Readings

Testing theory: The fundamental problem of causal evidence

• The fundamental problem of causal inference (FPCI)
  • The Rubin Causal Model (RCM)
  • Experiments and the RCM
  • Quasi-experiments in economics
• The method of Differences-in-Differences (DD)

Required Reading

*Card, David, and Alan B. Krueger. "Minimum Wages and Employment: A Case Study of the Fast-Food Industry in New Jersey and Pennsylvania." The American Economic Review 84, no. 4 (1994): 772–93.

[Mastering] Chapter 1: Randomized Trials.

Dugger, Celia W. "Wage Laws Squeeze South Africa's Poor." The New York Times, September 26, 2010.

Dube, Arindrajit. "The Minimum We Can Do." The New York Times, November 30, 2013.

Neumark, David. "Who Really Gets the Minimum Wage." The Wall Street Journal, July 6, 2014.

Recommended Reading

Holland, Paul W. "Statistics and Causal Inference." Journal of the American Statistical Association 81, no. 396 (1986): 945–60.

Consumer sovereignty: The Carte Blanche principle

• Utility maximization and constrained optimization
• The indirect utility f'n
• Expenditure minimization and the expenditure function
• Relationship between expenditure and indirect utility f'ns
• Applications of consumer theory
  • Lump-sum vs. in-kind transfers
  • Prince changes and consumer surplus

Required Reading

*Waldfogel, Joel. "The Deadweight Loss of Christmas." (PDF) The American Economic Review 83, no. 5 (1983): 1328–36.

Thompson, Derek. "If Economists Wrote Christmas Cards." The Atlantic, December 2013, 1–4.

Recommended Reading

Blattman, Chrisopther, Nathan Fiala, and Sebastian Martinez. "Generating Skilled Self-Employment in Developing Countries: Experimental Evidence from Uganda." The Quarterly Journal of Economics 129, no. 2 (2014): 697–752.

Haushofer, Johannes, and Jeremy Shapiro. "The Short-Term Impact of Unconditional Cash Transfers to the Poor: Experimental Evidence from Kenya." The Quarterly Journal of Economics 131, no. 4 (2016): 1973–2042.

Income effects, substitution effects, and the design of anti-poverty programs

• Normal, Inferior, and Giffen goods
• The Supplemental Nutrition Assistance Program (SNAP, AKA 'Food Stamps'): Improving choices by constraining them?
• Incentivizing work: Labor supply and the Earned Income Tax Credit

Required Reading

[Banerjee] Chapter 5.1: Consumer Comparative Statics: Price and Income Consumption Curves.

Williamson, Kevin D. "The White Ghetto." National Review, December 2013, 1–10.

*Eissa, Nada, and Jeffrey B. Liebman. "Labor Supply Response to the Earned Income Tax Credit." The Quarterly Journal of Economics 111, no. 2 (1996): 605–37.

Applied competitive analysis: The U.S. sugar program

• Aggregating individual to market demands
• Producer and consumer surplus in competitive equilibrium
• Distinguishing deadweight losses from transfers
• Application: The U.S. Sugar Program

Required Reading

*Scherer, Fredric M. "The U.S. Sugar Program." Harvard Kennedy School, Case 1128.0, 1992.

Editorial. "America's Sugar Daddies." The New York Times, November 29, 2003.

Malkin, Elizabeth. "In Mexico, Sugar vs. U.S. Corn Syrup." The New York Times, June 9, 2004.

American Sugar Alliance. "Trade Talks in Works Could Devastate U.S. Sugar Industry." October 21, 2003.

American Sugar Alliance. "New Global Study Confirms Americans Pay Less For Sugar." PR Newswire, February 21, 2003.

Driessche, Ray Van. "Sugar is Not Expensive." USA Today, May 23, 2000.

The gains from market integration: "The Digital Provide"

The principle of arbitage

Required Reading

*Jensen, Robert. "The Digital Provide: Information (Technology), Market Performance, and Welfare in the South Indian Fisheries Sector." The Quarterly Journal of Economics 122, no. 3 (2007): 879–924.

