Annotated Listing of New Books

Journal of Economic Literature, June 2003

Posterior Separable Cost of Information

By Tommaso Denti

American Economic Review, October 2022

We provide testable conditions under which the cost of acquiring information is given by the expected reduction of a measure of uncertainty (e.g., entropy). The assumption, under the name of posterior separability, is nearly universal in the literature of...

Credit, Attention, and Externalities in the Adoption of Energy Efficient Technologies by Low-Income Households

By Susanna B. Berkouwer and Joshua T. Dean

American Economic Review, October 2022

We study an energy efficient charcoal cookstove in an experiment with 1,000 households in Nairobi. We estimate a 39 percent reduction in charcoal spending, which matches engineering estimates, generating a 295 percent annual return. Despite fuel savings o...

Fake News, Voter Overconfidence, and the Quality of Democratic Choice

By Melis Kartal and Jean-Robert Tyran

American Economic Review, October 2022

This paper studies, theoretically and experimentally, the effects of overconfidence and fake news on information aggregation and the quality of democratic choice in a common-interest setting. We theoretically show that overconfidence exacerbates the adver...

Reference Dependence in the Housing Market

By Steffen Andersen, Cristian Badarinza, Lu Liu, Julie Marx, and Tarun Ramadorai

American Economic Review, October 2022

We quantify reference dependence and loss aversion in the housing market using rich Danish administrative data. Our structural model includes loss aversion, reference dependence, financial constraints, and a sale decision, and matches key nonparametric mo...

Population Aging and Structural Transformation

By Javier Cravino, Andrei Levchenko, and Marco Rojas

American Economic Journal: Macroeconomics, October 2022

We quantify the role of population aging in the structural transformation process. Household-level data from the United States show that the fraction of expenditures devoted to services increases with household age. We use a shift-share decomposition and ...

Optimal Regulation of E-cigarettes: Theory and Evidence

By Hunt Allcott and Charlie Rafkin

American Economic Journal: Economic Policy, November 2022

We model optimal e-cigarette regulation and estimate key parameters. Using tax changes and scanner data, we estimate relatively elastic demand. A demographic shift-share identification strategy suggests limited substitution between e-cigarettes and cigare...

Your Place in the World: Relative Income and Global Inequality

By Dietmar Fehr, Johanna Mollerstrom, and Ricardo Perez-Truglia

American Economic Journal: Economic Policy, November 2022

Although there is abundant evidence on individual preferences for policies that reduce national inequality, there is very little evidence on preferences for policies addressing global inequality. To investigate the latter, we conducted a two-year, face-to...

Reminders Work, but for Whom? Evidence from New York City Parking Ticket Recipients

By Ori Heffetz, Ted O'Donoghue, and Henry S. Schneider

American Economic Journal: Economic Policy, November 2022

We investigate heterogeneity in responsiveness to reminder letters among New York City parking ticket recipients. Using variation in the timing of letters, we find a strong aggregate response. But we find large differences across individuals: those with a...

Cognitive Behavioral Therapy among Ghana's Rural Poor Is Effective Regardless of Baseline Mental Distress

By Nathan Barker, Gharad Bryan, Dean Karlan, Angela Ofori-Atta, and Christopher Udry

American Economic Review: Insights, December 2022

We study the impact of group-based cognitive behavioral therapy (CBT) for individuals selected from the general population of poor households in rural Ghana (N = 7,227). Results from one to three months after the program show strong impacts on mental and ...

Measurement Systems

By Susanne Schennach

Journal of Economic Literature, December 2022

Economic models often depend on quantities that are unobservable, either for privacy reasons or because they are difficult to measure. Examples of such variables include human capital (or ability), personal income, unobserved heterogeneity (such as cons...

Consumption Heterogeneity: Micro Drivers and Macro Implications

By Edmund Crawley and Andreas Kuchler

American Economic Journal: Macroeconomics, January 2023

We document heterogeneity in the marginal propensity to consume (MPC) across household characteristics relevant to understanding heterogeneous agent models and monetary policy transmission. We find a strong negative relationship between household liquid w...

Assessing the Gains from E-Commerce

By Paul Dolfen, Liran Einav, Peter J. Klenow, Benjamin Klopack, Jonathan D. Levin, Larry Levin, and Wayne Best

American Economic Journal: Macroeconomics, January 2023

E-commerce represents a rapidly growing share of consumer spending in the United States. We use transactions-level data on credit and debit cards from Visa, Inc. between 2007 and 2017 to quantify the resulting consumer surplus. We estimate e-commerce reac...

House Prices and Consumption: A New Instrumental Variables Approach

By James Graham and Christos A. Makridis

American Economic Journal: Macroeconomics, January 2023

We introduce a novel Bartik-like instrument for house prices consisting of the local composition of housing characteristics interacted with aggregate changes in the marginal prices of these characteristics. Using household-level panel data, we estimate el...

Alert the Inert? Switching Costs and Limited Awareness in Retail Electricity Markets

By Luisa Dressler and Stefan Weiergraeber

American Economic Journal: Microeconomics, February 2023

We quantify how switching costs and limited awareness affect consumer inertia in liberalized retail electricity markets by developing and estimating a structural demand model using a novel dataset on electricity contract choices in Belgium. Our data allow...

Togetherness in the Household

By Sam Cosaert, Alexandros Theloudis, and Bertrand Verheyden

American Economic Journal: Microeconomics, February 2023

Spending time with a spouse is a major gain from marriage. We extend the classical collective model of the household to allow for togetherness between spouses. Togetherness takes the form of joint leisure and joint care for children. Using revealed prefer...

Why Do Households Leave School Value Added on the Table? The Roles of Information and Preferences

By Robert Ainsworth, Rajeev Dehejia, Cristian Pop-Eleches, and Miguel Urquiola

American Economic Review, April 2023

Romanian households could choose schools with one standard deviation worth of additional value added. Why do households leave value added "on the table"? We study two possibilities: (i) information and (ii) preferences for other school traits. In an exper...

The Response of Consumer Spending to Changes in Gasoline Prices

By Michael Gelman, Yuriy Gorodnichenko, Shachar Kariv, Dmitri Koustas, Matthew D. Shapiro, Dan Silverman, and Steven Tadelis

American Economic Journal: Macroeconomics, April 2023

This paper estimates how overall consumer spending responds to changes in gasoline prices. It uses the differential impact across consumers of the sharp drop in gasoline prices in 2014 for identification. This estimation strategy is implemented using comp...

Complexity and Procedural Choice

By James Banovetz and Ryan Oprea

American Economic Journal: Microeconomics, May 2023

We test the core ideas of the "automata" approach to bounded rationality, using simple experimental bandit tasks. Optimality requires subjects to use a moderately complex decision procedure, but most subjects in our baseline condition instead use simpler ...

Retrospectives: Edgar Sydenstricker: Household Equivalence Scales and the Causes of Pellagra

By Philip Clarke and Guido Erreygers

Journal of Economic Perspectives, Spring 2023

In the early part of the 20th century the disease pellagra, now almost unknown, affected and killed thousands of people in the United States. Some claimed it was an infection, while others maintained it was due to a dietary deficiency. The economist Edg...