Katrina's Children: Evidence on the Structure of Peer Effects from Hurricane Evacuees

By Scott A. Imberman, Adriana D. Kugler, and Bruce I. Sacerdote

American Economic Review, August 2012

In 2005, Hurricanes Katrina and Rita forced many children to relocate across the Southeast. While schools quickly enrolled evacuees, families in receiving schools worried about the impacts on incumbent students. We find no effect, on average, of the inflo...

What Do You Think Would Make You Happier? What Do You Think You Would Choose?

By Daniel J. Benjamin, Ori Heffetz, Miles S. Kimball, and Alex Rees-Jones

American Economic Review, August 2012

Would people choose what they think would maximize their subjective well-being (SWB)? We present survey respondents with hypothetical scenarios and elicit both choice and predicted SWB rankings of two alternatives. While choice and predicted SWB rankings ...

Industrial Structure and Capital Flows

By Keyu Jin

American Economic Review, August 2012

This paper provides a new theory of international capital flows. In a framework that integrates factor-proportions-based trade and financial capital flows, a novel force emerges: capital tends to flow toward countries that become more specialized in capi...

Spatial Differentiation and Vertical Mergers in Retail Markets for Gasoline

By Jean-François Houde

American Economic Review, August 2012

This paper studies an empirical model of spatial competition applied to gasoline markets. The main feature is to specify commuting paths as the "locations" of consumers in a Hotelling-style model. As a result, spatial differentiation depends in an intuiti...

Revealed Attention

By Yusufcan Masatlioglu, Daisuke Nakajima, and Erkut Y. Ozbay

American Economic Review, August 2012

The standard revealed preference argument relies on an implicit assumption that a decision maker considers all feasible alternatives. The marketing and psychology literatures, however, provide well-established evidence that consumers do not consider all ...

Heuristic Thinking and Limited Attention in the Car Market

By Nicola Lacetera, Devin G. Pope, and Justin R. Sydnor

American Economic Review, August 2012

Can heuristic information processing affect important product markets? Analyzing over 22 million wholesale used-car transactions, we find evidence of left-digit bias in the processing of odometer values, whereby individuals focus on the number's leftmost ...

The Multi-unit Assignment Problem: Theory and Evidence from Course Allocation at Harvard

By Eric Budish and Estelle Cantillon

American Economic Review, August 2012

We use theory and field data to study the draft mechanism used to allocate courses at Harvard Business School. We show that the draft is manipulable in theory, manipulated in practice, and that these manipulations cause significant welfare loss. Neverthel...

Durable Consumption and Asset Management with Transaction and Observation Costs

By Fernando Alvarez, Luigi Guiso, and Francesco Lippi

American Economic Review, August 2012

The empirical evidence on rational inattention lags the theoretical developments: micro evidence on one of the most immediate consequences of observation costs—the infrequent observation of state variables—is not available in standard datasets...

Credit Supply and Monetary Policy: Identifying the Bank Balance-Sheet Channel with Loan Applications

By Gabriel Jiménez, Steven Ongena, José-Luis Peydró, and Jesús Saurina

American Economic Review, August 2012

We analyze the impact of monetary policy on the supply of bank credit. Monetary policy affects both loan supply and demand, thus making identification a steep challenge. We therefore analyze a novel, supervisory dataset with loan applications from Spain. ...

Skill Dispersion and Trade Flows

By Matilde Bombardini, Giovanni Gallipoli, and Germán Pupato

American Economic Review, August 2012

Is skill dispersion a source of comparative advantage? In this paper we use microdata from the International Adult Literacy Survey to show that the effect of skill dispersion on trade flows is quantitatively similar to that of the aggregate endowment of h...

Interjurisdictional Spillovers, Decentralized Policymaking, and the Elasticity of Capital Supply

By Thomas Eichner and Marco Runkel

American Economic Review, August 2012

This paper points to the important role that the elasticity of aggregate capital supply with respect to the net rate of return to capital plays for the efficiency of policymaking in a decentralized economy with mobile capital and spillovers among jurisdic...

The Hidden Advantage of Delegation: Pareto Improvements in a Gift Exchange Game

By Gary Charness, Ramón Cobo-Reyes, Natalia Jiménez, Juan A. Lacomba, and Francisco Lagos

American Economic Review, August 2012

This paper analyzes the effect on performance and earnings of delegating the wage choice to employees. Our results show that such delegation significantly increases effort levels. Moreover, we observe a Pareto improvement, as the earnings of both employer...

Symposium on Tax Reform

[Symposium: Tax Reform]

By Henry J. Aaron

Journal of Economic Perspectives, Summer 1987

The papers in this symposium are a representative sample of the diverse views economists hold on the political and economic advantages and disadvantages of the Tax Reform Act of 1986.

Tax Reform: Theory and Practice

[Symposium: Tax Reform]

By Joseph A. Pechman

Journal of Economic Perspectives, Summer 1987

The Tax Reform Act of 1986 is the most significant piece of tax legislation enacted since the income tax was converted to a mass tax during World War II. After decades of erosion, the individual and corporate income tax bases were broadened and the revenu...

Tax Reform as Political Choice

[Symposium: Tax Reform]

By James M. Buchanan

Journal of Economic Perspectives, Summer 1987

Public choice theory explains and interprets politics as the interaction among constituents and agents seeking to advance or to express their own interests. Applied to an observed political event like the 1986 tax reform legislation, any such analysis mus...

Treasury I and the Tax Reform Act of 1986: The Economics and Politics of Tax Reform

[Symposium: Tax Reform]

By Charles E. McLure, Jr. and George R. Zodrow

Journal of Economic Perspectives, Summer 1987

During President Reagan's State of the Union Address in January 1984, he requested that Treasury Secretary Donald Regan prepare "a plan for action to simplify the entire tax code so that all taxpayers, big and small, are treated more fairly." In response,...

Short of Euphoria

[Symposium: Tax Reform]

By Richard A. Musgrave

Journal of Economic Perspectives, Summer 1987

The Tax Reform Act of 1986 is the most sweeping reform since the early 1940s when the pressures of war finance forced the transformation of the income tax into a mass tax, and made it the core of the federal tax system. Since then many adjustments have be...

The Tax Reform Act of 1986 and the Cost of Capital

[Symposium: Tax Reform]

By Alan J. Auerbach

Journal of Economic Perspectives, Summer 1987

The broad outlines of the recently passed Tax Reform Act of 1986 suggest a shift in the tax burden toward business. Over the five-year period 1987-1991, corporate tax revenues are projected to increase by $120.3 billion with individual tax revenues declin...

Tax Reform: Implications for the State-Local Public Sector

[Symposium: Tax Reform]

By Paul N. Courant and Daniel L. Rubinfeld

Journal of Economic Perspectives, Summer 1987

We analyze the effects of the Tax Reform Act of 1986 on the level and distribution of state and local spending, and on the mix of revenue sources employed by state and local governments. We expect state and local spending to fall by between 0.9 percent an...

Household Behavior and the Tax Reform Act of 1986

[Symposium: Tax Reform]

By Jerry A. Hausman and James M. Poterba

Journal of Economic Perspectives, Summer 1987

President Reagan's May 1985 letter to Congress, accompanying his tax reform proposal, argued that the existing tax system hindered economic growth because "most Americans labor under excessively high tax rates that discourage work and cut drastically into...