Does trade raise national income?

• How do we even test this question?
• The method of Instrumental Variables (IV) [also known as Two Stage Least Squares, 2SLS]

Required Reading

[Mastering] Chapter 3: Instrumental Variables.

*Feyrer, James. "Trade and Income: Exploiting Time Series in Geography." NBER Working Paper No. 14910, 2009.

Internalizing externalities: Barbed wire fencing

Enforcement of property rights: The case of barbed wire fencing

Required Reading

*Hornbeck, Richard. "Barbed Wire: Property Rights and Agricultural Development." The Quarterly Journal of Economics 125, no. 2 (2010): 767–810.

Risk preference, the value of time, and the value of statistical life

Using revealed preference to estimate the implicit value of statistical life

Required Reading

*Ashenfelter, Orley, and Michael Greenstone. "Using Mandated Speed Limits to Measure the Value of a Statistical Life." Journal of Political Economy 112, no. S1 (2004): S226–7.

Newman, Thomas P., Brian D. Johnston, and David C. Grossman. "Effects and Costs of Requiring Child-Restraint Systems for Young Children Traveling on Commercial Airplanes." Archives of Pediatric Adolescent Medicine 157, no. 10 (2003): 969–74.

Recommended Reading

Banzhaf, H. Spencer. "Retrospectives: The Cold-War Origins of the Value of Statistical Life." Journal of Economic Perspectives 28, no. 4 (2014): 213–26.

Moral hazard in the housing market: Subprime lending

• The Regression Discontinuity method
• Application: Moral hazard, Securitization and Subprime Lending

Required Reading

[Mastering] Chapter 4: Regression Discontinuity Designs.

*Keys, Benjamin J., Tanmoy Mukkerjee, et al. "Did Securitization Lead to Lax Screening? Evidence from Subprime Loans." The Quarterly Journal of Economics 125, no. 1 (2010): 307–62.

Imperfect information: Signaling in markets

• Why is information different?
• Signaling in markets
• The notion of equilibrium in strategic interactions

Required Reading

Spence, Michael. "Job Market Signaling." The Quarterly Journal of Economics 87, no. 3 (1973): 355–74.

[Banerjee] Chapter 12 and Chapter 15: Game Theory (especially section 12.3 on Nash Equilibrium), Asymmetric Information.

Mandating a pooling equilibrium: "Ban the Box" legislation

• Statistical discrimination: Definition and logic
• Statistical discrimination and "Ban the Box"

Required Reading

*Agan, Amanda, and Sonja Starr. "Ban the Box, Criminal Records, and Statistical Discrimination: A Field Experiment." (PDF) University of Michigan Law and Economics Research Paper, August 24, 2016.

Recommended Reading

Autor, David H., and David Scarborough. "Does Job Testing Harm Minority Workers? Evidence from Retail Establishments." The Quarterly Journal of Economics 123, no. 1 (2008): 219-277.

Doleac, Jennifer L., and Benjamin Hansen. "Does 'Ban the Box' Help or Hurt Low-Skilled Workers? Statistical Discrimination and Employment Outcomes When Criminal Histories are Hidden." NBER Working Paper No. 22469, 2016.

Bartik, Alexander W., and Scott Nelson. "Credit Reports as Résumés: The Incidence of Pre-Employment Credit Screening." MIT Department of Economics Graduate Student Research Paper 16–01, March 2016.

Health insurance in practice: Why it works, why it matters

• Adverse and advantageous selection
• Does health insurance affect health?

Required Reading

Finkelstein, Amy, and Kathleen McGarry. "Multiple Dimensions of Private Information: Evidence from the Long-Term Care Insurance Market." American Economic Review 96, no. 4 (2006): 938–58.

*Card, David E., Carlos Dobkin, et al. "Does Medicare Save Lives?" The Quarterly Journal of Economics 124, no. 2 (2009): 597–636.