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23 мая, 00:47

Climatic Constraints on Aggregate Economic Output -- by Marshall Burke, Vincent Tanutama

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Efficient responses to climate change require accurate estimates of both aggregate damages and where and to whom they occur. While specific case studies and simulations have suggested that climate change disproportionately affects the poor, large-scale direct evidence of the magnitude and origins of this disparity is lacking. Similarly, evidence on aggregate damages, which is a central input into the evaluation of mitigation policy, often relies on country-level data whose accuracy has been questioned. Here we assemble longitudinal data on economic output from over 11,000 districts across 37 countries, including previously nondigitized sources in multiple languages, to assess both the aggregate and distributional impacts of warming temperatures. We find that local-level growth in aggregate output responds non-linearly to temperature across all regions, with output peaking at cooler temperatures (5% poorer than they would have been without this warming.

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23 мая, 00:47

Transforming Naturally Occurring Text Data Into Economic Statistics: The Case of Online Job Vacancy Postings -- by Arthur Turrell, Bradley J. Speigner, Jyldyz Djumalieva, David Copple, James Thurgood

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Using a dataset of 15 million UK job adverts from a recruitment website, we construct new economic statistics measuring labour market demand. These data are ‘naturally occurring’, having originally been posted online by firms. They offer information on two dimensions of vacancies—region and occupation—that firm-based surveys do not usually, and cannot easily, collect. These data do not come with official classification labels so we develop an algorithm which maps the free form text of job descriptions into standard occupational classification codes. The created vacancy statistics give a plausible, granular picture of UK labour demand and permit the analysis of Beveridge curves and mismatch unemployment at the occupational level.

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23 мая, 00:47

Rationalizing Trading Frequency and Returns: Maybe Trading is Good for You -- by Yosef Bonaparte, Russell Cooper, Mengli Sha

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Barber and Odean study the relationship between trading activity and returns. They find that households who trade more have a lower net return than other households. They argue that these results cannot emerge from a model with rational traders and instead attribute these findings to overconfidence. In contrast, we find that household financial choices generated from a dynamic optimization problem with rational agents and portfolio adjustment costs can produce trading and return patterns that closely mimic these facts. Adding various forms of irrationality, modelled as beliefs about income and return processes that are not data based, do not improve the ability of the model to explain the patterns of turnover and net returns. Irrationality can improve the ability of the model to match a larger set of moments, including these turnover and net return moments coupled with those that capture the wealth to income ratio and portfolio composition.

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23 мая, 00:47

Special Deals with Chinese Characteristics -- by Chong-En Bai, Chang-Tai Hsieh, Zheng Michael Song

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Chinese local governments wield their enormous political power and administrative capacity to provide “special deals” for favored private firms. We argue that China’s extraordinary economic growth comes from these special deals. Local political leaders do so because they derive personal benefits, either political or monetary, from providing special deals. Competition between local governments limits the predatory effects of special deals.

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23 мая, 00:47

Equilibrium Trade in Automobile Markets -- by Kenneth Gillingham, Fedor Iskhakov, Anders Munk-Nielsen, John P. Rust, Bertel Schjerning

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We introduce a computationally tractable dynamic equilibrium model of the automobile market where new and used cars of multiple types (e.g. makes/models) are traded by heterogeneous consumers. Prices and quantities are determined endogenously to equate supply and demand for all car types and vintages, along with the ages at which cars are scrapped. The model allows for transactions costs, taxes, flexible specifications of car characteristics, consumer preferences, and heterogeneity. We apply the model to two examples: a revenue-neutral replacement of the new vehicle registration tax with a higher fuel tax and a hypothetical “merger to monopoly” in an oligopolistic new car market. We show substantial gains in consumer welfare from the tax policy change, as well as important effects on government revenues, automobile prices, driving, fuel consumption and CO2 emissions, while the merger leads to substantial welfare losses.

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23 мая, 00:47

Regressive Sin Taxes, With an Application to the Optimal Soda Tax -- by Hunt Allcott, Benjamin Lockwood, Dmitry Taubinsky

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A common objection to “sin taxes”—corrective taxes on goods that are thought to be overconsumed, such as cigarettes, alcohol, and sugary drinks—is that they often fall disproportionately on low-income consumers. This paper studies the interaction between corrective and redistributive motives in a general optimal taxation framework and delivers empirically implementable sufficient statistics formulas for the optimal commodity tax. The optimal sin tax is increasing in the price elasticity of demand, increasing in the degree to which lower-income consumers are more biased or more elastic to the tax, decreasing in the extent to which consumption is concentrated among the poor, and decreasing in income effects, because income effects imply that commodity taxes create labor supply distortions. Contrary to common intuitions, stronger preferences for redistribution can increase the optimal sin tax, if lower-income consumers are more responsive to taxes or are more biased. As an application, we estimate the optimal nationwide tax on sugar-sweetened beverages in our model, using Nielsen Homescan data and a specially designed survey measuring nutrition knowledge and self-control. Holding federal income tax rates constant, we find an optimal federal sugar-sweetened beverage tax of 1 to 2.1 cents per ounce in our model, although optimal city-level taxes could be as much as 60% lower due to cross-border shopping.

