An Experimental Comparison of Risky and Riskless Choice—Limitations of Prospect Theory and Expected Utility Theory

By Hui-Kuan Chung, Paul Glimcher, and Agnieszka Tymula

American Economic Journal: Microeconomics, August 2019

Prospect theory, used descriptively for decisions under both risk and certainty, presumes concave utility over gains and convex utility over losses, a pattern widely seen in lottery tasks. Although such discontinuous gain-loss reference-dependence is also...

Parents' Beliefs about Their Children's Academic Ability: Implications for Educational Investments

By Rebecca Dizon-Ross

American Economic Review, August 2019

Schools worldwide distribute information to parents about their children's academic performance. Do frictions prevent parents, particularly low-income parents, from accessing this information to make decisions? A field experiment in Malawi shows that, at ...

Emotional Tagging and Belief Formation: The Long-Lasting Effects of Experiencing Communism

By Christine Laudenbach, Ulrike Malmendier, and Alexandra Niessen-Ruenzi

AEA Papers and Proceedings, May 2019

Growing evidence in macrofinance suggests long-lasting effects of personally experienced outcomes on beliefs. To understand the underlying mechanism we turn to the neurological foundations of memory formation. We propose that emotional tagging plays a cru...

What Do We Know about the Effects of Austerity?

By Alberto Alesina, Carlo A. Favero, and Francesco Giavazzi

AEA Papers and Proceedings, May 2018

The literature on fiscal multipliers is far from having reached an agreed upon conclusion. One result, however, seems very robust: in OECD economies, fiscal consolidations based upon expenditure cuts are much less costly than those performed on the tax si...

Macroeconomics and Market Power: Context, Implications, and Open Questions

[Symposium: Markups]

By Chad Syverson

Journal of Economic Perspectives, Summer 2019

This article assesses several aspects of recent macroeconomic market power research. These include the ways market power is defined and measured; the use of accounting data to estimate markups; the quantitative implications of theoretical connections amon...

Disrupting Education? Experimental Evidence on Technology-Aided Instruction in India

By Karthik Muralidharan, Abhijeet Singh, and Alejandro J. Ganimian

American Economic Review, April 2019

We study the impact of a personalized technology-aided after-school instruction program in middle-school grades in urban India using a lottery that provided winners with free access to the program. Lottery winners scored 0.37 sigma higher in math and 0.23...

Online Privacy and Information Disclosure by Consumers

By Shota Ichihashi

American Economic Review, February 2020

I study the welfare and price implications of consumer privacy. A consumer discloses information to a multiproduct seller, which learns about his preferences, sets prices, and makes product recommendations. Although the consumer benefits from accurate rec...

Does the Election of a Female Leader Clear the Way for More Women in Politics?

By Thushyanthan Baskaran and Zohal Hessami

American Economic Journal: Economic Policy, August 2018

Women remain underrepresented in politics and it remains unclear how this might change. In this paper, we investigate whether female council candidates receive more preferential votes when a female mayor has been recently elected into office. We hand coll...

Identification in Macroeconomics

[Symposium: Macroeconomics a Decade after the Great Recession]

By Emi Nakamura and Jón Steinsson

Journal of Economic Perspectives, Summer 2018

This paper discusses empirical approaches macroeconomists use to answer questions like: What does monetary policy do? How large are the effects of fiscal stimulus? What caused the Great Recession? Why do some countries grow faster than others? Identificat...

The Taxing Deed of Globalization

By Peter H. Egger, Sergey Nigai, and Nora M. Strecker

American Economic Review, February 2019

This paper examines the effects of globalization on the distribution of worker-specific labor taxes using a unique set of tax calculators. We find a differential effect of higher trade and factor mobility on relative tax burdens in 1980–1993 versus 1994...

The State of New Keynesian Economics: A Partial Assessment

[Symposium: Macroeconomics a Decade after the Great Recession]

By Jordi Galí

Journal of Economic Perspectives, Summer 2018

In August 2007, when the first signs emerged of what would come to be the most damaging global financial crisis since the Great Depression, the New Keynesian paradigm was dominant in macroeconomics. Ten years later, tons of ammunition has been fired again...

Incentives and Unintended Consequences: Spillover Effects in Food Choice

By Manuela Angelucci, Silvia Prina, Heather Royer, and Anya Samek

American Economic Journal: Economic Policy, November 2019

Little is known about how peers influence the impact of incentives. We study how peers' actions and incentives can lead to peer spillover effects. Using a field experiment on snack choice in the school lunchroom (choice of grapes versus cookies), we rando...

Housing Constraints and Spatial Misallocation

By Chang-Tai Hsieh and Enrico Moretti

American Economic Journal: Macroeconomics, April 2019

We quantify the amount of spatial misallocation of labor across US cities and its aggregate costs. Misallocation arises because high productivity cities like New York and the San Francisco Bay Area have adopted stringent restrictions to new housing supply...

Alcohol and Self-Control: A Field Experiment in India

By Frank Schilbach

American Economic Review, April 2019

This paper studies alcohol consumption among low-income workers in India. In a 3-week field experiment, the majority of 229 cycle-rickshaw drivers were willing to forgo substantial monetary payments in order to set incentives for themselves to remain sobe...

Measuring Success in Education: The Role of Effort on the Test Itself

By Uri Gneezy, John A. List, Jeffrey A. Livingston, Xiangdong Qin, Sally Sadoff, and Yang Xu

American Economic Review: Insights, December 2019

US students often rank poorly on standardized tests that estimate and compare educational achievements. We investigate whether this might reflect not only differences in ability but also differences in effort on the test. We experimentally offer students ...

Does Science Advance One Funeral at a Time?

By Pierre Azoulay, Christian Fons-Rosen, and Joshua S. Graff Zivin

American Economic Review, August 2019

We examine how the premature death of eminent life scientists alters the vitality of their fields. While the flow of articles by collaborators into affected fields decreases after the death of a star scientist, the flow of articles by non-collaborators in...

Comparing UK Tax Returns of Foreign Multinationals to Matched Domestic Firms

By Katarzyna Anna Bilicka

American Economic Review, August 2019

In this paper, I use confidential UK corporate tax returns data to explore whether there are systematic differences in the amount of taxable profits that multinational and domestic companies report. I find that the ratio of taxable profits to total assets...

Is Inflation Default? The Role of Information in Debt Crises

By Marco Bassetto and Carlo Galli

American Economic Review, October 2019

We study the information sensitivity of government debt denominated in domestic versus foreign currency: the former is subject to inflation risk and the latter to default. Default only affects sophisticated bond traders, whereas inflation concerns a large...

Annotated Listing of New Books

Journal of Economic Literature, December 2019

The Gains from Input Trade with Heterogeneous Importers

By Joaquin Blaum, Claire Lelarge, and Michael Peters

American Economic Journal: Macroeconomics, October 2018

Firms differ substantially in their participation in foreign input markets. We develop a methodology to measure the aggregate effects of input trade that takes such heterogeneity into account. We provide a theoretical result that holds in a variety of set...