Labor Supply and the Value of Non-Work Time: Experimental Estimates from the Field. , July 2017, Paper, “We use a field experiment to estimate the marginal value of non-work time (MVT). During a national application process for phone survey and data entry positions, we randomly offered applicants alternative wage-hour bundles. Jobseeker choices over these bundles yield estimates for the MVT as a function of hours worked. These quantities trace out a labor supply relationship. As predicted by the conventional model of the allocation of time, the substitution effect is positive. Individual labor supply is highly elastic at low hours and becomes more inelastic at higher hours. For unemployed job applicants, the opportunity cost of a full-time job due to lost leisure, household production, and other non-work activities is approximately 60% of their estimated market wage. A similar estimate is found when we reproduce elements of this experiment in a nationally-representative survey.Link

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Deregulating Is Not So Easy. Cass Sunstein, July 25, 2017, Opinion, “In what sounded like a major announcement, the Trump administration last week highlighted numbers showing it was making big strides in controlling regulations. It is true that the pace of rulemaking has slowed dramatically. Thus far, the Office of Information and Regulatory Affairs has approved just 41 regulations, meaning that we might see fewer than 100 in all of 2017. That would be less than one-fifth of the average under the most recent Republican president, George W. Bush.” Link

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Assesses the Political Odds of Drug Pricing Reform. David Cutler, July 25, 2017, Video, “Legislators from both parties may have difficulty finding a common solution to high drug prices, but President Donald Trump could be instrumental in bringing prices down if he acts on his pledges, according to David M. Cutler, PhD, of Harvard University.Link

 

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(Mis)perceptions of Inequality. Michael I. Norton, July 24, 2017, Paper, “Laypeople’s beliefs about the current distribution of outcomes such as income and wealth in their country influence their attitudes towards issues ranging from taxation to healthcare–but how accurate are these beliefs? We review the burgeoning literature on (mis)perceptions of inequality. First, we show that people on average misperceive current levels of inequality, typically underestimating the extent of inequality in their country. Second, we delineate potential causes of these misperceptions, including people’s overreliance on cues from their local environment, leading to their erroneous beliefs about both the overall distributions of wealth and income and their place in those distributions. Third, we document that these (mis)perceptions of inequality—but not actual levels of inequality—drive behavior and preferences for redistribution. More promisingly, we review research suggesting that correcting misperceptions influences preferences and policy outcomes.Link

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Central Bankers Should’ve Been More Aggressive. Kenneth Rogoff, July 20, 2017, Audio, “Kenneth Rogoff, a professor at Harvard University, says central bankers should’ve been more aggressive during the financial crisis and that India’s demonetization was done too quickly. Prior to that, Kathy Matsui, chief Japan equity strategist at Goldman Sachs Japan, says Japanese companies are strong. Robert Shiller, a professor at Yale University, says New York City housing is more affordable than people think. Finally, New Orleans Mayor Mitch Landrieu says Washington’s stuck making the same mistakes in health care.Link

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Harvard’s Rogoff Says U.S. in High State of Dysfunction. Kenneth Rogoff, July 20, 2017, Video, “Harvard University Professor Kenneth Rogoff talks about the current state of the U.S. government and economy. He speaks with Bloomberg’s Tom Keene on “Bloomberg Surveillance.” (Source: Bloomberg)Link

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Tech Monopolies May Hurt Innovation. Kenneth Rogoff, July 20, 2017, Video, “In today’s “Single Best Chart,” Bloomberg’s Tom Keene displays the inflation-adjusted Nasdaq 100, going back to 1985. He speaks with Harvard University Professor Kenneth Rogoff on “Bloomberg Surveillance.” (Source: Bloomberg)Link

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Diagnostic Expectations and Stock Returns. Andrei Shleifer, July 2017, Paper, “We revisit La Porta’s (1996) finding that returns on portfolios of stocks with the most optimistic analyst long term earnings growth forecasts are substantially lower than those for stocks with the most pessimistic forecasts. We document that this finding still holds, and present several further facts about the joint dynamics of fundamentals, expectations, and returns for these portfolios. We then propose a new approach to modeling belief formation and over-reaction to news that explains these facts, based on a portable psychological model of judgment by representativeness.Link

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Research: Hiring Chief Risk Officers Led Banks to Take on Even More Risk. Frank Dobbin, July 12, 2017, “Risk taking by big U.S. banks exploded in the years leading up to the 2008 financial crisis, with disastrous consequences for American firms, markets, and households. Much of the added risk, of course, came in the form of complex, opaque financial instruments like derivatives, the “financial weapons of mass destruction” that played such a central role in the crisis and the panic that followed.Link

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Walmart Tries to Make Better Savers out of the Unbanked. Brigitte Madrian, July 7, 2017, Audio, “Jamie Aronton doesn’t have a bank account. Instead, she uses Money Mart, a check cashing spot in Pittsburgh, to direct deposit her salary onto prepaid debit cards. She makes $12-an-hour in a housekeeping job and said that by the time her deposits come through her cards are pretty tapped out.Link

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