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The Keynesian Method, Complexity, and the Training of Economists

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A MiddLab Project

Can European Economics Compete with U.S. Economics? And Should It?

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Can European Economics Compete with U.S. Economics? And Should It?

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A MiddLab Project

Reintegrating the Social Sciences: The Dahlem Group

Social science disciplines see themselves as distinct, with their own territory, their own methods, and their own framework. Within such an environment multidisciplinary work involves enormous conflict and translation problems. This situation is no longer acceptable. Dealing with modern problems requires researchers with broad transdisciplinary knowledge and with the ability to communicate with other social science researchers in a way that will allow them to arrive at transdisciplinary recommendations. Complex issues such as healthcare, income distributions, crime prevention, industrial policy, agriculture require not only insights from multiple social disciplines, but the integration of those insights. This document offers a proposal for training social science researchers. Specifically, it proposes reintegrating the social sciences by modifying the current system of trainingwhich provides completely separate training for researchers in each sub-disciplineto incorporate a common first year core"of training for all social science researchers. If implemented, the proposal will reduce the babble that currently characterizes much of the interdisciplinary conversations.

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Reintegrating the Social Sciences: The Dahlem Group

Roland Kupers

Thomas Lux

Casey Rothschild

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The Choice Architecture of Choice Architecture: Toward a Non-paternalistic Nudge Policy

The paper seeks to recast the goal of nudge policy from a goal of achieving a specific result determined by government or by behavioral economists to a goal of giving individuals as much power as is practical to decide the choice architecture they face. We call a nudge with such a giving individuals power over choice mechanisms goal a non-paternalistic nudge policy. The goal of non-paternalistic nudge policy is not to achieve a better result as seen by government or by behavioral economists. The goal of non-paternalistic nudge policy is to achieve a better result as seen by the agents being nudged as revealed through their choices of choice architectures. We argue that non-paternalistic nudge policy fits much better with the values inherent in Classical liberalism than does libertarian paternalistic nudge policy.

Civil War, Ethnicity, and the Migration of Skilled Labor

We investigate the impact of civil war on high skilled emigration rates to the OECD over the period 1985-2000. Controlling for economic and institutional characteristics of source countries, we find that civil war increases high skilled emigration by about 5 percent on the average. However, the nature of conflict matters: While brain drain from countries with ethnic conflict is about 6-8 percent greater on average than it is from countries without conflict, brain drain from countries with nonethnic conflict is less, and statistically insignificant. Duration also matters: Each additional year of ethnic conflict worsens the brain drain by between 0.4 and 1 percent, whereas the effect of an additional year of nonethnic conflict is small and insignificant.

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Aniruddha Mitra

James T. Bang

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Civil War, Ethnicity, and the Migration of Skilled Labor

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The Effectiveness of Charity Auction Mechanisms

Learn more about Economics at Middlebury College.

Nonprofit organizations depend on charitable donations to provide cash revenue. Charities frequently employ auctions and raffles to grow revenue and transform “in kind” donations into cash. Despite this, neither the theory nor the practice of efficient fundraising – and, in particular, charity auctions – has received sufficient attention from economists. In the previous stage of our research, we studied the revenue potential of fifteen different charity auction mechanisms in the experimental lab. While some mechanisms had already received attention from theorists and empiricists, we also explored the potential of new formats, such as the “bucket” and “hybrid” auctions. We are now testing the most lucrative mechanisms from the lab in the field at national non-profit conventions to identify the fundraising mechanisms that generate the most revenue for charitable organizations.

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Max Benjamin
Michael DeLucia
Maria Perille
Researchers

Jeff Carpenter
Associate Professor of Economics

Jessica Holmes
Associate Professor of Economics

Peter Matthews
James B. Jermain Professor of Political Economy

Average Revenue (in $) of Auction Mechanisms

(click to view full chart)

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The Financial Burden of Terminal Illnesses and the Support System

Learn more about Economics and History at Middlebury College.

The onset of terminal illness within low and middle income families often has devastating effects. This effect is substantially magnified if the person who becomes terminally ill is the primary bread winner of the family. In the Indian setting the onset of terminal illness causes three primary changes within a family’s daily functioning. Firstly, the individual and to an extent the family has to face social stigma that is associated with certain terminal illnesses like HIV/AIDS and Cancer. Secondly, if the primary bread winner is affected then the family looses a significant revenue source. Thirdly, the terminal illness results in large increases in medical expenses. However, regardless of the intensity of the financial crisis these families do function (however impaired) from a week to the next. My research explores the support structure that allows for this sustenance, its nature and composition, and attempts to utilize the findings to stimulate policy changes within the local and state systems.

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Anil Menon
Researcher

Peter Matthews
Sponsor and James B. Jermain Professor of Political Economy

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Symposium Presentation Slides

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Thiery Warin
Thesis Advisor& Associate Professor of Economics

Hang Du
Second Reader & Assistant Professor of Chinese

(click to enlarge)

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Read the Thesis

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Brain Drain and Institutions of Governance: Educational Attainment of Immigrants to the US 1988-1998

We investigate the impact of home country institutions on the skill level of immigrants to the United States over 1988-1998. Specifically, we explore the hypothesis that institutions are multidimensional and that the different dimensions have conflicting impacts on the migration of skilled labor. Using an exploratory factor analysis on fifteen institutional variables, we identify the following dimensions of institutional character: credibility; transparency; democracy; and the security of civil society. We find that credibility and transparency increase the magnitude of brain drain; security reduces it; and democracy has no significant impact.

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Aniruddha Mitra

James T. Bang

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Brain Drain and Institutions of Governance: Educational Attainment of Immigrants to the US 1988-1998

IN DIVISION I HOCKEY, DOES THE PUCK STOP JUNIOR YEAR?

Justin R. Gaines

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The Career Save Percentage Profile of NHL Goalies

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The Career Save Percentage Profile of NHL Goalies

Douglas A. Raeder

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BORN TO RUN CHI-SQUARE TESTS: MATHEMATICS IN MUSIC

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BORN TO RUN CHI-SQUARE TESTS: MATHEMATICS IN MUSIC

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A MiddLab Project

DO NEW BALLPARKS AFFECT THE HOME-FIELD ADVANTAGE?

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DO NEW BALLPARKS AFFECT THE HOME-FIELD ADVANTAGE?

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The WNBA and Graduation Rates of Female Basketball Players

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The WNBA and Graduation Rates of Female Basketball Players

Elizabeth T. Knopman

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A MiddLab Project

Derby Drop-Offs

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Nicholas B. Angstman

Andrea L. Buono

Trevor B. Dodds

Andrew K. Somberg

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Derby Drop-Offs

A MiddLab Project

Why Volunteer? Evidence on the Role of Altruism, Image, and Incentives

We examine motivations for prosocial behavior using new data on volunteer firefighters that contain a dictator-game based measure of altruism, surveyed measures of other behavioral factors, and call records that provide an objective measure of time spent volunteering. Controlling for a variety of other explanations, we find that the decision to volunteer is positively correlated with altruism as well as with concern for social reputation or image. Moreover, by utilizing variation in the presence and level of small stipends paid to the firefighters, we find that the positive effect of monetary incentives declines with image concerns, supporting a prediction that extrinsic incentives can crowd out image motivation for prosocial behavior.

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Why Volunteer? Evidence on the Role of Altruism, Image, and Incentives

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Are Russians the Highest-paid Goalies in the NHL?

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Are Russians the Highest-paid Goalies in the NHL?

Douglas A. Raeder

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A MiddLab Project

THE SKINNY ON OBESITY RATES AND THE U.S. ECONOMY

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THE SKINNY ON OBESITY RATES AND THE U.S. ECONOMY

Dylan J. Fitzpatrick

Erin A. Toner

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IS THERE HOME-FIELD ADVANTAGE IN INTERLEAGUE PLAY?

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IS THERE HOME-FIELD ADVANTAGE IN INTERLEAGUE PLAY?

