Private Provision of Social Insurance: Drug-Specific Price Elasticities and Cost Sharing in Medicare Part D

By Liran Einav, Amy Finkelstein, and Maria Polyakova

American Economic Journal: Economic Policy, August 2018

We explore how private drug plans set cost sharing in the context of Medicare Part D. While publicly provided drug coverage typically involves uniform cost sharing across drugs, we document substantial heterogeneity in the cost sharing for different drugs...

Strategic Formulary Design in Medicare Part D Plans

By Kurt Lavetti and Kosali Simon

American Economic Journal: Economic Policy, August 2018

The design of Medicare Part D causes most beneficiaries to receive fragmented health insurance, with drug and medical coverage separated. Fragmentation is potentially inefficient since separate insurers optimize over only one component of healthcare spend...

Review of Books on Student Loans

By Christopher Avery

Journal of Economic Literature, June 2019

This essay reviews three recent books on the causes and consequences of student debt. In addition to increases in college tuition and fees, supply and resource constraints both contribute to the growing phenomenon of default: degree completion rates are r...

Tax Compliance and Enforcement

By Joel Slemrod

Journal of Economic Literature, December 2019

This paper reviews recent economic research in tax compliance and enforcement. After briefly laying out the economics of tax evasion, it focuses on recent empirical contributions. It first discusses what methodologies and data have facilitated these con...

The Effects of Second-Generation Rent Control on Land Values

By Andreas Mense, Claus Michelsen, and Konstantin A. Kholodilin

AEA Papers and Proceedings, May 2019

Second generation rent control seeks to prevent negative quantity effects by exempting newly built units. The artificially lowered rent in the controlled segment makes renting attractive for households that would otherwise not have rented in the market, r...

Incidental Bequests and the Choice to Self-Insure Late-Life Risks

By Lee M. Lockwood

American Economic Review, September 2018

Despite facing significant uncertainty about their lifespans and health care costs, most retirees do not buy annuities or long-term care insurance. In this paper, I find that retirees' saving and insurance choices are highly inconsistent with standard lif...

Peer Effects in Legislative Voting

By Nikolaj Harmon, Raymond Fisman, and Emir Kamenica

American Economic Journal: Applied Economics, October 2019

We exploit seating rules in the European Parliament to identify peer effects in legislative voting. Sitting adjacently leads to a 7 percent reduction in the overall likelihood that two members of the European Parliament (MEPs) from the same party differ i...

Who Pays for Rent Control? Heterogeneous Landlord Response to San Francisco's Rent Control Expansion

By Rebecca Diamond, Tim McQuade, and Franklin Qian

AEA Papers and Proceedings, May 2019

Using a 1994 law change, we exploit quasi-experimental variation in the assignment of rent control in San Francisco to study which types of landlords bear the burden of decreased rental payments versus substitute away from supplying rent-controlled housin...

Competition in Treasury Auctions

By Helmut Elsinger, Philipp Schmidt-Dengler, and Christine Zulehner

American Economic Journal: Microeconomics, February 2019

We investigate the role of competition on the outcome of Austrian Treasury auctions. Austria's EU accession led to an increase in the number of banks participating in treasury auctions. We use structural estimates of bidders' private values to examine t...

Forward Guidance without Common Knowledge

By George-Marios Angeletos and Chen Lian

American Economic Review, September 2018

How does the economy respond to news about future policies or future fundamentals? Standard practice assumes that agents have common knowledge of such news and face no uncertainty about how others will respond. Relaxing this assumption attenuates the gene...

Unconventional Fiscal Policy

By Francesco D'Acunto, Daniel Hoang, and Michael Weber

AEA Papers and Proceedings, May 2018

Unconventional fiscal policy uses announcements of future increases in consumption taxes to generate inflation expectations and accelerate consumption expenditure. It is budget neutral and time consistent. We provide preliminary evidence for the effective...

Attention Management

By Elliot Lipnowski, Laurent Mathevet, and Dong Wei

American Economic Review: Insights, March 2020

Attention costs can cause some information to be ignored and decisions to be imperfect. Can we improve the material welfare of a rationally inattentive agent by restricting his information in the first place? In our model, a well-intentioned principal pro...

A Macroeconomic Model of Price Swings in the Housing Market

By Carlos Garriga, Rodolfo Manuelli, and Adrian Peralta-Alva

American Economic Review, June 2019

This paper shows that a macro model with segmented financial markets can generate sizable movements in housing prices in response to changes in credit conditions. We establish theoretically that reductions in mortgage rates always have a positive effect o...

The Persistence of Local Joblessness

By Michael Amior and Alan Manning

American Economic Review, July 2018

Differences in employment-population ratios across US commuting zones have persisted for many decades. We claim these disparities represent real gaps in economic opportunity for individuals of fixed characteristics. These gaps persist despite a strong mig...

The Welfare Effects of Social Media

By Hunt Allcott, Luca Braghieri, Sarah Eichmeyer, and Matthew Gentzkow

American Economic Review, March 2020

The rise of social media has provoked both optimism about potential societal benefits and concern about harms such as addiction, depression, and political polarization. In a randomized experiment, we find that deactivating Facebook for the four weeks befo...

Walk on the Wild Side: Temporarily Unstable Paths and Multiplicative Sunspots

By Guido Ascari, Paolo Bonomolo, and Hedibert F. Lopes

American Economic Review, May 2019

We propose a generalization of the rational expectations framework to allow for temporarily unstable paths. Our approach introduces multiplicative sunspot shocks and it yields drifting parameters and stochastic volatility. Then, we provide an econometric ...

A Review on Basic Income: A Radical Proposal for a Free Society and a Sane Economy by Philippe Van Parijs and Yannick Vanderborght

By Caterina Calsamiglia and Sabine Flamand

Journal of Economic Literature, September 2019

In order to clarify the potential impact of a basic income, we argue that any discussion on whether to adopt a basic income policy should be framed within the greater context of the transfer system as a whole. In particular, such discussion should conside...

Front Matter

American Economic Journal: Macroeconomics, July 2018

Monetary Policy and the Redistribution Channel

By Adrien Auclert

American Economic Review, June 2019

This paper evaluates the role of redistribution in the transmission mechanism of monetary policy to consumption. Three channels affect aggregate spending when winners and losers have different marginal propensities to consume: an earnings heterogeneity ch...

The Urban Mortality Transition and Poor-Country Urbanization

By Remi Jedwab and Dietrich Vollrath

American Economic Journal: Macroeconomics, January 2019

Today the world's fastest-growing cities lie in low-income countries, unlike the historical norm. Also unlike the "killer cities" of history, cities in low-income countries grow not just through in-migration but also through their own natural increase. ...