Archive for the ‘American Economic Review’ Category

The Effect of Language on Economic Behavior: Evidence from Savings Rates, Health Behaviors, and Retirement Assets

September 11, 2013 Comments off

The Effect of Language on Economic Behavior: Evidence from Savings Rates, Health Behaviors, and Retirement Assets (PDF)
Source: American Economic Review

Languages differ widely in the ways they encode time. I test the hypothesis that languages that grammatically associate the future and the present, foster future-oriented behavior. This prediction arises naturally when well-documented effects of language structure are merged with models of intertemporal choice. Empirically, I find that speakers of such languages: save more, retire with more wealth, smoke less, practice safer sex, and are less obese. This holds both across countries and within countries when comparing demographically similar native households. The evidence does not support the most obvious forms of common causation. I discuss implications for theories of intertemporal choice.

Are Consumers Myopic? Evidence from New and Used Car Purchases

June 27, 2013 Comments off

Are Consumers Myopic? Evidence from New and Used Car Purchases (PDF)

Source: American Economic Review (forthcoming)

We investigate how gasoline prices affect automobile purchases. We find that the adjustment of equilibrium market shares and prices in response to changes in usage cost varies dramatically between new and used markets. In the new car market, the adjustment is primarily in market shares, while in the used car market, the adjustment is primarily in prices. The effects are largest for the most- and least-fuel efficient cars. We argue that the difference in how gasoline costs affect new and used automobile markets can be explained by differences in the supply characteristics of new and used cars.

Subjective Well‐Being and Income: Is There Any Evidence of Saturation?

April 30, 2013 Comments off

Subjective Well‐Being and Income: Is There Any Evidence of Saturation? (PDF)
Source: American Economic Review, forthcoming (Betsey Stevenson/Justin Wolfers)

Many scholars have argued that once “basic needs” have been met, higher income is no longer associated with higher in subjective well-being. We assess th e validity of this claim in comparisons of both rich and poor countries, and also of rich and poor people within a country. Analyzing multiple datasets, multiple definitions of “basic needs” and multiple questions about well-being, we find no support for this claim. The relationship between well-being and income is roughly linear-log and does not dimini sh as incomes rise. If there is a satiation point, we are yet to reach it.

Strike Three: Discrimination, Incentives, and Evaluation

September 9, 2011 Comments off

Strike Three: Discrimination, Incentives, and Evaluation (PDF)
Source: American Economic Review (via Daniel S. Hamermesh)

Major League Baseball umpires express their racial/ethnic preferences when they evaluate pitchers. Strikes are called less often if the umpire and pitcher do not match race/ethnicity, but mainly where there is little scrutiny of umpires. Pitchers understand the incentives and throw pitches that allow umpires less subjective judgment (e.g., fastballs over home plate) when they anticipate bias. These direct and indirect effects bias performance measures of minorities downward. The results suggest how discrimination alters discriminated groups’ behavior generally. They imply that biases in measured productivity must be accounted for in generating measures of wage discrimination

Hat tip: PW

100 Years of the American Economic Review: The Top 20 Articles

March 1, 2011 Comments off

100 Years of the American Economic Review: The Top 20 Articles (PDF)
Source: America Economic Review

The Top 20 Committee, consisting of Kenneth J. Arrow, B. Douglas Bernheim, Martin S. Feldstein, Daniel L. McFadden, James M. Poterba, and Robert M. Solow, was appointed by Robert Moffitt with the task of selecting the “Top 20” articles published in the American Economic Review during its first hundred years. We decided against trying to define formally the criteria for inclusion: they surely comprise sheer intellectual quality, influence on the ideas and practices of economists, and general significance or breadth; but it would be fruitless to try to specify the marginal rates of substitution among these and other qualities. We were looking for 20 admirable and important articles.

As a starting point we used citation counts and numbers of searches in JSTOR. This is obviously important and relevant information, but not decisive on its own. Citation counts are biased in favor of subfields of economics with the largest populations. There is also a bias in favor of moderately recent articles, if only because the number of potential readers and writers has been increasing in time; very recent articles suffer from the fact that citations build up over time. In any case we were expected to use our judgment about quality and significance. So we used the citation and JSTOR data only to give us a large group of eligibles. We worried especially about overlooking articles in the very early days of the AER, some by great names in the history of economics. But we found, just to take one striking example, that although Irving Fisher published several articles in the journal, they were all minor or ephemeral pieces.

In the event, our early ballots showed an encouraging unanimity or near-unanimity, especially about the leading candidates. We very quickly converged on the Top 15 articles. There were occasional differences of opinion, only to be expected from a group with diverse interests, as we filled in the remaining three to five places. Here is our final list, arranged alphabetically, along with a brief reminder about each. There are few, if any, surprises.

Includes links to papers on the list.