Empathy or Antipathy? The Impact of Diversity

By Johanne Boisjoly, Greg J. Duncan, Michael Kremer, Dan M. Levy, and Jacque Eccles

American Economic Review, December 2006

Mixing across racial and ethnic lines could spur understanding or inflame tensions between groups. We find that white students at a large state university randomly assigned African American roommates in their first year were more likely to endorse affirma...

How Special Is the Special Relationship? Using the Impact of U.S. R&D Spillovers on U.K. Firms as a Test of Technology Sourcing

By Rachel Griffith, Rupert Harrison, and John Van Reenen

American Economic Review, December 2006

We examine the "technology sourcing" hypothesis that foreign research labs located in the U.S. tap into U.S. R&D spillovers and improve home country productivity. We show that U.K. firms that established a high proportion of inventors based in the U.S. by...

The Japanese Saving Rate

By Kaiji Chen, Ayşe İmrohoroğlu, and Selahattin İmrohoroğlu

American Economic Review, December 2006

Despite much work, economists have not been able to quantitatively account for the differences in the Japanese and U.S. saving rates after World War II. In this paper, we show that the use of actual Japanese total factor productivity growth rates in a sta...

Phased-In Tax Cuts and Economic Activity

By Christopher L. House and Matthew D. Shapiro

American Economic Review, December 2006

This paper uses a dynamic general equilibrium model to analyze and quantify the aggregate effects of the timing of tax rate changes enacted in 2001 (which called for successive rate reductions through 2006) and 2003 (which made immediate tax rate cuts sch...

A New Method of Estimating Risk Aversion

By Raj Chetty

American Economic Review, December 2006

I show existing evidence on labor supply behavior places an upper bound on risk aversion in the expected utility model. I derive a formula for the coefficient of relative risk aversion (γ) in terms of the ratio of the income elasticity of labor supply to...

Cheating Ourselves: The Economics of Tax Evasion

[Symposium: U.S. Tax Policy in International Perspective]

By Joel Slemrod

Journal of Economic Perspectives, Winter 2007

No government can announce a tax system and then rely on taxpayers' sense of duty to remit what is owed. Some dutiful people will undoubtedly pay what they owe, but many others will not. Over time the ranks of the dutiful will shrink, as they see how th...

Consumer Bankruptcy: A Fresh Start

By Igor Livshits, James MacGee, and Michèle Tertilt

American Economic Review, March 2007

Consumer bankruptcy provides partial insurance against bad luck, but, by driving up interest rates, makes life-cycle smoothing more difficult. We argue that to assess this trade-off one needs a quantitative model of consumer bankruptcy with three key feat...

Optimal Inattention to the Stock Market

By Andrew B. Abel, Janice C. Eberly, and Stavros Panageas

American Economic Review, May 2007

Beliefs, Doubts and Learning: Valuing Macroeconomic Risk

By Lars Peter Hansen

American Economic Review, May 2007

The Neuroeconomic Theory of Learning

By Andrew Caplin and Mark Dean

American Economic Review, May 2007

The Search for Economics Talent: Doctoral Completion and Research Productivity

By Wayne A. Grove and Stephen Wu

American Economic Review, May 2007

The Political Economy of the US Monetary Union: The Civil War Era as a Watershed

By David F. Weiman and John A. James

American Economic Review, May 2007

Investor Sentiment in the Stock Market

[Symposium: Behavioral Finance]

By Malcolm Baker and Jeffrey Wurgler

Journal of Economic Perspectives, Spring 2007

Investor sentiment, defined broadly, is a belief about future cash flows and investment risks that is not justified by the facts at hand. The question is no longer whether investor sentiment affects stock prices, but how to measure investor sentiment and ...

Markets: Gift Cards

By Jennifer Pate Offenberg

Journal of Economic Perspectives, Spring 2007

The Mobil Oil Company introduced the first retail gift card that recorded value on a magnetic strip in 1995. In under a decade, such gift cards replaced apparel as the number one item sold during the Christmas season. This study will discuss the reasons f...

Measuring Self-Control Problems

By John Ameriks, Andrew Caplin, John Leahy, and Tom Tyler

American Economic Review, June 2007

We develop a survey instrument to measure self-control problems in a sample of highly educated adults. This measure relates in the manner that theory predicts to liquid wealth accumulation and personality measures. Yet while self-control problems are typi...

Are You Sure You're Saving Enough for Retirement?

[Symposium: The Adequacy of Retirement Saving]

By Jonathan Skinner

Journal of Economic Perspectives, Summer 2007

Many view the soon-to-retire Baby Boomers as woefully unprepared for their golden years, while other economists have taken a more sanguine view of American levels of saving. And if Americans are failures at saving enough for retirement, why are some retir...

Heuristics and Biases in Retirement Savings Behavior

[Symposium: The Adequacy of Retirement Saving]

By Shlomo Benartzi and Richard Thaler

Journal of Economic Perspectives, Summer 2007

Standard economic theories of saving implicitly assume that households have the cognitive ability to solve the relevant optimization problem and the willpower to execute the optimal plan. Both of the implicit assumptions are suspect. Even among economists...

Bankruptcy Reform and Credit Cards

By Michelle J. White

Journal of Economic Perspectives, Fall 2007

From 1980 to 2004, the number of personal bankruptcy filings in the United States increased more than five-fold, from 288,000 to 1.5 million per year. By 2004, more Americans were filing for bankruptcy each year than were graduating from college, getting ...

Consistency and Heterogeneity of Individual Behavior under Uncertainty

By Syngjoo Choi, Raymond Fisman, Douglas Gale, and Shachar Kariv

American Economic Review, December 2007

By using graphical representations of simple portfolio choice problems, we generate a very rich dataset to study behavior under uncertainty at the level of the individual subject. We test the data for consistency with the maximization hypothesis, and w...

The Spending and Debt Response to Minimum Wage Hikes

By Daniel Aaronson, Sumit Agarwal, and Eric French

American Economic Review, December 2012

Immediately following a minimum wage hike, household income rises on average by about $250 per quarter and spending by roughly $700 per quarter for households with minimum wage workers. Most of the spending response is caused by a small number of house...