Race and Home Ownership from the End of the Civil War to the Present

By William J. Collins and Robert A. Margo

American Economic Review, May 2011

We present new estimates of home ownership for black and white households from 1870 to 2007. Black ownership increased by 46 percentage points, whereas white ownership increased by 20 points. Remarkably, 25 of the 26 point narrowing occurred between 1870 ...

Covenants without Courts: Enforcing Residential Segregation with Legally Unenforceable Agreements

By Richard R. W. Brooks

American Economic Review, May 2011

Racial restrictive covenants are private agreements prohibiting sale, rental, use or occupancy of properties by persons of designated races, ethnicities, nationalities and religions. Widely acknowledged for facilitating residential segregation, the Suprem...

The New Deal, Race, and Home Ownership in the 1920s and 1930s

By Trevor M. Kollmann and Price V. Fishback

American Economic Review, May 2011

Many federal government housing policies began during the New Deal of the 1930s. Many claim that minorities benefited less from these policies than whites. We estimate the relationships between policies in the 1920s and 1930s and black and white home owne...

Land and Racial Wealth Inequality

By Melinda C. Miller

American Economic Review, May 2011

Could racial wealth inequality have been reduced if freed slaves had been granted land following the Civil War? This paper exploits a plausibly exogenous variation in policies of the Cherokee Nation and southern United States to identify the impact of fre...

Heterogeneity in Choice Inconsistencies among the Elderly: Evidence from Prescription Drug Plan Choice

By Jason Abaluck and Jonathan Gruber

American Economic Review, May 2011

This paper investigates the degree to which choice inconsistencies documented in the context of Medicare Part D plan choice vary across consumers and geographic regions. Our main finding is that there is surprisingly little variation: regardless of age, g...

Part D Formulary and Benefit Design as a Risk-Steering Mechanism

By Dana P. Goldman, Geoffrey F. Joyce, and William B. Vogt

American Economic Review, May 2011

Medicare Part D relies upon drug plan competition. Plans have enormous scope to design benefits and to set premiums, but they may not charge differential premiums based on risk. We use the formulary and benefit design of all Medicare prescription drug pla...

The Medium-Term Impact of Medicare Part D on Pharmaceutical Prices

By Mark G. Duggan and Fiona Scott Morton

American Economic Review, May 2011

Medicare Part D began coverage of prescription drugs in 2006. Using data from the first year of the program we found that Part D reduced pharmaceutical prices for Medicare recipients, with these effects driven by enrollees previously without drug coverage...

Are Drugs Substitutes or Complements for Intensive (and Expensive) Medical Treatment

By Yuting Zhang, Joseph P. Newhouse, and Katherine Baicker

American Economic Review, May 2011

Little is known about the relationship between variation in drug and non-drug medical treatment and how areas may substitute one type of care for the other. Using pharmacy and medical claims data for Medicare beneficiaries, we examine whether areas with m...

The Risky Steady State

By Nicolas Coeurdacier, Hélène Rey, and Pablo Winant

American Economic Review, May 2011

We propose a simple quantitative method to linearize around the risky steady state of a small open economy. Unlike when the deterministic steady state is used, the net foreign asset position is well defined. We allow for stochastic income and stochastic i...

Market Sentiment: A Tragedy of the Commons

By Tarek A. Hassan and Thomas M. Mertens

American Economic Review, May 2011

We present a model in which investors decide whether or to what degree they want to allow their behavior to be influenced by "market sentiment." Investors who choose to insulate their decisions from market sentiment earn higher expected returns, but incur...

Disasterization: A Simple Way to Fix the Asset Pricing Properties of Macroeconomic Models

By Xavier Gabaix

American Economic Review, May 2011

A central difficulty in economics is to create a model with both good business cycle properties and asset pricing properties. I show how to solve this difficulty by a simple portable modeling device: the "disasterization" of models. Take an economy with g...

Regulating Asset Price Risk

By Philippe Bacchetta, Cédric Tille, and Eric van Wincoop

American Economic Review, May 2011

There has been a long debate about whether speculators are stabilizing or not. We consider a model where speculators have a stabilizing role in normal times, but may also provoke large risk panics. The very feature that makes arbitrageurs liquidity provid...

Leverage and the Financial Accelerator in a Liquidity Trap

By Karel Mertens and Morten O. Ravn

American Economic Review, May 2011

We show that the financial accelerator may be very large in a liquidity trap. We study a sticky price model with real estate and a financial friction specified as a collateral constraint. Expectations can lead the economy to a self-fulfilling liquidity tr...

Helping Consumers Know Themselves

By Emir Kamenica, Sendhil Mullainathan, and Richard Thaler

American Economic Review, May 2011

Firms sometimes know more about a consumer's expected usage than the consumer herself. We explore the consequences of this reversal in the information asymmetry. We analyze the consequences of making consumers more informed about themselves. While making ...

The Limits of Transparency: Pitfalls and Potential of Disclosing Conflicts of Interest

By George Loewenstein, Daylian M. Cain, and Sunita Sah

American Economic Review, May 2011

We review evidence from our published and ongoing research that disclosing conflicts of interest has unintended consequences, helping conflicted advisors and harming their advisees: With disclosure, advisors feel comfortable giving more biased advice, but...

The Financial Education Fallacy

By Lauren E. Willis

American Economic Review, May 2011

Research to date does not demonstrate a causal chain from financial education to welfare-enhancing financial behavior, in part due to biases, heuristics, and emotional influences on decisions. Yet the search for effective financial education continues. Bu...

Superfund Cleanups and Infant Health

By Janet Currie, Michael Greenstone, and Enrico Moretti

American Economic Review, May 2011

We are the first to examine the effect of Superfund cleanups on infant health rather than focusing on proximity to a site. We study singleton births to mothers residing within 5km of a Superfund site between 1989-2003 in five large states. Our "difference...

Environmental Regulation and Labor Reallocation: Evidence from the Clean Air Act

By W. Reed Walker

American Economic Review, May 2011

This paper uses newly available data on plant level regulatory status linked to the Census Longitudinal Business Database to measure the impact of changes in county level environmental regulations on plant and sector employment levels. Estimates from a va...

Water Quality Violations and Avoidance Behavior: Evidence from Bottled Water Consumption

By Joshua Graff Zivin, Matthew Neidell, and Wolfram Schlenker

American Economic Review, May 2011

We examine the impact of poor water quality on avoidance behavior by estimating the change in bottled water purchases in response to drinking water violations. Using data from a national grocery chain matched with water quality violations, we find an incr...

Monopsony, Mobility, and Sex Differences in Pay: Missouri School Teachers

By Michael R. Ransom and Val E. Lambson

American Economic Review, May 2011

We examine the sex differences in the pay of school teachers in Missouri. In Missouri school districts, pay is determined by a salary schedule that maps teaching experience and education level of an individual to a salary level. In spite of this apparentl...