Francesca Gino,
Harvard Business Review: The Rise of Behavioral Economics and Its Influence on
Organizations. Nudges can solve
all sorts of problems governments and businesses alike consider important. Here
are some examples. A few years ago, for instance, General Electric’s leaders
wanted to address the issue of smoking, believing that it impacted its
employees negatively. So, in collaboration with Kevin Volpp and his co-authors,
they conducted a randomized controlled trial (think: field experiment).
Employees in the treatment group each received $250 if they stopped for six
months and $400 if they stopped for 12 months. Those in the control group did
not receive any incentive. The
researchers found that the treatment group had three times the success rate of
the control, and that the effect persisted even after the incentives were
discontinued after 12 months. Based on this work, GE changed its policy
and started using this approach for its then-152,000 employees.
Vitor Gaspar,
Mercedes Garcia-Escribano, IMF: Inequality: Fiscal Policy Can Make the
Difference. Fiscal policy accounts for a large share of
differences in inequality across countries. In advanced economies, fiscal
policy offsets about a third of income inequality before taxes and transfers—commonly
known as market income inequality—with 75 percent coming from transfers.
Spending on education and health also affects market income inequality over
time by promoting social mobility, including across generations. In developing
economies, fiscal redistribution is much weaker, given lower and less
progressive taxes and spending
Eduardo Porter,
NYT: Why Big Cities Thrive, and Smaller Ones Are Being Left Behind. The dismal performance is not surprising. Built on
coal and steel, Steubenville and Weirton were ill suited to survive the
transformations brought about by globalization and the information economy.
They have been losing population since the 1980s. To prove his point, Mr. Muro
compared the 100 largest metropolitan areas in the country, those with
populations above 550,000, with the 182 smallest, which have populations
ranging from 80,000 to about 215,000. The difference in performance widened: Private employment grew almost
twice as fast in large metropolitan areas as it did in small ones from the
trough of the recession, in 2009, to 2015. Income grew 50 percent faster. And
the labor participation rate — the share of the working-age population in the
labor force — shrank only half as much. “Economic transitions work against
smaller America.”
Atila
Abdulkadiroglu, Parag A. Pathak, Jonathan Schellenberg, Christopher R. Walters,
NBER: Do Parents Value School Effectiveness? School choice may lead to improvements in school productivity if
parents' choices reward effective schools and punish ineffective ones. This
mechanism requires parents to choose schools based on causal effectiveness
rather than peer characteristics. We study relationships among parent
preferences, peer quality, and causal effects on outcomes for applicants to New
York City's centralized high school assignment mechanism. We use applicants'
rank-ordered choice lists to measure preferences and to construct
selection-corrected estimates of treatment effects on test scores and high
school graduation. We also estimate impacts on college attendance and college
quality. Parents prefer
schools that enroll high-achieving peers, and these schools generate larger
improvements in short- and long-run student outcomes. We find no relationship
between preferences and school effectiveness after controlling for peer quality.
Petra Thiemann,
Lund University and IZA: The Persistent Effects of Short-Term Peer Groups in
Higher Education. This paper
demonstrates that short-term peer exposure can generate achievement effects which
persist for several months and years. I study a mandatory freshmen week for
firstyear undergraduates and exploit the random assignment of students to
freshmen teams. I find
that the freshmen week contributes to the formation of persistent social ties.
Furthermore, peers’ observable characteristics impact college achievement for
up to three years. Ability peer effects are non-linear, i.e. very high
or low levels of average peer ability in a group harm students’ grades. These
effects are most pronounced for low-ability students.
Josue Ortega,
Philipp Hergovich, University of Essex: The Strength of Absent Ties: Social
Integration via Online Dating. We used to
marry people to which we were somehow connected to: friends of friends,
schoolmates, neighbours. Since we were more connected to people similar to us,
we were likely to marry someone from our own race. However, online dating has
changed this pattern: people who meet online tend to be complete strangers.
Given that one-third of modern marriages start online, we investigate
theoretically, using random graphs and matching theory, the effects of those
previously absent ties in the diversity of modern societies. We find that when a society
benefits from previously absent ties, social integration occurs rapidly, even
if the number of partners met online is small. Our findings are consistent with
the sharp increase in interracial marriages in the U.S. in the last two decades.
Eran Yashiv, VOX:
The value of top footballers, bubbles, and pitfalls of the free market. The €222 million transfer of Neymar to PSG calls
into question whether football superstars are a good investment. Using the financial details of
the transfer, this column argues that, at the price paid, Neymar has a negative
net present value. While there are other explanations for PSG's
willingness to pay, in purely economic terms his contract seems a bad
investment. Policymakers might use this type of calculation to justify
intervening in the transfer market through regulation and taxation.
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