Picks from this volume of the American Economic Review

Joining the American Economic Association, for those of you who have an interest in academic research, is a great value: it’s a little over $100 a year, and you get the full suite of excellent journals they publish.

This volume of the American Economic Review has some great papers from the Denver conference last year. These are going to appear behind a login, sorry, but I am betting you can find a free version somewhere online if you are interested.

The Richard Ely lecture, given by Janet Currie:

Currie, Janet. 2011. “Inequality at Birth: Some Causes and Consequences.” American Economic Review, 101(3): 1–22.

Hosken, Daniel, Louis Silvia, and Christopher Taylor. 2011. “Does Concentration Matter? Measurement of Petroleum Merger Price Effects.” American Economic Review, 101(3): 45–50.

We have estimated the price effects of two changes in market structure resulting from two changes in the ownership of gasoline refineries in the San Francisco Bay area: Tosco’s purchase of Unocal’s Rodeo refinery in April 1997 and UDS’s purchase of Tosco’s Avon refinery in August 2000. These events provide a relatively unique opportunity to test a price concentration relationship. If market concentration is related to price, then we should observe prices increase and then decrease by a similar amount following these transactions. We do not find evidence of a consistent price concentration relationship.

This one made the rounds on Facebook:
Ashenmiller, B. (2011). The effect of bottle laws on income: New empirical results. American Economic Review, 101(3), 60-64.

Eleven US states have “bottle laws,” deposit-refund programs that combine a consumption tax with a recycling rebate. When states set the bottle deposit low enough it becomes a tax on high wage earners, for whom the opportunity cost of their time prevents them from returning containers for their deposit. However, this bottle deposit will still be high enough that harvesting recyclables provides employment for low wage earners. Using individual data on observed cash recycling behavior, this paper shows that an unintended consequence of bottle laws is that they have the potential to increase the incomes of very low wage workers.

Kok, Nils, Marquise McGraw, and John M. Quigley. 2011. “The Diffusion of Energy Efficiency in Building.” American Economic Review, 101(3): 77–82.

We analyze the diffusion of buildings certified for energy efficiency across US property markets. Using a panel of 48 metropolitan areas (MSAs) observed over the last 15 years, we model the geographic patterns and dynamics of building certification, relating industry composition, changes in economic conditions, characteristics of the local commercial property market, and the presence of human capital, to the cross-sectional variation in energy-efficient building technologies and the diffusion of those technologies over time. Understanding the determinants and the rate at which energy-efficient building practices diffuse is important for designing policies to affect resource consumption in the built environment.

Viscusi, W. Kip, Joel Huber, and Jason Bell. 2011. “Promoting Recycling: Private Values, Social Norms, and Economic Incentives.” American Economic Review, 101(3): 65–70.

Evidence from a nationally representative sample of households illuminates the determinants of recycling behavior for plastic water bottles. Private values of the environment are influential in promoting recycling, as are personal norms for pro-environmental behavior. However, social norms with respect to the assessment of the household’s recycling behaviors by others have little independent effect. Particularly influential are policies that create economic incentives to promote recycling either through state recycling laws that reduce the time and inconvenience costs of recycling or through bottle deposits. Effective policies can have a discontinuous effect at the individual level, transforming non-recyclers into avid recyclers.

Wolak, Frank A.. 2011. “Do Residential Customers Respond to Hourly Prices? Evidence from a Dynamic Pricing Experiment.” American Economic Review, 101(3): 83–87.

This paper uses the results of a dynamic pricing experiment for households in the District of Columbia to determine whether the reduction in demand associated with an hourly price signal is economically different from the demand reduction associated with an equivalent price signal that is four times longer in duration. For both regular and all-electric customers, the percentage demand reduction associated with a given percentage increase in the hourly price is approximately equal to the percentage demand reduction associated with the same percentage price increase of a much longer duration.

Costa, Dora L., and Matthew E. Kahn. 2011. “Electricity Consumption and Durable Housing: Understanding Cohort Effects.” American Economic Review, 101(3): 88–92.

We find that households living in California homes built in the 1960s and 1970s had high electricity consumption in 2000 relative to houses of more recent vintages because the price of electricity at the time of home construction was low. Homes built in the early 1990s had lower electricity consumption than homes of earlier vintages because the price of electricity was higher. The elasticity of the price of electricity at the time of construction was -0.22. As homes built between 1960 and 1989 become a smaller share of the housing stock, average household electricity purchases will fall.

Jacobsen, Mark R.. 2011. “Fuel Economy, Car Class Mix, and Safety.” American Economic Review, 101(3): 105–09.

Fuel economy standards change the composition of the vehicle fleet, potentially influencing accident fatality risks. I estimate the direction and magnitude of this impact, introducing a correction for selection on driver behavior. A policy application using my new estimates shows that the present distinction between light trucks and cars in fuel economy rules has very negative consequences for overall safety: Each MPG increment to the standard results in an additional 150 fatalities per year in expectation. My correction for selection is pivotal in this finding. I then demonstrate a simple alternative regulation that can produce near-zero changes in accident fatalities.

I’ll probably write about more of these individually so I can get more in-depth.