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A MiddLab Project

The Complexity Era in Economics

This article argues that the neoclassical era in economics has ended and is being replaced by a new era. What best characterizes the new era is its acceptance that the economy is complex, and thus that it might be called the complexity era. The complexity era has not arrived through a revolution. Instead, it has evolved out of the many strains of neoclassical work, along with work done by less orthodox mainstream and heterodox economists. It is only in its beginning stages. The article discusses the work that is forming the foundation of the complexity era, and how that work will likely change the way in which we understand economic phenomena and the economics profession.

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Why are some lobby groups less benign in their external effects than others? Olson (1982) proposed that those that are less encompassing in the sense that their constituents collectively represent a narrower range of sectors are more apt to seek the types of subsidies, tariffs, tax loopholes and competition-limiting regulations that impose costs on the rest of society. But his hypothesis has to our knowledge not been directly tested. Part of the reason, we suspect, relates to the absence of adequate data. By drawing on a unique pair of surveys, targeted to both business associations (lobby groups) and their constituents, we provide what we believe to be the first direct test of Olsons hypothesis. Managers from a diverse array of Russian industrial firms and business associations were asked similar questions regarding their attitudes to policies that explicitly benefit well-defined sectoral or regional interests and, implicitly, impose external costs. The pattern of responses is striking. Managers of both the less encompassing associations and the firms that belong to such groups are much more apt to view such policies in a favorable light. More encompassing associations and the members of such organizations are relatively more skeptical of narrowly-targeted government interventions. The results, we believe, provide strong support for Olsons hypothesis.

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Who favors freer markets? The composition and interests of Russias regional business lobbies

Laura Solanko

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The Ancillary Benefits from Climate Policy in the United States

This study investigates the benefits to human health that would occur in the United States (U.S.) due to reductions in local air pollutant emissions stemming from a federal policy to reduce greenhouse gas emissions (GHG). In order to measure the impacts of reduced emissions of local pollutants, this study considers a representative U.S. climate policy. Specifically, the climate policy modeled in this analysis is the Warner-Lieberman bill (S.2191) of 2008 and the paper considers the impacts of reduced emissions in the transport and electric power sectors. This analysis provides strong evidence that climate change policy in the U.S. will generate significant returns to society in excess of the benefits due to climate stabilization. The total health-related co-benefits associated with a representative climate policy over the years 2006 to 2030 range between $90 and $725 billion in present value terms depending on modeling assumptions. The majority of avoided damages are due to reduced emissions of SO2 from coal-fired power plants. Among the most important assumptions is whether remaining coal-fired generation capacity is permitted to backslide up to the Clean Air Interstate Rule (CAIR) cap on emissions. This analysis models two scenarios specifically related to this issue. Co-benefits increase from $90 billion, when the CAIR cap is met, to $256 billion if SO2 emissions are not permitted to exceed current emission rates. On a per ton basis, the co-benefit per ton of GHG emissions is projected to average between $2 and $14 ($2006). The per ton marginal abatement cost for the representative climate policy is estimated at $9 ($2006).

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Nicholas Muller

Britt Groosman

Erin ONeill

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The Ancillary Benefits from Climate Policy in the United States

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Brain Drain and Institutions of Governance: Educational Attainment of Immigrants to the US 1988-2000

We use a fixed effects panel data model to investigate the impact of institutions of governance on the educational attainment of immigrants to the United States over the period 1988 2000. Distinguishing between the quality and stability of political institutions in the countries of origin, we find that the two characteristics of institutional structure have conflicting impacts on the nature of brain drain. Immigrants from countries with a higher quality of political institutions tend to be better educated, on the average, than immigrants from countries with institutions of lower quality. However, immigrants from countries with greater political instability tend to be better educated than immigrants from countries with more stable governments.

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Aniruddha Mitra

James T. Bang

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Brain Drain and Institutions of Governance: Educational Attainment of Immigrants to the US 1988-2000

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Business Boot Camp: Helping Liberal Arts Students Acquire Preprofessional Skills

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Michael Claudon

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Business Boot Camp: Helping Liberal Arts Students Acquire Preprofessional Skills

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Brains versus Brawn: Labor Market Returns to Intellectual and Health Human Capital in a Poor Developing Country

Previous studies report that adult height has significant associations with wages even controlling for schooling. But schooling and height are imperfect measures of adult cognitive skills (brains) and strength (brawn); further they are not exogenous. Analysis of rich Guatemalan longitudinal data over 35 years finds that proximate determinantsadult reading comprehension skills and fat-free body masshave significantly positive associations with wages, but only brains, and not brawn, is significant when both human capital measures are treated as endogenous. Even in a poor developing economy in which strength plausibly has rewards, labor market returns are increased by brains, not brawn.

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John Maluccio

Jere R. Behrman

John Hoddinott

Reynaldo Martorell

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Brains versus Brawn: Labor Market Returns to Intellectual and Health Human Capital in a Poor Developing Country

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How Economists Got It Wrong: A Nuanced Account

This paper considers how economists failed society by not preparing society to expect and plan for a possible financial crisis. It argues that the story told by Paul Krugman in his recent NYT Magazine article was too black and white in that it made it look as if Classical economists who were blinded by the beauty of mathematics, are to blame and that Keynesian economics is the path of the future. This paper takes issue with both those claims. It reviews the evolution of economic thinking from Classical to modern times, and shows the Keynesian/Classical terminology misses many of the nuances of policy discussions. It suggests that the solution for the macroeconomics profession isnt the solution that Krugman suggests it isto re-embrace Keynes. The solution is to re-embrace the broader Classical economic tradition, and to recognize that Keynes was an important part of that Classical tradition.

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How Economists Got It Wrong: A Nuanced Account

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Retail Redlining: Are gasoline prices higher in poor and minority neighborhoods?

Higher retail prices are frequently cited as a cost of living in poor, minority neighborhoods. However, the empirical evidence, which primarilycomes from the grocery gap literature on food prices, has been mixed. This study uses new data on retail gasoline prices in three major U.S.cities to provide evidence on the relationship between neighborhood characteristics and consumer prices. We find that gasoline prices do not varygreatly with neighborhood racial composition, but that prices are higher in poor neighborhoods. For a 10 percentage point increase in the percentof families with incomes below the poverty line relative to families with incomes between 1 and 2 times the poverty line, retail gasoline prices are estimated to increase by an average of 0.70 percent. This differential is reduced to 0.22 percent once we add controls for costs, competition, and demand. Finally, we provide evidence that the remaining, small, price differential for poor neighborhoods is likely the result of traditional price discrimination in response to less competition and/or more inelastic demand in these locations.

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This paper argues that the ideas that win out in economics are not necessarily those that a representative researcher would choose, but are rather the emergent result of the competition of ideas in which system replicator dynamics dominate. This means that those ideas that fit the analytic technology available to researchers at the time dominate, while better ideas that do not offer advancement to researchers lose out. This paper spells out that view. It differentiates a consumers understanding of theory from a producers understanding of theory, and argues that a consumers understanding of theory is often better suited to applied policy than is a producers understanding of theory. Because the replicator dynamics of the economics profession does not reward people for acquiring a consumers understanding of theory, that understanding is often neglected. Heterodox economists often have a better consumers understanding of theory than do mainstream economists but because they do not prepare students to be successful in economic institutional environment, their views do not receive the hearing they should in the profession. The paper offers a number of suggestions for heterodox European macro economists for competing and shaping the economic institutional environment.

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How Did Macro Theory Get So Far off Track, and what Can Heterodox Macroeconomists Do to Get it Back On Track?

