Front Matter

American Economic Review, November 2020

From Extreme to Mainstream: The Erosion of Social Norms

By Leonardo Bursztyn, Georgy Egorov, and Stefano Fiorin

American Economic Review, November 2020

Social norms, usually persistent, can change quickly when new public information arrives, such as a surprising election outcome. People may become more inclined to express views or take actions previously perceived as stigmatized and may judge others less...

How Well Targeted Are Soda Taxes?

By Pierre Dubois, Rachel Griffith, and Martin O'Connell

American Economic Review, November 2020

Soda taxes aim to reduce excessive sugar consumption. We assess who is most impacted by soda taxes. We estimate demand using micro longitudinal data covering on-the-go purchases, and exploit the panel dimension to estimate individual-specific preferences....

Seasonal Liquidity, Rural Labor Markets, and Agricultural Production

By Günther Fink, B. Kelsey Jack, and Felix Masiye

American Economic Review, November 2020

Rural economies in many developing countries are characterized by a lean season in the months preceding harvest, when farmers have depleted their cash and grain savings from the previous year. To identify the impacts of liquidity during the lean season, w...

Does When You Die Depend on Where You Live? Evidence from Hurricane Katrina

By Tatyana Deryugina and David Molitor

American Economic Review, November 2020

We follow Medicare cohorts to estimate Hurricane Katrina's long-run mortality effects on victims initially living in New Orleans. Including the initial shock, the hurricane improved eight-year survival by 2.07 percentage points. Migration to lower-mortali...

Gambling over Public Opinion

By Deepal Basak and Joyee Deb

American Economic Review, November 2020

We consider bargaining environments in which public opinion provides leverage by making compromises costly. Two parties make initial demands, before knowing the public opinion. If deadlocked, they can bargain again after public opinion forms, but suffer r...

Small and Large Firms over the Business Cycle

By Nicolas Crouzet and Neil R. Mehrotra

American Economic Review, November 2020

This paper uses new confidential Census data to revisit the relationship between firm size, cyclicality, and financial frictions. First, we find that large firms (the top 1 percent by size) are less cyclically sensitive than the rest. Second, high and ris...

Does Information Break the Political Resource Curse? Experimental Evidence from Mozambique

By Alex Armand, Alexander Coutts, Pedro C. Vicente, and Inês Vilela

American Economic Review, November 2020

Natural resources can have a negative impact on the economy through corruption and civil conflict. This paper tests whether information can counteract this political resource curse. We implement a large-scale field experiment following the dissemination o...

Importing polarization

[Research Highlight]

October 26, 2020

Professor Gordon Hanson discusses how competition from China has pushed some communities to the edges of the political spectrum.

Importing Political Polarization? The Electoral Consequences of Rising Trade Exposure

By David Autor, David Dorn, Gordon Hanson, and Kaveh Majlesi

American Economic Review, October 2020

Has rising import competition contributed to the polarization of US politics? Analyzing multiple measures of political expression and results of congressional and presidential elections spanning the period 2000 through 2016, we find strong though not de...

Front Matter

American Economic Journal: Economic Policy, November 2020

Discrete Prices and the Incidence and Efficiency of Excise Taxes

By Christopher T. Conlon and Nirupama L. Rao

American Economic Journal: Economic Policy, November 2020

This paper uses UPC-level data to examine the relationship between excise taxes, retail prices, and consumer welfare in the distilled spirits market. We document a nominal rigidity in retail prices that arises because firms largely choose prices that end ...

Accelerator or Brake? Cash for Clunkers, Household Liquidity, and Aggregate Demand

By Daniel Green, Brian T. Melzer, Jonathan A. Parker, and Arcenis Rojas

American Economic Journal: Economic Policy, November 2020

This paper evaluates the Car Allowance Rebate System (CARS) by comparing the vehicle purchases and disposals of households with eligible "clunkers" to those of households with similar but ineligible vehicles. CARS caused roughly 500,000 purchases during t...

The State of American Entrepreneurship: New Estimates of the Quantity and Quality of Entrepreneurship for 32 US States, 1988–2014

By Jorge Guzman and Scott Stern

American Economic Journal: Economic Policy, November 2020

Assessing the state of American entrepreneurship requires not simply counting the quantity but also the initial quality of new ventures. Combining comprehensive business registries and predictive analytics, we present estimates of entrepreneurial quantity...

Child Care Subsidies, Quality, and Optimal Income Taxation

By Spencer Bastani, Sören Blomquist, and Luca Micheletto

American Economic Journal: Economic Policy, November 2020

We study child care subsidies in a Mirrleesian optimal tax framework where parents choose both the quantity and quality of child care. Child care services not only enable parents to work, but also contribute to children's human capital. We examine the con...

Reported MPC and Unobserved Heterogeneity

By Tullio Jappelli and Luigi Pistaferri

American Economic Journal: Economic Policy, November 2020

Panel data on reported marginal propensity to consume in the 2010 and 2016 Italian Survey of Household Income and Wealth uncover a strong negative relationship between cash on hand and MPC. Even though the relationship is attenuated when using regression ...

Can Rationing Increase Welfare? Theory and an Application to India's Ration Shop System

By Lucie Gadenne

American Economic Journal: Economic Policy, November 2020

In many developing countries, households can purchase limited quantities of goods at a fixed subsidized price through ration shops. This paper asks whether the characteristics of developing countries explain why governments use such systems. I find an equ...

How Taxing Is Tax Filing? Using Revealed Preferences to Estimate Compliance Costs

By Youssef Benzarti

American Economic Journal: Economic Policy, November 2020

This paper uses a quasi-experimental design to estimate the cost of filing taxes. Using US tax returns, I observe how taxpayers choose between itemizing deductions and claiming the standard deduction. Taxpayers forgo large tax savings to avoid compliance ...

Optimal Income Taxation with Present Bias

By Benjamin B. Lockwood

American Economic Journal: Economic Policy, November 2020

Work often entails up-front effort costs in exchange for delayed benefits, and mounting evidence documents present bias over effort in the face of such delays. This paper studies the implications for the optimal income tax. Optimal tax rates are computed ...

Decompositions and Policy Consequences of an Extraordinary Decline in Air Pollution from Electricity Generation

By Stephen P. Holland, Erin T. Mansur, Nicholas Z. Muller, and Andrew J. Yates

American Economic Journal: Economic Policy, November 2020

Using integrated assessment models, we calculate the economic value of the extraordinary decline in emissions from US power plants. Annual local and global air pollution damages fell from 245 to 133 billion USD over 2010–2017. Decomposition shows change...