Failures in Contingent Reasoning: The Role of Uncertainty

By Alejandro Martínez-Marquina, Muriel Niederle, and Emanuel Vespa

American Economic Review, October 2019

We propose a new channel to account for the difficulties of individuals with contingent reasoning: the presence of uncertainty. When moving from an environment with one state of known value to one with multiple possible values, two changes occur. First, t...

Incentives and Unintended Consequences: Spillover Effects in Food Choice

By Manuela Angelucci, Silvia Prina, Heather Royer, and Anya Samek

American Economic Journal: Economic Policy, November 2019

Little is known about how peers influence the impact of incentives. We study how peers' actions and incentives can lead to peer spillover effects. Using a field experiment on snack choice in the school lunchroom (choice of grapes versus cookies), we rando...

One Markup to Rule Them All: Taxation by Liquor Pricing Regulation

By Eugenio J. Miravete, Katja Seim, and Jeff Thurk

American Economic Journal: Microeconomics, February 2020

Commodity taxation often involves uniform tax rates. We use alcohol laws that tax differentiated spirits with a comprehensive uniform markup to evaluate redistribution generated by such simple tax policy. We document preference heterogeneity among consume...

Mutually Consistent Revealed Preference Demand Predictions

By Abi Adams

American Economic Journal: Microeconomics, February 2020

Revealed preference restrictions are increasingly used to predict demand behavior at new budgets of interest and as shape restrictions in nonparametric estimation exercises. However, the restrictions imposed are not sufficient for rationality when predict...

Advertising and Environmental Stewardship: Evidence from the BP Oil Spill

By Lint Barrage, Eric Chyn, and Justine Hastings

American Economic Journal: Economic Policy, February 2020

This paper explores whether private markets can incentivize environmental stewardship. We examine the consumer response to the 2010 BP oil spill and test how BP's investment in the 2000–2008 "Beyond Petroleum" green advertising campaign affected this re...

Does Household Electrification Supercharge Economic Development?

[Symposium: Electricity in Developing Countries]

By Kenneth Lee, Edward Miguel, and Catherine Wolfram

Journal of Economic Perspectives, Winter 2020

In recent years, electrification has reemerged as a key priority in low-income countries, with a particular focus on electrifying households. Yet the microeconomic literature examining the impacts of electrifying households on economic development has p...

The Welfare Effects of Social Media

By Hunt Allcott, Luca Braghieri, Sarah Eichmeyer, and Matthew Gentzkow

American Economic Review, March 2020

The rise of social media has provoked both optimism about potential societal benefits and concern about harms such as addiction, depression, and political polarization. In a randomized experiment, we find that deactivating Facebook for the four weeks befo...

Compliance Behavior in Networks: Evidence from a Field Experiment

By Francesco Drago, Friederike Mengel, and Christian Traxler

American Economic Journal: Applied Economics, April 2020

This paper studies the spread of compliance behavior in neighborhood networks in Austria. We exploit a field experiment that varied the content of mailings sent to potential evaders of TV license fees. The data reveal a strong treatment spillover: untreat...

Digitizing Disclosure: The Case of Restaurant Hygiene Scores

By Weijia Dai and Michael Luca

American Economic Journal: Microeconomics, May 2020

Collaborating with Yelp and the City of San Francisco, we revisit a canonical example of quality disclosure by evaluating and helping to redesign the posting of restaurant hygiene scores on Yelp.com. We implement a two-stage intervention that separately i...

Do Parents Value School Effectiveness?

By Atila Abdulkadiroğlu, Parag A. Pathak, Jonathan Schellenberg, and Christopher R. Walters

American Economic Review, May 2020

School choice may lead to improvements in school productivity if parents' choices reward effective schools and punish ineffective ones. This mechanism requires parents to choose schools based on causal effectiveness rather than peer characteristics. We st...

The Economics of Tipping

By Ofer H. Azar

Journal of Economic Perspectives, Spring 2020

Tipping involves dozens of billions of dollars annually in the US alone and is a major income source for millions of workers. But beyond its economic importance and various economic implications, tipping is also a unique economic phenomenon in that people...

Economic Interpretations of Intergenerational Correlations

[Symposium: Intergenerational Mobility]

By Nathan D. Grawe and Casey B. Mulligan

Journal of Economic Perspectives, Summer 2002

Since accurate prediction ultimately determines the usefulness of theory, our paper gives the reader a taste of some predictions derived from economic theory and some empirical successes and failures. We provide only a taste, because there are a great man...

Measuring the Impact of Free Goods on Real Household Consumption

By Erik Brynjolfsson, Avinash Collis, W. Erwin Diewert, Felix Eggers, and Kevin J. Fox

AEA Papers and Proceedings, May 2020

We suggest a methodology that allows statistical agencies to form approximations to the benefits that flow to households from new free goods. The present production-oriented GDP measures are not satisfactory for measuring real household consumption and wi...

Individual Identity and Organizational Identification: Evidence from a Field Experiment

By Maria Guadalupe, Zoe Kinias, and Florian Schloderer

AEA Papers and Proceedings, May 2020

This paper explores the relationship between individual identity and organizational attachment. Using individual data from employees at a large employer in the services sector, we show that making individual values salient (through a value affirmation) on...

Diversity, Immigration, and Redistribution

By Alberto Alesina and Stefanie Stantcheva

AEA Papers and Proceedings, May 2020

This paper provides a simple conceptual framework that captures how different perceptions, attitudes, and biases about immigrants or minorities can shape preferences for redistribution and reviews the empirical evidence on the effects of increasing racial...

How Vouchers Could Change the Market for Education

[Symposium: School Vouchers]

By Derek Neal

Journal of Economic Perspectives, Fall 2002

Revealed Preferences over Risk and Uncertainty

By Matthew Polisson, John K.-H. Quah, and Ludovic Renou

American Economic Review, June 2020

We develop a nonparametric method, called Generalized Restriction of Infinite Domains (GRID), for testing the consistency of budgetary choice data with models of choice under risk and under uncertainty. Our test can allow for risk-loving and elation-seeki...

Earnings Risk in the Household: Evidence from Millions of US Tax Returns

By Seth Pruitt and Nicholas Turner

American Economic Review: Insights, June 2020

Using detailed Internal Revenue Service administrative data on millions of households, we find that households effectively insure against much of the risk facing primary earners. We show that households face less risk than males alone, and households face...

Revealed Preference Analysis with Normal Goods: Application to Cost-of-Living Indices

By Laurens Cherchye, Thomas Demuynck, Bram De Rock, and Khushboo Surana

American Economic Journal: Microeconomics, August 2020

We present a revealed preference methodology for nonparametric demand analysis under the assumption of normal goods. Our methodology is flexible in that it allows for imposing normality on any subset of goods. We show the usefulness of our methodology for...

Retrospectives: Whatever Happened to the Cambridge Capital Theory Controversies?

By Avi J. Cohen and G. C. Harcourt

Journal of Economic Perspectives, Winter 2003

We argue that the Cambridge capital theory controversies of the 1950s to 1970s were the latest in a series of still-unresolved controversies over three deep issues: explaining and justifying the return to capital; Joan Robinson's complaint that, due to pa...