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Does Supply Matter? Initial Supply Conditions and the Effectiveness of Conditional Cash Transfers for Grade Progression in Nicaragua

We combine administrative and survey data to examine the effect of a conditional cash transfer program on grade progression in Nicaragua from 19992003, putting the spotlight on initial supply side conditions and the extent to which they conditioned program effectiveness. Our principal findings are that the program had a substantial effect on grade progression and that these increased over time, even after the original intervention group stopped receiving demand-side transfers. Half of the estimated program effect on progression is accounted for by a reduction in the dropout and repetition rates of beneficiary children who were already in school when the program began. Supply side conditions were important and several of them led to heterogeneous program impacts. The program was more effective in areas with autonomous schools, suggesting flexibility at the school level better enabled schools to respond to changing demand conditions. At the same time, it was also more effective in intervention areas with poor initial supply conditions as measured by indicators of grade availability and distance to school. These were the areas with lower enrollments and grade progression before the program, and thus more room for improvement. With the analysis of child schooling in hand, we then turn to assess the effect of the program on school supply conditions. It is precisely in the intervention areas with poor initial school supply conditions, that the program was relatively more effective in improving school supply as measured by grade availability, number of sessions per day and number of teachers. The results suggest that initial school supply conditions do not represent insurmountable obstacles for the implementation of a conditional cash transfer program, as long as these constraints are identified at the planning stage and mechanisms put in place to deal with them during the execution stage. Our results also underscore the importance of carefully considering the integrated (demand and supply) nature of conditional-cash-transfer programs, something often overlooked in the design of these interventions and, particularly, in the impact evaluation literature.

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Alexis Murphy

Ferdinando Regalia

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Does Supply Matter? Initial Supply Conditions and the Effectiveness of Conditional Cash Transfers for Grade Progression in Nicaragua

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What Was It that Robbins Was Defining?

This paper argues that Robbins famous definition of economics was of economic science which he saw as only a narrow branch of the field of economics. The field of economics included both economic sciencewhich his definition dealt with, and political economy--which his essay did not deal with. His prescriptive message was that policy belonged in the political economy branch of economics. He believed that while the science of economics should avoid value judgments as much as possible, the political economy (applied policy) branch of economics should, and must, include value judgments. That prescriptive message has been lost.

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What Was It that Robbins Was Defining?

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How Do Median Graduate Economic Programs Differ from Top-ranked Programs?

This paper reports the results of a survey of median economics graduate programs and compares it with the results of a survey of top economics graduate programs done by Colander. Overall it finds that while there are some differences in the programs, there are large areas of similarity. Some of the particular finding are that there are more US respondents in median programs than in top programs, median students have more interest in econometrics, history of thought and economic literature than do students at top programs, although after the fifth year, their interest in any field drops significantly. It also finds that students at top schools are much more likely to be involved in writing scholarly papers, and that students at top schools give far less emphasis to excellence in mathematics as a path to the fast track than do students at median schools.

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How Do Median Graduate Economic Programs Differ from Top-ranked Programs?

Tiziana Dominguez

Gail Hoyt

KimMarie McGoldrick

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The Effect of Deposit Insurance on Market Discipline:Evidence from a Natural Experiment on Deposit Flows

We explore how the introduction of explicit deposit insurance affects deposit flows into and out of banks of varying risk levels. Using evidence from a natural experiment in Russia, we employ a difference-in-difference estimator to isolate the change in the deposit flows of the newly insured group (i.e., households) relative to the uninsured control group (i.e., firms), thus improving upon prior studies that have sought to identify the effect of deposit insurance on market discipline. We find that the relative sensitivity of household deposits to bank capitalization diminished markedly after the introduction of an insurance program covering their deposits but not those of firms. The finding, we demonstrate, is not an artifact of the two groups responding differently to a banking crisis that occurred in Russia at roughly the same time.

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The Effect of Deposit Insurance on Market Discipline:Evidence from a Natural Experiment on Deposit Flows

Alexei Karas

Koen Schoors

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Multilateralism cursed by bilateralism: Japans Role at the International Whaling Commission

We propose a new categorization of international organizations to account for the fact that within multilateral international organizations, states may engage in enticement strategies in order to advance their policy preferences. Thus, to the traditional multilateral/bilateral categorizations we substitute a hard multilateral/soft multilateral and reciprocal bilateral/bilateral taxonomy. For illustration purposes, we use the well-known case study of Japan and the International Whaling Commission (IWC). Using a modified gravity model to analyze Japans Official Development Assistance from 1973-2005, we find that Japan has a very traditional and generous assistance policy broadly defined, but when it comes to the IWC, some of the general principles driving the aid policy are put aside to possibly influence vote outcomes. Given this finding, we conclude that the IWC is best categorized as a soft multilateral organization.

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Multilateralism cursed by bilateralism: Japans Role at the International Whaling Commission

Kenneth S. Donahue

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The Financial Crisis and the Systemic Failure of Academic Economics

The economics profession appears to have been unaware of the long build-up to the current worldwide financial crisis and to have significantly underestimated its dimensions once it started to unfold. In our view, this lack of understanding is due to a misallocation of research efforts in economics. We trace the deeper roots of this failure to the professions focus on models that, by design, disregard key elements driving outcomes in real-world markets. The economics profession has failed in communicating the limitations, weaknesses, and even dangers of its preferred models to the public. This state of affairs makes clear the need for a major reorientation of focus in the research economists undertake, as well as for the establishment of an ethical code that would ask economists to understand and communicate the limitations and potential misuses of their models.

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Matching the gold standard: Comparing experimental and non-experimental evaluation techniques for a geographically targeted program

Hans Fllmer

Armin Haas

Michael Goldberg

Katarina Juselius

Alan Kirman

We compare non-experimental impact estimates based on matching methods with those from a randomized evaluation to determine whether the non-experimental approach can match the so-called gold standard. The social experiment we use was carried out to evaluate a geographically targeted conditional cash transfer antipoverty program in Nicaragua. The outcomes we assess include several components of household expenditure and a variety of childrens health outcomes including breast feeding, vaccinations, and morbidity. We find that using each of the following improves performance of matching for these outcomes: 1) geographically proximate comparison samples; 2) stringent common support requirements; and 3) both geographic- and household-level matching variables. Even for a geographically targeted program, in which the selection is at the geographic-, rather than at the individual- or household-level, and in which it is not possible to find comparison individuals or households in the program locales, matching can perform reasonably well. The results also suggest that the techniques may be more promising for evaluating the more easily measured individual-level binary outcomes, than for outcomes that are more difficult to measure, such as expenditure.

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John Maluccio

Sudhanshu Handa

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The Professional Development of Graduate Students in Economics

This paper provides insight into the skill development activities of graduate students at U.S. institutions providing graduate education in economics. It documents the extent of student participation in and preparation for research and teaching activities while in graduate school. Over fifty percent of students are involved in teaching related activities including grading, leading recitation sections, and teaching their own sections with and without guidance. Most were generally satisfied with their preparation. About fifty-five percent of graduate students attend economic conferences, twenty percent present papers, twenty-two percent submit papers and ten percent have published. Important differences by assistantship assignments, institutional rank, and gender in such activities are highlighted. Findings suggest that programs could do more to prepare students for participation in professional activities post graduation.

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The Professional Development of Graduate Students in Economics

KimMarie McGoldrick

Gail Hoyt

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What Economics Students Think of the Economics Major

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Steven Jones

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MACROECONOMIC POLICY AND COLLECTIVE ACTION

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Beyond DSGE Models: Toward an Empirically Based Macroeconomics

This paper argues that macro models should be as simple as possible, but not more so. Existing models are more so by far. It is time for the science of macro to step beyond representative agent, DSGE models and focus more on alternative heterogeneous agent macro models that take agent interaction, complexity, coordination problems and endogenous learning seriously. It further argues that as analytic work on these scientific models continues, policy-relevant models should be more empirically based; policy researchers should not approach the data with theoretical blinders on; instead, they should follow an engineering approach to policy analysis and let the data guide their choice of the relevant theory to apply.

