Front Matter

American Economic Review, September 2022

Belief Elicitation and Behavioral Incentive Compatibility

By David Danz, Lise Vesterlund, and Alistair J. Wilson

American Economic Review, September 2022

Subjective beliefs are crucial for economic inference, yet behavior can challenge the elicitation. We propose that belief elicitation should be incentive compatible not only theoretically but also in a de facto behavioral sense. To demonstrate, we show th...

RETRACTED BY THE AUTHORS: Dividend Taxes and the Allocation of Capital

By Charles Boissel and Adrien Matray

American Economic Review, September 2022

This paper investigates the 2013 threefold increase in the French dividend tax rate. Using administrative data covering the universe of firms from 2008 to 2017 and a quasi-experimental setting, we find that firms swiftly cut dividend payments and used thi...

The Rise and Fall of Local Elections in China

By Monica Martinez-Bravo, Gerard Padró i Miquel, Nancy Qian, and Yang Yao

American Economic Review, September 2022

We posit that autocrats introduce local elections when their bureaucratic capacity is low. Local elections exploit citizens' informational advantage in keeping local officials accountable, but they also weaken vertical control. As bureaucratic capacity ...

Rational Illiquidity and Consumption: Theory and Evidence from Income Tax Withholding and Refunds

By Michael Gelman, Shachar Kariv, Matthew D. Shapiro, and Dan Silverman

American Economic Review, September 2022

Low liquidity and a high marginal propensity to consume are tightly linked. This paper analyzes this link in the context of income tax withholding and refunds. A theory of rational cash management with income uncertainty endogenizes the relationship betwe...

Measuring Racial Discrimination in Bail Decisions

By David Arnold, Will Dobbie, and Peter Hull

American Economic Review, September 2022

We develop new quasi-experimental tools to measure disparate impact, regardless of its source, in the context of bail decisions. We show that omitted variables bias in pretrial release rate comparisons can be purged by using the quasi-random assignment of...

Separating Ownership and Information

By Paul Voss and Marius Kulms

American Economic Review, September 2022

This paper identifies an upside of the separation of ownership and control, typically the source of inefficiencies in the theory of the firm. Because insiders obtain private information by exercising control, the separation of ownership and control leads ...

Dispersed Behavior and Perceptions in Assortative Societies

By Mira Frick, Ryota Iijima, and Yuhta Ishii

American Economic Review, September 2022

We formulate a model of social interactions and misinferences by agents who neglect assortativity in their society, mistakenly believing that they interact with a representative sample of the population. A key component of our approach is the interplay be...

Experimental Cost of Information

By Tommaso Denti, Massimo Marinacci, and Aldo Rustichini

American Economic Review, September 2022

We relate two main representations of the cost of acquiring information: a cost that depends on the experiment performed, as in statistical decision theory, and a cost that depends on the distribution of posterior beliefs, as in applications of rational i...

Methods Matter: p-Hacking and Publication Bias in Causal Analysis in Economics: Comment

By Sebastian Kranz and Peter Pütz

American Economic Review, September 2022

Brodeur, Cook, and Heyes (2020) study hypothesis tests from economic articles and find evidence for p-hacking and publication bias, in particular for instrumental variable and difference-in-difference studies. When adjusting for rounding errors (introduci...

Auctions and the Price of Art

By Orley Ashenfelter and Kathryn Graddy

Journal of Economic Literature, September 2003

This paper contains a review of the burgeoning new research of the last decade that has been designed to shed light on how the art auction system works, what it indicates about price formation, and how well it performs. We begin with a short description o...

Methods Matter: p-Hacking and Publication Bias in Causal Analysis in Economics: Reply

By Abel Brodeur, Nikolai Cook, and Anthony Heyes

American Economic Review, September 2022

In Brodeur, Cook, and Heyes (2020) we present evidence that instrumental variable (and to a lesser extent difference-in-difference) articles are more p-hacked than randomized controlled trial and regression discontinuity design articles. We also find no e...

Front Matter

American Economic Review: Insights, September 2022

North-South Displacement Effects of Environmental Regulation: The Case of Battery Recycling

By Shinsuke Tanaka, Kensuke Teshima, and Eric Verhoogen

American Economic Review: Insights, September 2022

This study examines the effect of a tightening of the US air quality standard for lead in 2009 on the relocation of battery recycling to Mexico and on infant health in Mexico. In the United States, air-borne lead dropped sharply near affected plants, most...

Five Facts about the Distributional Income Effects of Monetary Policy Shocks

By Niklas Amberg, Thomas Jansson, Mathias Klein, and Anna Rogantini Picco

American Economic Review: Insights, September 2022

We document five facts about the distributional income effects of monetary policy shocks using Swedish administrative individual-level data. (i) The effects of monetary policy shocks are U shaped over the income distribution—that is, expansionary shocks...

Pretest with Caution: Event-Study Estimates after Testing for Parallel Trends

By Jonathan Roth

American Economic Review: Insights, September 2022

This paper discusses two important limitations of the common practice of testing for preexisting differences in trends ("pre-trends") when using difference-in-differences and related methods. First, conventional pre-trends tests may have low power. Second...

The Rise of Pass-Throughs and the Decline of the Labor Share

By Matthew Smith, Danny Yagan, Owen Zidar, and Eric Zwick

American Economic Review: Insights, September 2022

We study the coevolution of the fall in the US corporate-sector labor share and the rise of business activity in tax-preferred pass-throughs. We find that reallocating activity to the form it would have taken prior to the Tax Reform Act of 1986 accounts f...

Forecasting Output and Inflation: The Role of Asset Prices

By James H. Stock and Mark W.Watson

Journal of Economic Literature, September 2003

Are asset prices useful predictors of inflation and real output growth? After reviewing the large literature on this topic, we undertake an empirical analysis of quarterly data for seven OECD countries spanning 1959-99. The literature review and the empir...

Polarization, Valence, and Policy Competition

By Peter Buisseret and Richard Van Weelden

American Economic Review: Insights, September 2022

We study an election between two office-seeking candidates who are polarized along a partisan issue dimension when one candidate has a valence advantage. The candidates compete by choosing policy on a second issue dimension about which voters' preferences...

The COVID-19 Pandemic Disrupted Both School Bullying and Cyberbullying

By Andrew Bacher-Hicks, Joshua Goodman, Jennifer Greif Green, and Melissa K. Holt

American Economic Review: Insights, September 2022

One-fifth of US high school students report being bullied each year. We use internet search data for real-time tracking of bullying patterns as COVID-19 disrupted in-person schooling. We first show that pre-pandemic internet searches contain useful inform...