The Industrial Organization of Health-Care Markets

By Martin Gaynor, Kate Ho, and Robert J. Town

Journal of Economic Literature, June 2015

The U.S. health-care sector is large and growing—health-care spending in 2011 amounted to $2.7 trillion and 18 percent of GDP. Approximately half of health-care output is allocated via markets. In this paper, we analyze the industrial organization l...

Bounded Rationality and Robust Mechanism Design: An Axiomatic Approach

By Luyao Zhang and Dan Levin

American Economic Review, May 2017

We propose an axiomatic approach to study the superior performance of mechanisms with obviously dominant strategies to those with only dominant strategies. Guided by the psychological inability to reason state-by-state, we develop Obvious Preference as a ...

Teenage Motherhood and Sibling Outcomes

By Jennifer A. Heissel

American Economic Review, May 2017

Using annual longitudinal data, I show that all children in families with teen childbearing are on a downward trajectory several years before pregnancy begins. Compared to students on similar trajectories from families without teenage childbearing, siblin...

The Emigration of German-Speaking Economists after 1933

By F. M. Scherer

Journal of Economic Literature, September 2000

Economists were among the many scholars uprooted following Hitler's rise to power in 1933. This article reviews a series of books edited by Harald Hagemann and others which provide extensive biographical information on 314 German-speaking economists whose...

Anomalies: Risk Aversion

By Matthew Rabin and Richard H. Thaler

Journal of Economic Perspectives, Winter 2001

Economists ubiquitously employ a simple and elegant explanation for risk aversion: It derives from the concavity of the utility-of-wealth function within the expected-utility framework. We show that this explanation is not plausible in most applications, ...

Budget Deficits: Rhetoric and Reality

[Symposium: Budget Deficit]

By Robert Eisner

Journal of Economic Perspectives, Spring 1989

Whatever the real or imagined ills of the economy, the news media, most politicians and a fair proportion of the economics profession are quick to point to the culprit: "the budget deficit." No matter that few appear to know or care precisely what deficit...

A Theory of the Consumption Function, with and without Liquidity Constraints

[Symposium: Consumption Behaviour]

By Christopher D. Carroll

Journal of Economic Perspectives, Summer 2001

This paper argues that the modern stochastic consumption model, in which impatient consumers face uninsurable labor income risk, matches Milton Friedman's (1957) original description of the Permanent Income Hypothesis much better than the perfect foresigh...

Thinking Small: Poor Economics: A Radical Rethinking of the Way to Fight Global Poverty: Review Essay

By Mark R. Rosenzweig

Journal of Economic Literature, March 2012

In Poor Economics, Abhijit Banerjee and Esther Duflo eschew grand theorizing about poverty reduction in favor of an approach in which intelligently designed and tested small interventions, based on a scientific understanding of the lives of the p...

How Business Is Done in the Developing World: Deals versus Rules

[Symposium: Doing Business]

By Mary Hallward-Driemeier and Lant Pritchett

Journal of Economic Perspectives, Summer 2015

What happens in the developing world when stringent regulations characterizing the investment climate meet weak government willingness or capability to enforce those regulations? How is business actually done? The Doing Business project surveys expert...

Forensic Economics

By Eric Zitzewitz

Journal of Economic Literature, September 2012

A new meta-field of "forensic economics" has begun to emerge, uncovering evidence of hidden behavior in a variety of domains. Examples include teachers cheating on exams, road builders skimping on materials, violations of U.N. sanctions, unnecessary heart...

Understanding Markups in the Open Economy

By Beatriz de Blas and Katheryn N. Russ

American Economic Journal: Macroeconomics, April 2015

This paper presents a new model of Bertrand competition between heterogeneous firms in the open economy where the macroeconomic distribution of markups responds to the degree of trade openness and the underlying level of technology in each trading partner...

R&D Investment, Exporting, and Productivity Dynamics

By Bee Yan Aw, Mark J. Roberts, and Daniel Yi Xu

American Economic Review, June 2011

This paper estimates a dynamic structural model of a producer's decision to invest in R&D and export, allowing both choices to endogenously affect the future path of productivity. Using plant-level data for the Taiwanese electronics industry, both acti...

Consumer Inertia and Firm Pricing in the Medicare Part D Prescription Drug Insurance Exchange

By Keith M. Marzilli Ericson

American Economic Journal: Economic Policy, February 2014

I use the Medicare Part D prescription drug insurance market to examine the dynamics of firm interaction with consumers on an insurance exchange. Enrollment data show that consumers face switching frictions leading to inertia in plan choice, and a regr...

Institutions: Top Down or Bottom Up?

By William Easterly

American Economic Review, May 2008

Preferential Trade Agreements as Stumbling Blocks for Multilateral Trade Liberalization: Evidence for the United States

By Nuno Limao

American Economic Review, June 2006

Most countries are members of preferential trade agreements (PTAs). The effect of these agreements has attracted much interest and raised the question of whether PTAs promote or slow multilateral trade liberalization, i.e., whether they are a "building bl...

A Review of The Age of Sustainable Development by Jeffrey Sachs

By Matthew E. Kahn

Journal of Economic Literature, September 2015

How does economic science inform the study of sustainable development? In his new book, Jeffrey D. Sachs analyzes the challenges of achieving economic growth while protecting the environment and achieving an equitable distribution of resources. This revie...

The Cost of Financial Frictions for Life Insurers

By Ralph S. J. Koijen and Motohiro Yogo

American Economic Review, January 2015

During the financial crisis, life insurers sold long-term policies at deep discounts relative to actuarial value. The average markup was as low as -19 percent for annuities and -57 percent for life insurance. This extraordinary pricing behavior was due to...

Behavioral Foundations of Microcredit: Experimental and Survey Evidence from Rural India

By Michal Bauer, Julie Chytilová, and Jonathan Morduch

American Economic Review, April 2012

We use experimental measures of time discounting and risk aversion for villagers in south India to highlight behavioral features of microcredit, a financial tool designed to reduce poverty and fix credit market imperfections. The evidence suggests that mi...

Diversity in the Workplace

By John Morgan and Felix Várdy

American Economic Review, March 2009

We study minority representation in the workplace when employers engage in optimal sequential search and minorities convey noisier signals of ability than mainstream job candidates. The greater signal noise makes it harder for minorities to change employe...

Watta Satta: Bride Exchange and Women's Welfare in Rural Pakistan

By Hanan G. Jacoby and Ghazala Mansuri

American Economic Review, September 2010

Can marriage institutions limit marital inefficiency? We study the pervasive custom of watta satta in rural Pakistan, a bride exchange between families coupled with a mutual threat of retaliation. Watta satta can be seen as a mechanism for coordinating th...