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Resource Flows Among Three Generations in Guatemala Study (200708): Definitions, tracking, data collection, coverage, and attrition

Peter Howitt

The allocation of resources across generations and the consequences of these allocations represent a research agenda with significant policy implications. At the same time, their empirical investigation imposes immense data requirements, and therefore data collection challenges. In this paper, we describe how we met these challenges, in the Resource Flows Among Three Generations in Guatemala Study, or IGT, carried out in 200607. In doing so, we provide a guide for using and interpreting the data collected as part of IGT, as well as an example for others interested in implementing research projects on similar themes elsewhere. Complex research topics, across generations and across a range of possible measures of well-being, led to a relatively complicated sample selection process and survey design, with component modules that were applicable to different types of sample members, depending on their generational status and age, and who often lived in different locations. It also led to a wide set of survey domains, ranging from economic, educational, and psychological surveys to clinical medical exams for both the young and the elderly. Survey coverage was above 85% of the targeted sample for most categories of respondents and most modules, and a number of safeguards were in place to ensure high quality data. Biases due to attrition, measured against the original 1970s rounds of survey work upon which IGT built, while present, should not reduce substantially the validity of research findings to come from this rich sample. The extent to which this is true, though, may vary depending on the topic under consideration and the controls included in the analyses.

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Pal Melgar

Luis Fernando Ramrez

Scott McNiven

Rosa Mery Meja

Ann DiGirolamo

John Hoddinott

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Complexity and Macro Pedagogy: The Complexity Vision as a Bridge between Graduate and Undergraduate Macro

The macro economy is complex; everyone knows that. Complex systems are difficult to analyze and manage; everyone knows that too. The best approach to teaching and describing the complex macro economy is something we know much less well. Currently, in teaching macro to both graduate and undergraduate students, we dont stress just how complex the economy really is. The argument in this paper is that we should emphasize that complexity to frame the macro question.1 Having done that, we can get on with what we do, and much of the structure of both the graduate and undergraduate macro can be taught as it currently is. But instead of seeing the approaches at the two levels as substitutes for one another, complexity helps to frame as what they really are: complementary approaches to addressing a challenging set of questions.

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Complexity and Macro Pedagogy: The Complexity Vision as a Bridge between Graduate and Undergraduate Macro

Casey Rothschild

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The War in Iraq and the 2006 U.S. Elections

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Using Hedonic Property Models to Value Public Water Bodies: A Note Regarding Specification Issues

The hedonic literature has established that public water bodies provide external benefits that are reflected in the value of nearby residential real estate. The literature has employed several approaches to quantify these nonmarket services. With a residential hedonic model, this paper tests whether model specification affects resource valuation using an actively managed reservoir in Indiana and a passively managed lake in Connecticut. The results indicate that valuation is quite sensitive to model specification,and that omitting either the waterview or waterfront variables from the hedonic function likely results in a misspecified model. The findings from this study are important for researchers and public agencies charged with managing water resources to bear in mind as the external benefits from existing or man-made lakes anr reservoirs are estimated. Therefore, while it requires considerably more effort to determine which properties are in waterfront locations and which properties have a view, the potential misspecification of distance-only models likely justifies these extra research costs. Further, the findings in this analysis callinto question results from distance-only models in the literature.

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Nicholas Muller

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Using Hedonic Property Models to Value Public Water Bodies: A Note Regarding Specification Issues

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Watering Down Coors: The Rockies’ Ball Humidor

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Watering Down Coors: The Rockies' Ball Humidor

Mark J. Shimrock

Peter M. Lefeber

Christian Hansen

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Pluralism and Heterodox Economics: Suggestions for an Inside the Mainstream Heterodoxy

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Pluralism and Heterodox Economics: Suggestions for an Inside the Mainstream Heterodoxy

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TOURNAMENTS AND OFFICE POLITICS: Evidence from a real effort experiment

In many environments, tournaments can elicit more effort from workers, except perhaps when workers can sabotage each other. Because it is hard to separate effort, ability and output in many real workplace settings, the empirical evidence on the incentive effect of tournaments is thin. There is even less evidence on the impact of sabotage because real world acts of sabotage are often subtle manifestations of subjective peer evaluation or offce politics. We discuss a real effort experiment in which effort, quality adjusted output and o?ce politics are compared under piece rates and tournaments. Our results suggest that tournaments increase e?ort only in the absence of offce politics. Competitors are more likely to sabotage each other in tournaments and, as a result, workers actually provide less e?ort simply because they expect to be the victims of sabotage. Adjusting output for quality with the rating of an independent auditor shrinks the incentive effect of the tournament even further since output tends to become more slipshod. "The person who says Im not political is in great danger... Only the fittest will survive, and the fittest will be the ones who understand their offces politics." Jean Hollands, quoted in Playing Offce Politics, Newsweek, 16 September 1985

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TOURNAMENTS AND OFFICE POLITICS: Evidence from a real effort experiment

John Schirm

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Endogenous Participation in Charity Auctions

Data from a recent ?eld experiment suggests that differences in participation rates are responsible for much of the variations in revenues across formats in charity auctions. We provide a theoretical framework for the analysis of this, and other related, results. The model illustrates the limits of previous "?xed" results and introduces some new considerations to the choice of auction mechanism. It also implies, however, that the data cannot be explained in terms of participation costs alone: there must exist mechanism-speci?c obstacles to participation.

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Endogenous Participation in Charity Auctions

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When Do NFL Quarterbacks Pass Their Prime?

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When Do NFL Quarterbacks Pass Their Prime?

Stefan G. Hrdina

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Why the NBA Bounced Their New Basketball?

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Why the NBA Bounced Their New Basketball?

Robert M. Marcoux

Filip Marinkovic

George A. Mayer

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An Empirical Study of Price Dispersion in Homogenous Goods Markets

This paper presents the results of an empirical study of price dispersion in homogeneous goods markets. Modern economic theory suggests that inevitable asymmetries of information in markets lead to an equilibrium in which price dispersion is present even when goods are perfectly homogenous. In this paper we present an empirical analysis in which we employ both cross-sectional and time-series data gathered directly from Pricegrabber.com, one of the most popular and comprehensive online shopping/price-comparison sites on the Internet. In particular our analysis focuses on (i) the effect that the number of firms offering a good has on price dispersion, (ii) the informational value to the consumer of using the Pricegrabber website, and (iii) the persistency of price dispersion over time.

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An Empirical Study of Price Dispersion in Homogenous Goods Markets

Daniel B. Leiter

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Ladies First? A Field Study of Discrimination in Coffee Shops

Despite anecdotal and survey evidence suggesting the presence of discrimination against customers in stores, restaurants, and other small transaction consumer markets, few studies exist that identify or quantify the nature of any unequal treatment. We provide evidence from a ?eld study of wait times in Boston-area coffee shops that suggests that female customers wait an average of 20 seconds longer for their orders than do male customers even when controlling for gender differences in orders. We ?nd that this differential in wait times is inverse to the proportion of employees who are female and directly related to how busy the coffee shop is at the time of the order. This supports the conclusion that the observed differential is driven at least in part by employee animus and/or statistical discrimination rather than unobserved heterogeneity in the purchasing behavior of female customers.

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Ladies First? A Field Study of Discrimination in Coffee Shops

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WIN A WORLD SERIES, RAISE TICKET PRICES. BUT, EXCESSIVELY?

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WIN A WORLD SERIES, RAISE TICKET PRICES. BUT, EXCESSIVELY?

Ryan M. Keohane

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A Poisson Model For No-Hitters In Major League Baseball

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Edgeworth's Hedonimeter and the Quest to Measure Utility

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GENDER AND GRADUATE ECONOMICS EDUCATION IN THE US

This paper reports on the ?ndings of a survey of top economics graduate schools as they relate to women and men. The results provide strong evidence that at these top graduate schools, women graduate students are less integrated in their economic disciplines than are male graduate students. In the second part of the paper, this paper relates those ?ndings to alternative theories as to why this is the case. This paper concludes by suggesting that the emphasis on theoretical studies in the current core of the graduate economics program can be seen as a type of hazing process that seems to have a signi?cant cost since many women (and men) with great creative promise are discouraged from continuing in economics and do not bene?t nearly as much as they would have from more policy-driven core courses.

