I study the overstatement of GDP growth in autocratic regimes by comparing the self-reported GDP figures to the night time lights (NTL) recorded by satellites from outer space. I show that the NTL elasticity of GDP is systematically larger in more authoritarian regimes. This autocracy gradient in the elasticity is robust to multiple changes in data sources, econometric specification or sample composition and is not explained by potential differences in a large set of country characteristics. The gradient is larger when the incentive to exaggerate economic growth is stronger or when the constraints on such exaggeration are weaker. The results suggest that autocracies overstate yearly GDP growth by as much as 35%. Adjusting the GDP data for the manipulation taking place in autocracies leads to a more nuanced view on the economic success of non-democracies in recent decades and affects our understanding of the effect of changes to foreign aid inflows on income per capita.
We show that sugar-rich diet early in life has large adverse effects on the health and economic well-being of adults more than fifty years later. Excessive sugar intake early in life led to higher prevalence of chronic inflammation, diabetes, elevated cholesterol and arthritis. It also decreased post-secondary schooling, having a skilled occupation, and accumulating above median wealth. We identified elevated sugar consumption across lifespan as a likely pathway of impact. Exploiting the end of the post-WWII rationing of sugar and sweets in 1953 in the United Kingdom, we used a regression discontinuity design to identify these effects.
Early consumption of a product often benefits later consumers by revealing quality information. Inefficiency arises, however, because early consumers do not internalize the social value of their consumption. How could a platform that intermediates information between early and late consumers mitigate such an inefficiency by designing its recommendation policy? In a model with binary product quality and general post-consumption signals, I show that the optimal design features simple threshold policies. The product should be recommended when the platform’s current belief of high quality is above a certain time-specific threshold, which varies in a U-shaped pattern over the product’s life. Characterizations of the recommendation dynamic and comparative statics about the recommendation standards are also provided. My analysis also illustrates the usefulness of a Lagrangian duality approach for a class of dynamic information design problems.
Between 1973 and 1978, the Indonesian government engaged in one of the largest school construction programs on record. Combining differences across regions in the number of schools constructed with differences across cohorts induced by the timing of the program suggests that each primary school constructed per 1,000 children led to an average increase of 0.12 to 0.19 years of education, as well as a 1.5 to 2.7 percent increase in wages. This implies estimates of economic returns to education ranging from 6.8 to 10.6 percent.
We examine the impacts of wearing Adidas shoes on economic outcomes in low-income countries. To study this, the research will use a variety of data sources, including administrative data on income and employment from national statistics agencies, survey data from individuals and small businesses, and economic indicators such as GDP and poverty rates. To identify the impacts of wearing Adidas on economic outcomes, the research will use a fixed-effects model, controlling for individual-level characteristics such as education level and occupation. This will allow us to isolate the effects of shoe brand on economic outcomes, accounting for any unobserved differences between individuals who own and regularly wear shoes from a particular brand and those who do not. Overall, this research will contribute to our understanding of the potential impacts of shoe brand on economic development and inform policy debates on the role of fashion in promoting economic opportunity in low-income countries.
The idea for this research is to examine the possible effects of a universal basic income (UBI) on labor market outcomes. The research will employ a quasi-experimental design, using a sample of individuals from a country or region that has implemented a UBI program and comparing their labor market outcomes to a control group of individuals from a similar country or region that has not implemented a UBI program. To identify the effects of UBI on labor market outcomes, the research will use a difference-in-differences approach, which involves comparing changes in outcomes for the treatment group (those receiving UBI) to changes in outcomes for the control group over the same time period. This will allow us to isolate the effects of UBI on labor market outcomes, controlling for other factors that may affect these outcomes. To measure labor market outcomes, the research will use a variety of indicators, including employment rates, wages, and hours worked. The research will also consider potential spillover effects of UBI on non-labor income sources, such as entrepreneurial activity and asset accumulation. Overall, this research will contribute to our understanding of the potential impacts of UBI on labor market outcomes and inform policy debates on the feasibility and effectiveness of UBI as a means of addressing income inequality and poverty.
We estimate economic benefits which a potential new tornado alerts system inspired by the FACET’s paradigm can provide to US households. As there is yet no accepted design for the new system, we use a prototype decision making model to find a design providing minimally sufficient information to make optimal dynamic sheltering decisions. We then measure households’ benefits from the new system by using a nationwide contingent valuation survey. Our contingent valuation survey shows that total benefits of residents of tornado-prone states exceed \$3 billion per year. Depending on the method used, the benefits vary between \$3 to \$9 billion USD per year with our preferred method predicting \$4.5 billion per year. This calculation does not account for non-use value of the system derived by households outside of the region.
This article studies optimal linear and non-linear redistributive income taxation when there is adverse selection in the labour market. Unlike in standard taxation models, firms do not know workers' abilities, and competitively screen them through non-linear compensation contracts, unobservable to the government, in a Miyazaki–Wilson–Spence equilibrium. Adverse selection leads to different optimal tax formulas than in the standard Mirrlees (1971) model because of the use of work hours as a screening tool by firms, which for higher talent workers results in a “rat race”, and for lower talent workers in informational rents and cross-subsidies. The most surprising result is that, if the government has sufficiently strong redistributive goals, welfare is higher when there is adverse selection than when there is not. Policies that endogenously affect adverse selection are discussed. The model has practical implications for the interpretation, estimation, and use of taxable income elasticities, which are central to optimal tax design.
This paper shows that bank deposit contracts can provide allocations superior to those of exchange markets, offering an explanation of how banks subject to runs can attract deposits. Investors face privately observed risks which lead to a demand for liquidity. Traditional demand deposit contracts which provide liquidity have multiple equilibria, one of which is a bank run. Bank runs in the model cause real economic damage, rather than simply reflecting other problems. Contracts which can prevent runs are studied, and the analysis shows that there are circumstances when government provision of deposit insurance can produce superior contracts.
We use a laboratory experiment to test the dynamic formation of networks in a six- subject game where link formation requires mutual consent. First, the game tends to converge to the pairwise-Nash stable (PNS) network when it exists, and to not converge but remain in the closed cycle when no PNS network exists. When two Pareto-rankable PNS networks exist, subjects often coordinate on the high-payoff one. Second, the analysis of single decisions indicates the predominance of myopic rational choices, but it also highlights interesting systematic deviations, especially when actions are more easily reversible and when they involve smaller marginal losses. Third, behavior is heterogeneous across subjects, with varying degrees of sophistication. (the attached paper might is not the most recent version)