such food cultures can constrain caloric intake? I first document that interstate migrants within India consume fewe...

The Bidder's Curse: Comment

By Henry S. Schneider

American Economic Review, April 2016

The prices of auctions on eBay often exceed eBay's fixed-price "Buy- It-Now" prices. I investigate the causes of this overbidding, focusing on the interpretation in Malmendier and Lee (2011) that the observed overbidding cannot be explained "without al...

The Bidder's Curse: Reply

By Ulrike Malmendier

American Economic Review, April 2016

An important unresolved issue in the search literature is the question to what extent suboptimal search reflects "traditional search frictions," and to what extent it reflects behavioral biases. The distinction is important for assessing welfare, predi...

Separating Bayesian Updating from Non-Probabilistic Reasoning: An Experimental Investigation

By Dan Levin, James Peck, and Asen Ivanov

American Economic Journal: Microeconomics, May 2016

Through a series of decision tasks involving colored cards, we provide separate measures of Bayesian updating and non-probabilistic reasoning skills. We apply these measures to (and are the first to study) a common-value Dutch auction. This format is m...

Team versus Individual Play in Finitely Repeated Prisoner Dilemma Games

By John H. Kagel and Peter McGee

American Economic Journal: Microeconomics, May 2016

In finitely repeated prisoner dilemma games, two-person teams start with significantly less cooperation than individuals, consistent with results from the psychology literature. This quickly gives way to teams cooperating more than individuals. Team di...

Consumption Inequality

[Symposium: Inequality Beyond Income]

By Orazio P. Attanasio and Luigi Pistaferri

Journal of Economic Perspectives, Spring 2016

In this essay, we discuss the importance of consumption inequality in the debate concerning the measurement of disparities in economic well-being. We summarize the advantages and disadvantages of using consumption as opposed to income for measuring trends...

Appliance Ownership and Aspirations among Electric Grid and Home Solar Households in Rural Kenya

By Kenneth Lee, Edward Miguel, and Catherine Wolfram

American Economic Review, May 2016

In Sub-Saharan Africa, there are active debates about whether increases in energy access should be driven by investments in electric grid infrastructure or small-scale "home solar" systems (e.g., solar lanterns and solar home systems). We summarize the re...

Popular Attitudes toward Markets and Democracy: Russia and United States Compared 25 Years Later

By Maxim Boycko and Robert J. Shiller

American Economic Review, May 2016

We repeat a survey we did in the waning days of the Soviet Union (Shiller, Boycko and Korobov, AER 1991) comparing attitudes towards free markets between Moscow and New York. Additional survey questions, from Gibson Duch and Tedin (J. Politics 1992) are a...

Measuring and Understanding Behavior, Welfare, and Poverty

By Angus Deaton

American Economic Review, June 2016

The Demand for Energy-Using Assets among the World's Rising Middle Classes

By Paul J. Gertler, Orie Shelef, Catherine D. Wolfram, and Alan Fuchs

American Economic Review, June 2016

We study household decisions to acquire energy-using assets in the presence of rising incomes. We develop a theoretical framework to characterize the effect of income growth on asset purchases when consumers face credit constraints. We use large and plaus...

Measuring Discounting without Measuring Utility

By Arthur E. Attema, Han Bleichrodt, Yu Gao, Zhenxing Huang, and Peter P. Wakker

American Economic Review, June 2016

We introduce a new method to measure the temporal discounting of money. Unlike preceding methods, our method requires neither knowledge nor measurement of utility. It is easier to implement, clearer to subjects, and requires fewer measurements than existi...

Marijuana on Main Street? Estimating Demand in Markets with Limited Access

By Liana Jacobi and Michelle Sovinsky

American Economic Review, August 2016

Marijuana is the most common illicit drug with vocal advocates for legalization. Among other things, legalization would increase access and remove the stigma of illegality. Our model disentangles the role of access from preferences and shows that selectio...

Capital Taxation under Political Constraints

By Florian Scheuer and Alexander Wolitzky

American Economic Review, August 2016

This paper studies optimal dynamic tax policy under the threat of political reform. A policy will be reformed ex post if a large enough coalition of citizens supports reform; thus, sustainable policies are those that will continue to attract enough politi...

The Mechanics of Motivated Reasoning

[Symposium: Motivated Beliefs]

By Nicholas Epley and Thomas Gilovich

Journal of Economic Perspectives, Summer 2016

Whenever we see voters explain away their preferred candidate's weaknesses, dieters assert that a couple scoops of ice cream won't really hurt their weight loss goals, or parents maintain that their children are unusually gifted, we are reminded that peop...

Mindful Economics: The Production, Consumption, and Value of Beliefs

[Symposium: Motivated Beliefs]

By Roland Bénabou and Jean Tirole

Journal of Economic Perspectives, Summer 2016

In this paper, we provide a perspective into the main ideas and findings emerging from the growing literature on motivated beliefs and reasoning. This perspective emphasizes that beliefs often fulfill important psychological and functional needs of the in...

The Preference for Belief Consonance

[Symposium: Motivated Beliefs]

By Russell Golman, George Loewenstein, Karl Ove Moene, and Luca Zarri

Journal of Economic Perspectives, Summer 2016

We consider the determinants and consequences of a source of utility that has received limited attention from economists: people's desire for the beliefs of other people to align with their own. We relate this 'preference for belief consonance' to a varie...

Motivated Bayesians: Feeling Moral While Acting Egoistically

[Symposium: Motivated Beliefs]

By Francesca Gino, Michael I. Norton, and Roberto A. Weber

Journal of Economic Perspectives, Summer 2016

Research yields ample evidence that individual's behavior often reflects an apparent concern for moral considerations. A natural way to interpret evidence of such motives using an economic framework is to add an argument to the utility function such that ...