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GENDER AND GRADUATE ECONOMICS EDUCATION IN THE US

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Live and Dead Issues in the Methodology of Economics

We attempt to clarify divisions made by us in previous work (Colander et al., 2004a,b) between orthodox, mainstream, and heterodox in economics, following very useful remarks in Dequech (2007), whom we thank. We also provide specific advice for heterodox economists, namely: worry less about methodology, focus on being economists first and heterodox economists second, and prepare ideas to leave the incubator of heterodoxy to enter the mainstream economic debate.

Open Source Software Development, Innovation, and Coordination Costs

Open source is often presented as a very promising governance structure for the development of software in the Internet world. One of its greatest advantages is that it enables and integrates the flow of innovation coming from many unrelated developers. We extend previous inquiries by showing that, due to information communication problems, this governance structure is in fact more efficient for the development of incremental innovations rather than radical innovations. Implications are drawn in terms of the future of the open source system, the economics of innovation and public policy.

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Jere R. Behrman, University of Pennsylvania

John Hoddinott

Erica Soler-Hampejsek

Emily L. Behrman

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MEASURING PLAYER LOYALTY AMONG BASEBALLS HALL OF FAMERS

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The Impact of Nutrition during Early Childhood on Education among Guatemalan Adults

Early childhood nutrition is thought to have important effects on education, broadly defined to include various forms of learning. We advance beyond previous literature on the effect of early childhood nutrition on education in developing countries by using unique longitudinal data begun during a nutritional experiment during early childhood with educational outcomes measured in adulthood. Estimating an intent-to-treat model capturing the effect of exposure to the intervention from birth to 36 months, our results indicate significantly positive, and fairly substantial, effects of the randomized nutrition intervention a quarter century after it ended: increased grade attainment by women (1.2 grades) via increased likelihood of completing primary school and some secondary school; speedier grade progression by women; a one-quarter SD increase in a test of reading comprehension with positive effects found for both women and men; and a one-quarter SD increase on nonverbal cognitive tests scores. There is little evidence of heterogeneous impacts with the exception being that exposure to the intervention had a larger effect on grade attainment and reading comprehension scores for females in wealthier households. The findings are robust to an array of alternative estimators of the standard errors and controls for sample attrition

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John Hoddinott

Jere R. Behrman

Reynaldo Martorell

Agnes R. Quisumbing

Aryeh D. Stein

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The Impact of Nutrition during Early Childhood on Education among Guatemalan Adults

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Time Zones As Cues For Coordination: Latitude, Longitude, And Letterman

Market productivity is often greater, and leisure and other household activities more enjoyable, when people perform them simultaneously. Beyond pointing out the positive externalities of synchronicity, economists have not attempted to identify exogenous determinants of timing. We develop a theory illustrating conditions under which synchronicity will vary and identify three factors the amount of daylight, the timing of television programming, and differences in time zones that can alter timing. Using the American Time Use Survey for 2003 and 2004, we first show that an exogenous shock to time in one area due to non-adherence to daylight-saving time leads its residents to alter their work schedules to continue coordinating their activities with those of people elsewhere. With time use data from Australia, we also demonstrate the same response to a similar shock there. We then show that both television timing and the benefits of coordinating across time zones in the U.S. generally affect the timing of market work and sleep, the two most time-consuming activities people undertake. While these impacts do not differ greatly by people's demographic characteristics,workers in industries where we would expect more coordination outside of their local areas are more responsive to the effects of time zones.

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Discrimination as a Competitive Device: The Case of Local Television News

Local news offers a unique look not only at customer preferences but also at the strategic

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Discrimination as a Competitive Device: The Case of Local Television News

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Local Environmental Groups, the Creation of Social Capital, and Environmental Policy: Evidence from Vermont

Scholars who have studied local environmental groups and their effects in the United States have

Household Savings in Russia during the Transition

We exploit panel data from the second phase of the Russian Longitudinal Monitoring Survey

The Hiring of an Economist: A Case Study

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The Hiring of an Economist: A Case Study

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Selection and Reporting Bias in Household Surveys of Child Labor: Evidence from Tanzania

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Selection and Reporting Bias in Household Surveys of Child Labor: Evidence from Tanzania

Yohanne N. Kidolezi

Hugo opo

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Home Hill Advantage in Eastern Collegiate Ski Racing

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Home Hill Advantage in Eastern Collegiate Ski Racing

Kellan M. Florio

Jacob A. Whitcomb

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Does Relationship Lending Still Matter in the Consumer Banking Sector? Evidence from Two Financial Service Organizations in Vermont

We use actual loan applications submitted to a community development credit union (CDCU) and a traditional community bank to examine the role of relationship lending in the automobile loan market. We first show that the community bank relies upon credit scoring, not relationship lending; low-income households with poor credit histories are very unlikely to receive car loans from this traditional bank. We then show that relationship lending is a critical factor in the loan decision at the CDCU; low-income households with strong ties to the institution are likely to receive loans, despite poor credit histories. We conclude that as consolidation, deregulation and technology move mainstream financial institutions away from relationship lending and toward credit scoring, CDCUs will occupy an increasingly critical niche for low-income households.

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A Matching Penal-t in Mens Ice Hockey

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Brett Shirreffs

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Park Elevation and Long Ball Flight in Major League Baseball

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Park Elevation and Long Ball Flight in Major League Baseball

Jason M. Bloch

Kieran M. Coe

James K. Ebberson

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Do Social PreferencesIncrease Productivity? Field experimental evidence from fishermen in Toyoma Bay

We provide a reason for the wider economics profession to take social preferences, a concern for the outcomes achieved by other reference agents, seriously. Although, we show that student measures of social preference elicited in an experiment have little external validity when compared to measures obtained from a field experiment with a population of participants who face a social dilemma in their daily lives (i.e. team production), we do find strong links between the social preferences of our field participants and their productivity at work. We also find that the stock of social preferences evolves endogeously with respect to how widely team production is utilized.

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Do Social PreferencesIncrease Productivity? Field experimental evidence from fishermen in Toyoma Bay

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Chemical Bonds

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Along with the traditional primitives of economic development (material preferences, technology, and endowments), there is a growing interest in exploring how psychological and sociological factores (e.g., bounded rationality, norms, or social preferences) also influence economic decisions, the evolution of institutions, and outcomes. Simultaneously, a vast literature has arisen arguing that economic experiments are important tools in identifying and quantifying the role of institutions, socialnorms and preferences on behavior and outcomes. Reflecting on our experience conducting experiments in the field over more than five years, we survey the growing literature at the intersection of these two research areas. Our review has four components. In the introduction we set the stage identifying a set of behavioral factors that seem to be central for understanding growth and economic development./ We then divide the existing literature in two piles: standard experiments conducted in the field and on how to econometrically identify sociological factors in experimental data. We conclude by suggesting topics for future research.

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Experiments and Economic Development: Lessons from Field Labs in the Developing World

Juan Camilo Cardenas

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Norm Enforcement: Anger, Indignation or Reciprocity?

The enforcement of social norms often requires that unaffected third parties sanction offenders. Given the renewed interest of economists in norms, the literature on third party punishment is surprisingly thin, however. In this paper, we report on the results of an experiment designed to evaluate two distinct explanations for this phenomenon, indignation and group reciprocity. We find evidence in favor of both, with the caveat that the incidence of indignation-driven sanctions is perhaps smaller than earlier studies have hinted. Furthermore, our results suggest that second parties use sanctions to promote conformism while third parties intervene primarily to promote efficiency.

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Norm Enforcement: Anger, Indignation or Reciprocity?

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Wild and Crazy Ideas: In Memory of Ken Koford

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David Colander

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Wild and Crazy Ideas: In Memory of Ken Koford

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Stability and Growth Pact: An Index to Trigger an Early Warning Earlier?