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23 мая, 00:47

Should We Tax Sugar-Sweetened Beverages? An Overview of Theory and Evidence -- by Hunt Allcott, Benjamin Lockwood, Dmitry Taubinsky

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Taxes on sugar-sweetened beverages are growing in popularity and have generated an active public debate. Are they a good idea? If so, how high should they be? Are such taxes regressive? People in the U.S. and some other countries consume remarkable quantities of sugar-sweetened beverages, and the evidence suggests that this generates significant health costs. Building on recent work by Allcott, Lockwood, and Taubinsky (Forthcoming) and others, we review the basic economic principles that determine the socially optimal SSB tax. The optimal tax depends on (1) externalities: uninternalized health system costs from diseases caused by sugary drink consumption; (2) internalities: costs consumers impose on themselves by consuming too many sugary drinks due to poor nutrition knowledge or lack of self-control; and (3) regressivity: how much the financial burden and the internality benefits from the tax fall on the poor. We summarize the empirical evidence about the key parameters affect how large the tax should be. In the theoretical framework of Allcott, Lockwood, and Taubinsky (Forthcoming), our calculations imply that sugar-sweetened beverage taxes are welfare enhancing, and indeed that the optimal nationwide SSB tax rate may be higher than the one cent per ounce rate most commonly used in U.S. cities. Using our theoretical framework, we end by deriving seven concrete implications for optimal SSB tax structure.

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23 мая, 00:47

Peer Effects in Product Adoption -- by Michael Bailey, Drew M. Johnston, Theresa Kuchler, Johannes Stroebel, Arlene Wong

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We study the nature of peer effects in the market for new cell phones. Our analysis builds on de-identified data from Facebook that combine information on social networks with information on users' cell phone models. To identify peer effects, we use variation in friends' new phone acquisitions resulting from random phone losses and carrier-specific contract terms. A new phone purchase by a friend has a substantial positive and long-term effect on an individual's own demand for phones of the same brand, most of which is concentrated on the particular model purchased by the friend. We provide evidence that social learning contributes substantially to the observed peer effects. While peer effects increase the overall demand for cell phones, a friend's purchase of a new phone of a particular brand can reduce individuals' own demand for phones from competing brands---in particular those running on a different operating system. We discuss the implications of these findings for the nature of firm competition. We also find that stronger peer effects are exerted by more price-sensitive individuals. This positive correlation suggests that the elasticity of aggregate demand is substantially larger than the elasticity of individual demand. Through this channel, peer effects reduce firms' markups and, in many models, contribute to higher consumer surplus and more efficient resource allocation.

Выбор редакции
23 мая, 00:47

The Illusion of Stable Preferences over Major Life Decisions -- by Maximilian W. Mueller, Joan Hamory Hicks, Jennifer Johnson-Hanks, Edward Miguel

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We examine the stability of preferences over time using panel data from Kenya on fertility intentions, realizations, and recall of intentions. We find that desired fertility is very unstable, but that most people perceive their desires to be stable. Under hypothetical scenarios, few expect their desired fertility to increase over time. Moreover, when asked to recall past intentions, most respondents report previously wanting exactly as many children as they desire today. Biased recall of preferences over a major life decision could have important implications for measuring excess fertility, the evolution of norms, and the perceived need for family planning programs.

Выбор редакции
23 мая, 00:47

Consumer Myopia in Vehicle Purchases: Evidence from a Natural Experiment -- by Kenneth Gillingham, Sébastien Houde, Arthur van Benthem

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A central question in the analysis of fuel-economy policy is whether consumers are myopic with regards to future fuel costs. We provide the first evidence on consumer valuation of fuel economy from a natural experiment. We examine the short-run equilibrium effects of an exogenous restatement of fuel-economy ratings that affected 1.6 million vehicles. Using the implied changes in willingness-to-pay, we find that consumers act myopically: consumers are indifferent between $1 in discounted fuel costs and 15-38 cents in the vehicle purchase price when discounting at 4%. This myopia persists under a wide range of assumptions.

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23 мая, 00:47

Physician Bias and Racial Disparities in Health: Evidence from Veterans' Pensions -- by Shari Eli, Trevon D. Logan, Boriana Miloucheva

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We estimate racial differences in longevity using records from cohorts of Union Army veterans. Since veterans received pensions based on proof of disability at medical exams, estimates of the causal effect of income on mortality may be biased, as sicker veterans received larger pensions. To circumvent endogeneity bias, we propose an exogenous source of variation in pension income: the judgment of the doctors who certified disability. We find that doctors appeared to discriminate against black veterans. The discrimination we observe is acute—we would not observe any racial mortality differences had physicians not been racially biased in determining pension awards. The effect of income on health was indeed large enough to close the black-white mortality gap in the period. Our work emphasizes that the large effects of physicians’ attitudes on racial differentials in health, which persist today amongst both veterans and the civilian population, were equally prominent in the past.

Выбор редакции
23 мая, 00:47

Do Stricter Immunization Laws Improve Coverage? Evidence from the Repeal of Non-medical Exemptions for School Mandated Vaccines -- by Chelsea J. Richwine, Avi Dor, Ali Moghtaderi

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Nonmedical exemptions are widely shown to be associated with outbreaks of vaccine-preventable disease. In response to a recent measles outbreak in 2015, California acted to increase immunization coverage by removing all nonmedical exemptions effective in 2016. Employing a unique dataset of county-level vaccination and exemption rates at Kindergarten entry, we exploit the recent policy change in California to estimate the impact of the repeal of nonmedical exemptions on immunization coverage for school-mandated vaccines. Relative to a diverse group of control states, our findings indicate that vaccination coverage increased for all required vaccines following the repeal, ranging from 2.5% for MMR to 5% for Polio. We also find a significant 3.4 percentage-point decline in nonmedical exemptions, accompanied by a 2.1 percentage-point increase in medical exemptions in counties that previously had high rates of nonmedical waivers. Our findings indicate that the repeal of nonmedical exemptions in California was only partially effective in improving vaccination coverage, and may have led parents to substitute between medical and nonmedical exemptions, leading to a net decline in total exemptions of just 1 percentage-point.