This paper addresses the question of a technical change in one the components of the Stability and Grown Pact (SGP). Indeed, the SGP is composed of (1) a political commitment, (2) a preventive element, and (3) a dissuasive element, and an improvement of the SGP efficacy can come from any of these three components. In this paper the author proposes a new early warning procedure, part of the preventive element. The ideal situation would be for the European Commission to be able to identify countries at risk as soon as they vote their national budgets. Although this is not possible, as the measures of the deficit are based on GDP forecasts, the conclusion this paper makes is that the EC should avoid relying on GDP forecasts by calculating a reference index.

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Stability and Growth Pact: An Index to Trigger an Early Warning Earlier?

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Water Demand and the Welfare Effects of Connection: Empirical Evidence from Cambodia

Using cross-sectional household-level data from seven provincial Cambodian towns, we estimate a water demand equation for households connected to the network, and provide an empirical measurement of the economic value of tap water connection. The use of a two-step econometric procedure allows us to analyse issues relating to household access to water and to the volume of household water consumption. We estimate that the connection elasticity with respect to the one-off initial cost of connection is -0.39; the price elasticity of water demand for the connected households lies in a range between -0.4 and -0.5; and the welfare effects of water connection are approximately 17 percent of the actual expenditure of the poor unconnected households. Furthermore, providing a network connection to all households in the sample would have the distributional consequences of decreasing the estimated Gini coefficient by three percentage points and the poverty head-count ratio by six percentage points.

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This paper provides a non-technical and illustrated introduction to the econometric contributions of the 2003 Nobel Prize winners, Robert Engle and Clive Granger, with special emphasis on their implications for heterodox economists.

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The Making of an Economist II

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The Making of an Economist II

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Charity Auctions: A Field Experimental Investigation

Auctions are a popular way to raise money for charities, but relatively little is known, either theoretically or empirically, about the properties of charity auctions. The small theoretical literature suggests that the all-pay auction should garner more money than winner-pay auctions. We conduct field experiments to test which sealed bid format, first price, second price or all-pay raises the most money. Our experiment suggests that both the all-pay and second price formats are dominated by the first price auction. Our design also allows us to identify differential participation as the source of the difference between existing theory and the field. To conclude, we show that a model of charity auctions augmented by an endogenous participation decision predicts the revenue ordering that we see in the field.

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Charity Auctions: A Field Experimental Investigation

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Should Europe Get Rid of the Stability and Growth Pact?

The paper addresses the question of the abolition of the Stability and Growth Pact. More and more authors and policymakers are arising the negative impacts of the European deficit rule on te countries and their ability to respond an asymmetric economic shock. Some others are asking for a redefinition of the Pact. If the focus is only fiscal and in light of the non-respect of the Pact by two of the biggest countries in Europe since its implementation, it could be demonstrated that the SGP needs at least a reexamination. To the converse, if we introduce into the analysis its impacts on the European structural policies, things are different and getting rid of the SGP could hinder the still up-to-date convergence prospective. Indeed, this paper proposed a theoretical analysis of the SGP that emphasizes a new feature of the SGP: a strong incentive to structural reforms.

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Should Europe Get Rid of the Stability and Growth Pact?

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Economics as an Ideologically Challenged Science

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Economics as an Ideologically Challenged Science

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The Many Roads to Serfdom

The paper considers the planning/laissez faire debate discussed in the Hayek symposium, and offers three comments. The first is that all debates are contextual and Hayek's Road to Serfdom needs to be considered in its contextual setting. The second is that there are many roads to serfdom, not just the one outlined by Hayek, and the Hayek/Lerner debate today would probably focus a different road than it did in the 1930s. The third is that modern economists' focus on technical issues has in large part removed them from the role that Hayek and other top economists played in their time.

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The Many Roads to Serfdom

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What’s the Point of Reciprocal Trade Negotiations? Exports, Imports, and Gains from Trade

This paper explains why trade-policy makers may prefer reciprocal trade negotiations (RTN) to unilateral tariff reductions (UTR) for economic reasons. It answers puzzles like "Why WTO reciprocity?" and strengthens the unncecessarily weak case made for the WTO by those who downplay or dismiss benefits from foreign tariff reductions (FTR).

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Paul Wonnacott

Ronald Wonnacott

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What's the Point of Reciprocal Trade Negotiations? Exports, Imports, and Gains from Trade

As membership in traditional civic organizations declines in the United States (Putnam, 2000), could volunteering for nonprofit organizations be an alternative source of social capital formation? We use an updated household production framework (Becker, 1996) to theoretically connect volunteering with two forms of social capital: social connections and civic capacity. Using a unique statewide data set from Vermont, we then use the Cragg (1971) model to estimate the determinants of the probability of receiving a social capital benefit, and the level of such a benefit. We first show that the probability of receiving a social connection or a civic capacity benefit from one's most important nonprofit organization is increased: (a) if it is a religious or social service organization; (b) if one increases their volunteering for the organizations; and (c) if one is female, college educated or in a two-parent family. However, the relative magnitude of volunteering is similar, or relatively small, compared to the other significant determinants. We then show that an increase of volunteer hours does increase the levels of social connection and civic capacity, but the magnitude of this effect is also relatively small.

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Effects of Volunteering for Nonprofit Organizations on Social Capital Formation: Evidence from a Statewide Survey

Jane Kolodinsky

Garret Kimberly

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Local Environmental Groups, the Creation of Social Capital, and Environmental Policy: Evidence from Vermont

Many scholars have documented the important role of national environmental groups in affecting environmental policies in the United States. The role of local environmental groups, however, has not been thoroughly documented. Using data from a complete census of all environmental groups in two Vermont counties, we :(1) offer a set of conceptual categories for local environmental groups; (2) analyze how civic engagement in these groups is creating different forms of social capital through stewardship activities, education and communication, partnerships with other organizations, and alliances with public agencies; and (3) explore how these groups are affecting the policy process, illustrated with two case studies. We argue that the prevalence and contribution of local environmental groups, particularly local autonomous groups, has been underappreciated. We conclude that the greeining of social capital is significantly affecting environmental outcomes in the United States.

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Local Environmental Groups, the Creation of Social Capital, and Environmental Policy: Evidence from Vermont

Christopher McGrory Klyza

Andrew Savage

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The Varieties of Resource Experience: How Natural Resource Export Structures Affect the Political Economy of Economic Growth

Many oil, mineral, and plantation crop-based economies experienced a substantial deceleration of growth since the commodity boom and bust of the 1970s and early 1980s. Rodrik (1999) has demonstrated that the magnitude of a country's growth deceleration since the 1970s is a function of both the magnitude of the shocks and a country's "social capability" for adapting to shocks. In this paper, we demonstrate that in this respect countries, with what we term "point source" natural resource exports are doubly disadvantaged. Not only are countries with these types of exports exposed to terms of trade shocks, but the institutional capability for responding to shocks is itself endogenous and negatively related to export composition. Using two different sources of export data and classifications of export composition, we show that point source and coffee/cocoa exporting countries do worse across an array of governance indicators (controlling for a wide array of other potential determinants of governance). This is not just a function of being a "natural resource" exporter, as countries with natural resource exports that are "diffuse" do not show the same strong differences-and have had more robust growth recoveries.

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The Varieties of Resource Experience: How Natural Resource Export Structures Affect the Political Economy of Economic Growth

Lant Pritchett

Michael Woolcock

Gwen Busby

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Social Reciprocity

We define social reciprocity as the act of demonstrating one's disapproval, at some personal cost, for the violation of widely-held norms (e.g., don't free ride). Social reciprocity differs from standard notions of reciprocity because social reciprocators intervene whenever a norm is violated and do not condition intervention on potential future payoffs, revenge, or altruism. Instead, we posit that social reciprocity is a triggered normative reponse. Our experiment confirms the existence of social reciprocity and demonstrates that more socially efficient outcomes arise when reciprocity can be expressed socially. Too provide theoretical foundations for social reciprocity, we show that generalized punishment norms survive in one of the two stable equilibria of an evolutionary game with selection drift.

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Social Reciprocity

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Overcoming Information Asymmetries in Low-Income Lending: Lessons from the ‘Working Wheels’ Program

Without access to reliable transportation, the welfare-to-work transition for low-income households is nearly impossible, yet very little is known about the effectiveness of targeted loan programs designed to improve their access to credit. Since 1998, Vermont's TANF funds have been used to provide automobile loans to low-income residents through the "Working Wheels" program of the Vermont development Credit Union. In this paper, we take advantage of unique micro-level data on Working Wheels loan applications and loan performance to explore how such programs can cost-effectively provide car loans to those who are unable to obtain affordable loans elsewhere. Our results verify the importance of relationship lending, particularly among those without documented credit histories. In the presence of pronounced information asymmetries about credit history, our results justify a loan officer's increased trust in a client with whom the bank has had a stronger relationship; such clients, ceteris paribus, are less likely to default. We conclude that in the current climate of welfare reform, policymakers should consider programs that encourage welfare recipients to establish and maintain relationships with financial institutions in order to facilitate access to affordable credit and to minimize the risk of loan default.

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Overcoming Information Asymmetries in Low-Income Lending: Lessons from the 'Working Wheels' Program

Jessica Wasilewski

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Ethnicity and Earnings in Urban Peru

In this paper we study the relationship between ethnic exclusion and earnings in Urban Peru. Our approach to the concept of ethnicity involves the usage of instruments in many of its several dimensions: mother tongue, parental background, religion, migration events and race. In order to approximate what can be called racial differences in a context like the Peruvian in which "racial mixture" is the main characteristic of the population, we use a score-based procedure to capture both the differences and the mixtures. By means of this procedure each individual is assigned intensities by pollsters in each of the four categories that correspond to the most easily recognized distinct racial groups in the Peruvian society: Asiatic, White, Indigenous, and Black.

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Jaime Saavedra

Maximo Torero

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Ethnicity and Earnings in Urban Peru

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The Greening of Social Capital: An Examination of Land-Based Groups in Two Vermont Counties

By undertaking a census of all agricultural, outdoor recreational, and environmental groups (land-based groups) in two adjacent counties in Vermont, we demonstrate the dramatic increase of local environmental groups in the last 15 years. Building on the methodologies of Kempton et al. (2001), we first show that official lists of nonprofit groups-from the Vermont Secretary of State, the Internal Revenue Service, and local grassroots directories-significantly undercount local environmental groups. Second, we show that since the mid-1980s, the number and membership roles of local autonomous environmental groups have grown rapidly relative to all other types of local and non-local land-based groups in these counties. This article provides preliminary evidence of the recent "greening of social capital."

The AFTERMATH of Sammy Sosa's Corked Bat Incident

Brian Vickery

Nicholas Digani

Caitlin Toombs

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Post Walrasian Macro Policy and the Economics of Muddling Through

This paper expands on my earlier discussion of Post Walrasian macroeconomics policy. (Colander and van Ess 1996) First, it defines what I mean by Post Walrasian macroeconomics. Second, it discusses some of the theoretical differences between Post Walrasian and Walrasian macro theorizing as they relate to policy. Finally, it discusses how an acceptance of Post Walrasian economics might change the focus of macro policy discussions.

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Post Walrasian Macro Policy and the Economics of Muddling Through

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The Effect of Stakes in Distribution Experiments

We replicate previous results showing that stakes do not affect offers in the Ultimatum Game and show that stakes also have no effect on allocations in the Dictator Game. Both results are robust to the inclusion of demographic factors.

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Eric Verhoogen

Stephen Burks

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Complexity, Muddling Through, and Sustainable Forest Management

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A Poisson Model for Hurricanes of the North Atlantic

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A Poisson Model for Hurricanes of the North Atlantic

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Is a Ticket to Cooperstown Getting Any Cheaper?

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Is a Ticket to Cooperstown Getting Any Cheaper?

Richard B. Barfuss

Robert C. Howard

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Muddling Through and Policy Analysis

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Muddling Through and Policy Analysis

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The Real Curse of the Bambino

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The Real Curse of the Bambino

Christopher J. Brown

Lyon Carter III

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The Potential For Exploitation By Sports Franchises

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The Potential For Exploitation By Sports Franchises

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Why Punish: Social Reciprocity and the Enforcement of Prosocial Norms

Recently economists have become interested in why people who face social dilemmas in the experimental lab use the seemingly incredible threat of punishment to deter free riding. Three theories with evolvutionary microfoundations have been developed to explain punishment. We survey these theories and use behavioral data from surveys and experiments to show that the theory called social reciprocity in which people punish norm violators indiscriminately explains punishment best.

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Okomboli Ong'ong'a

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Why Punish: Social Reciprocity and the Enforcement of Prosocial Norms

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Pro-social Behavior in the Global Commons: A North-South Experiment

Differences in group affiliation may affect the level of cooperation in global commons situations such as programs for the conservation of resources which generate benefits that transcend state boundaries. We design a real-time, cross-cultural common pool resource (CPR) experiment purposely using participants from cultures that derive different benefits from biodiversity (extraction versus conservation) to analyze the effect of group affiliation on cooperative behavior. In addition, we elicit real donations to local and international conservation funds to augment our CPR results. In the CPR environment, we find evidence that group affiliation affects hehavior such that heterogeneity contributes to over-extraction in the commons. In the donation stage, we show that nationality affects the distribution of donated earnings between the local and global funds. We also examine the possibility that altruistic preferences to donate to a conservation fund are endogenous, in that they reflect the level of cooperation in the CPR game.

Crying Over Spilt Milk: Sunk Costs, Fairness Norms and the Hold-Up Problem*

This paper explores a possible connection between two behavioral anomalies in economics, the observed responsiveness of individual decision-makers to sunk costs, and the apparent failure of backward induction to predict outcomes in experimental bargaining games. In particular, we show that under some conditions, a "sunk cost sensitive" fairness norm can evolve in such environments. Under this norm, a fair distribution allows all parties to recoup whatever each has invested in their relationship before the net surplus is then divided into equal shares. The establishment of such a norm would have important consequences for the hold-up problem, which we characterize in terms of ultimatum bargaining in the presence of an outside option. We then conclude with a brief discussion of the possible labor market implications of our results.

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Crying Over Spilt Milk: Sunk Costs, Fairness Norms and the Hold-Up Problem*

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Foreword to John and Wendy Cornwalls book Modelling Capitalist Development

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Foreword to John and Wendy Cornwalls book Modelling Capitalist Development

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The New Hurry-Up Face-Off Rule in the NHL

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The New Hurry-Up Face-Off Rule in the NHL

Marc P. Scheuer

Woo Y. Chang

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George Brockway: A Remembrance

Paul Davidson Interview of July 1997

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Cooperation, Trust, and Social Capital in Southeast Asian Urban Slums

We conduct experiments in the field with people who live in urban slums to measure trust and cooperation and to see how behavior varies with demographic factors and associational measures of social capital. Overall, we find high rates of contributions among Thai and Vietnamese participants in a voluntary contribution game and we see that many participants are willing to socially sanction other participants who free ride. At the individual level, we find that behavior varies with many demographic factors (e.g., sex, schooling, age) and with many associational factors (e.g., home ownership and community homogeneity). However, many of these correlations differ significantly between our Thai participants and our Vietnamese participants indicating the role of culture.

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Cooperation, Trust, and Social Capital in Southeast Asian Urban Slums

Amrita Daniere

Lois Takahashi

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The Art of Teaching Economics

The Strange Persistence of the IS/LM Model

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The Aging of an Economist

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The Aging of an Economist

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No Switchbacks: Rethinking Aspiration-Based Dynamics in the Ultimatum Game

Aspiration-based evolutionary dynamics have recently been used to model the evolution of fair play in the ultimatum game showing that incredible threats to reject low offers persist in equilibrium. We focus on two extensions of this analysis: we experimentally test whether assumptions about agent motivations (aspiration levels) and the structure of the game (binary strategy space) reflect actual play, and we examine the problematic assumption embedded in the standard replicator dynamic that unhappy agents who switch strategies may return to a rejected strategy without exploring other options. We find that the resulting "no switchback" dynamic predicts the evolution of play better than the standard dynamic and that aspirations are a significant motivator for our participants. In the process, we also construct and analyze a variant of the ultimatum game in which players can adopt conditional (on their induced aspirations) stategies.

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No Switchbacks: Rethinking Aspiration-Based Dynamics in the Ultimatum Game

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The Effects of Volunteering for Non-profit Organizations on Social Capital Formation: Evidence from a Statewide Survey

We use the household production framework to theoretically connect sociability and purposive incentives for volunteering and two forms of social capital: social connections and civic capacity. Then, using a unique statewide data set, we estimate the determinants of (a) the probability of receiving social capital benefits and (b) the level of such benefits. We show that: religious and social service organizations have a large impact on social capital formation; the probability of being socially and civically engaged increases with volunteering; and two-adult families are more likely to feel socially and civically engaged. These results are consistent with recent aggregate evidence on the decline of social capital in the United States: social capital formation declines with less religious and altruistic orientation at the community level, and as families move away from a two-adult family structure. By contrast, through volunteering, one can increase the likelihood of being socially and civically engaged.

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The Effects of Volunteering for Non-profit Organizations on Social Capital Formation: Evidence from a Statewide Survey

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Are Institutionalists an Endangered Species?

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Are Institutionalists an Endangered Species?

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The Changing Composition and Influence of Land-Based Groups: Evidence from Two Counties in Vermont

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The Changing Composition and Influence of Land-Based Groups: Evidence from Two Counties in Vermont

Christopher Klyza

Andrew Savage

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The Death of Neoclassical Economics

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The Death of Neoclassical Economics

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On the Treatment of Fixed and Sunk Costs in Principles Texts

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A Note on Measuring the Unofficial Economy in the Former Soviet Republics

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Functional Finance, New Classical Economics and Great Great Grandsons

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Functional Finance, New Classical Economics and Great Great Grandsons

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"Unemployment Insurance," "Workers’ Compensation" and "The OSH Act"

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"Unemployment Insurance," "Workers' Compensation" and "The OSH Act"

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U.S. Open Prognostications Going to Seed?

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U.S. Open Prognostications Going to Seed?

Steven E. Hulce

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"March Madness: The Racket in Regional Brackets"

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"March Madness: The Racket in Regional Brackets"

Christopher E. Fanning

Kyle H. Pilkington

Tyler A. Conrad

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Social Capital and Consumption among Agricultural Households

This paper develops a life cycle model for agricultural households in which social capital is a fixed input into household production. The intertemporal solutions of the model yield four results that are consistent with recent empirical and qualitative literature on social capital and consumption among agricultural households: commodity consumption will rise for an agricultural household in a village where public social capital is increasing - even if the household itself has invested little in their own accumulation of social relations; increased inequality within villages is associated with lower social capital; public social capital will decrease significantly in the presence of migration of young from rural communities; and current consumption levels will be less sensitive to increases in income uncertainty when social capital is increasing. The paper uses information on agricultural households in Tanzania to illustrate the model.

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Social Capital and Consumption among Agricultural Households

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Institutional Determinants of the Impact Community-Based Water Services: Evidence from Sri Lanka and India

Using data from community-based water services in Sri Lanka and India, this paper shows first that: (a) improved household health and reduced water collection times are associated with better service design and construction: (b) well-designed services involve more community members in the design process and final decision-making about service type; and (c) well-constructed services have effective mechanisms to monitor household contributions to construction. The paper then shows that these service-level institutions are endogenously determined: in communities with higher levels of social capitalin particular, with more active community groups and associationsdesign participation is more likely to be high and monitoring mechanisms are more likely to be in place. This suggests a way to place an economic value on this form of social capital in the context of water projects: as the net present value of the marginal increase in health associated with active critic associations. These results suggest that designers and supervisors of community-based water projects need to pay special attention to the prevailing levels of social capital as one of the factors that will influence performance. When targeting a range of communities, the allocation of investment resources for water services programs may need to be adjusted to take into account the lack of this form of social capital in some villages: possible adjustments include increased investments in social mobilization efforts (for example, through the strengthening of local organizations) and in more direct supervision to oversee system performance.

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Institutional Determinants of the Impact Community-Based Water Services: Evidence from Sri Lanka and India

Satu Kahkonen

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A MiddLab Project

Does Governance Explain Unofficial Activity?

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Interstate Differences in Insured Unemployment: Some Recent Evidence

Aaron T. Copeland

David J. Greiner

Recent panel data is used to reconsider the determinants of interstate differences in the ratio of insured to total unemployment. We conclude that previous research on the influence of replacement rates, duration of jobless spells and female labor force participation is robust, but find that political affiliations and attitudes could be more important, and unionization rates less important, than once believed.

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Ivan T. Kandilov

Bradford Maxwell

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A MiddLab Project

The Fuzzy Math on Butterfly Ballots and The Buchanan Vote

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Do the characterisitics of local social structures affect fertilizer adoption among rural households? This paper extends the model of technology adoption of Feder and Slade (1984) to incorporate social capital, and then tests the model with household data from two agro-ecological zones in rural Tanzania. Probit estimates of the model show that the probability of adoption of improved fertilizer in 1994-95 in the Central Plateau region in increasing in land under cultivation, cumulative adoption patterns, ethnically-based social affiliations, the adoption of improved seeds, the availability of credit and extension services, and the average years of residence in the village. In the Plains region, this probability is increasing in land under cultivation, ethnically based social affiliations and consultative norms. Overall, these results, which are robust after testing for the likely reverse causality of land under cultivation, support the finding that ethnically based and participatory social affiliations act as forms of social capital in the adoption decision.

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The Effect of Social Capital on Fertilizer Adoption: Evidence from Rural Tanzania

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A MiddLab Project

The Writing on the Wall

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The Writing on the Wall

A MiddLab Project

Incentives and Superstars on the LPGA Tour

Following Ehrenberg and Bognanno (1990a, b), this paper explores the role of incentives on the 2000 LPGA Tour. Overall, it finds them to have limited effectiveness. Several possible explanations are considered, including unmeasured differences in both abilities and courses and variations in the distribution of prizes across tournaments. The existence of a superstar effect is also considered.

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Incentives and Superstars on the LPGA Tour

Francisco Peschiera

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A MiddLab Project

A MiddLab Project

Should we Bet on Private or Public Water Utilities in Cambodia? Evidence on Incentives and Performace from Seven Provincial Towns

Is public or private sector provision of water more likely to succeed in urban areas of Cambodia? Using quantitative and qualitative data from a range of surveys and technical assessments, this paper compares consumer satisfaction and technical performance of four private and four public utilities in Cambodia. The results indicate that households served by private utilities are significantly more satisfied with the piped water than customers of public utilities: the daily availability and quality of piped water is better and service interruptions are less frequent. This has not happened by accident. Private utilities hire more educated staff whom they pay higher salaries; maintain their facilities on a more regular basis; and implement quality control programs more diligently. Private sector operators seem to face stronger incentives than public utilities to keep their customers satisfied. However, this improved service does not come for free and, consequently, does not yet reach all the available households. Households served by private utilities pay significantly more for piped water services, and some lower-income households that are not served by private utilities are partially limited by the high connection fees (as opposed to the regular monthly payments). Overall, while this recent effort to introduce private sector involvement in the water sector in Cambodia is encouraging, the full gains have not yet been realized. The commercial incentive for improved performace will likely be stronger if the privatization option used is a lease or concession arrangement; if there is more competition in the water market; and if the regulatory structure in Cambodia encourages commercial incentives to be more demand-responsive and cost conscious. Under these conditions, the private sector is a good bet.

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